The Minnesota Elevator Company, a corporation, owned and operated several warehouses,, receiving grain from other parties for storage therein, and also buying wheat and storing it therein on its own account. At different times, from Sеptember 15, 1883, to May 1, 1884, the company obtained loans of money from certain banks, (the appellants,) and, having a large quantity of wheat of its own in store in its different warehouses, in order to secure the loans by way of pledge, it executed and delivered to the banks warehouse receipts for the same, designating therein (except, perhaps, in a single instance) the warehouses where such wheat was stored. These receipts ran directly to the banks' or to the compаny’s secretary and treasurer, who, serving as a mere conduit, transferred them to the banks by indorsement. The grade of the wheat, as described in some of the warehouse receipts, did not precisely correspond with the grade of wheat in store; as, for example, in some receipts it was described as “No. 1, hard,” when, in fact, it was simply “No. 1.” But inasmuch as the court finds as a fact that these receipts were intended to cover the wheat owned and held in store by the company at the time they were issued, we think that, at least between the parties, this variance dr misdescription of grade is immaterial. At the times of issuing and delivering the receipts, the company had in store, in each of the warehouses named therein, large quantities of wheаt, the property of other persons and not of the company, which was held for storage only. This wheat was, in each of the warehouses, mingled with that owned by the company in a common mass, and the wheat represented by the receiрts was not, at anytime, separated from such common mass, and the banks did not, in any manner, take actual possession of the same.
On September 2, 1884, the company, under the insolvent laws of this state, made an assignment for the benefit of creditors tо defendant Wilder; the company at that time owing the banks about $60,000, for which they held the receipts as security. At the date of the assignment the wheat owned by the company in its warehouses (about 15,000 bushels) was not the identical wheat owned by it and in the warеhouses at the time when the receipts were issued and delivered
The rule is as universal as it is elementary that possession by the pledgee is necessary to the existence and continuance of a pledge. But this need not be actual physical possession. The delivery of a recognized symbol of title, such as a bill of lading or a warehouse receipt, which serves to put the pledgee in the control and constructive possession of the property, is sufficient. Jones on Pledges, § 37. Where property is in store with a warehouseman, the delivery of the warehouse receipt to the pledgee carries with it the constructive possession, and from the time of the transfer the warehouseman becomes the bailеe of the pledgee. In accordance with this theory, and in harmony with the usages of trade, the tendency of the later authorities (although the proposition has been sometimes doubted or denied) is to hold that the owner of goods, if a warehouseman, can pledge the same by issuing and delivering his own warehouse receipt to the pledgee. Colebrooke on Collateral Securities, § 420; Easton v. Hodges, 18 Fed. Rep. 677; Merchants’, etc., Bank v. Hibbard,
In this case, as appears from the findings of the court, there was an appropriation of specific property to the contract, and the elevator company was a warehouseman, and hence could create a valid pledge by issuing its own warehouse receipts. Therefore, if the identical wheat in store at the time these receipts were issued had been kept on hand, there could have been no doubt of the right of the banks to recover.
It appears that, in accordance with the usual course of business on part of the elevator company, which the banks must be taken to have known, and with reference to which they must be assumed to have contracted, the elevator company shipped and sold this wheat as suited their interest or convenience, so that no part of the original mass remained. ’ The holders of these receipts, when they called for their wheat, could not hаve received the identical wheat pledged, nor any part of the immediate mass of which it formed a part. ^ The elevator company did not always keep on hand an amount of their own grain equal to that called for by these warehouse receipts, — a state of things that might naturally be anticipated from their ordinary course of doing business. ’All that the banks could have expected was that, upon presentation of the receipts, the elevator company would deliver a like quantity of grain of the same kind and grade.
According to what we understand to be the almost unbroken chain of authority, such a transaction, independently of any statute changing the rule, would not be one of bailment proper, but of sale or mu-tuum, where the title of the property passed to the receiver or mutu-ary. It was to'change the rule of law in this regard that our “ware-
The learned judge who tried this case was fully justified by what-was said in the Fishback Case, (Fishback v. Van Dusen,
On further reflection we arе satisfied that we placed too narrow and limited a construction upon the term “depositor” as used in this statute. We still think that probably the legislature had more especially in mind, the case of farmers and others who made an actual physiсal deposit of grain. But inasmuch as the issuing of warehouse receipts by a warehouseman for his own grain actually in store transfers the title and legal possession to the holder of the receipts, and.
The result of whаt has been said is that the plaintiffs are entitled to the proceeds of the wheat in controversy, and to an order to the assignee of the elevator company to pay them over in accordance with the prayer of their petition. There is no occasion to remand