that defendant was the president of the bankrupt mill company; that he bought the wheat to enable the mill to carry on its operations; that the secretary issued to him the receipt; that the wheat was almost immediately made into flour, with the defendant's knowledge, but the receipt was not surrendered until a short time before the bankruptcy, when the money was paid to the defendant. The bill of exceptions rests upon the proposition that, even if such were the facts, it is not competent, in view of the terms of the receipt and the provisions of the statute, to show these facts, or similar facts, by parol evidence. True, it is not competent to allow a witness to state what he intended by the use of the language in which the receipt was couched, but the bill of exceptions, taken as a whole, does not show that this was permitted. The contention of the defendant seems to have been, if such a receipt was given, that no state of case could be shown by parol evidence which would make him liable to the assignee in bankruptcy. Such a proposition is too broad to be sound, and, if adopted, might be the means of not only working a fraud upon the bankrupt act, but upon bona fide grain depositors under the local statute. 18. Authority to sell must be express.

Parol evidence to show the circumstances under which the grain was received, the custom and mode of doing business, the use made of the grain with the consent of the depositor, etc., has often been admitted in cases like the present. Rahilly v. Wilson, 3 Dill., 420 (§§ 19-22, infra); Randell's Case, Law Rep., 3 P. C., 101; Chase v. Washburn, 1 Ohio St., 244; Lonergan v. Stewart, 55 Ill., 44. The only change in this respect made by the local statute is that the authority to sell must be "express," but it need not necessarily be in writing.

I regret that the bill of exceptions is not more full and precise, but, as I construe it, no error is affirmatively disclosed, and the judgment below is affirmed.

RAHILLY v. WILSON.

(Circuit Court for Minnesota: 3 Dillon, 420-430; 17 Int. Rev. Rec., 46. 1873.)

STATEMENT OF FACTS.- This is an appeal in bankruptcy from the decree of the district court, granting relief prayed in the original bill of Rabilly, filed for himself and other holders of warehouse grain receipts, and dismissing the cross-bill of the First National Bank of St. Paul. The suit was brought to recover the grain itself or the value thereof, mentioned in certain warehouse receipts issued to plaintiff and others by the bankrupts. When they had failed, and after it had become known they had stopped business, they issued two warehouse receipts for twelve thousand bushels of wheat, which afterwards came into the hands of the First National Bank of St. Paul with full notice of all these circumstances. The case was tried. The bank, by stipulation, being made a party defendant, answered the bill and also filed a cross-bill, alleging that to the extent of its claim it had a prior right to the funds in court. The district court dismissed this bill, but decreed that the ordinary grain receipt holders were entitled to the grain on hand at the time of filing the petition in bankruptcy.

Opinion by DILLON, J.

The proofs satisfy me that the invariable and known course of business at the elevator warehouses in Lake City was to mingle together all grain of the same grade, whether purchased outright and paid for at the time, or received

on tickets specifying the grade and quantity and which contemplated the future delivery of the like amount of the same grade of wheat to the holders of such receipts when they should call for it, or the payment in money of the value of that amount and quality of grain.

§ 19. Parties depositing wheat as did complainant presumed to know the invariable course of business.

Those who deposited wheat must be taken to know, and in fact did know, that it would be thus mingled with other grain; that it would be shipped and sold by the warehousemen, when the latter should deem it for their interests (for such was the uniform practice), and consequently, if the depositor should demand wheat instead of the value of the wheat, he would not receive, unless by accident, any of the identical wheat deposited, nor any of the immediate mass into which it went. As wheat was being daily received and constantly shipped, the amount on hand fluctuated from time to time. In July, 1870, there was not a bushel of wheat in the elevator building, although many receipts for the crop of the previous year, or years, were outstanding. The proofs show that it was very unusual to deliver wheat to the depositor, as he almost always chose to take the value of the amount and quality called for in the receipt at the date when he desired to surrender it and close the transaction.

Under these circumstances the question is, What is the relation which exists between the grain depositor and the warehouseman? Is the depositor a bailor simply, and the warehouseman a bailee, or is the former a seller, and the latter a purchaser, of the wheat? The district court held the former theory, and that the holders of outstanding receipts were entitled to the grain in the warehouse at the time of the failure of the bankrupts, and that as the amount therein did not equal the amount called for in the outstanding receipts, they must share pro rata. This view proceeds upon the ground that the title in the grain deposited does not pass to the warehouseman, but remains in the depositor, and that the latter has the title at all times to an amount of wheat in the warehouse equal to that called for in his receipt; and it is contended that if sales are made by the warehouseman, this is a conversion of the depositor's property, and if other like property is placed in the warehouse, the law will imply that it is placed there in substitution for that which was wrongfully removed, and hence that the grain at any time on hand belongs to the depositors to the extent of their receipts or tickets. It seems to me that this view cannot be maintained, and that it would lead to difficulties and confusion, and that it is against the established legal principles by which sales and bailments are discriminated. If this view is sound and the warehouse should burn without the fault of the owner, this would be a defense to any demand on the part of the ticket holder either for the wheat or its value a proposition which cannot, I think, be maintained, and which is against the precise point adjudged in several wellconsidered cases. Chase v. Washburn, 1 Ohio St., 244. 1853; South Australian Ins. Co. v. Randall, Law Rep., 3 Privy Council Appeals, 101, 1869. $20. The contract one of sale, not of bailment.

Viewed in the light of the uniform course of business, the contract is not one of bailment proper, but one (mutuum) where the property passes to the mutuary or receiver, and is delivered to him for his own use or consumption, and where he is not bound to return the identical article in its original or altered shape, but property of the same kind and value; in which case it is a sale, and the title passes, and the receiver becomes a debtor for the stipulated

Jones on Bailments, 64, 102; Story on Bailments, sec. 439; 2 Kent's Com., 590. That this is a correct view of the relations between the wheat depositors and the bankrupts is expressly adjudged in the following cases, which, in their facts, are identical with the one under consideration: South Australian Ins. Co. v. Randall, supra; Chase v. Washburn, supra; Lonergan v. Stewart, 55 Ill., 44, 1870; Johnson v. Brown, infra. See Myers v. Adams, 8 N. B. R., 214; Stearns v. Raymond, 26 Wis., 74.

Applying the principle above mentioned, the privy council, in the case of the South Australian Insurance Company, in an elaborate judgment, decided, where corn was deposited by farmers with a miller to be "stored," and used as part of the current or consumable stock or capital of the miller's business, and was by him mixed with other corn deposited for a like purpose, subject to the right of the farmers to claim, at any time, an equal quantity of corn of the like quality, without reference to any specific bulk from which it is to be taken, or, in lieu thereof, the market price on any equal quantity on the day on which he made his demand, with a small charge for general purposes, that the transaction was a sale by the farmer to the miller of the corn deposited, and not a bailment. In giving their lordships' judgment, Sir Joseph Napier says: "It appears to their lordships that there is no sound distinction, in principle, between this and the case of money deposited with a banker on a deposit receipt; that it is not the case of a possession given (by the farmer) subject to a trust, but that it is the case of property transferred for value, at the time of delivery, upon special terms of settlement. Law Rep., 3 Privy Council App., 109, 311.

And so the supreme court of Iowa, in Johnson v. Brown, 37 Ia., 200. 1873, has also held. In the case just cited, wheat was left in the elevator with the understanding that, when the depositor should be ready to sell it, the proprietor of the elevator would give the highest market price or the same amount of wheat of like grade and quality—the custom being to ship off grain, but to keep on hand sufficient to fill outstanding storage receipts, but not the identical wheat received and it was adjudged that the transaction was a sale and not a bailment. I regard the case at bar distinguishable from Young v. Miles, 20 Wis., 615; 23 Wis., 643; and Kimberly v. Patchin, 19 N. Y., 330, and like cases, where the bulk from which the mingled articles were to be taken was specific and not subject to constant fluctuations.

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8 21. Finding of district court reviewed.

I am of opinion, therefore, that the court erred in holding that the receipt owners had the right to the wheat in the warehouse as against the assignee, and its decree in this respect is reversed, and a decree will be entered here dismissing the bill. I may add that I am entirely satisfied, in the light of the mode of conducting business at the grain elevators, as shown in the testimony, that the foregoing is a sound view of the relation between the grain depositor and the proprietor of the elevator, and that legislation to protect the former against the insolvency of the latter would appear to be called for. 8 22. Dismissal of bank's cross-bill affirmed.

In respect to the claim of the bank upon the two wheat receipts for twelve thousand bushels, made by the bankrupts after their failure, to secure $10,000 to their local bankers, I concur so fully in the views of Judge Nelson that I do not deem it essential to do more than refer to his opinion.. The decree of the district court dismissing the cross-bill of the bank is affirmed. The cause

will be remanded to the district court with directions to tax the costs in that court equitably as between the receipt holders and the bank. The costs on this appeal will be borne equally between the same parties.

ADAMS v. MERCHANTS' NATIONAL BANK.

(Circuit Court for Indiana: 9 Bissell, 396-404. 1880.)

Opinion by DRUMMOND, J.

STATEMENT OF FACTS.-In the fall of 1877 Van Camp & Sons were engaged in business at Indianapolis, in buying and selling apples and other produce, and in the manufacture and putting up of meats, fruits, etc. They had a storehouse at Indianapolis, where they kept articles which they wished to hold for better prices. At that time they applied to the bank for a loan of $2,000. The bank agreed to make the loan upon the execution of a note by the bankrupts with certain sureties, and on the condition that they would convert their storehouse into a public warehouse of class "B" by taking out a permit therefor under the statute, and would place the eight hundred barrels of apples, for the purchase of which they made the loan, in the warehouse, issuing warehouse receipts therefor to a certain person by name, the son of one of the firm, to be by him indorsed, and left with the bank as collateral security. This arrangement was carried out, the note executed with sureties, the apples purchased and placed in the warehouse, for which a permit was taken out, the store being made a warehouse of class "B," and the receipts issued and indorsed to the bank as provided in the agreement. The son to whom the receipts were given had no interest in the property, and had no business connection with the firm in any way. During the time that these transactions occurred the bankrupts kept their general account with the bank, and deposited and drew out money as they received or needed the same; and the note, discounted by the bank, was placed as a credit to their general account. In January, 1878, Van Camp & Son were adjudged bankrupts by the district court for this district; and the apples covered by the receipts referred to, together with the other property, came into the hands of the assignee, and were sold by the order of the district court, the proceeds being permitted to remain in the hands of the assignee subject to the same rights which existed against the property itself. Upon application by the bank to the district court, requesting that a lien might be declared in its favor on the fund arising from the sale of the apples, the assignee was ordered to pay the amount of the note out of the fund in his hands, on the ground that the bank had an absolute lien upon the property for which it held the warehouse receipts. That order the assignee asks to have reviewed by this court, and the question before the court is whether the bank had a priority of lien over the general creditors as the district court adjudged.

§ 23. In order that a receipt for property shall be considered a warehouse receipt under the law of Indiana, the statute of the state on that subject must have been strictly complied with.

There is nothing in the statement of the case to indicate that the bankrupts used their warehouse as a warehouse under the statute in any other way than for the purpose specially intended by the bank. It does not appear that the property of any other person than that of the bankrupts was stored in the warehouse. The case then was one where the bankrupts, having purchased and taken possession of property, stored it in their warehouse, for which a

permit had been obtained as class "B," and issued receipts for the same and transferred them through a third person, to whom they were issued, to the bank as collateral security for the loan made.

By the act of March 9, 1875 (1 Davis, 1876, page 927), public warehouses are divided into two classes, "A" and "B." Any person or incorporation may keep a public warehouse by obtaining a permit from the auditor of the county in which the warehouse is situated. The warehouse shall continue subject to the provisions of the law until the owners shall file a notice in the auditor's office, renouncing the character of public warehousemen. Class "A" embraces warehouses in which grain is stored in bulk, and that of different owners mixed together. Class "B" embraces warehouses where property of any kind is stored for a consideration.

Most of the sections following the first and second, to which reference has been particularly made above, refer to the storing of grain in warehouses of class "A." The fourteenth section of the act declares that receipts for property stored in any class of warehouses shall be negotiable and transferable by the indorsement of the warehouse receipts which are to be given for the property stored, and the indorsement of the party to whom the receipt is given shall constitute a valid transfer of the property. The indorsement is to be deemed a warranty that the indorser has a good title and lawful authority to sell the property named in the receipt.

All warehouse receipts for property stored in warehouses of class "B" are to state distinctly on their face the brand or distinguishing mark of the property. The fourth section of the act provides specifically for the issue of a receipt for property stored in warehouses of class "A." There seems to be no such provision in relation to property stored in warehouses of class "B;" but the fourteenth section of the act speaks of warehouse receipts for property stored in any class of public warehouses, and includes, of course, class "B" as well as "A."

There is nothing to show that the money advanced by the bank to the bankrupts was specifically appropriated in the purchase of the apples covered by the receipts; but they seem to have been paid for as other purchases were, by checks on the bank drawn on the general account of the bankrupts. Independent of the fact that there is no evidence to show any other receipt issued by the bankrupts as warehousemen for property deposited in their warehouse, and of the fact claimed that these were receipts given by them of their own property in the warehouse, substantially to themselves (the son of one of the bankrupts being merely a nominal party in whose name the receipts were issued and who indorsed them to the bank), the receipts can hardly be considered as valid under the statute. They are as follows: "Received of Cortland Van Camp, subject to his order, and deliverable on return of this receipt, one hundred and fifty barreis of apples for storage in fruit house." Signed by the bankrupts and indorsed by Cortland Van Camp. The other receipts are similar. Now the statute of the state in relation to warehouses of class "B" provides for property stored therein "for a consideration;" which can hardly be said to be true of the property in this case, as it belonged to the bankrupts themselves by whom the receipts were issued. And the law also declares that all warehouse receipts for property stored in warehouses of class "B" should distinctly state on their face the brand or distinguishing mark of the property, which these receipts did not state, and so were not within the terms of the statute. I think, therefore, under all the circumstances of the case, they can