New-York tribune., 1911-02-04
WH|SKEY PAPER HELD VOID
Pittsburg Decision Hits Use OF
Warehouse Certificates.
DISTILLERS IN LEGAL FIGHT
Opinion, Handed Down Three
Weeks Ago, Only Became
Public Yesterday.
fBy Telegraph TO TIE Tribunal


Pittsburg, Feb. 3.-That warehouse cef.
tifcates issued by a distiler for whiskey
stored In his warehouse. even though under
the supervision and control Of the govern
ment. are practically worthless as a de-
livery Of the goods themselves, either actual
or constructive. or for making an effective
sale or pledge Of the whiskey. is the effect
OF decision handed down in the United
States Circuit Court o. Appeals for the ID
District few weeks ago. The decision be-
came public to-day.
This decision so seriously affects the
usual custom ot distillers-that OF issuing
certificates and either selling them outright,
subject 10 the payment OF the government
tax. or pledging them collateral for
loans 70 carry on business-that action 10
now being taken by distillers the country
over 10 have the decision reversed.
Reference to the decision in local case.
that OF the receiver Of the Thomas Moore
Distllling Company. bankrupt. brought II
10 light. The decision has been carefully
guarded by distillers, who have even sue
ceeded In keeping II out OF advance federal
reports
Judge Archibald. IN handing down the
decision, reversed the lower court In The
case OF Taney. trustee. against the Penn
National Bank OF Reading. Penn. Unless
this opinion Is reversed either at rehear.
ing in the Circuit Court OF Appeals or oy
decision OF the Supreme Court certificates
are no better collateral than prornissory
note OF the distilery which issues them,
and cannot stand ss A delivery OF the
actual barrels OF whiskey. unless the same
has been stored in general warehouse.
the property Of a third party. and not re-
naming in the warehouse 81 the distiller
! himself.
Thar much alarm has been cres.sc
among the dlstillers OF the United states
is shown by the great number or briefs
already fled Every legal effort Is 20 Do
r,adA 70 show the court that II has erred.
Heretofore whiskey certificates have been
considered as good as government notes
The paper was regarded by the holder as
an actual delivery Of the whiskey as soon
az he paid the government tax thereon. Ic
was believed that they could not be taken
bv the general creditors OF bankrupt con-
Germ and could not be held 70 be the prop
erty Of any other person than the holder.
The decision upsets this theory and holds
that the whiskey is still the property OF
the distiller and that the government act.
ually has no control over IL other than to
see that the tax is paid upon IL and thao
the goods are not bailed 10 the government.
In the Thomas Moore Distuling Company
case Il was found by the receiver that there
was actually stored IN the distiller's ware
house under government control s.2S BAR
res OF whiskey, for each OF which certir-
Gates were issued. When the concern went
into the hands OF the receiver he found
two or more certificates were issued for
the same barrel Of whiskey. all seemingly
issued as original certificates. and either
sold outright 10 the purchaser or used as
collateral 10 secure loans and in some
cases simply loaned 10 be used as collat-
eral. Il was discovered that there we're
over $500 certificates out on this quantity
OF whlskey and each holder claimed tho
whiskey his number called for.
! While the holders Of these wh'skey GER
tifcates were fighting among themselves TO
determine who owned the whiskey and who
! got the first certificate on any designated
barrel. the whole matter was settled By the
decision reversing the lower court In
similar case. holding that none Of them
owned the whiskcy. and that they were
simply common creditors Of bankrupt
ccmrany and could only take their pro
/ rata share OF what the receiver obtained
for The goods as whole.