## Facts

- Procter & Gamble Distributing Co. (P&G) acquired large quantities of soybean (salad) oil connected to transactions involving Allied Crude Vegetable Oil Refining Corp. and stored the oil in tanks operated as a field warehouse in Bayonne, New Jersey.
- Lawrence American Field Warehousing Corp. (Field) acted as warehouseman and issued nonnegotiable warehouse receipts to P&G for several million pounds of soybean oil.
- Field also issued month-end statements, based on its records, indicating the oil was present in the warehouse.
- After the collapse of a large-scale vegetable oil fraud, the tanks were found not to contain the oil in the quantities and quality represented; the contents were largely adulterated material.
- P&G demanded delivery of its oil; Field could not deliver and did not provide a satisfactory explanation of how or when the goods disappeared.
- P&G sued Field for conversion and sought damages measured by the market value of the oil at the times of delivery to the warehouse (a higher value than at later discovery of loss).

## Issues

1. Whether a warehouseman that issued warehouse receipts and statements is liable for conversion when it cannot deliver the goods and offers no adequate explanation for the disappearance.
2. If liable for conversion, whether damages are measured by the market value at the time of delivery/issuance of receipts or at the time the owner learned the goods were missing.

## Decision

- The Court of Appeals held that Field’s unexplained nondelivery of goods represented by its warehouse receipts established conversion as a matter of law.
- The court agreed there was no triable issue on liability and that summary judgment for P&G was proper.
- The court rejected the Appellate Division’s approach to damages and awarded P&G the undisputed market value of the goods at the times of delivery to Field.
- The court reasoned that the delivery-date value was as high as any value before P&G received notice of the disappearance, making that measure appropriate on these facts.

## Legal Principles

- A warehouseman that issues receipts for goods and then cannot redeliver them, without adequately accounting for the loss, is liable in conversion.
- Warehouse receipts and the warehouseman’s related records are evidence of receipt and custody of the goods described, shifting to the warehouseman the obligation to account for nondelivery.
- In conversion based on a warehouseman’s unexplained nondelivery of goods covered by receipts, damages may be measured by the market value at the times the goods were delivered and receipts issued, particularly where that value equals the highest value before notice of loss.
- Summary judgment is appropriate where issuance of receipts, demand, nondelivery, and lack of a satisfactory explanation are undisputed.

## Conclusion

The court imposed conversion liability on a field warehouseman that could not deliver oil covered by its receipts and could not explain the disappearance, and it fixed damages at the market value when the goods were delivered and the receipts were issued rather than at the later time the loss was discovered.


Procter & Gamble Distrib. Co. v. Lawrence Am. Field Warehousing Corp., 16 N.Y.2d 344 (N.Y. 1965)