This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 581.— A firm of commission merchants have as part of their business a large warehouse, part of which they use as a bonded warehouse. They sell on commission as agents for various manufacturers and producers in the United States and in Europe, meats, salts, agricultural implements, sugar, and various other lines of merchandise. Their capital is largely invested in their warehouse, and they are therefore sometimes obliged to borrow to settle customs duties on goods ordered for local clients, or to enable them to carry consignments. They wish to protect the bank making the advances and purpose doing it by assigning to the bank certain goods, their own property, purchased on their own account and sold by them from time to time to the trade. In what form can the proposed assignment be made, and in what shape can the bank legally accept it? Can the firm give a security receipt seeing the goods assigned are in their own warehouse?
Answer.—Such security would have to be taken under section 74 of the Bank Act, and we do not think any of the above commodities come under its provisions.
Warehouse Receipt for Goods in Bond.
Question 582. — Can a warehouseman properly issue a warehouse receipt within the meaning of the Bank Act for goods in bond; or, in other words, are goods in bond in the " actual, visible and continued possession" of the warehouseman ?
Answer.—We are of opinion that a warehouse receipt cannot be given for goods in bond, as they are in the possession of an officer representing the Crown.
The Customs' Act permits of the transfer of the property in the goods, and it would no doubt be practicable in some way to get security, but it cannot be by way of warehouse receipt.