This section is from the book "Canadian Banking Practice", by John T. P. Knight.
Question 536. - A, a resident of Ontario, sells to B a quantity of goods which B duly pays for, but asks A to keep for him until they are required. B subsequently wishes to borrow on the security of the goods, and A gives him a warehouse receipt for them. Can a bank, by lending money on the security of this warehouse receipt, acquire a good title to the property, or would there be a flaw in it owing to the fact that the sale had not been accompanied by a change of possession? No bill of sale was given.
Answer. - Under the Ontario Statutes respecting Bills of Sale and Chattel Mortgages, a sale of goods unaccompanied by delivery or change of possession would not be good as against creditors of the vendor, unless there were a registered bill of sale. The bank in the case stated would acquire the purchaser's title, that is a title subject to the above defect; good against the vendor, but not against the vendor's creditors. Of course as a basis for an advance, this might be all that the bank requires.