183 F. 96 | 2d Cir. | 1910
The Erie Preserving Company was engaged in the business of canning vegetables and fruit in factories at Irving, North Collins, and Model City, N. Y. The American Warehousing Company was engaged in what is known as “field storage warehousing”; that is, warehousing the owner’s goods on the premises of the owner or of the former owner. This system is frequently practiced and is entirely effective when properly carried on. Phila. Co. v. Winchester (C. C.) 156 Fed. 600.
In August, 1907, the preserving company entered into an agreement with the warehousing company for the purpose of obtaining warehouse receipts for goods stored on its own premises; the receipts to be used as collateral for loans. To that end it leased all its premises to the warehousing company, and the warehousing company appointed one Wode, who was the preserving company’s superintendent, to act as its own custodian of the warehoused goods. Various other agreements not necessary to mention were entered into to carry out the arrangement.
The course of dealing was that, upon requisitions of Wode, the warehousing company issued warehouse receipts for property actually on the premises to the order of the preserving company, which it indorsed and used as collateral. Receipts of this kind were held by the New York County National Bank, dated in June, 1908, and Arbuthnot, Latham & Co., dated from September, 1907, to March, 1908.
Other receipts similar in form were issued by Edward J. Sheridan, an employe of the preserving company, as a warehouseman, and used in the same way. Such receipts were held by Ladenburg, Thalmann & Co., dated in March, 1908, and by Conrad Heinrich Donner, dated in February, 1908, both of whom supposed that Sheridan was an independent warehouseman.
Other similar receipts were issued by Wode as a warehouseman and used in the same way. Such receipts were held by the Bank of North Collins, dated January, February, and March, 1908. It knew that Wode was the superintendent of the preserving company, but appointed him as its own custodian of the goods mentioned in the receipt.
March 7, 1908, receivers of the preserving company were appointed in this suit by a stockholder and a general creditor, alleging that
The goods mentioned in the receipts of the Bank of North Collins and goods in kind and amount of those mentioned in the other receipts were sold without prejudice to the rights of any one, and the holders of the receipts claim the proceeds or an equitable lien on the same.
Only one lease is in evidence, viz., that to the warehousing company for all the preserving company’s premises. Sheridan testified that he had a “little lease” which was called for but not produced. Of course there could not be two leases of the same premises to different persons at the same time, and 'at the date of Sheridan’s receipts the premises were leased to the warehousing company, which had a custodian there. Wode did not pretend to have any lease.
The business of the preserving company after the lease of its premises to the warehousing company went on in exactíy the same way as before. Goods covered by the receipts, except in the case of the Bank of North Collins, were sold and other goods substituted. The use and occupation of all the premises by the preserving company was open, continuous, and exclusive. Care was taken by the warehousing company and by Sheridan that there should always be more goods of the same kind on the premises than were called for by the warehouse receipts, but none of the goods-called for by the receipts were segregated or marked so as to be distinguished from the general stock of the preserving company, except in the case of the Bank of North Collins.
All the loans were made in entire good faith on the strength'of the receipts and of the goods called for by them, and the preserving company intended to give a valid lien thereon. The receipts were assigned to the lenders for the purpose of pledging the goods, and we think the case turns on the question: Had the lenders valid pledges ? A pledgee, though he may sell the pledge if the debt is not paid, has only a lien upon and no title to it. The common law does not recognize a lien unaccompanied by possession either actual or constructive. This does not depend in any way upon fraud, actual or presumptive. We therefore need not examine the statutes or the law as to sales unaccompanied by delivery. We are not concerned with the questions whether such sales are void as absolutely fraudulent or only voidable as presumptively fraudulent, or whether all creditors may attack them or only creditors existing when the sales were made. The law as to pledges is clear, viz., that they are utterly invalid unless accompanied by actual or constructive possession. The subject is elaborately considered by Mr. Justice Bradley in Casey v. Cavaroc, 96 U. S. 467, 24 L. Ed. 779.
The judge of the Circuit Court rightly held that the receipts were invalid because the goods were not warehoused, and that there was no valid pledge because no delivery was made to the lenders except in the case of the Bank of North Collins.
Warehouse receipts would give constructive possession of goods actually warehoused; but it is plain that the warehousing company did not maintain a warehouse in any proper sense, because it had no
It is contended by the holders of the receipts of the warehousing company atid of Sheridan that they have an equitable lien. Equity would have compelled the preserving company to make actual delivery of the goods intended to be pledged, and it is said that the receivers standing in the place of the preserving company are subject to the same rule. But, though equity will treat that which ought to have been done as done between the parties, it will not do so to the prejudice of third parties. If the essential element of possession of property' in existence was wanting to make the pledges good when receivers were appointed, equity would not thereafter supply it to the detriment of general creditors.
All the orders are affirmed, with costs.
