trover, a tender of advances and charges of the factor must be made before suit is commenced.' Where the act of pledge by the factor is in excess of his advances and charges, the owner of the goods may recover from the pledgee, who has converted the same, the damages actually sustained by the wrongful pledge and conversion of the property, being the fair value of the goods, if sold in the usual course of business, after deducting commissions, and any payments of the factor in connection with the special goods covered by the illegal pledge.' A bill in equity will not lie to enforce the payment by a factor of proceeds of his sale, upon the ground that the moneys constitute a trust fund, there being ample remedy at law." § 410. THE PLEDGEE, WITH NOTICE, SUBJECT TO EQUITIES. Bales of cotton were consigned to factors, with instructions not to sell, but to hold for further directions and better prices, and the firm stored the cotton in a warehouse. The factors at the time were considerably in debt to their principal, and had no pecuniary interest in the particular shipment. Shortly afterwards the factors obtained an advance from an insurance company giving the cottonpress receipts, made deliverable to the order of the company, as collateral security. Before the maturity of the notes for which the receipts were given as collateral, the factors failed. In a suit to settle claims to the property pledged, to which all were parties, judgment was entered for the consignor. Goods consigned to a factor or agent for sale, were pledged to a bank aware of the principal's ownership, together with certain notes made by the principal to the factor which it was understood should be paid from the proceeds of the goods. The bank, being charge 1 Steiger v. Third Nat. Bank, 2 McCrary, 494. Alabama etc Manf. Co. v. Third Nat. Bank, 12 Mo. App. 8 Taylor v. Turner, 87 Ill. 303; Navulshaw. Brownrigg, 1 Sim. (N. 4 Insurance Co. v. Kiger, 103 U. S. 352. able with notice, was required to apply the proceeds of the property to the payment of the notes; and the defense thus arising was available to an action upon the notes by the pledgee as indorsee.' No rights or title can be acquired by a pledgee, chargeable with negligence, under a pledge by a consignee, not being a factor, and having no indicia of title nor possession of the property. Under statutes giving validity to the claims of pledgees receiving warehouse receipts and other indicia of property from factors or agents as collateral security for advances, the like rule as to notice prevails. It is an essential requisite that the pledgees, in cases of misappropriation of such property as bills of lading, indicia of title, should have received. the same in good faith and without knowledge of the want of authority of the factor or agent so to use the same. Where a pledgee is chargeable with notice of such facts, he is not a holder for value of the property, nor of the documents of title, although he may have paid value therefor.' The goods may be recovered by the principal or owner in an action of replevin, or other appropriate action, without tendering repayment of the loan.* The lien of the factor for his charges. is not deducted from his demand, only in cases where a demand for such charges has been made.' § 411. THE PLEDGEE'S TITLE PROTECTED, AS AGAINST OWNER, FACTOR, ETC.-If the owner of property, or of documents of title or of property, entrusts the same to a third person, a factor, so that he appears to have a good title to the same and an apparent ownership, he enables such factor 1 St. Louis Nat. Bank v. Ross, 9 Mo. App. 399. 2 Chicago Taylor, etc. Co. v. Lowell, 60 Cal. 454. Macky v. Dillinger, 73 Pa. St. 85; Easton v. Clark, 35 N. Y. 225; Wilson v. Nason, 4 Bosw. 40; Stevens v. Wilson, 6 Hill, 512; First Nat. Bank v. Nelson, 38 Ga. 391; St. Louis 5 Merchants' Nat. Bank v. Trenholm, 12 Heisk. 520; Macky v. Dillinger, 73 Pa. St. 85. by fraud and deceit, to obtain from a pledgee an advance of money upon the credit of such property or indicia of property. If a loan has been made in good faith, and without notice, the principal is without defense as against the pledgee, although the act of pledge be a misappropriation and fraud, and not included in the secret agreement of the parties.' An indorsement and delivery of the documents of title, symbols of property, must be made at the time of the advance. And where other securities besides the bill of lading are pledged by the factor for advances made by a third person to himself, the principal is entitled to require in the event of the factor's insolvency, that the other securities shall be first resorted to, or that he shall be given a lien thereon for the balance due upon the special consignment. The rights of a bona fide pledgee for value, of documents of title to goods, held in a warehouse by a factor, and receiving a warehouse receipt acknowledging the pledgee's title to the cotton, were protected as against a subsequent fraudulent sale thereof by the factor, and delivery to the purchaser by the warehouseman, notwithstanding part of the proceeds were paid by the factor to the pledgees on account of a debt antecedent to that for which the cotton was pledged, but without their knowledge.* And a pledge made by a factor of a warehouse receipt, the funds being advanced on the credit of the representations contained in the receipt, and of the pledgor's possession, was sustained, although the invoice of the goods would have shown that the goods belonged to the principal." 'Cartwright v. Wilmerding, 24 N. Y. 521; Botts v. McCoy, 20 Ala. 578; Bonito v. Mosquero, 2 Bosw. 401; Gray v. Agnew, 95 Ill. 320. Bonito v. Mosquero, 2 Bosw. 410. Broadbent v. Barlow, 3 DeG. F. & J. 570. 4 Bott v. McCoy, 20 Ala. 578. * * Cartwright v. Wilmerding, 24 N. Y. 521. Div. 3.-WAREHOUSE RECEIPTS. CHAPTER XLV. WAREHOUSE RECEIPTS AS COLLATERAL. 412. The warehouse receipt quasi-negotiable. 413. Transfer in pledge, with or without indorsement. 414. The pledgee of warehouse receipts, a holder for value. § 412.-THE WAREHOUSE RECEIPT QUASI-NEGotiable. -Except in the rare cases where statutory enactments have made warehouse receipts negotiable as bills of exchange or promissory notes, a warehouse receipt is not a negotiable instrument, and its indorsement and delivery, or delivery merely where payable to "holder," carries none of the effects as to cutting off the defenses of the warehouseman against the original holder, nor is there any certain time at which it matures, nor is the title of the person loaning money upon it protected when lost or stolen, as in the case of commercial paper. Nor is the warehouseman a guarantor of the title of property held by him, and for which he has issued a receipt Issued, however, "subject to the order hereon" of the person depositing the property, "and the surrender of this receipt," it becomes a representation on the part of the warehouseman to every successive holder for value, under indorsement in blank, that he has the property in store, and by a transfer of it the title to the property and right to its possession pass to the indorsee as if the property were actually delivered. The title thus acquired, as between the parties to the transfer, is such a title as if the property itself were delivered, no better and no worse. The warehouseman may, by his direct representations on the face of the receipt, when in the hands of an innocent holder for value advanced upon the face of its statements, estop himself to show that he has not the property or to set np any fraud, or wrongful delivery procured by misrepresentation. In such cases, and generally by reason of its negotiability by transfer from hand to hand under blank indorsement, the warehouse receipt comes within the class of quasi-negotiable instruments, equally with certificates of stock, and bills of lading.' The transfer of warehouse receipts, by indorsement and delivery carries with it, in exceptional cases, under statutory enactments, the privileges of negotiability. The receipt, in the hands of third persons, holders for value advanced, without notice of equities, is given the same freedom from antecedent equities as the favored instruments of commerce, bills of exchange and promissory notes. Any defense the warehouseman might have had as against the original holder of the receipt is cut off as against an indorsee for value, without notice. Where the provision is, that 1 Insurance Co. v. Kiger, 102 U. S. 352; Canadian Bank v. McCrea, 106 Ill. 281; Burton v. Curyea, 40 Ib. 320; First Nat. Bank v. Bates, 1 Fed. Rep. 702; McNeil v. Hill, 1 Woolw. 96; Allen v. Maury, 66 Ala. 10; Gibson v. Chillicothe Bank, 11 Ohio St. 311; Yenni v. McNamee, 45 N. Y. 614; Whitlock v. Hay, 58 Ib. 484; Stewart v. Phoenix Ins. Co., 9 Lea, 104; Davis v. Russell, 52 Cal. 611. 2 Gibson v. Stevens, 8 How. 384; Erie & P. Disp. Co. v. Compress Co., 6 Mo. App. 175; People's Bank v. Gayley, 92 Pa. St. 518; s. c. 12 Phila. 183; First Nat. Bank v. Bryce, 78 Ky. 42; Greenbaum v. Megibben, 10 Bush, 419. |