This suit was brought on the equity side of the court, for the purpose of obtaining a determination of all controversy relating to the title of the proceeds of 200 bales of burlap which had been sold by the plaintiff under a warehouse receipt, issued by the Terminal Warehouse Company. The plaintiff claimed to be entitled to the greater part of the proceeds. Some 30 of the defendants each preferred a claim to the proceeds of some portion of the 200 bales. The several claims of these appellants were as follows: Antony Gibbs & Sons asserted title to 15 of the bales, the Hongkong & Shanghai Banking Corporation to 22 bales, Cotesworth & Powell to 9 bales, and each party claimed to be entitled to the proceeds of the sale of the several bales to which they asserted ownership.
The point is made by one of the appellants that no case was made for any relief in equity, and that the complaint should' have been dismissed, citing the decision of this court in Trust Co. v. Blydenstein, 70 Hun, 216, 24 N. Y. Supp. 164. Blydenstein & Co. opposed a motion made in this suit for a preliminary injunction restraining any of the defendants from prosecuting any other suit against the plaintiff affecting the title to any of the 200 bales. Their opposition was unsuccessful at the special term, and Blydenstein & Co. appealed, resulting in a reversal of the order, so far as they were concerned, at general term. This order was subsequently affirmed in thé court of appeals. 139 N. Y. 657, 35 N. E. 208. Had the appellant who now makes the point seasonably made-objection that an action in equity would not lie, the decision of the court in Blydenstein’s appeal would sustain his position. But all of the defendants, except Blydenstein & Co., seem to have acquiesced in the form of the action; and this appellant did not, by his answer, raise the question whether the suit was properly brought on the equity side of 'the court. Nor do we find in the record that he made such an objection during the progress of the trial. It is now too late to make the objection for the first time, and as to these appellants it must be held that the form of the action is good. Town of Mentz v. Cook, 108 N. Y. 504, 15 N. E. 541; Ostrander v. Weber, 114 N. Y. 95, 21 N. E. 112.
After the decision of the court of appeals on the appeal of Blydenstein & Co., to which we have referred, they prosecuted their action in the federal court against the trust company (this plaintiff), for a conversion of the proceeds of the bales claimed by them; and it resulted in a judgment in favor of the trust company. 59 Fed. 12. Subsequently this judgment was affirmed in the circuit court of appeals. 67 Fed. 469. The decision of the special term is based upon the decision of that court, and we should be content to rest an *357affirmance of the judgment upon the discussion of the court in that case were it not that the appellants apparently take a different position than did the counsel for Blydenstein & Co. in the circuit court of appeals. The argument of the court in Blydenstein’s Case, leading to the conclusion that these appellants- had so clothed Lipman & Co. with the indicia of ownership, as to the bales of burlap in question, as to protect any one who, within the terms of the factors’ act, dealt with Lipman & Co. upon the faith of such apparent ownership, seems to us conclusive. The appellants have apparently reached the same conclusion, for neither of them, on this- appeal, undertakes any discussion of that question. On the contrary, one of the counsel states in his brief that:
“It may very well be, if Lipman & Company had sold the goods, and had been paid for them, or had pledged them to some one who had parted with something on the faith of their possession, the title of Gibbs & Sons and the Hong Kong & Shanghai Banking Corporation would have been lost; but this would be because they would be estopped under the factors’ act.”
While a discussion of that question is now wholly undesirable, for the reasons given, it is, nevertheless, necessary to state briefly the leading facts, in order to appreciate fully the questions which the appellants bring to our attention.
September 7, 1892, Lipman & Co. issued their notes for $50,000 to the New York Security & Trust Company, the plaintiff. As security for the loan, Lipman & Co. pledged to the trust company 500 bales of burlap, in the bonded warehouse of the Terminal Warehouse Company of New York City. The evidence of the pledge consisted of five negotiable warehouse receipts-, for 100 bales each, issued by the Terminal Warehouse Company. Each of the receipts bore the date of December 1, 1891, at which time they were issued to Lipman & Co., and by them, at about that time, delivered to the plaintiff, as collateral for a loan of .like amount with that made on September 7, 1892. In October and November, 1892, Lipman & Co. reduced the amount of the loan by payments aggregating $30,000, and received from the plaintiff three of the warehouse receipts, representing 300 of the 500 bales of burlap. The situation of the loan on December 15, 1892, was that Lipman & Co. still owed the trust company, on account of the loan, $20,000; and its security consisted of the pledge of 200 bales of burlap, which was represented by the warehouse receipts. These receipts were in the name of Lipman & Co., which firm had indorsed them in blank. On the day last named, the trust company presented the two receipts at the warehouse, and received in exchange a single warehouse receipt for 200 bales, made out in its own name. Shortly prior to this action being taken, Lipman & Co. failed, without having paid the $20,000 then owing to the plaintiff on account of the loan. Thereafter the 200 bales were sold, the amount realized being $22,823.84. The judgment directs the payment of plaintiff’s claim in full, and awards to the appellants a pro rata share in the sum remaining after satisfying plaintiff’s claim. The appellants severalty insisted then, as now, that they should each receive the total proceeds of the bales which they claimed to own.
*358In order to avoid confusion, we shall only discuss the facts relating to the claim of Antony Gibbs & Sons. Their case is taken,' rather than that of the other appellants, because in its facts it is, at least, as favorable to the position taken by the appellants as any. The bales claimed by Antony Gibbs & Sons were stored in the Terminal Warehouse Company’s warehouse on the 8th day of December, 1892, three months after the loan by the trust company was made, and only seven days before it surrendered to the warehouse company the warehouse receipts, which had been indorsed to it in blank by Lipman & Co., and received from the warehouse company a receipt, in its own name, for the 200 bales. When the last-named warehouse receipts were given, there were but 200 bales of burlap which had been stored there by Lipman & Co., and included among the 200 bales were the 15 bales of Antony Gibbs & Sons, which Lip-man & Co. stored in the warehouse seven days before.
As we have already observed, the appellants, in effect, concede that notwithstanding Antony Gibbs & Sons were the owners of the 15 bales stored December 8th by their factors,. Lipman & Co., still they had so clothed Lipman & Co. with the indicia of title that, had the plaintiff thereafter made a loan to Lipman & Co. upon a pledge of the 15 bales secured by a negotiable warehouse receipt, the trust company would have been entitled to so much of the proceeds of the bales as should be necessary to satisfy the loan. In such case, say the appellants, the trust company would have been entitled to the protection of the third section of the factors’ act, which reads as follows:
“Every factor or other agent intrusted with the possession of any bill of lading, custom house permit or warehouse keeper’s receipt for the delivery of any such merchandise, and every such factor or agent not having the documentary evidence of title, who shall be intrusted with the possession of any merchandise for the purpose of sale, or as a security for any advances to be made or obtained thereon, shall be deemed to be the true owner thereof, so far as to give validity to any contract made by such agent with any other person, for the' sale or disposition of the whole or any part of such merchandise, for any money advanced, or negotiable instrument or other obligation in writing given by such other person upon the faith thereof.’’ 4 Rev. St. (8th Ed.) p. 2518.
The advance to Lipman & Co. by the trust company having been, made long before December 8th, and it appearing that the trust company never saw the bills of lading or the shipping documents which Antony Gibbs & Sons sent to Lipman & Co., furnishes, the basis for the claim of the appellants that the section of the factors’ act quoted does not apply. They insist that it necessarily follows from such facts that the trust company did not advance any money or take any action upon the faith of the 15 bales of burlap. If there were no other facts than those to which the appellants refer, their position would be well taken. Moors v. Kidder, 34 Hun, 536.
It is further insisted by the appellants that, if it be assumed that the plaintiff received the bales of Antony Gibbs & Sons through; the act of Lipman & Co., they took them as security for an antecedent debt or demand, and hence are denied the right to hold them by the fourth section of the factors’ act, which provides that:
*359“Every person who shall hereafter accept or take any such merchandise in deposit from any such agent as a security for an antecedent debt or demand shall not acquire thereby or enforce any right or interest in or to such merchandise or document other than was possessed or might have been enforced by such agent at the time of such deposit.”
Summarized, the appellant’s position is that, if there were any evidence that Lipman & Co. pledged the 15 bales to the trust company after their storage, it was done to secure an antecedent debt, and the trust company acquired no rights thereunder; that the plaintiff advanced nothing upon the faith of the documents intrusted to Lipman & Co., nor upon the bales in the warehouse; and that such bales were not in fact pledged by Lipman & Co. to the trust company. In taking this position, the appellants ignore certain important, and, we think, controlling, facts. When the five warehouse receipts were issued, December 1, 1891, there were 801 bales in the possession of Lipman & Co., and stored in the warehouse. Prior to that time the representative of Lipman & Co. had informed the officers of the Terminal Warehouse Company that, when he called for negotiable warehouse receipts, he wished to have them made out without bale marks, so that he could substitute other bales for them whenever he should desire to do so. So, while Gutman, the representative of Lipman & Co., testified that there was nothing said about substitution at the time he obtained the five negotiable warehouse receipts, dated December 1, 1891, he also testified that, when he first took out negotiable receipts, “they [the officers of the warehouse company] asked me whether I wanted any particular bales, and I said, ‘Eo.’ I wanted to have no bale marks, so that I could substitute whenever I like. But since that time, when I sent down for negotiable warehouse receipts, they always made them out the same way; so that, when these particular warehouse receipts were made out, there was no conversation on the subject.” It further appears from his testimony that, under these negotiable warehouse receipts, Lipman & Co., from time to time, substituted bales of burlap for others which had been taken out and sold. The absence of any special conversation on the subject at the time the warehouse receipts in question were taken out does not affect the situation, because, having informed the plaintiff that, when he called for negotiable warehouse receipts, he wanted them made out without bale marks on, so that he could make substitution from time to time, the request for open negotiable warehouse receipts representing the 500 bales, and their issuance by the warehouse company, were necessarily under their previous agreement, which provided for substitution in such cases. Each- of the receipts issued expressed an agreement by the warehouse company to deliver to Lipman & Co., or. to their assignees, 100 bales of burlap upon the return of the receipts. By it the warehouse company further agreed that, while the receipts were outstanding, it would keep on hand, ready for delivery, the number of bales called for by it, but not that it would deliver bales bearing any particular marks; and at the time of issuing the five open receipts, as we have observed, there were in the warehouse 801 bales, or 301 more than the amount covered by the receipts. Lipman & Co., in accord*360anee with the usual custom in such cases, and its agreement with the warehouse company, continued thereafter to deposit bales of burlap in the warehouse, as they were received from time to time, and to sell burlap which was stored, and to call for deliveries to their purchasers; the oldest bales being always held for delivery on the open receipts, and, when they were delivered, the next oldest bales were substituted. Thus, the bales which were on hand at the time the warehouse receipts in question were given were after a time all disposed of by this process of substitution, new bales being put in the place of the old as fast as they were taken out, so that there was always in the possession of the warehouse company a sufficient number of bales to make good the agreement which the warehouse company expressed in its receipts; and the arrangement which Lipman & Go. had with the warehouse company made it possible to take out the old bales from the warehouse, and put in new ones, without the necessity of making new receipts every time there was a sale. Such was "the agreement, and of its validity there seems to be no doubt.
No statute is violated nor is any reason apparent for deeming it against public policy for a bailee to agree with his bailor that, if he shall at any time have on storage a greater amount of goods of the same kind and quality, he may substitute the surplus for a like quantity of that which was originally pledged. It was precisely that which the Terminal Warehouse Company and Lipman & 06. agreed should be done, and it was that which they in fact did. Bales of burlap were never delivered upon the order of Lipman & Co., unless there were present in the warehouse other bales, apparently the property of Lipman & Go., to substitute in their place. By this process of substitution, it so happened, in the course of time, that the entire 801 bales which were in the warehouse on the 1st day of December, 1891, were delivered to persons to whom they had been sold by Lipman & Go., and other bales stored in the warehouse were substituted in their place and stead. On the 8th day of December, 1892, when Lipman & Co. stored with the warehouse company the 15 bales to which Antony Gibbs & Sons claim to have the title, there were in the storehouse the 200 bales called for by the open negotiable receipt of the trust company. But, between that date and the 15th of the same month, the warehouse company delivered to the purchasers, on the order of Lipman & Co., 15 bales, and substituted the 15 bales in question for them, after which there were in- the warehouse only the 200 bales called for by the trust company receipt. We have already asserted that the agreement in pursuance of which this was done was one the parties were entirely competent to make, and we next observe that the surrender of the original bales of burlap covered by the negotiable warehouse receipt upon the order of Lipman & Go. constituted a valuable consideration for the giving of the new bales by Lipman & Co. in substitution, and that the pledgee, as to the latter, is a holder for value, in the usual course of business. And that rule applies to the substitution of appellant’s bales, and brings the transaction within section 3 of the factors’ act, instead of section 4, as contended by the appellants'." They were not taken by the trust company as security for an antecedent debt, but *361in consideration of the surrender of other bales, on the faith' of which the loan had been made by the trust company. There was therefore a present parting of value, independent of the antecedent debt.
The judgment should be affirmed, with costs. All concur.