who have power to issue a technical warehouse receipt, the transfer of which is a good delivery of the goods represented by it.52

In order to constitute a warehouse receipt, a transfer of which will pass title and give constructive possession of goods stored thereunder, there must be something on the face of the instrument to indicate that a contract of storage has been entered into; and hence it has been decided that mere weighing tags given by a company that makes no charge for storing, and which only show the weight and number of sacks of beans weighed on the company's scales for the person named therein, are not warehouse receipts, and a transfer of such weighing tags to a pledgee thereof, does not transfer title to, and the possession of, the beans, and they may be attached by a creditor of the pledgor. But the transfer of a warehouse receipt by a debtor to a creditor to hold the goods covered thereby as security for the debt, operates as a delivery of the goods, and places them beyond the control of the debtor in so far as debtor and creditor are concerned, and no notice of such transfer is necessary to the warehouseman.53

It is not always essential, however, that a warehouse receipt should be duly indorsed in order to transfer title to the goods storedi. e., if the warehouse receipt states that the goods stored are "subject to the presentation of this receipt only." In such case, the legal effect is to transfer title to the goods by mere delivery of the receipt itself and without indorsement, and is analogous to a negotiable instrument payable to bearer this is undoubtedly true if such be the intention of the parties. In such case the warehouseman becomes the bailee of the person receiving the certificate. even though the former has no notice of the transfer.54

§ 1714. There are statutory enactments in England which greatly enlarge the effect of such instruments.55 In Virginia, by

52. Franklin Nat. Bank v. Whitehead, 149 Ind. 560, 49 N. E. 592, 63 Am. St. Rep. 302; Sinsheimer v. Whitely, 111 Cal. 378, 43 Pac. 1109, 52 Am. St. Rep. 192.

53. Friedman, Keller & Co. v. Peters, 18 Tex. Civ. App. 11, 44 S. W. 572; Sinsheimer v. Whitely, 111 Cal. 378, 43 Pac. 1109, 52 Am. St. Rep. 192; New York Security & Trust Co. v. Lipman, 157 N. Y. 551, 52 N. E. 595.

54. Citizens' Banking Co. v. Peacock & Carr, 103 Ga. 171, 29 S. E. 752. 55. See Benjamin on Sales, 607, and the factors' acts there cited. In Planters' Rice Mill Co. v. Merchants' Nat. Bank, 78 Ga. 582, Bleckley, J., speaking of the nature and effect of warehouse receipts, said: "Warehouse receipts,

recent act of Assembly, warehouse receipts (for produce) are made negotiable under certain rules and regulations,56 and in Minnesota they are negotiable by indorsement and delivery.57 And so in Ohio.58

In Rhode Island a warehouse receipt was given to C. F. A. & Co., subject to the order of the Fifth National Bank for 390 cases of eggs to be delivered according to the indorsement thereon, but only on the surrender and cancellation of the receipt and on demand of the charges payable thereon. Across its face was the word "negotiable." The depositor borrowed money on the receipt from the Fifth National Bank; and then himself got the cases of eggs mentioned in the receipt from the pure and simple, with only the incidents annexed to them by law, and none superadded by special contract, conduct, or representation, are no more oblig. atory in the hands of bona fide holders for value, than in the hands of the bailor of the property stored; but, if warehouse receipts of a special form and character be adopted and issued in due course of business, for the express purpose of being pledged as security to obtain money, and if, as a part of the regular system of using them, the warehousemen acknowledge in writing on each receipt notice of assignment by the pledgor to the pledgee before the latter advances his money thereon, the pledgee, after advancing his money in good faith, is entitled to stand on the terms of the pledged receipt. Thus, though in fact no goods had been received for storage, the recital in the special receipt being utterly false, nevertheless the recital will have the same effect in protecting such bona fide pledgee, as if the goods had been received and stored." In the case of Hanover Nat. Bank v. The American Dock & Trust Co., 148 N. Y. 612, 43 N. E. 72, 51 Am. St. Rep. 721, held, that if a bank in good faith makes a personal loan to an officer of a warehouse company, having express authority to sign and issue negotiable warehouse receipts for goods deposited by persons other than himself, but having no such authority to sign or issue certificates in his own favor, upon the transfer to it (the bank) as collateral security, of a warehouse certificate, issued and signed by such officer in his own favor, and giving on its face a purchaser thereof such notice as should put a prudent person upon inquiry in regard to the officer's authority, and the bank, in order to maintain an action against the company on the certificate, must show that implied authority had been conferred upon the officer to issue certificates to himself for goods that he had actually deposited.

56. See Acts of Assembly of 1874, p. 233.

57. State v. Loomis, 27 Minn, 521; National Exch. Bank v. Wilder, 34 Minn. 149. So in New York. Brooks v. Hanover Nat. Bank, 26 Fed. 301.

58. Cleveland v. Sherman, 40 Ohio St. 176. In Missouri, goods in the hands of the warehouseman may be pledged by a transfer of the warehouse receipt. Conrad v. Fisher, 37 Mo. App. 367. So of a “cotton note,” which is a species of warehouse receipt. Fourth Nat. Bank v. Cotton Compress Co., 11 Mo. App. 341. Also in Wisconsin. See Geilfuss v. Corrigan, 95 Wis. 651, 70 N. W. 306, 60 Am. St. Rep. 143.

warehouseman. The bank sued for the value of the eggs, and the Supreme Court held that it could recover, the extent of the damages being the loan upon the receipt with interest. The fact that the eggs have no distinguishing mark upon them and that the depositor had other eggs in the same warehouse was not regarded as material, the particular eggs in question being packed in cases.59 A shipping ticket has been held not a warehouse receipt, and, therefore, not negotiable.

59. Fifth Nat. Bank v. Providence Warehouse Co., 17 R. I. 114, 20 Atl. 203. See also Hall v. Milwaukee Dock Co., 29 Wis. 482; Stewart v. Insurance Co., 9 Lea, 104; Goodwin v. Scannell, 6 Cal. 541.

CHAPTER LIII.

BILLS OF CREDIT.

§ 1715. Constitutional prohibition upon the emission of bills of credit by the States. The tenth section of the first article of the Constitution of the United States contains certain prohibitions and restrictions upon the power of the States; and the first clause of the section reads as follows: "No State shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money, EMIT BILLS OF CREDIT; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts." Herein, we are only concerned in the prohibition against the emission of bills of credit; but that prohibition it is important to consider, as negotiable instruments to which the States are parties are frequently impugned as coming within its pale; and sometimes a question of nicety is involved in determining whether they do or not. Every word of the prohibition, "No State shall emit bills of credit," is pregnant with significance. In the first place, the prohibition is upon the States only; and corporations chartered by the States may be authorized to issue bills which the State itself cannot issue.1 In the second place, the word "emit" is appropriately selected, because it is never employed in describing those contracts by which a State binds itself to pay money at a future day for services actually received, or for money borrowed for present use.2 And in the third place, the term "bills of credit" is used in a sense well understood when its history is adverted to. We propose to consider (1) What are bills of credit, and (2) What are not bills of credit.

SECTION I.

WHAT ARE BILLS OF CREDIT.

§ 1716. Definition. A bill of credit is a negotiable paper designed to pass as currency and circulate as money. Such a bill of credit as comes within the constitutional prohibition is a nego

1. Briscoe v. Bank of Kentucky, 11 Pet. 433 (1837). 2. Craig v. State of Missouri, 4 Pet. 328 (1830).

tiable paper issued by the sovereign power of one of the United States, and designed to pass as currency and circulate as money.

§ 1717. The nature of this class of negotiable instruments, and the object and spirit of the constitutional restriction, first received a judicial exposition in the case of Craig v. State of Missouri. In that case it appeared that the State of Missouri, with a view to relieve the necessities of the times, established loan offices to loan certain sums to citizens, taking security by mortgage redeemable in instalments. The loan was in certificates in the following form:

"This certificate shall be receivable at the Treasury, or any of the loan offices of the State of Missouri, in the discharge of taxes or debts due the State for the sum of $ with interest for the same at the rate of two per centum per annum from this date, the day of

182-."

They were signed by the auditor and treasurer, were not to exceed in amount two hundred thousand dollars, and were to be of denominations not over ten dollars nor less than fifty cents.

They were also made receivable in payment of salt at the salt springs, and by all public officers, civil and military, in discharge of their salaries and fees of office. The proceeds of the salt springs, the interest accruing to the State, and all estates purchased, and all debts due the State, were constituted a fund for their redemption. Chief Justice Marshall, rendering the opinion. of the majority of the court, said: "In its enlarged, and perhaps its literal sense, the term 'bill of credit' may comprehend any instrument by which a State engages to pay money at a future day, thus including a certificate given for money borrowed. But the language of the Constitution itself, and the mischief to be prevented, which we know from the history of our country, equally limit the interpretation of the terms. The word 'emit' is never employed in describing those contracts by which a State binds itself to pay money at a future day for services actually received, or for money borrowed for present use; nor are instruments executed for such purposes in common language denominated 'bills of credit.' To 'emit bills of credit' conveys to the mind the idea. of issuing paper intended to circulate through the community for its ordinary purposes as money, which paper is redeemable

3. 4 Pet. 411 (1830).