[HOUSE OF LORDS.]

AND

Pledge - Constructive Delivery - Whisky stored in Distiller's Warehouse - Delivery Order - Company - Mortgage or Charge - Registration - Bill of Sale - Debentures - Trust Deed - Appeal - Competency - Winding-up in Ireland - Appeal by Liquidator without Leave of Court - Spirits Act, 1880 (43 & 44 Vict. c. 24), ss. 49, 51, 52, 61 - Bills of Sale (Ireland) Act, 1879 (42 & 43 Vict. c. 50), s. 4 - Companies Act, 1900 (63 & 64 Vict. c. 48), s. 14 - Companies (Consolidation) Act, 1908 (8 Edw. 7, c. 69), s. 151.

Sect. 151 of the Companies (Consolidation) Act, 1908, which enables a liquidator, in the case of a winding-up in Ireland, to bring or defend legal proceedings with the sanction of the Court, does not confer on third parties any right to object to proceedings brought by a liquidator in the name of the company on the ground that no such sanction has been obtained.

The plaintiff advanced moneys to a distillery company on the security of manufactured whisky of the company stored in a warehouse provided by the company on the distillery premises in accordance with the Spirits Act, 1880. Neither the company nor the excise officer could obtain access to the warehouse without the assistance of the other, and the whisky could only be delivered out on presentation to the excise officer of a special form of warrant supplied by the Crown. On the occasion of each advance the company entered the name of the plaintiff in pencil in their stock-book opposite the particulars of the whisky intended to be pledged and delivered to the plaintiff (1.) an ordinary trade invoice and (2.) a document called a warrant, which described the particulars of the whisky and stated that it was deliverable to the plaintiff or his assigns and contained the words "free storage." No intimation of the transaction was given to the excise officer.

The plaintiff also advanced moneys to the company upon second debentures issued to him by the company in 1903, but forming part of an issue authorized by the company in 1895 and secured by a trust deed of that year.

Neither the warrants nor the debentures nor the trust deed were registered under s. 14 of the Companies Act, 1900.

In an action by the plaintiff against the company in liquidation and the trustees for the second debenture holders to enforce his securities:-

Held (1.) by Lord Atkinson and Lord Sumner, and semble by Earl of Halsbury and Lord Parker of Waddington, that the plaintiff was not entitled to a valid pledge on the whisky comprised in the warrants; (2.) that, assuming that a pledge was created, it was, within s. 14, sub-s. 1 (c), of the Companies Act, 1900, a mortgage or charge created or evidenced by an instrument in writing which if executed by an individual would require registration as a bill of sale, and was consequently void as against the liquidator, for want of registration; (3.) that the plaintiff was entitled to a valid lien on the debentures for the amount of his advances to the extent of the property comprised in the trust deed.

Ex parte Close (1884) 14 Q. B. D. 386, In re Cunningham & Co. (1885) 28 Ch. D. 682, Ex parte Hubbard (1886) 17 Q. B. D. 690, and Charlesworth v. Mills [1892] A. C. 231 distinguished.

The authorities on constructive delivery reviewed by Lord Atkinson.

Decision of the Court of Appeal in Ireland [1912] 1 I. R. 349 reversed on points 1 and 2 and affirmed on point 3.

APPEAL from an order of the Court of Appeal in Ireland affirming a judgment of Barton J. (1)

The action was brought by the respondent against the trustees for the holders of second debentures in the appellant company and against the company in liquidation for (inter alia) declarations (1.) that he had become entitled to a good and valid pledge on certain whiskies which had been sold in the course of the liquidation of the company in priority to the second debenture holders; (2.) that he was entitled to a good and valid lien upon certain second debentures specified in the statement of claim for advances made by him to the company.

The company was incorporated in 1890 under the Companies Acts, 1862 to 1886, for the purpose of carrying on the business of whisky distillers at Dublin and elsewhere in Ireland, and by its memorandum of association it was empowered to borrow money on the security of all or any of its property. In September, 1890, the company raised the sum of 35,000l. by the issue of 350 debentures of 100l. each. In October, 1895, the company authorized the issue of a second series of debentures to the amount of 25,000l. These debentures created a floating charge on the

(1) [1912] 1 I. R. 349.

property of the company and they were further secured by a trust deed dated November 9, 1895, whereby certain freehold and leasehold property of the company was conveyed to trustees for the second debenture holders.

The second debentures stated that the registered holders of that issue for the time being were entitled pari passu to the benefit of the above-mentioned trust deed and they contained the following condition: "4. Nothing herein contained shall be taken to authorise the creation of any mortgage or charge on the property for the time being of the company in priority to the charge hereby created, with this exception, that the company may from time to time pledge to their bankers, or others, by delivery warrants, or other means, their manufactured whiskey, and the barrels and vessels containing the same, to secure an advance or advances, for the purposes of the company's business." Of this series the company issued debentures to the amount of 13,570l. prior to January 1, 1901, the date at which the Companies Act, 1900, came into operation. No further issue of this series was made until long after that date.

Between the months of November, 1904, and January, 1905, the respondent, who was a director of the company, had advanced to the company for the purposes of its business sums amounting in the aggregate to 2350l. These advances were made by the respondent's accepting the company's bills of exchange, which were then negotiated by the company, and which the respondent was ultimately obliged to take up. The mode in which these advances were secured was as follows: The company held a large stock of manufactured whisky in numbered casks bonded in the warehouse of the company on the distillery premises. The warehouse had two locks. The key of one lock was kept by the company and the key of the other by the excise officer, and neither party could obtain access to the warehouse without the assistance of the other. The particulars of the whisky were entered in the excise books kept on the company's premises in the name of the company as owner, and in the company's stock-book the number of each cask of whisky was then entered with a statement of its contents in gallons. On the occasion of each advance made by the respondent the company purported to pledge to

him certain specific casks of whisky. The company first prepared a warrant in the following form:-

"No. 3441.

"Great Brunswick St., .....

Dublin, 5th August, 1903.

"Warrant for 5 butts and 4 hhds. D. C. D. Pot Still Whiskey, bonded January, 1903, as per particulars underneath.

"Deliverable to Edward Doherty, Esq., Dublin, or assigns, by endorsement hereon, on payment of rent from ..... ..... and all other charges from date hereof.

"Free Storage. (Then followed the particulars of the whisky.)

"The Dublin City Distillery .....

"(Great Brunswick St., Dublin),

Limited. ..... .....

"Alfred J. W. Howes, Secretary.

"Entered Jno. Atkinson, Clerk."

This warrant was then handed to the respondent together with an invoice in the same form as if the whisky had been sold to him. The number of the warrant was then entered in red ink in the company's stock-book opposite the numbers and particulars of the casks, and opposite this entry of the warrant the name of the respondent and the date of the issue of the warrant were written in pencil. The particulars of the transaction were also entered in the company's register of mortgages. No intimation of the transaction was given to the excise officer. Notwithstanding the issue of these warrants the company sold the whisky comprised therein if it could find a purchaser for it. On the occasion of a sale the regular practice was to get up the warrant and cancel it, rub out the name of the respondent, which had been written in pencil in. the stock-book, and enter the name of the purchaser in ink, and then substitute as a fresh security to the respondent fresh warrants and invoices of other whisky and make fresh entries in the stock-book in the same way as was done in the case of the original security. Occasionally the warrants were not delivered up for cancellation, but no whisky was ever sold without the consent of the respondent. When the whisky was being delivered to the

purchaser from the bonded warehouse a yellow form supplied by the Crown called "Warrant for the delivery of wet goods from a bonded warehouse" was filled up and signed on behalf of the company and handed to the excise officer, and this was the only form on which the excise officer would deliver goods. The warrants delivered to the respondent were not registered under s. 14, sub-s. 1 (c), of the Companies Act, 1900.

The respondent also advanced further sums to the company amounting in the aggregate to 350l. to enable it to introduce a yeast plant and for other purposes of its business, and as security for these advances the company issued to a trustee for the respondent twenty-seven second mortgage debentures. These debentures were issued at various dates in 1903 and 1904. They were not registered under s. 14 of the Companies Act, 1900, but the respondent claimed the benefit of the trust deed of November 9, 1895.

In 1905 an action of Cox v. Dublin Distillery Co. (1) was brought on behalf of the first debenture holders to enforce their security. The appellant Smyth was appointed receiver in that action and was also appointed liquidator in the winding up of the company. The assets of the company were more than sufficient to satisfy the claims of the first debenture holders and the respondent, but were not sufficient to pay all the second debenture holders in full.

In 1909 the respondent, by leave of the Court, commenced the present action, which was defended by the liquidator in the name of the company. The second debenture holders did not put in any defence.

The evidence given at the trial is fully dealt with in the judgment of Lord Atkinson.

Barton J. held (1.) that the respondent was entitled to a good and valid pledge on the whiskies contained in the warrants set forth in the second schedule to the judgment and that such pledge took priority over the second debentures; (2.) that he was entitled to a good and valid lien on the debentures in question so far as the same affected the freehold and leasehold premises comprised in the trust deed of November 9, 1895, for the amount

(1) [1906] 1 I. R. 446.

of his advances; and this judgment was affirmed by the Court of Appeal (Barry L.C. and Holmes L.J., Cherry L.J. dissenting).

The respondent presented an incidental appeal submitting that the appeal was incompetent inasmuch as under s. 151 of the Companies (Consolidation) Act, 1908, leave to appeal to this House should have been obtained from the judge to whose Court the winding up of the company was assigned, and leave was refused.

1913. Nov. 27, 28; Dec. 1. Younger, K.C., and A. Alfred Dickie (the latter of the Irish Bar), for the appellants.

Ronan, K.C. (of the Irish and also of the English Bar), and Herbert Wilson, K.C. (of the Irish Bar) (Cave, K.C., and J. Walker Doherty (the latter of the Irish Bar) with them), for the respondent, took an objection as to the competency of the appeal. Under s. 151, sub-s. 1, of the Companies (Consolidation) Act, 1908, the liquidator, in the case of a winding-up in Ireland, has no right of appeal except with the sanction of the Court, and, the Court having refused its sanction, this appeal is incompetent. Under the Companies Act, 1862, s. 95, this rule applied to all liquidators, whether the winding-up was in England, Scotland, or Ireland, but the Companies (Winding up) Act, 1890, s. 12, allowed a liquidator in an English winding-up to do practically everything without the sanction of the Court. That Act, however, did not apply to Scotland or Ireland, and the law has not been altered by the Act of 1908. A liquidator is the creature of statute and his only right of appeal to this House is the statutory right provided by the Act of 1908.

Younger, K.C., and A. Alfred Dickie, contra. It is said that no leave has been obtained to prosecute this appeal and that the respondent is entitled to take that objection. But Lord Lindley in his book on Companies, 5th ed., p. 712, lays it down that the objection of want of leave cannot be taken by an adverse litigant. The effect of a liquidator's taking proceedings without leave is that he exposes himself to the risk of having to pay the costs personally. See Lee v. Sangster (1); Piercy v. Roberts (2);

(1) (1857) 2 C. B. (N.S.) 1.

(2) (1832) 1 My. & K. 4.

In re Silver Valley Mines (1); In re London Metallurgical Co. (2)

Ronan, K.C., replied.

EARL OF HALSBURY. We are all of opinion that the appeal must proceed.

The appeal was then heard upon the merits.

Younger, K.C., and A. Alfred Dickie, for the appellants. 1. The security comprised in the warrant and invoice, accompanied by the entry of the lender's name in pencil in the stock-book of the company and by the entry of the transaction in the register of mortgages, did not constitute a valid pledge. There can be no pledge without delivery actual or constructive, and neither the warrant nor the entry in the private books of the company operated a constructive delivery: Anderson v. McCall (3); Mathison v. Alison. (4) Castle v. Sworder (5), which is the strongest case in favour of the respondent, is distinguishable, first, because the decision was merely that there was some evidence of a change of possession, and, secondly, because the warehouse in that case included goods which did not belong to the seller. All the cases cited in the judgments of the Courts below are distinguishable. In Marvin v. Wallis (6) it was plain from the evidence that the character of the possession had changed, but here the evidence points to the contrary, for the company continued to deal with the goods in question in the ordinary course of business. Martin v. Reid (7) turned upon the construction of an instrument which stated on its face that possession of the goods had been transferred to the pawnee. Reeves v. Capper (8), which raised a question between rival pledgees of a chronometer, has no bearing on the point at issue In Meyerstein v. Barber (9) the question was at what period a bill of lading ceased to be operative for the purpose of effecting delivery. Willes J. there says that a mere contract to pledge is

(1) (1882) 21 Ch. D. 381.

(2) [1897] 2 Ch. 262.

(3) (1866) 4 Macph. 765.

(4) (1854) 17 D. 274, at pp. 281, 283.

(5) (1861) 6 H. & N. 828.

(6) (1856) 6 E. & B. 726.

(7) (1862) 11 C. B. (N.S.) 730.

(8) (1838) 5 Bing. N. C. 136.

(9) (1866) L. R. 2 C. P. 38.

not sufficient to carry the legal property in the goods but amounts only to an authority to take possession, and that to complete the pledge there must be delivery, although constructive delivery is sufficient. That decision was affirmed first by the Exchequer Chamber (1) and afterwards by the House of Lords. (2) In Ex parte Hubbard (3) Lord Esher shews that the essential character of a pledge is the advancing of money on an actual deposit of goods as distinguished from an authority to take possession. Tried by that test this truncation was not a pledge, for the money was advanced on the warrant, which was a mere authority to take possession. Here there never was at any time any completed pledge at all. If the documents represent anything they represent a mortgage.

2. Assuming that this was a pledge it is void against the liquidator and the creditors of the company because the warrant by which the security was evidenced required registration under s. 14 of the Companies Act, 1900. It is "a mortgage or charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale." It is a licence to take possession of personal chattels as security for a debt and as such is included in the definition of a bill of sale in s. 4 of the Bills of Sale (Ireland) Act, 1879. It is said that this warrant comes within the words "warehouse keeper's certificates, warrants or orders for the delivery of goods, or any other documents used in the ordinary course of business as proof of the possession or control of goods" in the exception in that section and therefore does not require registration as a bill of sale. The words "in the ordinary course of business" govern all the documents mentioned in the section (see Benjamin on Sales, 5th ed., p. 857, upon a very similar provision in the definition clause (s. 1, sub-s. 4) of the Factors Act, 1889), and this exception was put in to protect ordinary recognized commercial transactions. It must therefore be shewn that this document was used in the ordinary course of business as proof of the possession or control of the goods and was intended to be so used. A warehouseman's certificate imports or connotes the

(1) (1867) L. R. 2 C. P. 661.

(2) (1870) L. R. 4 H. L. 317.

(3) 17 Q. B. D. 690, at p. 697.

existence of three independent parties to the bargain, namely, the owner, the custodian, and the purchaser or mortgagee; and the certificate must be by the custodian. That is outside the mischief of the Bills of Sale Acts, the object of which was to prevent persons from getting false credit by apparent possession, but this document is within that mischief and is a bill of sale within the definition in s. 4 of the Act of 1879; and if it is within the definition it is immaterial that the transaction cannot be expressed in the form given in the schedule: Ex parte Hubbard. (1) Both that case and Charlesworth v. Mills (2) are distinguishable by the fact that there there had been an antecedent delivery and the document was merely evidence of what had taken place, whereas any shadow of title which the present respondent may have to this whisky is dependent on the warrant itself.

3. The respondent cannot claim any lien on the second debentures because they were not registered under the Act of 1900. Barton J. has held that, inasmuch as these debentures, though issued after the date of the coming into operation of the Act, are secured by a trust deed prior to that date, they are good to the extent of that security. But the trust deed was not an effective mortgage or charge in 1901 as regards debentures not then issued, and as to the debentures subsequently issued registration was necessary. The true view is that a debenture is created when it is issued: In re Bircham (3); In re Harrogate Estates (4); In re I. C. Johnson & Co. (5); In re S. Abrahams & Sons. (6) In re Spiral Globe (No. 2) (7) and In re New London and Suburban Omnibus Co. (8) were wrongly decided. [They also referred to Cox v. Dublin City Distillery. (9)]

Cave, K.C., and Ronan, K.C. (with them Herbert Wilson, K.C.,and J. Walker Doherty), for the respondent. 1. On the documents and on the evidence it is clear that an effective pledge was made. The respondent accepts the view that to make an effective pledge possession must be given to the pledgee. But possession may be actual or constructive; it may be possession

(1) 17 Q. B. D. 690, at p. 696.

(2) [1892] A. C. 231.

(3) [1895] 2 Ch. 786.

(4) [1903] 1 Ch. 498.

(5) [1902] 2 Ch. 101.

(6) [1902] 1 Ch. 695.

(7) [1902] 2 Ch. 209.

(8) [1908] 1 Ch. 621.

(9) [1906] 1 I. R. 446.

by a bailee, and the bailee may be the pledgor: Meyerstein v. Barber (1); Farina v. Home (2); Imperial Bank v. London and St. Katharine Docks Co. (3); Marvin v. Wallis (4); Langton v. Waring (5); Castle v. Sworder. (6) Anderson v. McCall (7) and Mathison v. Alison (8) are inconsistent with the English authorities, although there is no difference between the laws of England and Scotland as regards pledges: North Western Bank v. Poynter, Son, & Macdonalds. (9) If the whisky were in the custody of a warehouseman the proper course would have been to give the warehouseman a delivery order to the respondent, but the company being their own warehousemen all that they could do was to give to the respondent some documents which shewed that they held the whisky for him. The delivery warrant is just the ordinary warehouseman's warrant by which he acknowledges that he holds the goods for the person mentioned in the warrant. The real question is whether on the evidence the company did agree to hold this whisky as warehousemen for the respondent. The character of the possession depends upon what was done to change the possession and what was the intention with which it was done: Blackburn on Contract of Sale, 3rd ed., pp. 362-3, 365. Here undoubtedly the intention of both parties was to make a valid pledge, and if they were honest men anxious to carry out their contract - and in mercantile transactions the Court proceeds on the basis that the parties are acting honestly: Easton v. London Joint Stock Bank (10); Marsh v. Joseph (11) - the acts which ensued - the giving of the warrant and invoice and the entry of the respondent's name in the stock-book - were all done to evidence the change in the character of the possession of these goods. This is eminently a case in which very slight evidence would be sufficient for that purpose. Not a single butt of whisky was sold without the consent of the warrant holder and the company always gave him other whisky

(1) L. R. 2 C. P. 38, at p. 52.

(2) (1846) 16 M. & W. 119, at p. 123.

(3) (1877) 5 Ch. D. 195, at p. 201.

(4) 6 E. & B. 726, at p. 735.

(5) (1865) 18 C. B. (N.S.) 315, at p. 330.

(6) 6 H. & N. 828, at p. 838.

(7) 4 Macph. 765.

(8) 17 D. 274.

(9) [1895] A. C. 56, at p. 70.

(10) (1886) 34 Ch. D. 95, at p. 115.

(11) [1897] 1 Ch. 213, at p. 246.

in the place of the whisky which they sold. The words "free storage" in the warrant are significant of its purpose. This warrant agrees exactly with the form given in Butterworth's Bankers' Advances on Mercantile Securities other than Bills of Exchange, p. 114, and is a common form commercial document. There is no fixed form of warrant. The essence of this case is that the company acknowledge that they hold this property for the respondent. Acknowledgment of agency may just as well be made by the vendor as by a third party. It is no objection that the company filled the double capacity of manufacturers and warehousemen. The delivery of the warrant operated as an estoppel against them: Henderson & Co. v. Williams (1); Gosling v. Birnie (2); Blackburn on Contract of Sale, 3rd ed., p. 205.

It is not true to say that the company dealt with these goods as if there were no pledge. This was not a floating or hovering charge, but a specific charge for which another specific charge was from time to time substituted. It is true that no transfer was entered in the excise books, but that is immaterial. The excise officer is merely a watchman and his only duty was to see that nothing left the warehouse without payment of duty: Spirits Act, 1880, ss. 49, 51, 52, 56, 62. No question of reputed ownership arises in this case, since that doctrine does not apply to the winding up of a company: Gorringe v. Irwell India Rubber and Gutta Percha Works. (3) Nor can any adverse inference be drawn from the entry of this transaction in the register of mortgages because the obligation to register under s. 43 of the Companies Act, 1862, extended to pledges as well as mortgages: In re South Durham Iron Co. (4)

2. Then it is said that the delivery warrant is void as against the liquidator for want of registration; but, first, this warrant is not a bill of sale within the definition in the Act of 1879. The warrant is not a licence to take possession but an acknowledgment by the owner that he holds possession on behalf of somebody else. The authorities shew that a pledge is not within the definition because a pledge assumes that possession has been taken, and the Act does not apply to a case where possession has

(1) [1895] 1 Q. B. 521.

(2) (1831) 7 Bing. 339.

(3) (1886) 34 Ch. D. 128.

(4) (1879) 11 Ch. D. 579, at p. 585.

been given independently of the instrument: Ex parte Close (1); Ex parte Hubbard (2); Charlesworth v. Mills. (3) Secondly, it is within the express exception in the Bills of Sale Act. This is either a warehouseman's certificate or a warrant for the delivery of goods. The words "used in the ordinary course of business" apply only to "other documents," but, further, to borrow money on pledges of this nature is within the ordinary course of business. A warrant is an ordinary business document and is within the exception: In re Hamilton Young & Co. (4)

3. As regards the second debentures the charge created by the debentures themselves is void for want of registration, but the trust deed takes effect in respect of the whole series and inasmuch as the deed was executed before the passing of the Act of 1900 it does not require registration. The need for registration arises when the deed is executed and does not revive when fresh debentures of the series are issued. The respondent is therefore entitled to a lien on the debentures for the amount of his advances to the extent of the property comprised in the deed: In re Spiral Globe (No. 2) (5); In re Harrogate Estates (6); In re New London and Suburban Omnibus Co. (7); Esberger & Son v. Capital and Counties Bank. (8) In In re Bircham (9) it was held that a covering deed was not a completed mortgage when no debentures were issued under it; but if half the debentures had been issued the decision would have been the other way. In In re S. Abrahams & Sons (10) and In re I. C. Johnson & Co. (11) no question arose as to the registration of the covering deed.

Younger, K.C., in reply, referred to Townley v. Crump (12) as to the effect of a delivery order made by the vendor upon himself, and to Tennant v. Howatson (13) as to the meaning of "the ordinary course of business."

The House took time for consideration.

(1) 14 Q. B. D. 386.

(2) 17 Q. B. D. 690.

(3) [1892] A. C. 231.

(4) [1905] 2 K. B. 772.

(5) [1902] 2 Ch. 209.

(6) [1903] 1 Ch. 498.

(7) [1908] 1 Ch. 621.

(8) [1913] 2 Ch. 366.

(9) [1895] 2 Ch. 786.

(10) [1902] 1 Ch. 695.

(11) [1902] 2 Ch. 101.

(12) (1835) 4 Ad. & E. 58.

(13) (1888) 13 App. Cas. 489, at pp. 493, 494.

1914. Feb. 27. LORD ATKINSON. My Lords, this is an appeal from an order of the Court of Appeal in Ireland dated May 17, 1912, affirming the judgment of Barton J., dated June 8, 1911, pronounced in an action in which the respondent was plaintiff, and the appellant company and others were defendants.

Three questions arise for determination on this appeal:-

(1.) Whether your Lordships' House has jurisdiction to entertain the appeal.

(2.) Whether the respondent is entitled to a good and valid pledge on the whiskies contained in the warrants set forth in the second schedule annexed to the said judgment of Barton J. as against the appellants.

(3.) Whether the respondent is entitled to a good and valid lien on the debentures mentioned in the twenty-sixth paragraph of the statement of claim, in so far as the same affect the freehold and leasehold premises comprised in the trust deed dated November 9, 1895, for the amount of certain advances made by him to the appellant company.

Barton J. in his judgment, which has been affirmed, has, in effect, answered each of the two latter questions in the affirmative.

The facts of the case, so far as material, are as follows: The appellant company was incorporated under the Companies Acts on April 25, 1890, for the purpose of carrying on the business of distillers of whisky at Dublin, Banagher, and elsewhere in Ireland.

Its memorandum of association empowered it to borrow money, and to secure the repayment thereof by mortgages or debentures, charging all its property and rights.

In exercise of this power the company, in September, 1890, raised a sum of 35,000l. by the issue of 350 debentures of 100l. each, carrying interest at 5 per cent., and on the 20th of that month, in order to secure the same, executed, as is usual, a trust deed. With the validity of these debentures or the rights they confer this appeal is not conversant.

In the year 1895 the company, for the purpose of raising a further sum of 25,000l., created and issued 250 debentures of 100l. each, carrying interest at 5 per cent. per annum, and

charged with the payment thereof its undertaking and all its property, present and future, not comprised in the said indenture of September 20, 1890. These latter debentures are in the case styled the second debentures, and, like the first, purport to constitute a floating charge over all the assets of the company. The second debentures were further secured by an indenture dated November 9, 1895 (called in the case the second trust deed).

By it certain freehold and leasehold premises, the property of the company, were conveyed and assigned to Frederick Hans Kennedy and William Findlater, as trustees for the debenture-holders.

Amongst the conditions on which these second debentures were issued was one, No. 4, the terms of which it is necessary to consider. It ran as follows:-

No. 4. "Nothing herein contained shall be taken to authorise the creation of any mortgage or charge on the property for the time being of the company in priority to the charge hereby created, with this exception, that the company may from time to time pledge to their bankers, or others, by delivery warrants, or other means, their manufactured whiskey, and the barrels and vessels containing the same, to secure an advance or advances, for the purpose of the company's business."

On May 12, 1903, the company passed a resolution to issue 4000l. of these second debentures to the said Frederick Hans Kennedy as trustee for the respondent, Edward Doherty, and one Frederick Kennedy (two of the directors of the said company) as collateral security for advances made by them to the company. On May 27, 1903, in pursuance of this resolution, the company issued under their seal forty of these second debentures of 100l. each, bearing interest, as the others, at 5 per cent. per annum, to the said Frederick Hans Kennedy as such trustee as aforesaid.

On January 20, 1904, the company passed a resolution to issue twenty-seven additional second debentures to the said Frederick Hans Kennedy as trustee for those persons making advances to the company, otherwise unsecured, in connection with the purchase of some yeast plant and for carrying on the business of the company, and accordingly these debentures were duly signed and sealed.

On August 8, 1900, the Companies Act, 1900, was passed. By s. 14, sub-s. 1, of that statute it is enacted that every mortgage or charge created by a company after the commencement of the Act, and being either (a) a mortgage or charge for the purpose of securing any issue of debentures, or (c) a mortgage or charge created or evidenced by an instrument in writing which, if executed by an individual, would require registration as a bill of sale, or (d) a floating charge on the undertaking or property of the company, should, so far as any security on the company's property was thereby conferred, be void as against the liquidator and any creditor of the company unless filed with the registrar for registration in the manner required by the Act within twenty days after the date of its creation.

Neither the deed of November 9, 1895 (the second trust deed), nor the second debentures nor any of them were ever registered as required by this sub-section. Whether this was due to the company and its advisers being ignorant of the existence of this statute, or to inadvertence, or to a belief that registration was unnecessary to validate any of the securities they had created, does not clearly appear. No explanation was given of the omission to take this obvious precaution.

Between the months of November, 1904, and January, 1905, the respondent accepted several bills of exchange drawn upon him by the company, and by it negotiated. On the failure of the company to take up these bills at maturity, the respondent was obliged to do so, and on the latter date the company stood indebted to him on this account in a sum of 2350l. It also stood indebted to him in the additional sum of 350l. advanced by him to enable it to introduce the yeast plant already mentioned.

The company in the conduct of its business habitually stored the whole or the larger portion of the whisky it manufactured, when put into casks, in three separate stores upon its own premises in Dublin, the casks being, of course, numbered. These stores were created warehouses under the provisions of the 49th section of the Spirits Act of 1880. It is essential to consider some of the provisions of that statute in order to appreciate what follows from this creation, especially with regard to the change thereby effected in the extent and nature of the distiller's

(in this case the company's) possession of and control over the spirits placed in these warehouses. These warehouses must, under the section, be situated, as they are in this case, in the distillery premises. They are stated to be established for the convenience of persons who desire to store in them whisky distilled in the distillery. No other kind of whisky can be stored in them. The distiller in such cases is bound to provide accommodation for the officer of the Inland Revenue put by the Revenue authorities in charge of them. In the presence of this officer, and only then, is the owner of the whisky, whoever he may be, permitted to view or examine it, or the cask containing it, or to shew the spirits for sale, and the distiller is permitted, on giving proper security but not otherwise, to transfer the whisky while it remains in the warehouse to another, once, but only once, all other transfers being prohibited (s. 62).

If the distiller should, therefore, sell or pledge any of the whisky stored in the warehouse, and should transfer in the warehouse books the goods so purchased or pledged from his own name into that of the purchaser or pledgee, neither of these latter could again transfer it while it remained there to another person. This disability accounts, I think, for the mode in which the respondent's name was dealt with in the company's books.

If the distiller should, in the absence of the Revenue officer, open any door or lock of such a warehouse, or remove any spirits therefrom, he is subjected to a heavy penalty. The Revenue authorities are, however, by the 52nd section, protected from the responsibility which one would think should naturally attach to them from the stringent control over the warehouse and its contents exercised by their officers. That section provides that the proprietor or occupier of the warehouse shall be alone responsible to the proprietor of any spirits warehoused therein for their safe custody, and further that no action shall be brought against the Commissioners of Inland Revenue or any of their officers for loss or damage occasioned to spirits while warehoused in such a warehouse, or on account of any wrong or improper delivery of spirits therefrom.

It is obvious, therefore, that in order that the Revenue officer should see that the provisions of this section are carried out, and

that due security is given by the distiller before he transfers any of the warehoused whisky to a purchaser or pledgee, it is essential that he should be informed that a transfer is about to be made, or has in fact been made, and should keep a record of some kind of the transaction.

The mode in which these provisions of the statute were in fact carried out in the appellants' warehouse was, according to the evidence, this: There were two locks on each door of each of the warehouses; the Revenue officer had the key of one lock, the company of the other. Books were kept in the office provided for these Revenue officers called the excise office. In these books the whisky placed in the warehouse was by one of the officers (there were two in charge) entered, in the first instance, in the name of the distillers, the appellant company.

The officers would not permit any whisky to be delivered out of the warehouse to the company, or to any one claiming from or through it, unless a document called "A warrant for the delivery of wet goods from a bonded warehouse" (see p. 116 of the Appendix), properly filled up, was first presented to them and the duty paid, but a transfer would be entered up by them in their own books if any writing duly authorized by the company was presented to them requesting that a transfer should be made to the person named therein. No particular form of document was prescribed or used for that purpose. The two officers in charge of the company's warehouses, Patrick Hurley and John Cronin, were examined at the hearing before Barton J. They proved that no request had ever been made to them to transfer in their books any whisky into the name of the respondent, and that they never had in fact done so. A document called a delivery warrant (printed at p. 114), upon which much in the case turns, was presented to each of them when in the witness chair.

Both proved that they would not deliver out any whisky on such a document. The first of them also stated that he had never seen such a document as this presented for the purpose of having a transfer made, the words "please transfer" or "transfer" not being in it, but that it was quite possible the officer in charge might accept it as a request to transfer, and so act upon it, and the second witness stated that he would, himself,

so accept it, and so act upon it if it were presented to him. Both proved that once a transfer is entered up in their book the whisky will only be delivered out to the transferee.

The condition No. 4, already set forth, reserved to the company power to secure priority over the second debentures for pledges made to their bankers or others of their manufactured whisky "by delivery warrants or other means." The company determined to exercise this power in favour of the respondent, and from time to time delivered to him warrants of which that printed at p. 114 is a specimen. On each occasion the company delivered to him with the warrant an invoice bearing a number corresponding to the number on the warrant.

These two documents together with the two entries, one in the stock-book of the company, and the other in the register of mortgages, constitute the entire written evidence of the alleged pledge of this whisky having been given. No evidence was given as to what this stock-book was, in fact; whether a book kept by the company for the purpose of their business as distillers, or a book kept by them solely in their character of warehousemen, and no parol evidence whatever was given to shew that any negotiations had taken place, or any understanding had been arrived at, or any arrangement or agreement made between the respondent and the company as to whether the whisky was to be pledged to the respondent, or as to the terms upon which these invoices and warrants were delivered, or what it was intended to effect by their delivery, save what is contained in the respondent's answer to three questions put to him in the course of his examination at the trial. These questions run thus:-

"117. As regards the advances for taking up these bills of exchange, aid the company give you any security? - They gave me the warrants.

"118. Are they set out in your schedule? - Yes.

"119. Did you keep them until you handed them over to the receiver? - Yes."

It was not shewn that the respondent knew anything about the entries in the books of the company. It is evident, I think, that he considered that the warrants were operative instruments,

and that by the mere delivery of them to him his debt was secured. He accordingly took no further step to perfect his security. The warrants were never indorsed by him to any one, as they naturally would be if the whisky pledged to him was sold to another. The invoice is quite a negative document; it cannot in itself have any operative effect.

The entry in the stock-book is peculiar in form. The respondent's name is written in pencil opposite the entries of the numbers of the several warrants delivered to him, but as the company continued to trade with the whisky so purported to be pledged, the names of the persons to whom it was ultimately delivered in pursuance of the sales made of it are entered in the last column on the page opposite these items, and the writing of the respondent's name in pencil is notwithstanding this allowed to remain. It is not erased or obliterated.

The reason why this expedient was adopted is obvious. If the transfer to the respondent had been duly completed, no other transfer of the whisky while it remained in bond could be made, so that however this stock-book may be regarded, whether as the book of the company as owners of the goods, or their book as warehousemen, the transaction with the respondent is deliberately kept incomplete. To render the sale and delivery of the whisky by the company legal and valid under the statute, it was necessary that the transfer of it to the respondent should be fictitious, and so it was, in my opinion, treated by the parties. This fact is clearly brought out in the evidence of the clerk of the company in his replies to questions 200 and 201. These questions and the answers to them run as follows:

"200. Did the company ever transfer to another person the whisky contained in these warrants without getting up the warrants? - We have frequently delivered whisky under special circumstances without getting up the warrants.

"201. Did you ever do it without the consent of the holder of the warrant? - No."

It was also deposed to that when the goods mentioned in a warrant were sold the warrant was cancelled, and a new warrant covering substituted whisky delivered to the respondent in its stead, but no evidence was given as to the nature of the special

circumstances under which this was done, or how, and at what time, the respondent's consent to it was asked for or given.

Moreover, this consent would have been necessary even if a charge only on the whisky had been created. It is admitted that the respondent did not receive, and was not credited with, any portion of the proceeds of these sales.

It is not disputed by the appellants that the delivery of each of these warrants may have crested an equitable charge in favour of the respondent upon the whisky mentioned in it, or that, if so, it would have been necessary, under the 43rd section of the Companies Act of 1862, for the company to have entered it in the register of mortgages. The respondent contends, on the authority of In re South Durham Iron Co., Smith's Case (1), that the respondent being a director of the company, it would still have been necessary for the company to have registered a pledge to him even if completed by constructive delivery of the whisky pledged. On the face of the register in this case the warrant is treated as the operative instrument creating the liability of the company, and it is equally consistent with its delivery being treated as per se creating a charge, and its delivery being but an effective and operative step in a transaction culminating in the creation of a pledge.

The respondent does not contend that the delivery of these warrants per se effected a pledge of the whisky mentioned in them; but that the delivery of them as a security, plus the entries in the company's books, shews that there was a constructive delivery to the respondent of the whisky, and, therefore, that it was validly pledged to him. The appellants, on the other hand, contend, first, that no constructive delivery of the whisky to the respondent is proved, that there was, therefore, no pledge of it effected, that at most a charge merely upon the whisky was created, and that this charge, not having been registered under the Companies Act of 1900, is void; and, second, that even if a pledge was given the warrants were the effective instruments by which it was created, and as such are void for want of registration under the Bills of Sale Act.

The question as to the competency of the appeal is easily

(1) 11 Ch. D. 579, at p. 592.

disposed of. On July 31, 1905, an order was made to wind up the appellant company, and the appellant, Samuel Smyth, was appointed liquidator. After the judgment of the Court of Appeal, now appealed from, was delivered, the liquidator applied to Barton J. for liberty to appeal therefrom to your Lordships' House. The application was refused by the learned judge, but he intimated that he would give every facility to the liquidator's taking the case on appeal to this House if the debenture-holders and creditors, in the interest of whom the liquidator appeared, would subscribe the necessary funds. This, I understand, they have done, and the usual security has been given by the liquidator. It is contended that under s. 151 of the Companies (Consolidation) Act, 1908, and s. 95 of the Companies Act, 1862, the liquidator had no power to present the petition of appeal in the case without the leave of Barton J., and that this leave had not been obtained; but it is clear, on the authority of Lee v. Sangster (1), Piercy v. Roberts (2), In re Silver Valley Mines (3), and In re City and County Investment Co. (4), that leave is not a necessary preliminary, and that the liquidator can always appeal at the peril, if unsuccessful, of being deprived of his costs. There is nothing, therefore, in the point.

As to the second question, it was not disputed that, according to the law of England, and indeed of Scotland, a contract to pledge a specific chattel, even though money be advanced on the faith of it, is not in itself sufficient to pass any special property in the chattel to the pledgee. Delivery is, in addition, absolutely necessary to complete the pledge; but of course it is enough if the delivery be constructive, or symbolical, as it is called, instead of actual.

The example of constructive delivery frequently given is the delivery of the key of the store or house in which the goods have been placed; but that is because, in the words of Lord Hardwicke, "it is the way of coming at the possession, or to make use of the thing": Ward v. Turner. (5) I doubt whether, owing to the dual control over this whisky exercised by the

(1) 2 C. B. (N.S.) 1.

(2) 1 My. & K. 4.

(3) 21 Ch. D. 381, at p. 387.

(4) (1879) 13 Ch. D. 475, at p. 483.

(5) (1751) 2 Ves. Sen. 431, at p. 443.

distillers and the Revenue officer, it would not be necessary in the present case that both keys should be delivered.

Again, it is not disputed that if a vendor who has sold goods should, after the sale has been completed, agree with the vendee to retain the physical possession of the goods, but on such terms that the nature and character of his former possession is changed from that of owner to that of bailee for the purchaser, that transaction will amount to an acceptance and actual receipt of the goods within the 17th section of the Statute of Frauds, and necessarily to a good constructive delivery sufficient to create a pledge. The case of Elmore v. Stone (1) is an example of this. There the vendee, after the sale, asked the vendor, who was a horse dealer and livery stable keeper, to keep the horse for him at livery. The right to charge for the keep of the horse obviously shewed that the character of the vendor's possession had been changed, and that he thenceforward kept possession of the horse as the bailee for the purchaser.

In Marvin v. Wallis (2) the vendor, after the sale of a horse for more than 10l., requested the vendee to lend him the horse, which the latter consented to do. The jury found that the vendee gave this consent "as owner." On that finding it was held that there had been an acceptance and receipt of the horse to satisfy the statute, Coleridge J. stating, however, that had the plaintiff retained possession of the horse in his character of unpaid vendor the result would have been different. In Carter v. Toussaint (3) the plaintiff, a farrier, sold by parol to the defendant for 30l. a horse which required to be fired. The plaintiff subsequently, at the request and in the presence of the purchaser, fired the horse. It was arranged between them that the horse should be kept by the plaintiff without charge, and it then was, by the defendant's directions, taken by the plaintiff's servant to Kempton Park and put to grass there. The horse was not entered at Kempton Park in the books of those who took it to graze in the name of the defendant. A Court composed of Abbott C.J., Bayley and Holroyd JJ., distinguished this case from Elmore v. Stone (1), and held that there had been

(1) (1809) 1 Taunt. 458.

(2) 6 E. & B. 726.

(3) (1822) 5 B. & Al. 855.

no acceptance and actual receipt of the horse to satisfy the statute. It is said that the authority of this case, which resembles the present case more than either of the two preceding, has been questioned. I cannot find, however, that it has been overruled. It certainly was decided by three very able and distinguished judges, and was apparently approved of in Marvin v. Wallis. (1) The distinguishing feature in Reeves v. Capper (2), the chronometer case, as it was styled in argument, is that in that case there was, in fact, a delivery of the chronometer (the chattel to be pledged) by the pledgor to the clerk or agent of the pledgee, and that after a momentary possession by the latter there was by him a redelivery, duly authorized, of the chronometer to the original pledgor, the captain of the ship, on loan. The fact that the possession of the pledgee's agent, acting for his principals, was only momentary could make no difference. The case is wholly distinguishable from the present.

In the cases of Hurry v. Mangles (3) and Whitehouse v. Frost (4) the vendors of the goods sold were also warehouse keepers, but in the first of these the vendor received rent from the vendee for storing the goods, and, just as the liability for the livery of the horse in Elmore v. Stone (5) shewed that the character of the vendor's possession was changed, so here the payment of this rent shewed that the vendor held as bailee for the vendee, and that there was, therefore, a good acceptance and actual receipt of the goods to satisfy the statute. In the second case the vendee, who resold the goods, gave to the sub-vendee an order on the vendor to deliver them to the sub-vendee, and the vendor accepted that order. The goods sold were ten tons of oil, portion of forty tons stored in the vendor's tank, and it was held that from the moment of the acceptance of the vendee's order the possession of the vendor became changed, that he thenceforth held these ten tons as bailee for the sub-vendee, and that consequently this quantity of oil had been constructively delivered to the latter, so that the right of the seller to stop in transitu on the bankruptcy of the vendee was lost.

(1) 6 E. & B. 726.

(2) 5 Bing. N. C. 136.

(3) (1808) 1 Camp. 452.

(4) (1810) 12 East, 614.

(5) 1 Taunt, 458.

Castle v. Sworder (1), decided in the year 1861, resembles the present case more closely, I think, than any of the foregoing. There the plaintiffs, who were wine and spirit merchants, kept a bonded warehouse in which they stored the goods of themselves and others, charging those others warehouse rent. The plaintiffs had one key of the door of this warehouse, the Customs House officer the other. The defendants bought from the plaintiffs, on credit, two puncheons of rum which were to remain in bond till wanted, the defendants to have six months' further credit. The plaintiffs sent to the defendants an invoice describing the puncheons by marks and numbers, with the words "Free six months" written thereon, which meant that the puncheons were to remain for that time in the warehouse without liability for rent. The plaintiffs entered in the rum book of their warehouse these puncheons of rum as sold to the defendants, and proved that after this entry they themselves had no power to get the goods out. The rum remained in the warehouse for two years, during which time the defendants on several occasions asked the plaintiffs to take the puncheons back or buy them from them. It was held by the Court of Exchequer Chamber, reversing the decision of the Court of Exchequer, that there was evidence to go to a jury that the character in which the plaintiffs held the goods was changed, and that if they held them as warehousemen for the defendants there was evidence of an acceptance and receipt of the goods by them to satisfy the 17th section of the Statute of Frauds.

Several of the facts which were relied upon in the judgments of Cockburn C.J. and Crompton J., who alone delivered judgments, distinguish that case from the present: (1.) the warehouse was a general warehouse; (2.) the request made by the defendants to the plaintiffs to buy back the goods; (3.) the entry in the rum and brandy book of the warehouse; and (4.) the proof by the plaintiffs that after this entry had been made they could not get the goods out of their warehouse. Nothing similar to these facts exists in the present case, and in addition one has to take into account the strong provisions of the Spirits Act of 1880. In Townley v. Crump (2) the defendants, merchants at Liverpool,

(1) 6 H. & N. 828.

(2) 4 Ad. & E. 58.

having wine in their own bonded warehouse, sold some of it to Wright, who afterwards became a bankrupt. An invoice was delivered by the vendors at the time, stating that the goods were bought by Wright of the defendants. On the same day they gave to Wright a delivery order in the following words: "Mr. Benjamin Wright, - We hold to your order 39 pipes and 1 hhd. red wine, marked J.C. J.M. No. 41a 67 - 69a 80 - pipes, No. 105 hhd., rent free, to 29 November next. - John Crump and Co." It was proved that as a matter of custom in Liverpool the goods specified in such an order would be considered to be the property of the person holding the order. Lord Denman, in delivering judgment, said "there was a total failure of proof that, where a vendor who is himself the warehouseman sells to a party who becomes bankrupt before the goods are removed from the warehouse, the delivery order operates, by reason of this custom, to prevent a lien from attaching; and I think it is not contended that there is any general usage which could devest this right in such a case, upon the insolvency of the vendee. Cases have been cited, but none where the question arose between the original vendor and vendee." It did not appear in this case that the defendants had made any transfer in their books, and it was contended that the words "rent free" in the delivery order shewed that the persons giving it considered themselves as being merely warebousemen for the bankrupt, yet it was held there was no constructive delivery of the wine: see Harman v. Anderson. (1)

The giving by the owner of goods of a delivery order to the warehouseman does not, unless some positive act be done under it, operate as a constructive delivery of the goods to which it relates: McEwan v. Smith. (2) And the delivery of a warrant such as those delivered to the respondent in the present case is, in the ordinary case, according to Parke B., no more than an acknowledgment by the warehouseman that the goods are deliverable to the person named therein or to any one he may appoint. The warehouseman holds the goods as the agent of the owner until he has attorned in some way to this person, and agreed to hold the goods for him; then, and not till then, does the warehouseman become a bailee for the latter; and then, and

(1) (1809) 2 Camp. 243.

(2) (1849) 2 H. L. C. 309.

not till then, is there a constructive delivery of the goods. The delivery and receipt of the warrant does not per se amount to a delivery and receipt of the goods: Farina v. Home (1); Bentall v. Burn. (2)

This statement of the law in Farina v. Home (1) is supported by many authorities, and, as I understand, was not questioned on on behalf of the respondent in the present case.

In my opinion it is quite impossible to treat these delivery warrants as the agreement or memorandum in writing was treated in Ex parte Hubbard (3), namely, as a document accompanying a pawn or pledge made aliunde, and merely regulating the rights of the pledgee with regard to goods the possession of which was already delivered to him. In that case the bankrupt borrowed a certain sum of money, and then and there deposited with the lender two tricycles as security for the repayment of the loan. The memorandum, which it was contended was a bill of sale, was then drawn up. In the present case there is not a particle of evidence, independent of the warrant and the entries in the books, to shew that a single cask of the whisky was ever pledged to the respondent. On the contrary, in the passage of his evidence already referred to he distinctly states that it was the delivery of these warrants which constituted his security.

The same remark applies to the case of Charlesworth v. Mills. (4) There the man who took possession of the goods seized on behalf of the sheriff continued in possession on behalf of Charlesworth after the amount of the execution had been paid. And Lord Watson, at p. 240 of the report, states in one sentence the ratio decidendi thus: "It" (the letter) "contains a mandate to hold and sell the goods; but it was not intended to operate, and did not, in point of fact, come into operation, until possession had been actually transferred from the sheriff to the appellant." For myself, I may say that I have been unable to discover in the present case any evidence of a parol contract to give a pledge, or of any pledge having been completed in pursuance of that contract.

Turning to the warrant itself, it states that the goods are deliverable to the respondent or his assigns, which can only

(1) 16 M. & W. 119.

(2) (1824) 3 B. & C. 423.

(3) 17 Q. B. D. 690.

(4) [1892] A. C. 231.

mean, I think, at most, that he or his assigns were entitled to obtain delivery of them if he or they should demand it. That statement would, of course, be perfectly true if he were merely the purchaser of the goods and had paid for them, or was entitled to obtain delivery of them in that character or by that right. No indication is given whether the company executed the warrants in the character of warehousemen or in that of owners or vendors or pledgors. No rent is to be paid. The words "Free storage" indicate, I think, nothing more than this, that the respondent is not to pay anything for the storage of the goods by the company till they are delivered, while the indorsements on the back of the specimen warrant shew that portions of the goods mentioned in it were in fact delivered out on November 4, 1903, and again twelve months afterwards, and that the remainder were sold to J. Clarke & Co. on November 15, 1905. Presumably the document could not have been cancelled till this latter date, when the last portion of the whisky it covered was disposed of. The respondent was not asked a single question in reference to the company's dealing in this way with the property he contends was pledged to him. The only evidence touching it is that already referred to given by the clerk. This evidence is, in my view, extremely vague and unsatisfactory. It leaves it quite uncertain whether the company did not, in their dealings with this whisky in the first instance, practically ignore the alleged pledge, and treat the whisky as their own. I am, therefore, of opinion that the evidence, documentary and oral, such as it is, does not establish that there was a constructive delivery to the respondent of the whiskey with which this case is conversant.

Even if this were not so, the question would remain whether these delivery warrants are bills of sale within the meaning of the Bills of Sale (Ireland) Act, 1879, and the amending Act of the year 1883, requiring registration to give them validity. These statutes are practically identical with the corresponding English statutes of the years 1878 and 1882. The English authorities are, therefore, directly applicable.

The warrants in this case are unlike delivery orders addressed to a bailee directing him to give to the pledgee possession of the goods intended to be pledged. They are not so explicit as the

document held to be a bill of sale in Ex parte Parsons. (1) That document ran thus: "I hereby authorize and empower you to take immediate possession of all my goods, chattels, etc., etc." In Ex parte Close (2), the bank on November 10, 1882, received an advice note from the railway company somewhat similar to the warrants in this case, to the effect that certain bales of leather had arrived at their station and were held by them to the order of the bank. On November 13 the bank received from the railway a similar advice note that they had received fourteen additional bales. The bank on the same day advanced to the trader 500l., and a minute of the transaction was entered in the bank books and was signed by the trader. The contest was as to whether this minute, not the advice note sent by the railway company, was a bill of sale, and it was held not to be so. The advice note was apparently held to be an attornment by the railway company to the bank. These warrants also differ from the documents contended to be bills of sale in Ex parte Husband (3) and in Charlesworth v. Mills (4) which merely regulated the rights of pledgees under pledges made aliunde. In re Cunningham & Co. (5) is distinguishable from the present case owing to the fact that there immediate possession of the goods was delivered to the pledgee contemporaneously with the execution of the document which it was contended was a bill of sale.

I think these warrants come within the words of s. 14, sub-s. 1 (c), of the Companies Act of 1900. I further think that if they are bills of sale at all within the meaning of the 4th section of the Irish Bills of Sale Act of 1879 they are not shewn to be included in the exceptions mentioned in that section, since no proof was given of their use in the ordinary course of business as proof of the possession or control of goods. I own I entertain some doubt as to whether they come within the words of this section at all, either as assurances of personal chattels, or as licences to take possession of goods, or yet as agreements by which a right in equity to personal chattels or a charge thereon is conferred; but my doubt is not sufficiently serious to induce

(1) (1886) 16 Q. B. D. 532.

(2) 14 Q. B. D. 386.

(3) 17 Q. B. D. 690.

(4) [1892] A. C. 231.

(5) 28 Ch. D. 682.

me to differ from the conclusions on this point at which my noble and learned friends Lord Halsbury, Lord Parker, and Lord Sumner have arrived. I therefore concur with them.

As to the third question, I concur with Barton J. and the Court of Appeal, that the second debentures are void for want of registration, so far as they purport to create a floating charge on the general assets of the company, but that the holders of them are in the position of cestuis que trust under the trust deed of November 9, 1895, and that the respondent is entitled to a good and valid lien on the debentures mentioned in the twenty-sixth paragraph of the statement of claim, so far as they affect the freehold and leasehold properties comprised in that deed for the amount of the advances. In other words, I think that Barton J.'s answer to the third question was correct. I am, therefore, of opinion that the appeal should be allowed so far as it concerns the second question, and that the order of Barton J. should be modified accordingly.

LORD PARKER OF WADDINGTON. My Lords, I am asked to state that my noble and learned friend Lord Halsbury agrees with the judgment I am about to deliver.

My Lords, the respondent in this appeal claims, and has been held in the Courts below to be entitled to, certain spirits which at the date of the winding-up were stored in a warehouse belonging to the appellant company. It appears that the company, being indebted to him in various sums in respect of bills, accepted for its accommodation, and retired by him as they matured, gave him from time to time, by way of security for such indebtedness, certain invoices in a form specified on p. 113, and certain warrants in a form specified on p. 114, of the Appendix, and in respect of each such warrant made an entry in its books shewing that it had been issued to him. Every invoice and warrant referred specifically to spirits the property of the company and stored in the company's warehouse. It may, I think, be taken that the parties intended that, by virtue of these documents, the respondent should obtain, for the moneys due to him from the company, a security on the spirits specified in the invoices and warrants. There was, however, no antecedent agreement as to the nature

of the security intended to be created, and the effect of what was done must in this respect be gathered from the documents themselves.

The respondent contends that these documents operate by way of pledge. It is quite certain that at common law a pledge cannot be created unless possession of the goods the subject of the pledge be delivered to the pledgee. When the goods in question are in the actual possession of the pledger, possession of them is, as a rule, given to the pledgee by actual delivery of the goods themselves. There are, however, cases in which possession may pass to the pledgee without actual delivery, for example, whenever there is some agreement between the parties the effect of which is to change the possession of the pledger from a possession on his own account as owner into a possession as bailee for the pledgee: see Meyerstein v. Barber. (1) Such an agreement operates as a delivery of the goods to the pledgee and a redelivery of the goods by the pledgee to the pledger as bailee for the purposes mentioned in the agreement. A mere book entry cannot, however, have this effect. When the goods are not in the actual possession of the pledger, but of a third party as bailee for him, possession is usually given by a direction of the pledger to the third party requiring him to deliver them to, or hold them on account of, the pledgee, followed either by actual delivery to the pledgee or by some acknowledgment on the part of the third party that he holds the goods for the pledgee. The form in which such direction or acknowledgment is given is immaterial. Where the third party is a warehouseman the direction usually takes the form of a delivery order and the acknowledgment of a warrant for delivery of the goods or an entry in the warehouse books of the name of the pledgee as the person for whom the goods are held. The acknowledgment, whatever its form, does not change the nature of the warehouseman's possession. He still holds as bailee, but for the pledgee instead of the pledger. He has simply attorned to the pledgee.

I will ask your Lordships to assume for the present that the spirits to which each invoice and warrant related were in the

(1) L. R. 2 C. P. 38.

actual possession of the company when such invoice and warrant were handed to the respondent by way of security. It is common ground that there was no actual delivery of the spirits to the respondent. If the spirits were delivered at all so as to constitute a valid pledge at common law, it can only have been because each invoice and warrant, taken alone or in connection with the corresponding entry in the company's books, changed the nature of the possession of the company from a possession as owner into a possession as bailee for the respondent. For this purpose it appears to me that the invoice, which merely identifies the goods, and the entry in the books, which only records the name of the person to whom the invoice and warrant were issued, may be disregarded. The real question is as to the effect of the warrant. This warrant is somewhat ambiguous in its terms. It may mean simply that the company undertakes to deliver the goods referred to therein when required by the respondent or his assigns by indorsement. It may mean that the company acknowledges that it holds the goods referred to as bailee for the respondent or his assigns by indorsement. On the whole, having regard to the circumstances under which it was executed, I incline to the opinion that it was intended to have the latter meaning, and this fits in with the provision as to free storage. If this be the true meaning of the warrant it is sufficient to change the nature of the company's possession, operating as an actual delivery of the goods to the respondent, and a redelivery of the same goods by him to the company to hold as bailee for him. Under these circumstances, on the hypothesis that the company was in actual possession, the respondent obtained a good pledge at common law.

This, however, does not dispose of the matter, for your Lordships have still to consider the effect of s. 14 of the Companies Act, 1900, which provides (sub-s. 1) that every mortgage or charge created by a company, and being (c) a mortgage or charge created or evidenced by an instrument in writing which, if executed by an individual, would require registration as a bill of sale, shall, unless registered as therein provided, be void against the liquidator.

Several questions arise on this provision, which is not very

happily worded. In the first place, your Lordships have to decide whether the expression "mortgage or charge" as there used includes a common law pledge. In my opinion it does. The object of the section is to give notice to all who deal with a company of certain matters which vitally affect the company's credit. For this purpose no distinction can be drawn between a pledge at common law and a mortgage or charge. Moreover, the same words in s. 43 of the Act of 1862, which was passed with the same object, and was replaced by s. 14 of the Act of 1900, were held to include common law pledges: see In re South Durham Iron Co. (1) In the next place, assuming the warrants to have been bills of sale, would they, if executed by an individual, have required registration as bills of sale? If bills of sale, they would, if executed by an individual, have been totally void under the Irish Bills of Sale Act of 1883 for at least three reasons: they are not in the statutory form required for all bills of sale by way of security for money; they are not attested; and they do not state the consideration for which they were given. They would be no more valid if registered than if unregistered. They could not, therefore, require registration in any ordinary sense of the word. At the same time it is hardly conceivable that s. 14, sub-s. 1 (c), was intended to refer only to instruments which fulfilled these statutory requirements. I think, therefore, that the provision therein contained must be construed as applying to all instruments which, if executed by an individual, would for their validity require registration, apart from any other ground upon which they would be invalid under the Irish Bills of Sale Act of 1883. If this be so the warrants, if bills of sale at all, would be within s. 14, sub-s. 1 (c), of the Companies Act, 1900.

It remains to be considered whether the warrants in question are bills of sale at all. On the principle laid down in Ex parte Hubbard (2) and Charlesworth v. Mills (3) it was argued that they were not. I do not, however, think that those principles have any application to the present case. They apply only when the pledge at common law is complete without any assistance

(1) 11 Ch. D. 579.

(2) 17 Q. B. D. 690.

(3) [1892] A. C. 231.

from the document said to constitute a bill of sale. In the present case, however, it would, I think, be hopeless to contend that, apart from the warrants, there was a good pledge at common law. The question, therefore, whether the warrants are or are not bills of sale depends entirely on the definition of a bill of sale contained in s. 4 of the Irish Bills of Sale Act of 1879. It appears to me that a document, the effect of which is to complete a common law pledge by passing to the pledgee the possession of the goods the subject of the pledge, is an assurance of personal chattels within the definition, even if it be not also a licence to take possession of the goods. In the case of Ex parte Close (1) there had been a delivery order by the owner of goods in the hands of a common carrier, directing transfer to the order of a bank, which was advancing money on the security of the goods, followed by an advice note from the carrier to the bank stating that the goods were held to the order of the bank. The delivery was thus completed, but there was also a memorandum signed by the owner of the goods, and specifying the terms of the bargain between the parties. It was contended that the delivery order and memorandum were bills of sale, and required registration. Clearly, however, the delivery order was within the express exception contained in s. 4 of the English Act of 1878, and the pledge being complete without the memorandum, the principle afterwards laid down in Ex parte Hubbard (2) applied. Cave J. says: "I am satisfied on the construction of the Bills of Sale Acts that they do not include letters of hypothecation accompanying a deposit of goods by merchants or factors, or pawn tickets given by pawnbrokers, or, in fact, any case where the object and effect of the transaction are immediately to transfer the possession from the grantor to the grantee." It seems to me that Cave J. was referring to cases in which the pledge had been completed by delivery independently of the document which was said to be a bill of sale. I do not think he meant to say that a document which itself passed the possession to the pledgee, and was not within the exception, was not a bill of sale. In re Cunningham & Co. (3) was a

(1) 14 Q. B. D. 386.

(2) 17 Q. B. D. 690.

(3) 28 Ch. D. 682.

precisely similar case. The possession was given by means of the indorsement of a wharfinger's warrant, followed by an attornment of the wharfinger to the pledgee. It was held that a memorandum of the terms of the transaction did not require registration, though executed between the date of the delivery order and the date of the attornment. In Ex parte Parsons (1) both these decisions were criticized on an erroneous view of the ratio decidendi. Ex parte Close (2) was, however, approved in Ex parte Hubbard. (3) But in his judgment in the latter case Bowen L.J. made use of expressions capable of indicating that, in his opinion, Cave J. had held, and was right in holding, that no document which passed to the pledgee the possession of the goods the subject of the pledge could ever be a bill of sale. I cannot think that Bowen L.J. really meant this, nor can I find any other authority for such a proposition. In my opinion, therefore, the warrants in question were bills of sale unless they can be brought within the exception. I am of opinion that they cannot be brought within the exception. They are, it is true, substantially in the same form as a warehouseman's delivery warrant, but their effect is quite different. A warehouseman's delivery warrant, given under circumstances such as exist in the present case, would operate only as an attornment to the pledgee, a thing of every-day occurrence. But the warrants in question operate to change the nature of the pledger's possession from a possession as owner to a possession as bailee for the pledgee, a thing comparatively rare. I am of opinion that the warrants for delivery referred to in the exception are warrants which operate in the ordinary manner and not warrants which, though in the same form, have a totally different effect. Otherwise any owner of personal chattels could evade the Bills of Sale Acts altogether by executing as to the furniture in his house, the hay in his barn, or the wine in his cellar, a document in the form adopted in this case. It was suggested that the warrants in this case, even if not warrants for delivery, were, nevertheless, within the exception as "other documents used in the ordinary course of business as proof of the possession or control of goods, or authorising, or

(1) 16 Q. B. D. 532.

(2) 14 Q. B. D. 386.

(3) 17 Q. B. D. 690.

purporting to authorise either by indorsement or by delivery, the possessor of such document to transfer or receive the goods thereby represented." But in my opinion, in order to bring the warrants in question within these words it must be proved that they are documents used in the ordinary course of business, and this was certainly not proved.

I am of opinion, therefore, that even if the respondent has a valid common law pledge, it is, under s. 14 of the Companies Act, 1900, void as against the liquidator, for want of registration under the Act of the warrants in question.

I am, however, inclined to think, though perhaps it is unnecessary to decide the point, that the respondent never had any pledge at common law, for quite another reason. The warehouse in which the goods were stored was a distiller's warehouse kept by the company, and approved by the Inland Revenue under the Spirits Act, 1880. If that Act be examined, it seems to me to contemplate that neither a warehouse so kept and approved nor any spirits stored therein will remain in the distiller's possession or at any rate in his exclusive possession. The distiller has, under the 51st section, to provide accommodation at the warehouse for the Inland Revenue officer in charge thereof, but under the 52nd section he is to be alone responsible to the proprietors of any spirits warehoused there for the safe custody of such spirits, and no action is to lie against the Inland Revenue or its officers for loss or damage to spirits whilst in a distiller's warehouse, or on account of wrong delivery of spirits therefrom. Under the 61st section the proprietor of the spirits in the warehouse (who must be either the distiller or a transferee from the distiller) may have access to them for certain purposes, but only in the presence of the officer in charge. This makes it necessary for the officer in charge to recognize the title of transferees from the distiller, but subject to the proviso contained in the 62nd section, which enables the distiller to transfer to a purchaser, but so that no further transfer be made while the goods remain in the same warehouse. The Act, therefore, seems to contemplate that the officer in charge of a distiller's warehouse will, for some purposes at any rate, be in the position of a warehouseman holding the warehoused spirits

as bailee for the distiller or his assignees, but not bound to recognize the title of any assign who does not claim by direct transfer from the distiller.

In the case of the warehouse on the distillery premises of the defendant company at the date of the winding-up, the practice appears to have been as follows: The warehouse was secured by means of two locks. The company had the key of one, and the officer in charge had the key of the other. Neither could obtain access to the warehouse without the assistance of the other. The officer in charge kept a book containing particulars of the spirits in the warehouse. If so requested by the company as to any parcel, he transferred it in his book to the name of the company's assignee, and after so doing recognized the assignee as sole proprietor of the parcel so transferred, and did not allow the parcel to be dealt with otherwise than by the order of such assignee. Until transfer he recognized no title but that of the company. Under these circumstances it is, I think, difficult to hold that the possession of any spirits after being placed in the warehouse remained solely in the company. It would rather appear that such possession was thereafter at most the joint possession of the company and the officer in charge, the spirits being held on account of the company or of its transferee in the books of the officer in charge. I am of opinion that a delivery warrant signed by one of two joint warehousemen, even if it be expressed to be so signed on behalf of both, can only bind the other if the one who signs can be treated as the agent of the other duly authorized in that behalf. Here the circumstances are such as to negate any such agency. It would seem to follow that the respondent, having neglected to complete his title as pledgee by obtaining an attornment from the officer in charge of the warehouse either by means of a proper entry in such officer's book or otherwise, did not obtain possession of the spirits referred to in the invoices and warrants, and therefore obtained no valid pledge, but at most became entitled to an equitable charge, which, having regard to what I have said above, would be certainly void against the liquidator of the company for want of registration under s. 14 of the Companies Act, 1900.

My Lords, there is yet another point which arises on this

appeal. It appears that on November 9, 1895, the company executed a trust deed for the purpose of securing an issue of second debentures. By this deed certain freeholds and leaseholds belonging to the company were conveyed or demised to the trustees therein named, upon trust in certain events therein specified to sell the same and hold the proceeds subject to the payment of costs in trust for the holders of such second debentures as the company might thereafter issue. Clearly neither the trust deed itself nor any second debentures issued prior to the passing of the Companies Act, 1900, required registration under that Act. But the company, after the passing of that Act, issued certain second debentures to the respondent, these debentures containing (1.) a clause entitling him to the benefit of the trust deed, and (2.) a floating charge over all the assets of the company. So far as this floating charge is concerned, it is admitted to be void as against the liquidator of the company for want of registration under the 14th section of the Act, but the question arises whether notwithstanding such want of registration the respondent is not entitled to the benefit of the trust deed pari passu with the other holders of second debentures. I have come to the conclusion that he is so entitled. As a holder of second debentures he is a cestui que trust under the trust deed, which itself is good as against the liquidator though unregistered. His debentures are not entirely avoided by the 14th section, even against the liquidator, but avoided only so far as any security on the company's property or undertaking is thereby conferred. In my opinion the security to which the respondent claims title is, so far as the property comprised in the trust deed is concerned, conferred by such deed and not by the debentures. Even if the debentures had not referred to the trust deed, the respondent would have been a cestui que trust thereunder. The case is analogous to a charge for the portions of younger children contained in a settlement of real estate. The portions are conferred by the settlement, and not by the birth of the cestui que trust. In my opinion, on this point the appeal fails. I need only add, with reference to the preliminary point as to the competency of this appeal, that in my opinion s. 151 of the Companies (Consolidation) Act, 1908, which enables a liquidator in

the case of a winding-up in Ireland to bring or defend legal proceedings with the sanction of the Court, was not intended to confer, and does not confer, on third parties any right to object to proceedings brought by a liquidator in the name of the company, on the ground that no such sanction has been obtained. In this respect I agree with the opinion expressed in Lindley on Companies, 5th ed., pp. 712, 713.

LORD SUMNER. My Lords, the first question is this: Did Mr. Doherty obtain a legal pledge of the whisky in question or only some other security? The evidence in the case was very meagre; much was taken for granted. Both by Barton J. and by the majority of the Court of Appeal it was found as a fact that, before any warrant was delivered to Mr. Doherty, there existed a parol agreement between him and the distillery company "to give him the security which he required, namely, a valid pledge by delivery warrants or other means." With all deference I can see no evidence of this. Mr. Doherty, though a witness, said nothing about it, nor did anybody else. No doubt the question of security had been raised; possibly something had been settled. I do not suppose the warrants and invoices fell on Mr. Doherty as it were from the clouds, but we are left altogether in the dark about this agreement. We can only guess what it was or when it was made. Condition 4, indorsed on the second debentures, is supposed to help us. It is said that this condition, truly construed, permits priority over the second debentures only to legal pledges, pledges which are to be effected somehow by the issue of warrants; that the company and Mr. Doherty must be taken so to have understood the condition and to have intended to give effect to it when these documents were delivered; and that the law will therefore give to these documents the meaning and effect which the parties intended them to have. Intention, however, is a question of fact and depends on proof, and where is the proof of all this? Mr. Doherty may or may not have read the debentures, which he joined in issuing as a director and took as a creditor. If he read them he may have understood them in this sense or in that. Even the construction is not certain, but is open to debate. Such evidence as there is on this point is satisfied by inferring that

Mr. Doherty was to be secured, and that it was believed that his security would take priority over the second debentures, but if the language used and the acts done fail to establish a pledge, I cannot see that your Lordships can be warranted in holding that there was a pledge because, as things are seen to stand now, the parties might well have agreed to create one.

My Lords, I think that in truth Mr. Doherty's claim rests on the delivery of the warrants themselves, coupled with the invoices and book entries and the other circumstances of the case; indeed, he so pleaded it in paragraph 13 of his statement of claim. The material circumstances I take to be these: (1.) that, in spite of the use of an invoice, the transaction was really one of loan and not of sale; (2.) that Mr. Doherty's name, though entered in a particular manner by the distillery company in its own stock-book, was never entered at all in the books of the excise officers; (3.) that the store in which the whisky was kept, being a store to which the Spirits Act, 1880, applied, could not be opened without the concurrence of the excise officer, who had keys of it; (4.) that the whisky, in respect of which Mr. Doherty held warrants, was never delivered to purchasers without his consent first obtained, nor generally without redelivery of the warrants held by him, in which case he received new warrants for other whisky of equivalent quantity but not necessarily of equal value.

I propose to assume, without any decision upon the actual effect of the Spirits Act, that the excise officer is not in possession of the whisky in the statutory distiller's warehouse, either separately or jointly with the distillery company; that, in the phrase of Cherry L.J., he is not a warehouseman but a watchman. I will assume too, as the evidence suggests, that the separate "yellow form," on which alone, duly filled up, the excise officer would permit the removal of whisky, was one which the distillery company would have been bound to fill up and would have filled up for Mr. Doherty, if he had otherwise obtained constructive delivery of possession and had demanded to have the whisky actually put into his hands. In other words I will take it that, if the delivery of the warrant was a constructive delivery of possession of the whisky at all, it would be so none

the less that the excise officer would not let the goods pass except on presentation of the yellow form, duly filled in by the distillery company or with its assent.

Apart from the delivery of the warrants themselves, to what do these surrounding circumstances, proved or assumed, amount? In my opinion little or nothing. That the transaction was a loan on security does not advance matters; the question is on what security? That Mr. Doherty's name was entered (most informally be it said) in the distillery company's own books is relevant only to the company's intention, for the entry was not shewn to have been communicated to him or to strangers and might have been deleted at any time. Whether what was intended was a valid pledge or some other security we cannot tell, not even with condition 4 to help us. At most the intention was to effect a pledge by means of the warrant, if by means of that warrant it could be done. Without going so far as Cherry L.J. did, I think it is clear that no one was to sell the whisky except the distillery company, and that the purpose of the alleged pledge would have been almost defeated had it been otherwise. The security in question was collateral security for Mr. Doherty's liability as indorser of the company's finance bills, and how would sales and deliveries by him of whisky lying in the store, in which the company was maturing its own product before sale, be consistent with the maintenance of its credit? In practice nothing of the kind was attempted; before selling the whisky and giving Mr. Doherty substituted warrants the company got his consent, but there is no suggestion that his consent was ever in doubt. In my judgment the surrounding circumstances, so far as they go, point rather to a promise to give a floating charge than to a legal pledge.

What effect, then, has the warrant itself? The document is in a form which is used by warehouse keepers, and I do not doubt that, in the hands of or issued by such persons, it would have been a valid warehouseman's warrant. It would have been a statement that the warehouse keeper in fact held the goods named, which he would have been estopped from denying. It would have imported a promise, made to the party to whom it was issued, to deliver, as between bailee and bailor, in accordance with its terms and on

payment of the charges due, if any. On presentation of it by an indorsee and on attornment to him by the warehouse keeper, a like estoppel and a like promise would have arisen in his favour. The company's position, however, is different. It is not a warehouse keeper. It carries on no such business. The warehouse, so called, was its own, used for its own whisky only and not for the goods of others. There is no magic in the word "warehouse"; "cellar," "store," or "vault" would have done as well. The company issued these warrants in great numbers, as the serial numbers shew, but there is no evidence that it did so for any purpose except to create a security. The language of the document is ambiguous. As it contains no verb, we lack the chief indication to shew whether it is a statement de pr¾senti or de futuro, whether it promises that these "deliverable" goods will be delivered, or avers that, being "deliverable," they have been already delivered constructively and are at Mr Doherty's disposal in specie. Warrants it is said (Q. 37) are issued when a purchaser asks for them, but there is no evidence that he ever does so, and the evidence of the excise officer (Q. 165) is quite inconsistent with anything of the kind. There was no evidence of any usage of the distillery business to employ warrants for such a purpose as this, or to deal with a distiller's warrant, relating to whisky of his own manufacture lying in his own store, as warehousemen's warrants are dealt with in commerce generally. Nor was this proved in the earlier case of Cox v. Dublin City Distillery. (1) As in that case so in the present one, both Courts below said, and truly, that warrants are very familiar documents, but they spoke of warrants issued by persons who are in fact warehouse keepers. They neither assert nor imply familiarity with the use of warrants in such transactions as occurred between the company and Mr. Doherty. I daresay similar transactions occur. Its stock of maturing whisky in bond is an asset which a distillery company would naturally use as a security for loans, but that is not the point. The question is whether there is anything here, outside the warrant itself, to establish a valid pledge by the company under the circumstances of the case. The fact that the delivery of a

(1) [1906] 1 I. R. 446.

similar warrant, issued by persons carrying on another business under different circumstances, would have been capable of creating a valid pledge of the goods named therein is not ad rem.

When a warehouse keeper issues his warrant for goods, he has already been constituted a bailee of them by deposit and receipt of the goods themselves. The warrant does not make him bailee; it enables the bailor to make other parties bailors. Its delivery to the depositor of the goods does not effect a delivery of the goods by him to the warehouse keeper, or a delivery of them by the warehouse keeper to him. It warrants a bailment, which has already taken place. Here the case is quite otherwise. Nothing has been delivered to the issuer of the warrant. The goods were in the company's store before the issue and are there after it. The pencil entry of Mr. Doherty's name in the stock-book is as provisional as can be, and is far removed from a statement that the specific goods henceforth are held for him. It is at most a memorandum that he has some interest in or connection with them. In the warrant itself the significant words are "deliverable" and "free storage." "Deliverable" addressed by the distiller to his lender imports a promise to deliver in future rather than an admission that the goods have been delivered already and are now held by Mr. Doherty's agent for him. The written words "free storage" mean no more than they say. The goods are in store and storage will not be charged, but why that should be is not stated or conveyed. The insertion of these words is simply equivalent to the deletion of the printed word's beginning "on payment of rent." The goods are the company's goods and are in the company's store. If the document is presented to a proposed transferee the words serve to assure him that, in order to obtain the goods, at any rate it will not be necessary to pay any rent accrued. The expression no more implies that the goods are being held in store for Mr. Doherty, as pledgee, gratis than that they are being held in store gratis in spite of a promise to treat them as charged in his favour. After all it was for Mr. Doherty to make out his case of pledge; with all deference to the learned judges in the Courts below I do not think he proved it. He only established that he was secured, but how secured he left in doubt.

It was urged upon the authority of decided cases, that constructive possession had been given, because the character of the distillery company's possession had been changed from a holding on its own behalf to a holding on behalf of Mr. Doherty. This, however, depends on the circumstances evidencing such a change. No case has been cited which goes far enough to cover the present one. All that has happened is that the company has delivered a piece of paper, not shewn by any mercantile custom to be a symbol of goods, as an indorsed bill of lading is for goods at sea, and has made an enigmatic entry of Mr. Doherty's name in its stock-book. There was no proved relationship between the parties to add colour to the neutral possession. I do not think it necessary to refer to the English cases after the exhaustive examination of them which my noble and learned friend Lord Atkinson has made. It is enough to say that, in my opinion, no case goes the length required by the respondent here. I will only add with regard to the cases cited that the authority of Lord Justice-Clerk Inglis (Anderson v. M'Call (1)) was invoked in support of the proposition that, as between vendor and vendee, and presumably between pledgor and pledgee, "in order to operate constructive delivery by means of a delivery order, there must be three independent persons - the vendor, the vendee, and the custodier of the goods - and if the custodier of the goods be identified with the vendor, there ceases to be a third independent person." Such an opinion is weighty, but I do not base myself upon it. The Scots decisions on the relation of possession and pledge differ considerably from the English law - see, for example, Hamilton v. Western Bank of Scotland (2) and compare Bell's Principles of the Law of Scotland, 10th ed., 1364 - and it may be that the principles underlying the two systems of law do not concur on this point.

My Lords, I think that no valid pledge was created in the present case, since no change took place in the character of the company's possession sufficient to complete an agreement to give a pledge by actually putting the pledgee in possession by his bailee. If this is so, I think that your Lordships might well have treated the respondent's claim to a legal pledge as his only case,

(1) 4 Macph. 765, at p. 770.

(2) (1856) 19 D. 152.

and have declined to consider the validity of any other security to which he might lay claim to be entitled in the alternative. Pledge was the only case he pleaded, and this was the case which he established in both the Courts below. It was, however, argued at your Lordships' Bar that his security might be an equitable one, and the appellant contended that, if so, it was bad for want of registration, while the respondent replied that it needed no registration, being "a warehouse keeper's certificate, warrant, or order for the delivery of goods or a document used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by indorsement or by delivery, the possessor of such document to transfer or receive goods thereby represented."

That the security in this case was a "charge created or evidenced" by so-called warrants, which "if executed by an individual would require registration as a bill of sale," within the Companies Act, 1900, s. 14, sub-s. 1 (c), I make no doubt. The question then is whether it is a document which, if executed by a natural person, would require registration as a bill of sale. The mere fact that the transaction could not be expressed in the statutory form prescribed for bills of sale is beside the point. The statutory requirement of registration of a document issued by a company cannot be defeated merely because a similar document between other parties would have been void on other grounds.

In my opinion these warrants come at any rate within the words in s. 4 of the Bills of Sale (Ireland) Act, 1879, "Any agreement .... by which a right in equity to any personal chattels, or to any charge or security thereon, shall be conferred." They may also be "assurances of personal chattels," or "authorities or licences to take possession of personal chattels as security for any debt." The question turns on the wording of these instruments themselves and the circumstances under which they were created in this case. I have already stated my reasons for thinking that their meaning and effect may be very different according as they are issued by warehouse keepers already constituted bailees of the goods, in favour of the holder of the documents, or by a company, itself the manufacturer and

possessor of the goods, which has not received them from anybody, and neither is, nor is supposed to be, a warehouse keeper at all. The goods described as being "deliverable" to Mr. Doherty might or might not be delivered to him. In fact, except in case of insolvency, actual or imminent, the company was not expected to deliver to him or his assigns at all. The document was an offer of a promise to do so, and by accepting and keeping the document he accepted the offered promise.

In my opinion the document is not a warrant or a warehouse keeper's certificate or order for the delivery of goods such as is saved from inclusion in the term bill of sale. It is not proved to be used in the ordinary course of business as proof of the matter specified. The catalogue of instruments which are declared by the Bills of Sale Acts not to be included in the term bill of sale is old. It is common both to the Bills of Sale Acts and to the Factors Acts. It goes back, substantially in the same form, to the Factors Act, 1825, and it is plain that the Legislature intended to save certain documents, already well known in commerce, and others which, by the usage of business, might come into existence notoriously and for the same or similar purposes. I think that immunity from registration cannot depend on the mere adoption of a name or the mere employment of some recognized form. A lodging-house keeper cannot escape the Bills of Sale Acts by squeezing the hypothecation of his furniture into a bill of lading or figuring for the nonce as a dock company and issuing a warrant for it. As I have said, it is unfortunate that no attempt seems to have been made to prove a mercantile practice for distillers to give security over their whisky maturing in bond by issuing warrants in the ordinary course of their business, nor is the absence of such evidence to be accounted for by supposing it to have been dispensed with by admissions made, tacitly or expressly, for the appellants' case takes the point that the warrants were not issued in the ordinary course of business, and it was not objected by the respondent that this had been admitted or taken as common ground.

My Lords, the matter is not one in which we can substitute general mercantile knowledge for evidence of a particular

practice; still less can we resort to surmise. In my opinion these documents are void for want of registration, and upon this part of the case the appeal must succeed. Upon the rest of the case I think that the appeal fails, and that, for the reasons already given by my noble and learned friend Lord Parker of Waddington, which I need not repeat, the respondent is entitled to the benefit of the trust deed of November 9, 1895. I also think, for the reasons given by my noble and learned friend, that the respondent's preliminary objection fails. In the result the judgments of Barton J. and of the Court of Appeal must be varied by discharging so much of them as declares that the respondent is entitled to a good and valid pledge on the whiskies contained in the warrants in question, with the consequential directions thereon.

Solicitors for appellants: Charles Russell & Co., for Robert Dickie, Dublin.

Solicitors for respondent: Leman & Co., for F. Kennedy & Sons, Dublin.