not be considered to come within the meaning of the special statute in relation to warehouses of class "B." Indeed, that is hardly claimed by counsel; and so the case must turn upon the general law upon the subject.

If this had been a sale of the property to the bank, and these receipts had been given upon the sale, there would, perhaps, not be so much difficulty about the case; but that is not claimed by the bank, and it is clear from the facts that there was no sale unless the circumstances attending the transaction amounted to a sale. In nearly all the cases which have been cited in support of the decree herein the court found that there was a sale of the property. For instance, in Gibson v. Stevens, 8 How., 384, the case proceeds throughout upon the assumption that the party through whom the plaintiff claimed the property had purchased it of the warehousemen who issued the receipts therefor. It was the case, therefore, of a sale of property for which receipts were given, and in consequence of which the vendors became bailees of the purchasers, and so the title of the property was in the purchasers or in their assignees by virtue of the indorsement of the warehouse receipts. The case of Gibson v. Chillicothe Bank, 11 Ohio St., 311, was in many respects like this, and there would seem, from a statement of the evidence, to be strong grounds for the claim that it was a case of mere security, although the contract under which the advances were made and the receipts given in that case are not set forth; but the court found that the receipts were not merely given as security, but that the money was advanced upon an agreement that the title of the property was passed when the receipts were given; and that it was to be held for the payment of the advances made. In Yenni v. McNamee, 45 N. Y., 614, the court referred to the difference between the case of a sale of property for which a receipt was given, and one where it was a mere security, distinguishing the case from that of Gibson v. Stevens, and holding that as the property was held merely as a security, and there was not an absolute sale, it came within the principle of a mortgage of chattels, and, the law of the state not being complied with, it was invalid as against other creditors.

In the case of Shepardson v. Green, 21 Wis., 539, the owners of coal gave a warehouse receipt to the plaintiff for a certain quantity of coal then in their possession. They treated the coal as their own, and sold portions of it to their customers, appropriating the proceeds to their own use, and afterwards a third person purchased all the coal which the parties who had given the warehouse receipts then had in their possession. The court found against the warehouse receipts in that case, and the judgment was affirmed by the supreme court on the ground the receipt was given as a security only, and in the nature of a chattel mortgage. There seems to have been a misapprehension by the counsel on both sides in this case as to the effect of the decision of the court in that case. The question arose in a different form in the case of Shepardson v. Cary, 29 Wis., 34, where the court intimates (although it was clearly not necessary to the decision of that case, as they held that the former judg ment was a bar to the latter) that a warehouse receipt given by a warehouseman transferred the property, and the implication is that if it had appeared in the former case that the parties who gave the receipt were regular warehousemen, that the decision would have been different in Shepardson v. Green. In Shepardson v. Cary this language is used by the court in referring to Gibson v. Stevens and Gibson v. Chillicothe Bank, and to Rice v. Cutler, 17 Wis., 351: "Such relation and the consequent rights and obligations of the parties are held by the decisions just referred to, even where the sale is made collat

eral security for the payment of a debt due from the warehouseman, not to be affected by the statute regulating the filing of mortgages of personal property, nor by the act concerning warehouse receipts and bills of lading," which language can hardly be said to be justified, as we have already seen, either by the case of Gibson v. Stevens, or by the case of Gibson v. Chillicothe Bank; and Rice ". Cutler was, like the others, one of sale, and not of mere security. § 24. Receipts for property as security for debts, not being valid as warehouse receipts, may be considered as chattel mortgages, and if not recorded are, in Indiana, void as against creditors.

There may be some question, perhaps, whether the parties, having relied upon a title under the statute of this state in relation to warehouses, can change their ground and rely upon the efficacy at common law of the receipts which were given; but waiving that question, there not having been any actual sale of the apples in this case, in order to render the contract valid as to creditors, there must have been a pledge or a mortgage of the property. As already stated, the bank has not proceeded upon the assumption that there was a sale of the property, but only that it had a lien for the money loaned. There was no pledge of the property because the possession was not with the pledgee. Possession, actual or constructive, is in general indispensable to the validity of a pledge as against creditors. Neither was there any valid mortgage of the property, because there was no possession in the mortgagee, nor was there, in fact, any written mortgage. If the receipts and the circumstances connected with them constituted a mortgage, then it was not recorded as required by the statute of Indiana. Under the facts I cannot regard this as anything more than a security given by the bankrupts to the bank for the loan that was made. It therefore was in the nature of a chattel mortgage, and for the reasons already stated as such, it was invalid under the statute.

§ 25. When a debtor who has given an invalid warehouse receipt becomes bankrupt the holder of the receipt is not entitled to any priority as a preferred creditor.

Undoubtedly this was a valid contract as between the parties, and it is claimed it was therefore valid as against the creditors of the bankrupts because the assignee, it is insisted, can be in no better position than the bankrupts themselves, he simply being the representative of the bankrupts, and standing as they stood in relation to their rights and equities. But that I do not understand to be the true rule in cases of this kind. The assignee represents all the creditors of the bankrupts. He occupies as such a different position from that of the bankrupts themselves. This has always been the rule established in this circuit, and I think is the better rule. The reasons for it have been given in In re Gurney, 7 Biss., 414. They are also stated by Mr. Justice Strong in Miller v. Jones, 15 Bank. Reg., 150. The same rule is also laid down in the case of Allen v. Massey, 17 Wall., 351. If it once be admitted that the contract which is the subject of controversy is fraudulent as to creditors, then by the express provision of the bankrupt law it is competent for the assignee to attack it, and to cause it to be abrogated for the benefit of creditors. I think that the assignee has the right of a judgment creditor, where the mortgage or the pledge is invalid in consequence of wanting any element requisite under the law or under the statute. This is the rule laid down in In re Gurney, and also in Miller v. Jones. In the latter case, while admitting there are decisions to the contrary, Strong, J., says: "The adjudication of bankruptcy is equivalent to the recovery of a judgment and a levy." It seems to me that any other

rule than this would be fatal to the rights of creditors and would render the bankrupt law in one particular almost entirely inoperative.

It is also claimed, on the part of the bank, that the bankrupts received a considerable fund at the time that this contract was made, which went to increase their estate, and therefore, it not being a security given for an antecedent indebtedness, but for money actually received at the time, it ought to be held valid. Undoubtedly there are distinctions between a case where an effort is made to secure or pay a precedent debt, and that where money or property is received at the time by the bankrupt as a part of the contract which is the subject of investigation; but that circumstance alone cannot render a contract valid as against creditors, which otherwise is unlawful, because that would enable one creditor to obtain a priority of payment over another; and to hold the contract valid in this case would give the bank a preference over the general creditors of the bankrupts, which ought not to be allowed unless the contract is in all respects valid. This principle is recognized, and the law as to pledges and the rights of an assignee in bankruptcy as the representative of the creditors stated, in Casey v. Cavaroc, 6 Otto, 467 (BAILMENT, §§ 38-47). The result is that the decree of the district court must be reversed, and the bank stand as a common instead of a preferred creditor of the bankrupt's

estate.

MCNEIL v. HILL.

(Circuit Court for Minnesota: 1 Woolworth, 96-98. 1865.)

Opinion by MILLER, J.

As civilization has advanced and commerce extended new and artificial modes of doing business have superseded the exchanges by barter and otherwise which prevail while society is in its early and simple stages. The invention of the bill of exchange is a familiar illustration of this fact.

§ 26. Warehouse receipts are the representative of the property for which they are given, and pass the title to it by indorsement.

A more modern, but still not recent, invention, of like character, for the transfer, without the somewhat cumbersome and often impossible operation of actual delivery of articles of personal property, is the indorsement or assignment of bills of lading and warehouse receipts. Instruments of this kind are sui generis. From long use in trade they have come to have, among commercial men, a well understood meaning. And the indorsement or assignment of them as absolutely transfers the general property of the goods and chattels therein named as would a bill of sale. Austin v. Craven, 5 Taunt., 167; White v. Wilkes, 12 East, 614; Conard v. Atlantic Ins. Co., 1 Pet., 386; Gardiner v. Suydam, 7 N. Y.; 3 Seld., 357; Gibson v. Chillicothe Bank, 11 Ohio St., 311.

$27.warehouseman giving such receipt is estopped to deny that he has received the property which it represents.

When a warehouseman issues such a receipt he puts it in the power of the holder to treat with the public on the faith of it. He enables him to say, and to induce others to believe, that he has certain property which he can sell or pledge for a loan of money. If the warehousman gives to the party who holds such receipt a false credit he will not be suffered to contradict the statement which he has made in the receipt, so as to injure a party who has been misled by it. That is within the most exact definition of estoppel. If A. gives to B. his note for $100, although he has received no value therefor, and may

defend against the note in a suit brought by B., yet if B. sells the note to a third party who does not know of the facts, A. then must pay the note. Just so in the case of a warehouse receipt. If A. issues such a paper to B., for articles which he has never received, a third party treating with B. on the faith of the statement and promise contained in the receipt will hold A. for the goods or their value. It is of no consequence what the transaction may be between the original parties; whether the receipt, as is claimed here, was intended as a security for a loan, or was entirely false.

The defendant here offers to prove that he never received the property mentioned in the receipt which he has given, but that the paper was issued as a security for a loan, or as an advance on wheat to be delivered. But he has stated in this receipt that he has the wheat in his warehouse, and also promised therein to deliver the wheat to the order of Upham & Co. These plaintiffs, believing this statement to be true, and relying on this promise, bought of Upham & Co. the receipt and property mentioned therein. They were justified in doing this, and the defendants must respond to their promise. The evidence is not admissible.

HARRIS v. BRADLEY.

(Circuit Court for Nebraska: 2 Dillon, 284–289; 16 Int. Rev. Rec., 165. 1872.) STATEMENT OF FACTS.- Action for a lot of corn for which defendants had given what it is insisted was a warehouse receipt, to Bailey & Weightman, who assigned it to the plaintiffs as security for a pre-existing debt and for further advances. It appeared that defendants were commission merchants and grain dealers in Nebraska City, and after giving the receipt in question shipped the corn for the account of Bailey & Weightman to Chicago. The receipt in question was in the following words:

"NEBRASKA CITY, May 26, 1870. "Received in store for the account of Bailey & Weightman three thousand sacks of corn.

(Signed)

"BRADLEY & ROBERTSON."

There was a general and special verdict in favor of plaintiffs, who moved for judgment upon them.

$ 28. "Received in store for account of B. & W. three thousand sacks of corn" is a warehouse receipt, and its indorsement passes the title to the indorsee, who can hold the warehouseman responsible upon it.

Opinion by DILLON, J.

1. The title to the corn mentioned in the receipt of May 26, 1870, was in Bailey & Weightman, and the defendants, Bradley & Robertson, were their bailees. The receipt was the evidence of the title of Bailey & Weightman, and the indorsement and delivery thereof in St. Louis to the plaintiffs, the property being then in Nebraska City, was equivalent to the delivery to the plaintiffs of the property itself. The indorsement and delivery of the receipt of the warehouseman in the course of trade passes the title and right of possession of the property to the party to whom it is so indorsed and delivered. Such is the law, and such is the understanding of the business community. The legal title to the property passed to the plaintiffs by the indorsement and delivery to them of the evidence of the title. To the extent of their advances, certainly they are purchasers for value, if not, indeed, as respects their pre-existing debt, and they hold the title to the corn to

protect their interests. When the transfer was made to them the defendants became their bailees, and ceased to be the bailees of Bailey & Weightman. All the foregoing principles are established by the judgment of the supreme court of the United States in the case of Gibson v. Stevens, 8 How., 884.

2. The defendants insist that the instrument in suit is not a warehouse receipt, either within the contemplation of the local statute of the state on that subject (R. S. of Neb., p. 652), or of the law relating to this peculiar class of instruments. See McNeil v. Hill, Woolw. C. C. R., 96 (§§ 26, 27, supra), where the subject is discussed by Mr. Justice Miller.

The fourth special finding of the jury shows that the defendants were engaged in buying, storing and shipping grain generally, and particularly for Bailey & Weightman (to whom the receipt was issued), on a contingent commission. The defendants advertised themselves to the world as merchants and grain dealers. Clearly they were warehousemen, and it is to be presumed that they were known as such to the bus ness community.

29. In the absence of law or usage it is not necessary that a warehouse receipt should be in any particular form.

It is urged that the instrument in suit was not intended to be a warehouse receipt, or to be used or negotiated as such, but was intended simply as a memorandum or personal voucher to Bailey & Weightman to show that the defendants had that amount of corn in store for them; and this view, it is argued, is supported by the nature or tenor of the paper itself, since it contains no words indicating that the defendants are to account to any persons other than Bailey & Weightman.

In other words, it is claimed by the defendants, as a matter of law, that in order to give to such an instrument, even when issued by a merchant or warehouseman, a negotiable or assignable quality, so as to estop the makers from showing against a subsequent holder that the property mentioned has not been in fact received, or had, before notice of the assignment, been delivered to the persons to whom the instrument was originally made, the instrument should contain language showing that it was to be or might be thus used. If the receipt in question had contained, after the name of Bailey & Weightman, the words "or order," or after the word corn the words "delivered in virtue of this receipt," or similar language, it is conceded that it would have the qualities of a warehouse receipt, and that a delivery to any person without the production of the receipt would be at the peril of the warehouseman or party making it. No authorities have been produced to sustain this. view; nor is it shown that there is any such custom or usage among warehousemen or known to the business community.

There is nothing in the statute of the state requiring or implying that such instruments should be of any particular form, and the instrument on which the plaintiffs rely for title would seem to be more formal than some of those in the case of Gibson v. Stevens before cited.

Under these circumstances, it is my opinion that the defendants were not justified, with this receipt outstanding, in shipping the corn mentioned in it, as the jury find they did, to Chicago for the benefit of Bailey & Weightman. Judyment for plaintiff.

§ 30. Warehouse receipts stating the kind and grade of the grain stored and the terms of storage are such instruments as under the act of the legislature of Minnesota of March 3, 1876 (Gen. Laws of Minn., 8th Session, 96), constitute prima facie evidence of title to the