vest. Trust (1924) 64 Utah, 151, 228 Pac. 896.

This result may be reached on the theory of estoppel. Thus, in Jones v. Commercial Invest. Trust (Utah) supra, it was held that when a finance company which had advanced money for the purchase by a dealer of automobiles, and taken from the latter a trust receipt in which the dealer agreed to hold the automobiles in trust as the property of the finance company, with liberty to sell the same with the company's consent, agreeing to account to it for the proceeds of sales, placed the automobiles in the possession of the dealer for the purpose of sale, knowing that it was a retail dealer in such cars, and would hold itself out and advertise itself as the owner thereof and as having a right to sell the same, and permitted the dealer to exhibit the cars for sale in its salesroom, it thereby clothed the dealer with such apparent ownership and authority to sell that it was estopped to deny, as against one who purchased an automobile from the dealer in good faith, for full value, in the regular course of the seller's business, and without any knowledge or notice of the finance company's claim thereto, that the dealer had the right to make the sale and to assert his superior title to the automobile. The court said that to hold otherwise would be to open the door to fraud and sharp practice, and would be carrying entirely too far the doctrine that the owner of personal property may give the same into the possession of another upon such conditions as they may agree upon, and then repossess himself thereof on a breach of those conditions, even as against innocent third parties claiming under his conditional vendee or agent.

So, where bankers who had advanced money for the purchase price. of goods imported into this country voluntarily put the bills of lading, indorsed in blank by the shipper, into the hands of the purchaser, who gave a trust receipt in which he agreed to hold the merchandise in storage as the property of the bankers, in trust until their acceptances for the purchase

money were paid or satisfactorily provided for, it being stipulated that the intent of the trust receipt was to preserve and protect unimpaired the title of the bankers to the goods, it was held in Munroe v. Philadelphia Warehouse Co. (1896; C. C.) 75 Fed. 545, that, having thus clothed the party giving the trust receipt with the apparent absolute ownership of the goods, and enabled the latter to obtain advances upon the bills of lading from a warehouse company, the bankers were estopped to claim ownership as against the right of the warehouse company. The court applied the principle that where one of two persons equally innocent of actual fraud must suffer from the tortious acts of a third, he who gives the wrongdoer the means of perpetrating the wrong must bear the consequences of the act, stating that this principle has often been enforced by the courts against a party who, by documentary evidence of title or otherwise, has clothed his agent, or some other person, with the apparent absolute ownership of personal property, and thus enabled him to deal with it as if he were the owner. it was said that, aside from statute, the bills of lading were so far negotiable that, by the indorsement thereof by the consignee, the title to the goods was transferable to a bona fide purchaser or pledgee for value.

And

Assuming that the ownership of the goods passed from the shippers to the bank which made advances and received the bills of lading, and did not pass back to the shippers by withdrawal of the bills of lading under trust receipts, the court, in Blydenstein v. New York Secur. & T. Co. (1805) 15 C. C. A. 14, 35 U. S. App. 175, 67 Fed. 469, took the view that the shippers became factors intrusted with the possession both of the documentary evidence of title and of the goods, and, as such, were to be deemed the true owners so far as to give validity to contracts which they might make with any other person of the kind enumerated in the factors' act; that they might dispose of the merchandise as an owner might, and, if another advanced money or entered

into obligations on the faith of the apparent ownership with which possession clothed the factors, the law would hold that apparent ownership to be real.

In Arbuthnot, L. & Co. v. Richheimer & Co. (1916) 139 La. 798, 72 So. 251, the court said that the trust receipt, at most, was a private agreement between the parties, which, of course, did not affect third persons without notice. In this instance it was held that a commercial firm which had furnished the money or credit to enable an importer to purchase goods in a foreign country, and which had taken the bill of lading in its own name as security, by indorsing and delivering the same to the importer on arrival of the shipment in this country, and taking in lieu thereof a trust receipt (which obligated the importer to hold the goods as the property of the firm making the advance, with liberty to sell the same and account for the proceeds to said firm, the expressed intention of the agreement being to preserve unimpaired the lien of the firm on the property), did not have a prior claim as against one to whom the holder of the bill of lading had in due course pledged the same. It was held that the subsequent pledgee had the right to recover possession of the goods, and that its rights as pledgee should be recognized and enforced.

In New Haven Wire Co. Cases (1889) 57 Conn. 352, 5 L.R.A. 300, 18 Atl. 266, in which the trust receipt transaction was regarded as a conditional sale, the court took the view that on the sale by the conditional vendee the goods ceased to be security to the vendor, and the purchaser acquired a good title, and if the original vendee did not pay to the vendor the proceeds, but retained and used them, he became a debtor to the vendor therefor, and the latter had no priority over other creditors.

Statutory provisions sometimes affect the decision. (As to recording (As to recording acts, see V. infra.) Thus, in Re Richheimer (1915) 136 C. C. A. 542, 221 Fed. 16, it was held that the trust receipt contracts were governed by the local law, and that, under the Negotia

ble Warehouse eRceipt Act of Illinois and other statutes of that state, the banks which had financed the importation of the goods and delivered them to the importer under trust receipts did not have title which would prevail over that of parties to whom the importer had negotiated the warehouse receipt taken in his (the importer's) name. It was said that the statutory rule and policy of that state had long been settled in favor of possession as "one of the strongest evidences of title to" personal property, which "cannot be rightfully separated from the title, except in the manner pointed out by statute." The Warehouse Receipt Act provided that a person to whom a negotiable receipt had been duly negotiated acquired thereby such title to the goods as the person negotiating the receipt had, or had ability to convey to a purchaser in good faith for value, and that the validity of the negotiation should not be impaired by the fact that it was a breach of duty on the part of the negotiator. And the court said that the breach of duty on the part of the bankrupt (the importer) in making the negotiation of the warehouse receipts could not aid the claims of the banks (the holders of the trust receipts), as the power was unquestionably vested in the importer to convey title to the goods to a purchaser in good faith for value, which would bind the owner of the goods. The case also involves the effect of the recording statutes. See statement of case in 25 A.L.R. on p. 335.

And it was held in Commercial Nat. Bank v. Canal-Louisiana Bank & T. Co. (1916) 239 U. S. 520, 60 L. ed. 417, 36 Sup. Ct. Rep. 194, Ann. Cas. 1917E, 25, that a pledgee of bills of lading, who permits the pledgeors to withdraw the same under a trust receipt agreement to hold for the pledgee's account, and thus enables the pledgeors to obtain negotiable warehouse receipts which they pledge to a bank as security for their notes, cannot question the title of the latter, having clothed the pledgeors with the indicia of ownership, within the meaning of the doctrine established by the Uniform Warehouse Receipts Act of Lou

isiana, providing in effect that if the owner of goods permits another to have possession or custody of negotiable warehouse receipts, running to the order of the latter or to bearer, it is a representation of title upon which bona fide negotiators for value are entitled to rely, despite breaches of trust or violations of agreement on the part of the apparent owners. The case was one where the consignee, having pledged the bills of lading with a bank to secure advances, withdrew them on trust receipts, and then surrendered the bills of lading to the railway company, thus obtaining possession of the goods, which it stored in a warehouse, receiving in turn negotiable warehouse receipts. And the court said that, after the bank had allowed the consignee to be clothed with apparent ownership, through possession of the warehouse receipts, it could not be heard to question the title of a bona fide purchaser for value, to whom they had been negotiated.

The negotiable warehouse receipts were subsequently pledged, in Commercial Nat. Bank v. Canal-Louisiana Bank & T. Co. (U. S.) supra, to another bank, under trust receipts similar to those given the first bank, and it was contended that the equities of the two banks were equal, and that those of the first bank should, therefore, prevail. But this contention was overruled, as the first bank had, by clothing the consignee with the indicia of ownership, enabled him to contract with a bona fide purchaser for value, and the second bank had not lost its rights by any subsequent negotiation. of the warehouse receipts.

See INTERNATIONAL TRUST Co. v. WEBSTER NAT. BANK (reported herewith), ante, 267, as to rights under the Massachusetts statute of one advancing money to the importer.

And in Roland M. Baker Co. v. Brown (1913) 214 Mass. 196, 100 N. E. 1025, the decision is based on the Uniform Bills of Lading Act of Massachusetts, under which anyone to whom a negotiable bill, as therein defined, has been duly negotiated, acquires such title to the goods as the

person negotiating it to him had, or had ability to convey to a purchaser in good faith for value, and also such title as the consignee and consignor had, or had power to convey to a purchaser in good faith for value, the validity of the negotiation not being impaired by the fact that it was a breach of duty on the part of the person making it, and the court said that its previous decisions, by which bankers advancing money for importations were protected against the consequences of their agent's breach of duty, had been abrogated and nullified by the statute. So that it was held that a purchaser from the importer, for value and in good faith, acquired title as against the bank, although the negotiation was in breach of the importer's obligation under the trust receipts. The court said further that by the transaction in question, under the common law as declared by the decisions in that state, the title to the property remained in the bankers, who had advanced the money for the importation and taken the bills of lading in their own name; that the importer had no right to dispose of the goods in any other way than by sale in accordance with the provisions of the trust receipt (which was given at the time the importer received the indorsed bill of lading, and stated that the importer acknowledged the receipt of the goods in trust to deliver the same to a specified person, who it was stated had purchased the goods, and to obtain from the latter the proceeds and deliver them immediately to the bankers); that no one else could by purchase from the importer, or by any dealings with it, acquire a title to the property which would be good against the bankers; that the bill of lading merely represented the goods themselves, and the importer had no greater right, and could not pass to any purchaser other than the one specified in the trust receipt any greater right, than if its possession with this limited authority had been of the goods themselves, instead of the bill of lading which was their representative. But this result, as indi

cated above, it was held, was changed by the Uniform Bills of Lading Act.

Also, in New York Secur. & T. Co. v. Lipman (1899) 157 N. Y. 551, 52 N. E. 595, in which the rights of a pledgee of the importer were sustained, as against bankers who had delivered to the importer the bills of lading and invoices, thereby enabling the latter to obtain negotiable warehouse receipts which he had surrendered to the pledgee as security for a loan, the court took the position that, although the importer was called a trustee in the trust receipts given to the bankers in exchange for the shipping documents, yet that he was in effect an agent within the meaning of the Factors' Act, and, since the trust receipts authorized a sale by the importer, the provisions of that act applied, which made every factor or other agent intrusted with the possession of a bill of lading or warehouse receipt, or with the possession of merchandise for the purpose of sale, the true owner thereof, so far as to give validity to any contract made by such agent with any other person for sale or disposition thereof, for money advanced or obligations entered into upon the faith thereof. The court said that the transaction was of the kind contemplated by the Factors' Act as ordinarily done by agents; that calling the importer a trustee did not make him such as to third persons with no notice of the secret agreement, the object of the statute being to protect innocent persons who deal in reliance upon apparent ownership, resting upon possession either of the merchandise itself or of documentary evidence of ownership.

It is intimated in CANAL-COMMERCIAL TRUST & SAV. BANK v. NEW ORLEANS, T. & M. R. Co. (reported herewith) ante, 274, though unnecessary to the decision, that the holder of the trust receipt takes the risk that third persons may in good faith deal with the apparent owner of the bill of lading, and that the bank will in such case, to that extent, forfeit its rights.

And it is intimated (dictum), also, in English Bank v. Barr (1888) 31 Abb. N. C. (N. Y.) 7, that a bona fide

purchaser of the goods from the importer, for value and without notice, could hold the goods as against the bank which financed the importation and indorsed the bills of lading to the importer under a trust receipt agreement in which the importer agreed to hold the goods as the property of the bank, with liberty to sell the same and to account to it for the proceeds until its advances were repaid. Also, in Dennistown v. Barr (1893) 31 Abb. N. C. 21, 28 N. Y. Supp. 255, it is suggested that a bona fide purchaser from the importer, without notice of the bank's right or title, would obtain superior rights; but this question was not before the court for decision.

Where the trust receipt authorizes the importer to sell the merchandise for the account of the bank financing the importation, for which bank the importer agrees to hold the merchandise in trust, accounting to it for the proceeds, an exercise of the power of sale, so far as the purchaser is concerned, devests the title of the bank. Perkins v. Halpren (1917) 257 Pa. 402, 101 Atl. 741. See also Canadian Bank v. Baum (Pa.) infra.

In several cases, however, the holder of the trust receipt has prevailed. Thus, where a bank, being the legal owner of goods imported, delivered the shipping documents to the importer, taking in exchange from the importer a so-called "storage receipt" under which the bank retained title, but gave to the importer the right to sell the goods and to account and pay to it the proceeds, it was held, in Canadian Bank v. Baum (1898) 187 Pa. 48, 40 Atl. 975, that, while any valid exercise of the power of sale on the part of the importer would devest the title of the bank and transfer it to the purchaser, yet in this case there was not a sale in the ordinary course of business such as would be a valid exercise of the authority to sell contained in the receipt, and that the bank retained title as against the socalled purchaser from the importer. In this instance the latter, in anticipation of failure, and without any prior communication to a third party, or knowledge on the latter's part, sent

to him an invoice and bill of sale of the goods received under the storage receipt, and subsequently delivered the goods to him, this action by the importer being due to the fact that he had misappropriated checks which the third party had sent to meet notes arising out of other transactions, which notes were not due at the time the importer attempted to make a transfer of the goods in question, so that at that time the importer had merely a prospective indebtedness to the third party which he endeavored to discharge, in part, by the consignment of goods belonging to the bank. The court said that if the goods had been those of the importer the payment might have stood as against other creditors or a general assignee, but that this was not a sale under the authority of the storage receipt, that the purchaser did not part with any present value on the faith of the goods, and that the consignment was manifestly in payment of a balance that would be due on a general account.

And in Moors v. Kidder (1887) 106 N. Y. 32, 12 N. E. 818, in which it was held that the bankers who advanced funds for an importation were owners and not pledgees of the goods (see this case supra, II. b, under heading, "Pledgeor and pledgee"), it was held that their rights should prevail over the claims of a pledgee of the importer. The bill of lading was delivered to the importer by the bankers, who had taken it in their own name and indorsed it in blank to enable the importer to obtain entry of the goods at the customhouse, and to warehouse them for account of the bankers, the receipt of the importer being substantially a trust receipt, although not expressly so designated; but the importer, instead of entering the goods in the name of the bankers, entered them in the name of his own broker, and then pledged them to a third party as security for a loan, the pledgee trusting to the representations of the importer and the warehouse receipt. The pledgee was not shown the bill of lading with indorsement thereon, his action not being in any manner affected thereby, so that he was not within the 49 A.L.R.-20.

provision of the Factors' Act making the transfer by an agent intrusted with the evidence of title, which transfer has been made upon the faith thereof, valid under some circumstances, even against the real owner. It was accordingly held that the pledgee could not maintain an action against the bankers and the warehouseman to recover possession of the goods.

Also, in Munroe v. Bonanno (1893) 31 Abb. N. C. 1, 28 N. Y. Supp. 375, it was held that bankers, by advancing money for the purchase price of goods and taking bills of lading therefor in their own name, acquired a lien upon the goods, which subsequently came into the possession of the purchaser, who, on surrender of the bills of lading to him, executed an agreement containing substantially the provisions of the ordinary trust receipt, which lien was superior to the rights of a third person, thereafter acquired, for advances to the purchaser on the faith of the latter's representations that he was the owner of the property and would repay such third person out of the proceeds realized on the sale of the goods. It was indicated that the third party under these circumstances had no lien. But at any rate the court took the position that the bankers had a lien superior to that of anyone whose interest in the property was subsequently acquired, and should first be reimbursed out of the proceeds of the sale of the property.

And in Farmers' & M. Nat. Bank v. Logan (1878) 74 N. Y. 568, in which the court overruled the contention that the bank was only a pledgee which had lost its special property, as against a bona fide purchaser from the principal, by committing the goods to the possession of the latter, as the general owner and pledgeor, the transaction was somewhat similar to a trust receipt agreement, though not expressly so designated. (See statement of the case under III. supra.) It was held that the bank could recover for conversion of the property by parties who purchased it from the principal in New York (who occupied somewhat the position of the re