Strong Spring Sales

WAREHOUSE
LIEN FAQ
QMust the items be placed for auction?
The Michigan statute governing the enforcement of warehouse
liens requires that in instances where the goods are stored
by a merchant in the course of his/her business, the sale may be
public or private at any time or place and on any terms which are
commercially reasonable, after notifying all persons known to claim
an interest in the goods. MCL 440. n 10(1). In instances where there
exists a warehouse lien on goods other than goods stored by a merchant
in the course of his/her business, the sale must be public and
by auction at a specified time and place. MCL 440. n 10(2) (c).
Q
PAUL MILLENBACH
FOSTER, SWIFT, Collins & smith pc
If conducting a private sale, does an ad have to be placed in the
newspaper?
Again, a private sale may only be conducted when the warehouse
has a lien on goods stores by a merchant in the course of his/her
business. In this instance, the sale can be private provided it is
held at a time and place and on terms which are commercially reasonable
after notifying all persons known to claim an interest in
the goods. The statute sets forth specific requirements if the notice
which include a statement of the amount due, the nature of the
proposed sale and the time and place of the sale. If the warehouse
sells the goods in the usual manner in any recognized market, or
sells the goods at the price current in such market at the time of
the sale, or if the goods are sold in conformity with commercially
reasonable practices among dealers in the types of goods sold, the
warehouse has sold in a commercially reasonable manner.
Q
Can the warehouse hold a “garage like” sale instead of an auction?
A “garage like” sale can only be held in instances where a private
sale is allowed, i.e. when there exists a lien on goods stored
by a merchant in the course of his business and with the proper
notification outlined above.
Q
Can the warehouse purchase or dispose of the stored items and call
it even?
Yes, but the warehouse must first satisfy the notice requirements
that all persons known to claim an interest must be notified and
such notification must be delivered in person or sent by registered
or certified letter to the last known address of any person
to be notified. In addition, the notice must include an itemized
statement of the claim, a description of the goods, and a demand
for payment within a specified time, not less than ten days after
receipt of the notification. The notice must also provide a statement
that unless the claim is paid within that time, the goods will
be advertised for sale and sold by auction at a specified time and
place. Only then can the warehouse purchase or dispose of the
stored items.
Q
Can the warehouse purchase the items without having a public sale?
Not until the notification and sale requirements are satisfied.
8 THE CARRIER