Extinction

by sale or

Pr., 424; 12 How. Pr., 424). But the changes in the law, proposed by the chapter on OFFER OF PERFORM ANCE, make it unnecessary to prescribe any peculiar rule here.

S1604. The sale of any property on which there conversion. is a lien, in satisfaction of the claim secured thereby, or, in case of personal property, its wrongful conversion by the person holding the lien, extinguishes the lien thereon.

Lien, not extin

guished by lapse of time under statute of limitations.

Apportionment of lien.

When restoration extin

guishes

lien.

Cortelyou v. Lansing, 2 Cai. Cas., 200; Dykers v. Allen, 7 Hill, 497; Wilson v. Little, 2 N. Y., 443; Lewis v. Graham, 4 Abb. Pr., 106.

S 1605. A lien is not extinguished by the mere lapse of the time within which, under the provisions of the CODE OF CIVIL PROCEDURE, an action can be brought upon the principal obligation.

So held as to a mortgage (Pratt v. Huggins, 29 Barb., 277 ; see Waltermire v. Westover, 14 N. Y., 16), and as to a pledge (Taunton v. Goforth, 6 Dowl. & Ryl., 384; see Story on Bailm., § 362).

S 1606. The partial performance of an act secured by a lien does not extinguish the lien upon any part of the property subject thereto, even if it is divisible. Code of La., 3130, 3131, 3138; Code Napoleon, 2083; see, to same effect, Boqut v. Coburn, 27 Barb., 230.

S1607. The voluntary1 restoration of property to its owner, by the holder2 of a lien thereon, dependent upon possession, extinguishes the lien,' as to such property, unless otherwise agreed by the parties;5 and extinguishes it, notwithstanding any such agreement, as to creditors of the owner, and persons acquiring a title to the property, or a lien thereon, in good faith, and for a good consideration ; unless such restoration is made to the owner as a mere employee of the holder of the lien, or for a merely transient purpose.9

'Of course a restoration obtained by fraud does not affect

the lien (Bigelow v. Heaton, 6 Hill, 43; 4 Denio, 496), except as to intervening purchasers, &c., for value. A forcible taking from the lienor does not affect the lien (Baker v. Hoag, 7 N. Y., 557).

So held as to an ordinary lien (Bigelow v. Heaton, 4 Denio, 496; Perkins v. Boardman, 14 Gray, 481); and so as to a pledge (Story Bailm., § 229).

A lien upon several articles is not lost as to all of them
by the surrender of one.

That the parties may otherwise agree, see Bigelow v.
Heaton, 4 Denio, 496.

• McFarland v. Wheeler, 26 Wend., 467 (Ct. of Errors).
When a lien is void as to general creditors, it is clear
that it must be void against purchasers, even with-
out a strictly valuable consideration.

"So held as to a pledge (Macomber v. Parker, 14 Pick.,
497; Reeves v. Capper, 5 Bing. N. C., 136), and
the rule is equally applicable to any other lien.
So held as to a pledge (Hays v. Riddle, 1 Sandf., 248;
White v. Platt, 5 Denio, 269; Roberts v. Wyatt, 2
Taunt., 268). Compare, however, McFarland v. Wheel-
er, 26 Wend., 467, which is in principle applicable to
all classes of liens dependent upon possession.

CHAPTER П.

MORTGAGE.

ARTICLE I. Mortgages in general.

II. Mortgage of real property.

III. Mortgage of personal property.

ARTICLE I.

MORTGAGES IN GENERAL.

SECTION 1608. Mortgage, what.

1609. Lien of a mortgage, when special.

1610. Transfer of interest, when deemed a mortgage.

1611. Provisions of this chapter do not affect bottomry or re

spondentia.

1612. Transfer made subject to defeasance, may be proved.

1613. What interests may be mortgaged.

1614. Property adversely held may be mortgaged.

1615. Power of sale.

1616. Power of sale, how executed.

1617. On what a lien.

1618. Against whom a mortgage is a lien.

1619. Mortgage of thing held adversely.

1620. Mortgage does not entitle mortgagee to possession.

1621. Foreclosure.

1622. Waste.

S1608. Mortgage is a contract, by which specific property is hypothecated for the performance of an act, without the necessity of a change of possession.

This definition is new. It is designed to make a clear
distinction between a pledge and a mortgage, and at
the same time to avoid the idea of a mortgage being in
any sense a transfer. "Hypothecation" is the proper
word for this purpose, as it has a well recognized
meaning in the civil and admiralty law, correspond-
ing precisely to the design of the Code (see Stainbank
v. Sheppard, 13 C. B., 441).
Under the present law, three classes of cases are to
be considered. 1. Where the debtor retains the gene-
ral title to the property and gives possession only to
the creditor. This is a pledge. 2. Where the debtor
retains the possession and use, giving the creditor only
some right to be satisfied out of the property. This is
a mortgage. The distinction is not that one relates to
personal property and the other to real, but that one
involves change of possession, while the other relates
to, or affects the change of title (See Cortelyou v. Lans-
ing, 2 Cai. Cas., 199; Barrow v. Paxton, 5 Johns., 658;
McLean v. Walker, 10 id., 471; Brownell v. Hawkins,
4 Barb., 491; Bank of Rochester v. Jones, 4 N. Y., 497,
and 4 Denio, 489: Stevens v. Marsh, 4 Denio, 227;
Power v. Lester, 23 N. Y., 527, 531). 3. A class of
cases presenting greater difficulty arises where the
property is of a kind not capable of actual manual
delivery, unaccompanied by the transfer of some muni-
ments of title, as in the case of shares of stock in an
incorporated company. Here a pledge may be created
by a written transfer, or authority to require a transfer
on the books of the company; and the transaction may
be a pledge and not a mortgage, notwithstanding that
the legal title passes to the pledgee. Thus, where
there was a transfer of stock, absolute in its terms,
but a note for borrowed money, given by the plaintiff to
the defendant at the time, stated that the stock was
"deposited as collateral security," it was held, that the
transaction was a pledge and not a mortgage (Wilson
v. Little, 2 N. Y., 443; affirming S. C., 1 Sandf., 351;
Vaupell v. Woodward, 2 Sandf. Ch., 143; compare
Huntington v. Mather, 2 Barb., 538; S. C., 6 N. Y. Leg.
Obs., 206; Hasbrouck v. Vandervoort, 4 Sandf., 74;
McLean v. Walker, 10 Johns., 471; Garlick v. James,
12 id., 146; White v. Platt, 5 Den., 269; Tompkins v.
Tysen, 16 Barb., 456; Wheeler v. Newbould, 16 N. Y.,
392; Lewis v. Graham, 4 Abb. Pr., 106; Lewis.
Varnum, 12 Abb. Pr., 305).

S1609. The lien of a mortgage is special, unless Lien of a otherwise expressly agreed, and is independent of when possession.

mortgage,

special.

interest,

deemed a

S 1610. Every transfer of an interest in property, Transfer of made only as a security for the performance of when another act, is to be deemed a mortgage,' except mortgage. when, in the case of personal property, it is accompanied by an actual change of possession, in which case it is to be deemed a pledge.2

1 So it is held with respect to real property (Chase v.
Peck, 21 N. Y., 581; Clark v. Henry, 2 Cow., 324;
aff'g S. C., 7 Johns. Ch., 40; Elliott v. Pell, 1
Paige, 263; Stewart v. Hutchins, 13 Wend., 485;
aff'd, 6 Hill, 143; see Lawrence v. Farmers' Trust
Co., 13 N. Y., 200, 642).

It is intended by this clause, which in some respects
involves a material alteration of the law, to relieve
chattel mortgages, accompanied with a genuine
change of possession, from the necessity of filing,
and to prevent the frauds against which the statute
requiring the filing of mortgages was aimed, by
subjecting such mortgages to the law of pledge,
by which it is clear that they ought to be governed.

of this

chapter do

S 1611. Coutracts of bottomry or respondentia, Provisions although in the nature of mortgages, are not affected by any of the provisions of this chapter.

Bottomry and respondentia are simply mortgages of a
peculiar character, governed by maritime law. A defi-
nition of mortgages, which should in a single section
exclude these contracts, would be extremely cumbrous
and unscientific in its form.

S1612. The fact that a transfer was made subject to defeasance on a condition, may, for the purpose of showing such transfer to be a mortgage, be proved, except as against a subsequent purchaser or incumbrancer, for value and without notice, though the fact does not appear by the terms of the instrument.

See Clark v. Henry, 2 Cow., 324; affirming Henry v.
Davis, 7 Johns. Ch., 40; James v. Johnson, 6 Johns.
Ch., 417; Jackson v. Green, 4 Johns., 186; Peterson
v. Clarke, 15 Johns., 205; Brown v. Dean, 3 Wend,

not affect bottomry or respondentia.

Transfer

made sub

ject to de

feasance

may be

proved.

What interests may be mortgaged.

Property adversely held may be mortgaged.

Power of sale.

Power of sale, how

executed.

208; Palmer v. Gurnsey, 7 Wend., 248; Parsons v. Mumford, 3 Barb. Ch., 152; Brown v. Dewey, 1 Sandf Ch., 56; Barton v. May, 3 id., 450; Hall v. Van Cleve, 11 N. Y. Leg. Obs., 281; Slee v. Manhattan Co., 1 Paige, 48; Whittick v. Kane, id., 202; Van Buren v. Olmstead, 5 id., 9; Lane v. Shears, 1 Wend., 433; Grimstone v. Carter, 3 Paige, 421; White v. Moore, 1 id., 551; Williams v. Thorn, 11 id., 459; Despard v. Walbridge, 15 N. Y., 374; Tyler v. Strang, 21 Barb., 198; Hodges v. Tennessee Marine & Fire Ins. Co., 8 N. Y., 418; Sturtevant v. Sturtevant, 20 N. Y., 39. Proof of a parol agreement for a defeasance, was formerly admitted only in courts of equity, but the rule is held to be general under the CODE OF CIVIL PRO

CEDURE.

See also, in connection with this topic the case of Freeman v. Auld, 25 How. Pr., 327.

S 1613. Any interest in property, which is capable of being transferred, may be mortgaged.

Story Eq. Jur., § 1021; Wilson v. Wilson, 32 Barb., 328. There may be a mortgage of personal property not yet in being, if it is the anticipated product of property owned by the mortgagor (as where he mortgages all the produce of his farm during a given season), taking effect upon the property as soon as it comes into existence (Conderman v. Smith, 41 Barb., 404). But the mere expectancy of an heir apparent cannot be mortgaged (Carlton v. Leighton, 3 Meriv., 667). See sections 460 & 461, for a definition of what may be transferred.

S 1614. A mortgage may be created upon property held adversely to the mortgagor.

1 R. S., 739, § 148.

S1615. A power of sale may be conferred by a mortgage upon the mortgagee or any other person, to be exercised after a breach of the obligation for which the mortgage is a security.

Wilson v. Troup, 7 Johns. Ch., 25.

S 1616. A power of sale under a mortgage is a trust, and can be executed only in the manner prescribed by the CODE OF CIVIL PROCEDURE.

The reference is to the Code as reported complete. In Olcott v. Tioga R. R. Co., 40 Barb., 179, it was held that a mortgagee of chattels may purchase under a