and operation of the traffic and trackage contracts, and the creation of the $8,000,000 debt and the execution of the mortgage to secure it, with their results, and, therefore, they and the holders of the notes and bonds should, in the interests of these bondholders, yield their rights. thereunder.

Assuming that the amount of damages may still be fixed, and that such a contract is enforceable against the Wheeling in full life, it was in any event the Wheeling's personal obligation only, and when the receiver took possession in the foreclosure proceedings, and operated the road for the benefit of the bondholders, and did not adopt it as will appear, the rights of the bondholders were limited to the recovery of damages only.

But it is claimed that this court, on the first appeal, in effect held that the receiver must continue to pay contributions to the trustee of the bondholders under its express agreement. This is based on language found in the opinion (218 Fed. 273, 287, 134 C. C. A. 69, 83):

"Since the contribution was to continue until the prior lien obligations were paid, there can be no inequity in denying the application of the usual rule authorizing a receiver to elect not to be bound by a contract thought detrimental to his trust. The court below was right in setting aside its order discontinuing those payments."

At the time that was written, the court had not considered a modification made by the court below directing a cancellation of a former order authorizing the receiver to discontinue payments. The order, as modified, read:

"That the order of this court entered on the 14th day of December, 1908, authorizing the receiver of The Wheeling & Lake Erie Railroad Company to refuse to adopt the said contribution contract, be set aside, cancelled and held for naught; but nothing herein contained shall be construed as a direction to the receiver to adopt the said contract that matter being reserved for further consideration, as hereinafter set forth."

The District Court never did finally expressly authorize the receiver to adopt or repudiate the contract, although in the final decree made in that case and in the case in which the other parties claimed liens on the Wheeling, the two having been consolidated, the court found, on the claims of Carpenter et al.:

"Neither the said decree of April 12, 1912, as modified by said decree of September 27, 1912, nor the cause of action upon which said decree was based constitutes a preferred claim against the Wheeling Company and neither said decree nor said cause of action is entitled to any preference or priority in payment out of the property of the Wheeling Company or the receiver of said company over other general creditors of the Wheeling Company, and the said decree as so modified, but only to the extent that the same shall be affirmed on the appeal pending as aforesaid, constitutes only a general claim against the estate of the Wheeling Company, and is hereby allowed as such to be paid pro rata with other general creditors of the Wheeling Company."

This is the order from which Carpenter et al. now appeal, and necessarily decides that the receiver should not pay upon the contribution. agreement as a continuing contract binding upon the property or on him, and was a direct affirmance of his conduct in refusing, as he did, to pay the contributions, although he had not been expressly author

ized to adopt or reject the contract itself. We think that, under these circumstances, the receiver cannot be said to have adopted the contract, and what he did under the order of reservation amounted to a repudiation. He had the right to repudiate it, subject to the control of the court, if, in his opinion, it would be undesirable or unprofitable to adopt it.

But, whatever the effect of the language used in the opinion in the case of Carpenter as between these bondholders and the receiver of the Wheeling, it could not affect rights under the general mortgage. Clearly this court, by reserving the question of priority in accordance with the reservation in the court below, did not intend to decide the question, even as against the Wheeling, or its receiver. The damages were the debt of the Wheeling for breach of contract, and partake of no other quality. They were made up by adding the amounts per ton the Mining Company would have paid the Coal Company and the contributions the Railroad Company would have paid the trustee of the bondholders during the life of the contract, if the minimum had been hauled.

Nor can the theory upon which, in equity, claims against a railroad are sometimes allowed in preference to the payment of mortgage bonds, because they are current debts and should be paid out of the current income, prevail for the reason-if there were none other—the consideration with which the bondholders parted for the agreements with the Wheeling did not in the slightest degree contribute to the continued existence of the railroad as a going concern. The many cases on this subject will be searched in vain for any principle upon which such a claim as this is awarded the priority sought. It would be useless to cite them.

The claim of these bondholders for priority arising from the alleged diversion by the Wheeling, or its receiver, of money due the Coal Company to pay taxes, and for repairs, which, under the plan of reorganization, the Mining Company agreed to pay, if otherwise maintainable, cannot be considered, because the record does not disclose any evidence of such diversion. It may be said, applicable to the bondholders, both of the Terminal and of the Coal Company, that they have not, in these actions, asserted any claim for damages against the Wabash and Gould and his associates, in the syndicate for bringing about the situation in which they find themselves, if such action were maintainable. Hence such questions are foreign to this appeal.

General equities claimed to arise as against Gould and the Wabash, growing out of their alleged conduct, including the bringing about, with knowledge, the breach of the traffic and trackage contracts by causing the execution of the general mortgage and the issuing of the notes, and the breach of the Wheeling's contract made for the benefit of the Coal Company's bondholders by causing the execution of the traffic and trackage contracts and the execution of the general mortgage and issuing of the bonds and notes, cannot be considered as against Gould, because, if there were no other reason, he is not a party to the suits. If such equities exist against the Wabash, it has been herein before shown that the traffic and trackage contracts were made for the benefit

of the Terminal and its bondholders, and the $8,000,000 and interest which the Wabash borrowed from the bankers to take up the notes secured by pledge of the general mortgage bonds, was spent largely for the benefit of the Terminal and its bondholders and kept the Wheeling running in their interests for three years. The Wabash's interest in the pledge of the bonds is comparatively small after the bankers are paid. But its right to receive what there is is at least as strong as any equity these bondholders may have. It is at least a countervailing, if not a paramount, equity.

[3] Nor can Gould be said to be represented by the trustee of the general mortgage, or the trustee of the note agreement. Such trustees represent the bondholders only in matters affecting the enforcement of the security and administration of the trust property under the terms of the trust. Short on Railway Bonds and Mortgages, § 274. So far as any question involved in this case is concerned, the only powers the trustees had are such as were committed to them in the instrument creating the trust. Railway Co. v. Blair, 214 N. Y. 497, 511, 108 N. E. 840; Miller v. R. R. Co., 36 Vt. 452, 486, 487.

We are unable to see how, on the case made here, bondholders, either of the Terminal or of the Coal Company, have any claim on. the property of the Wheeling, and, if they have, in what respect it is superior to the rights of holders of the general mortgage bonds.

From all of these considerations, it follows that the decrees of the District Court appealed from by Baker, receiver, and by Carpenter et al., should be, and they are, affirmed at the respective appellants' costs.

On Petition for Rehearing.

Upon consideration of the petition for a rehearing filed by the appellants, we are of opinion that it should be, and it hereby is, denied.

But we think, upon further consideration of the record, that this court was not justified in holding that the Coal Company's bonds were not a debt of the Wheeling. The District Court, in its opinion, expressed the view that the Coal Company's bonds constituted a general claim against the Wheeling, if it should be necessary to assert the bonds as such a claim. But that court, in its decree, spoke as follows: "The question of the allowance of the claim of the cross-complainants, E. E. Carpenter, Franklin Leonard, Jr., and Joseph T. McCaddon, against the Wheeling Company upon the $634,500 4 per cent. mortgage bonds as a general claim against the estate of The Wheeling & Lake Erie Railroad Company, to the extent of any balance of said bonds remaining unpaid after the property covered by the mortgage securing the same shall have been exhausted, is hereby reserved."

The question so reserved, whether or not these bonds constitute a general claim against the Wheeling, was not, therefore, before this court on the present appeal of these bondholders, and no finding should have been made upon it. The direct question was not presented, and the finding is not to be considered by the District Court as in prejudice. of any conclusion that court may reach upon such reserved question, after all the parties concerned have had the opportunity to be heard, and is without prejudice to the rights of the parties, should that question be presented to this court upon appeal or error, as the case may be.

(235 Fed. 32)

INTERSTATE BANKING & TRUST CO. v. BROWN et al.

In re LESSER-ELY COTTON CO.

(Circuit Court of Appeals, Sixth Circuit. July 20, 1916.)

Nos. 2717, 2718, 2885, and 2886.

1. BANKRUPTCY 151-REPRESENTATIVE POSITION OF TRUSTEE-STATUTE. In proceedings relative to the bankruptcy of a firm of cotton factors by virtue of Bankruptcy Act, § 47a (2), as amended by Act June 25, 1910, c. 412, § 8, 36 Stat. 840 (Comp. St. 1913, § 9631), the trustee represented unsecured creditors with the same force and effect as if they had, on the date of the filing of the petition in bankruptcy, levied executions upon the cotton stored by the firm in a warehouse.

[Ed. Note. For other cases, see Bankruptcy, Cent. Dig. §§ 193, 239: Dec. Dig. 151.]

2. WAREHOUSEMEN 2-UNIFORM WAREHOUSING ACT-SUPERSESSION OF COMMON AND STATUTORY LAW.

Uniform Warehousing Act Tenn. (Acts 1909, c. 336), intended to cover the subject of the respective rights of holders of warehouse receipts and creditors of the depositors, has superseded all existing common or statutory law on the subject.

[Ed. Note.-For other cases, see Warehousemen, Cent. Dig. § 2; Dec. Dig. 2.]

3. PLEDGES 11-VALIDITY AGAINST EXECUTION LEVYING CREDITORS-DELIVERY.

It is a general rule that a pledge, not followed by delivery, actual or symbolical, is invalid against execution levying creditors of the pledgor. [Ed. Note. For other cases, see Pledges, Cent. Dig. §§ 28-35; Dec. Dig. 11.]

4. FACTORS 19-PLEDGES-UNIFORM WAREHOUSING ACT-STRICT CONSTRUC

TION.

Uniform Warehousing Act Tenn. (Acts 1909, c. 336), giving factors the right effectively to pledge the consignor's interest, which did not formerly belong to them, will be strictly construed.

[Ed. Note. For other cases, see Factors, Cent. Dig. § 20; Dec. Dig. 19.]

5. WAREHOUSEMEN 2-UNIFORM WAREHOUSING ACT-STRICT CONSTRUCTION. Uniform Warehousing Act Tenn. (Acts 1909, c. 336), recognizing the power of the depositor of goods in warehouse to pledge warehouse receipt so as to give a better title than he had and to disregard those rights which under the state's policy would otherwise accrue to the execution creditor, will be strictly construed.

[Ed. Note.-For other cases, see Warehousemen, Cent. Dig. § 2; Dec. Dig. 2.]

6. WAREHOUSEMEN 12-WAREHOUSE RECEIPT STATUTE.

Under Uniform Warehousing Act Tenn. (Acts 1909, c. 336) § 2, prescribing what every warehouse receipt must embody, receipts reading "Received in warehouse for the account of Lesser-Ely Company two hundred bales of cotton. Same to be held subject to the order of the Lesser-Ely Cotton Co. D. W. McLemore & Co., Warehousemen. No. Bales, 200"-was insufficient to come within the protection of the act as failing to describe the cotton for purposes of identification as required by clause F of section 2. [Ed. Note.-For other cases, see Warehousemen, Cent. Dig. §§ 19-24; Dec. Dig. 12.]

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

7. WAREHOUSEMEN 12-UNIFORM WAREHOUSING ACT-NEGOTIABLE RECEIPT. Uniform Warehousing Act Tenn. (Acts 1909, c. 336) § 5, providing that a receipt stating that the goods will be delivered to the bearer or to the order of any person named in such receipt, is a negotiable receipt, and that no provision shall be inserted in the negotiable receipt that it is nonnegotiable, such provisions if inserted being void, does not convert into a valid statutory negotiable receipt a paper which fails to contain all the requisites of a statutory receipt, but sections 4 and 5 must be read in connection with section 2, cl. (d), providing that every warehouse receipt must embody the statement whether the goods received will be delivered to the bearer or to a specified person, or to a specified person or his order. [Ed. Note. For other cases, see Warehousemen, Cent. Dig. §§ 19-24; Dec. Dig. 12.]

8. WORDS AND PHRASES "FUNGIBLE Goods."

"Fungible goods" are those of which each unit is fully equivalent to each other unit, an equivalency which may be inherent or may result from an agreement which may be expressed or implied from custom.

9. WAREHOUSEMEN 20-FUNGIBLE GOODS-WAREHOUSE RECEIPT-UNIFORM WAREHOUSING ACT.

Under Uniform Warehousing Act Tenn. (Acts 1909, c. 336) § 23, providing that if authorized by agreement or custom, a warehouseman may mingle fungible goods with other goods of the same kind and grade, etc., where cotton warehousemen in the city had long been in the habit of issuing receipts which banks of the city and adjacent cotton country had been in the habit of treating as good for loans of $50 per bale, all of the bales of cotton in a warehouse of varying values did not become pro tanto fungible goods, so that holders of the warehouse receipts became tenants in common of the entire mass.

[Ed. Note. For other cases, see Warehousemen, Cent. Dig. §§ 15, 16; Dec. Dig. 20.]

10. FACTORS 52-PLEDGES-RIGHT OF CONSIGNORS.

Where the consignors of cotton to a firm of factors did not participate in an arrangement whereby the firm stored the cotton in a warehouse, taking blanket warehouse receipts which it pledged for loans in accordance with a custom of the vicinity, the consignors (having no knowledge of the custom permitting such blanket receipts) were not bound by estoppel by the pledges for the factors' debts accompanied by neither actual nor symbolical delivery, since estoppel cannot bind those not parties to an arrangement, and who never did anything on the faith of which another has acted.

[Ed. Note. For other cases, see Factors, Cent. Dig. §§ 83, 84; Dec. Dig. 52.]

11. WAREHOUSEMEN 15(3)-Pledges-RIGHTS OF CREDITORS OF FACTORS.

General creditors of a firm of cotton factors, not parties to the arrangement and without knowledge thereof, which stored cotton in a warehouse, taking blanket receipts and pledging them to secure loans by banks, were not estopped by the pledge of the receipts.

[Ed. Note.-For other cases, see Warehousemen, Cent. Dig. § 37; Dec. Dig. 15(3).]

12. EXECUTION 113-EXECUTION CREDITOR'S SUPERIORITY OF LIEN-TENNESSEE LAW.

It is the policy of Tennessee law that an execution creditor gets a lien superior to other prior liens which may be perfectly good as between lienor and lienee, but which have not been preserved against execution creditors in some manner provided by law.

[Ed. Note. For other cases, see Execution, Cent. Dig. §§ 241-248; Dec. Dig. 113.]

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes