looking after the business, and charged with the duty of maintaining the system theoretically adopted in all of its details.

The contention is that the placarding was insufficient to mark or point out the premises, or to give notice to the public that any particular parts of the premises were occupied for warehousing purposes, or that any of the premises was so occupied, and that the system of tagging and marking the property covered by any warehouse receipt was insufficient to identify the same. It is insisted that the warehousing premises were not marked off by any sufficiently defined boundaries, by stakes, placards, fences, gates, signboards, or otherwise, to show and maintain the exclusive possession of the warehousing companies. The argument is that there was no warehouse at all, and that the very foundation on which a valid warehouse receipt could be issued is thus wanting. The further contention is that there was no exclusive possession of the premises, and that there was and could be no exclusive possession of the property delivered, so as to constitute a pledge, and that, if delivered, the property was not so separated or marked that the material on hand at the time of issuing any warehouse receipt therefor could now be identified, as the evidence discloses that from time to time the manufacturing company used up this material as the operation of its factory and the demands of its business might require, and that other material was substituted from time to time, and frequently, so that it cannot now be said that very little, if any, of the original material covered by the warehouse receipts is on hand, or was at the time of the beginning of the bankruptcy proceedings.

This is the contention in respect of the facts given in brief outline, and a discussion in detail of the evidence would extend this opinion beyond all reasonable limits, and does not seem to be called for in pronouncing what the court regards as a proper judgment in the case. and giving briefly and chiefly, in respect of questions of law, the grounds on which the judgment proceeds.

It is not to be disputed that the earlier cases on the subject declare a very strict doctrine in regard to the questions of actual delivery, segregation, and exclusive possession, as necessary conditions in constituting a valid pledge, but a study of more recent cases discloses what is always recognized-that the law itself, in order to meet the requirements of commerce and our constantly changing industrial and commercial conditions, is progressive and expansive, and constantly, by slow changes, adapting itself to the changed conditions due to progress, and in this way the earlier and more stringent rules are constantly being liberalized and somewhat relaxed. It is now well established, for example, that, in determining the sufficiency of delivery in a pledge, it is necessary to consider the nature of the property, the surrounding circumstances, and the objects of the pledge, and the reasonable convenience of the pledgor and pledgee, and the apparent demands of larger aggregations of capital and large operations in business. It is settled that there need not in all cases be an actual moving of property, but only such a delivery as the property is reasonably capable of, and as is reasonably suitable under the circumstances. In the case of property of much weight or bulk,

moved or transferred with difficulty and expense, a symbolical or constructive delivery has become the rule in almost all cases, instead of an actual delivery; and for much the same reasons the strict necessity of segregation is slowly disappearing, and the validity of substitution is very well settled. It is well settled that, where property is stored in a warehouse, the owner may pledge it by transferring to the pledgee the warehouse receipts-this being a symbolical delivery of the property-and it will give the pledgee such special property in the goods as will entitle him to recover possession. The same doctrine is applicable to bills of lading as ordinarily made out, with notes or drafts attached, and discounted at banking institutions. The cases on this subject are many, and need not be cited, but in this connection reference may be made to the following cases: Means v. Bank of Randall, 146 U. S. 620, 13 Sup. Ct. 186, 36 L. Ed. 1107; Clark v. Iselin, 21 Wall. 360, 22 L. Ed. 568; Stewart, Gwynne & Co. v. Insurance Co., 9 Lea, 104; Cornick v. Richards, 3 Lea, 1; Price v. Wisconsin M. & F. Ins. Co., 43 Wis. 267; Bank of Rome v. Haselton, 15 Lea, 242. Other and many cases will be found collated in 22 A. & E. Encycl. of L. (2d Ed.) p. 858.

It may be of service to refer briefly to some of the leading cases: In the leading case of Blydenstein v. New York Security & Trust Company, 15 C. C. A. 14, 67 Fed. 469, a system of doing business was adopted by which the warehouse issued what was called "open receipts" for certain specified quantities of burlap, without specifying any particular bales, and kept against such open receipts those bales. which had been longest in store, and delivering to the pledgor's order the oldest bales, and substituting for such bales later bales under the open receipts, but keeping on hand always a sufficient quantity to cover the outstanding open receipts, under which the holders could at any time call for the quantity specified in the receipts from the warehouse; and in such a system substitutions were constantly going on, and the holders of the outstanding warehouse receipts were not able at any time to call for the burlap bales originally covered by the warehouse receipts, but, as the quantity was kept up, they could at any time call for burlap bales of like number, quantity, and quality. It was held that the pledge of the open receipts as security gave the pledgee a valid lien on the bales then in store; that the release of older bales from time to time constituted a valuable consideration for subjecting the new bales, as they were deposited from time to time, to the same lien; and that the transaction was not unlawful, and was in all respects valid, and the pledge good.

This same system of warehousing was brought in question in the subsequent case of New York Security & Trust Co. v. Lipman, 91 Hun (N. Y.) 554, 36 N. Y. Supp. 355, and the subject re-examined at length, and the Blydenstein Case followed and approved; the Supreme Court (now the Appellate Division of the Supreme Court) holding that it was competent for Lipman & Co. and the warehouse company to make an agreement by which receipts were to be issued without bale marks, so that other bales could be substituted for those in pledge; that such an agreement as this violated no statute, and was not against public policy, and was valid. It was, of course, held

and necessarily implied in such a decision that the transfer of the warehouse receipts carried title to the property, and created a valid lien upon the property-not only the bales of burlap originally in possession when the pledge was made, but upon the new bales subsequently substituted and finally found on the premises-and that the plaintiff in that case, as pledgee, was, as to the bales stored in substitution of the older ones, a holder for value, in the usual course of business. The opinion was by Parker, J., then one of the Judges of the General Term of the Supreme Court, now Chief Judge of the Court of Appeals. Referring to this contract and system of dealing, under which the property was not segregated by marks or distinguishing brands, but was an open receipt, according to the understanding. and subject to the constant substitution of new for older bales, the learned judge said:

"Lipman & Co. in accordance with the usual custom in such cases, and their agreement with the warehouse company, continued thereafter to deposit bales of burlap in the warehouse as they were received from time to time and to sell burlap which was stored, and to call for deliveries to their purchasers, the oldest bales being always held for delivery on the open receipts, and, when they were delivered, the next oldest bales were substituted. Thus the bales which were on hand at the time the warehouse receipts in question were given, were after a time all disposed of by this process of substitution, new bales being put in the place of the old as fast as they were taken out, so that there was always in the possession of the warehouse company a sufficient number of bales to make good the agreement which the warehouse company expressed in its receipts. The arrangement which Lipman & Co. had with the warehouse company made it possible to take out the old bales from the warehouse, and put in new ones, without the necessity of making new receipts every time there was a sale. Such was the agreement, and of its validity there seems to be no doubt. No statute was violated, nor is any reason apparent for deeming it against public policy for a bailee to agree with his bailor that, if he [the bailor] shall at any time have on storage a greater amount of goods of the same kind and quality, he may substitute the surplus for a like quantity of that which was originally pledged. It was precisely that which the Terminal Warehouse Company and Lipman & Co. agreed should be done, and it was that which they did in fact. Bales of burlap were never delivered upon the order of Lipman & Co., unless there were present in the warehouse other bales, apparently the property of Lipman & Co., to substitute in their place. By this process of substitution it so happened, in the course of time, that the entire 801 bales which were in the warehouse on the 1st day of December, 1891, were delivered to persons to whom they had been sold by Lipman & Co., and other bales stored in the warehouse were substituted in their place and stead."

This case was on appeal affirmed by the Court of Appeals of New York. New York Security & Trust Co. v. Lipman & Co., 157 N. Y. 551, 52 N. E. 595. The Court of Appeals of New York, referring to the case of Blydenstein v. New York Security & Trust Co., 15 C. C. A., 14, 67 Fed. 469, said:

"We close our review by quoting from that opinion as follows: "The trust company, therefore, on September 7, 1892, obtained a valid lien on 500 bales of Lipman & Co.'s burlap then stored in the warehouse. Thereupon the warehouse company became its bailee, and held the bales for it. Gibson v. Stevens, 8 How. (U. S.) 384 [12 L. Ed. 1123]. Whenever thereafter Lipman & Co. asked to substitute other similar goods of their own for those originally delivered as collateral, the surrender of an equal quantity of the original security of equal value would be a valuable consideration for the giving of the 136 F.-59

new security. The pledgee as to the latter would be a holder for value, and the exchange would have no effect upon the rights of the pledgee as founded upon the original contract. Colebrooks on Col. § 15; Clark v. Iselin, 21 Wall. 360 [22 L. Ed. 568].'"

In the case of National Exchange Bank of Hartford v. Wilder, 34 Minn. 149, 24 N. W. 699, the rule was recognized and declared that possession by the pledgee was necessary to the existence and continuance of a pledge. It was held, however, that such possession need not be actual physical possession. The delivery of a recognized symbol of title, such as a warehouse receipt, which puts the pledgee in control and constructive possession of the property, was declared to be sufficient. It was further held that where the property was part of a large, uniform mass, like wheat in an elevator, separation was not necessary to constitute an appropriation by the contract of pledge, and that a warehouse receipt was equivalent to an actual transfer of the possession, and rendered the warehouseman bailee of the pledgee. The opinion in this case is instructive and reviews the authorities.

In the case of Hoffman et al. v. Schoyer et al., 143 Ill. 598, 28 N. E. 823, the warehouse receipts called in question were issued without showing on their face the brands or distinguishing marks of the property stored, notwithstanding a statute of the state of Illinois required that the warehouse receipts should distinctly state on their face the brands or marks upon such property. The receipts were nevertheless held good in the hands of an assignee for value. It was further declared that the holders of such receipts had a specific lien as against the party storing the property, notwithstanding the property covered by the receipts was mingled in a common mass with such other property, and that most of it had been removed from the warehouse and disposed of after issuance of the receipts, and other property substituted in its place. The transactions were, of course, good on the ground of estoppel as against the owner or pledgor; and it was held that the lien created by the warehouse receipts was not lost by the appointment of a receiver, and was good against the firm creditors. The case is distinguishable from the one at bar in the fact that the creditors in that case were partnership creditors, under the necessity of working out any equity they might have through the partnership, while in this case the general creditor is not limited by that view, and may assert all the rights belonging to a general creditor of an individual.

In the case of Citizens' Banking Co. v. Peacock & Carr, 103 Ga. 171, 29 S. E. 752, it was held that, to create a pledge or pawn, it is necessary that the property pledged shall be delivered into the possession of the pledgee, but delivery may be either actual or constructive, and when warehouse receipts for cotton are given in pledge the effect is to deliver the cotton itself.

In the case of Alabama State Bank v. Barnes, 82 Ala. 607, 2 South. 349, it was decided that, in the absence of statute regulation, the delivery of a warehouse receipt, payable to bearer, as collateral security, without indorsement, placed the legal title and vested the possession of the property in the pledgee, as if there had been an actual manual

delivery, and that a transfer by mere delivery passed a special property and a constructive possession, and that this possession was sufficient to create a valid pledge between the parties, and as against third persons who had not acquired prior or intervening rights.

In the case of American Pig Iron Storage Warrant Co. v. German, Ex'x, et al., 126 Ala. 194, 28 South. 603, 85 Am. St. Rep. 21, it was said that possession of the property pledged, and good faith on the part of the pledgee, are both necessary to constitute a valid pledge as against the rights of the creditors of the pledgor, but that statutes requiring mortgages of personal property to be in writing were without application. It was also held that possession must be complete, unequivocal, or exclusive of the pledgor's possession in his own right. It was declared to be unnecessary, however, in order to give validity to the pledge, that delivery of the property should be made at the very time of the contract, but that the property might be subsequently delivered, and that the pledge would become valid and take effect upon such delivery in performance of the contract. further adjudged that in case of pledge of tons of iron under an agreement of pledge, on a spot of ground belonging to the pledgor (a furnace company), but located apart from its other ironyards, and tons of iron pledged placed upon such spot of ground, and marked with paint with the pledgee's initials, this was sufficient delivery of possession of the iron, and gave sufficient public notice of the pledgee's interest in the iron. It was furthermore ruled that the subsequent wrongful removal of the iron so delivered, without the consent or ratification of the pledgee, could not defeat the pledgee's right, upon maturity of the debt, to have such iron subjected to the payment of the debt, and this notwithstanding the iron removed was transferred to a bona fide vendee.

In this state (Tennessee) it was declared as early as the case of Julius Ochs et al. v. Burger, and F. Seibel v. W. G. Price et al., 6 Heisk. 483, that a transfer and delivery of a bill of lading is, in law, a delivery of the property, and vests title in the transferee; such a delivery being constructively sufficient.

In Stewart, Gwynn & Co. v. Insurance Co., already cited, it was declared, in accordance with the doctrine of the modern cases, that warehouse receipts are considered representatives of property, and that an assignment of the receipt is equivalent to a delivery of the property, and that such receipts are contracts.

In the case of Ex parte Fitz, 9 Fed. Cas. 185, 2 Lowell, 519, it was ruled by Judge Lowell, of Massachusetts, that a bill of sale intended for security operated as a pledge, and that delivery to the pledgee. might be either actual or constructive, and, again, that possession might be kept by an agent, and that such agent might be the pledgor. In Dunn v. Train, 125 Fed. 221, 60 C. C. A. 113, the agreement was that a paper company should deliver the product of its mill to selling agents as security for advances which were made to it by the plaintiff, and deliveries were made, as the goods were manufactured, to an agent agreed upon, who was also an employé of the manufacturing company, and the product was placed by itself on the premises of the company, and was thereafter controlled by its agent, who