The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1915-08-26

Recent inquiries sent out with the
view of completing the warehouse list
have resulted In the addition of a large
number of warehouses in the cotton grow
ing states. 1t appears that building &C.
tivity in the last three months has been
great, especially In Texas, and II
Is thought not at all unlikely that, be-
fore the present crop comes on the mar
ket, there will be 5000 warehouses of all
classes In the south. Should this prove
true, there Will be storage capacity In the
southern warehouses for not less than Il,
10000 bales of fiat cotton, while the cot
ton mill warehouses will be able to take
care of about 100000 bales. 1t is stated
that there Is the greatest diversity in the
character of these warehouses as to the
materials used, cotton handling facilities.
location. fire hazards and other points.
Many of the storage companies are not
properly organized and frequently their
receipts are not considered of much value
as collateral. In many instances the
buildings are poorly constructed and SO i'm
properly located that rates of insurance
upon their contents are very high, but
practically all the cotton mill warehouses
are of standard construction with auto
matte sprinkler equipment, and carry
very low rates of insurance
THE legal department of the federal re-
serve board has prepared an abstract of
the laws of the cotton producing states,
with especial reference as to wehther or
not the Pledge of cotton warehouse re-
ceipt obtains the first lien on the cotton
in question or whether his lien may be dis
placed by attachment or otherwise on ac-
count of any Indebtedness due by the own
er of the cotton for labor, rent or any
other account. The counsel consulted in
the preparation of the digest legal repre-
sentatives of the federal reserve banks of
St Louis. Richmond, Dallas, Atlanta and
Kansas City, and the consensus of their
opinion seems to be that the holder of
negotiable warehouse receipt is pro-
tected from all claims of subsequent lien
holders and subsequent creditors of the
original owner of the commodity COW
cred by the receipt. The rights of the
Pledge of a warehouse receipt are ap-
parently superior to the unsecured prior
claims of the creditors of the pledgor.
The pledgees rights however would seem
to be inferior to all valid claims upon the
commodity obtained prior to It's deposit
in the warehouse. Want of title In the
pledgor will defeat the lien of the Pledge,
as would the nonexistence of the cotton
in the warehouse, for which latter, how
ever, the warehouseman is liable
Landlords Lien
I'm nearly all the southern states the
vances, which lien Is superior to the
rights of the transferee of negotiable
warehouse receipt, and in many states
the warehouseman is also given prior
lien for charges. Some states require
knowledge on the part of the rransreree
that the crop was grown on leased prem
ises as a condition precedent to the re-
covery of the landlord, while other states
disregard this knowledge. The holder
of negotiable warehouse receipt appears.
as asrule. to acquire such title as the
person negotiating the receipt to him
had. or had the ability to convey, to a
purchaser in good faith and for value.
In other words. the transferee of a ne
gotiable warehouse receipt has exactly
the same rights as the purchaser where
the cotton is sold and actually delivered,
and is deemed in most instances to be
in actual possession of the Gotten. In
view of difficulties that may arise in
satisfying distant lenders as to the valid
ity under all conditions of warehouse re-
ceipts for cotton offered them as COL
lateral, 1t would seem that, for the pres
emit at least, loans on cotton must be
first negotiated through local banks in