640 CHAPTER LIII. Sect. 1. Definition 2. Distinction between mortgage and pledge. 3. What property may be the subject of a pledge 4. The title of the pledgor. 5. Delivery of pledge and effect of re-delivery 6. For what debts or engagements a pledge may be made 7. Rights of pledgee 8. Sale of pledge PLEDGES OR PAWNS. Page. 640 641 ib. 642 643 644 ib. 9. Pledge of negociable securities 10. Transfer of pledge 11. Distress or execution. 12. Use and care of the pawn 13. The Pawnbrokers Act (1.) Definition. A PLEDGE or pawn (for these words are used indifferently) is a security by way of bailment of a personal chattel, by which a special or qualified property therein, sufficient to support an action against a person who wrongfully converts it, is vested in the pledgee, the general property remaining in the pledgor, and it is created by, and is incomplete without, an actual or constructive delivery of the thing pledged to or on behalf of the pledgee (a). The pledgee is entitled to hold every separate thing comprised in the pledge, and also whatever by natural increase becomes accessory to it, as the young of sheep born after the pledge of the flock (6), but not such as are substituted for them (c). (a) Fish. Mtg. 64, ed. 3; 72, ed. 4. (c) Webster v. Power, 2 J. C. 69; 5 Mo. P. C. N. S. 92. (2.) Distinction between mortgage and pawn. The distinction between a mortgage and a pawn is, that the former passes the whole legal interest to the mortgagee; in the latter, the pawnee has a special property in the goods pawned, to detain them for his security, the general property continuing in the pawnor (d); and upon tender by him of the debt, the property, notwithstanding the refusal, is revested instantly without claim (e); and the pawnor may sue for them (f); but it seems that the property would not be revested on tender by one of several joint owners (g). There is also another distinction. In a pledge the right of the pledgee is not completed except by possession, and ordinarily when that possession is relinquished the right of the pledgee is extinguished or waived (h). What constitutes a sufficient possession is a matter sometimes of considerable nicety (). But in the case of a mortgage of personal property, the right of property passes by the assignment to the mortgagee, and possession is not or may not be essential to create or support the title (k). The addition of a power of sale is not sufficient to convert the pawnee into a mortgagee (1). (3.) What property may be the subject of a pledge. These are ordinarily goods and chattels; but money debts, negociable instruments, choses in action, coupon bonds (m), shares in the stock of an incorporated company, mortgages (m), and indeed any other valuable things of a personal nature, such as patent rights and manuscripts, may by the common law be delivered in pledge (n). (d) Jones v. Smith, 2 Ves. J. 378; Lickbarrow v. Mason, 6 East, 25, n. (e) Noy, 137; Ratcliff v. Davis, Cro. Jac. 244; 1 Bulstr. 30; Yelv. 178; Coggs v. Bernard, Lord Raymond, 909; 3 Salk. 268; Holt, 528; Isaac v. Clark, 2 Bulst. 306; Ryall v. Rowles, 1 Atk. 167. (f) 5 Com. Dig. 148, A. (g) Harper v. Godsell, 5 L. R. Q. B. 422. (h) Story, Bailm. s. 287. (i) Martin v. Reid, 11 C. B. N. S. 730; Donald v. Suckling, 1 L. R. Q. B. 587. (k) Story, Bailm. s. 287. (1) Franklin v. Neate, 13 M. & W. 48. (m) Story, Bailm. s. 290. (n) Kemp v. Westbrook, 1 Ves. S. 278; Lockwood v. Ewer, 9 Mod. 278; S. C. 2 Atk. 303; Roberts v. Wyatt, 2 Taunt. 268. C.-VOL. I. TT Jus tertii. Possession through fraud. Limited interests. (4.) The title of the pledgor. It is not indispensable that the pledge should belong to the pledgor; it is sufficient if it is pledged with the consent of the owner (o). The pledgor impliedly undertakes that he has an interest in the pledge, and that it shall be made effectual to answer the obligation (p). The pledge is at all events good between the parties; the jus tertii cannot be set up, unless the third person enforces his own superior right of property (q). But as against the real owner, the pawnee will not acquire a special property in the chattel if the person who assumes to pledge be himself without title, for the pawnee can have no greater right than the pawnor (→). A custom that a pledge by a stranger in market overt in London binds the owner is bad (s). The mere possession, obtained through false representations, of a document of title to a chattel, will not support the title of a bonâ fide pawnee of the chattel for value, though without notice of the pledgor's want of title (f); and even where the pawnor remaining in possession for a limited purpose under the original contract to pawn, or by the fraudulent use of a document of title affects to pledge the chattel to another, the right remains in the first pawnee, though the second has actually obtained possession and sold the chattel (u). The sale by a person allowed by the true owner to have possession of the goods so that he is able to hold himself out as owner, probably only binds the true owner, where the possessor, from the nature of his employment, had primâ facie a right to sell (v). If the pledgor has only a limited title to the thing, as for life or for years, he may still pawn it to the extent of his title; but when that expires, the pledgee must surrender it to the person who succeeds to the ownership (r). And the bailee of goods of tenants (0) Story, Bailm. s. 291, ed. 8. (p) Ib. s. 311, per Pollock, C. B.; Cheeseman v. Exall, 6 Exc. 341. (q) Story, Bailm. s. 291; Garth v. Howard, 5 Car. & P. 346, 350. (r) Hooper v. Ramsbottom, 4 Campb. 121; Cheeseman v. Exall, sup.; Waller v. Hanger, 3 Buls. 17. (s) Shepp. Abr. Customs; Plowd. 243; Bro. Abr. Prerog. 5; Fitzh. Custom, pl. 2; Hartopp v. Hoare, 3 Atk. 52. (t) Kingsford v. Merry, 26 L. J. Exc. 83; 1 H. & N. 503; Lamb v. Attenborough, 1 B. & S. 831. (u) Reeves v. Capper, 5 Bing. N. C. 136; Meyerstein v. Barber, 2 L. R. C. P. 38, 661; 4 L. R. H. L. 317, per Martin, B. (v) Higgons v. Burton, 26 L. J. Exc. 342. (x) Hoare v. Parker, 2 T. R. 376; Hooper v. Ramsbottom, sup.; McCombie v. Davies, 7 East, 5. in common cannot, by direction of one of them, justify a pledge of the whole (y). The same rule applies to any other special interest or special property in a thing, such as a lien or a right by a former pledge, which may be again pledged to the extent of such lien or right, although not beyond it (≈). The person in lawful possession of negociable instruments for money may pledge them (a), but not bills of lading; as a factor may sell, but ordinarily cannot pledge, bills of lading (a). (5.) Delivery and effect of re-delivery. It is of the essence of the contract that there should be a delivery of the pledge, and without delivery the pledgee obtains no right of property in the thing (b). Delivery may be either actual, or constructive, or symbolic, as Delivery. of goods at sea by transfer of the muniments of title, such as a bill of lading or an assignment thereof; so goods in a warehouse may be transferred by a delivery of the key thereof (c), and goods in a warehouse subject to customs, freight, and storage, which the warehouseman agrees to hold for the pledgee (d). The pledge of the bill of lading will carry the right of posses- Pledge of bill of lading. sion even after the landing of the goods, so long as they have not come to the hands of the person entitled to receive them under the bill of lading (e). The possession from the symbolical delivery by a key or bill of lading cannot, it would seem, be affected by possession being gained by means of a false key or false bill of lading (f). The re-delivery of the possession of the thing, with the consent Re-delivery. of the pledgee, terminates his title (g); but if the thing is delivered back to the owner for a temporary purpose, and it is agreed to be re-delivered by him, the pledgee may recover it against the owner Possession of pledgor. Bond fide transferee if he refuse to return it after the purpose is fulfilled (h); but a wrongful possession by the owner does not terminate the pledge (i), nor a delivery to the owner as a special bailee or agent (i). The possession of the pledgor himself may be deemed sufficient, if by the contract it be made the possession of the pledgee (k), while that of the pledgee will not be affected by reason that the pledgor has the use of the chattel, provided that it remain under the pledgee's control, and that the user be for the purpose of carrying out, or be consistent with, the contract (1). Where the pledgee having a special property in the pledge is from pledgor. induced by the fraudulent representation of the pledgor to revest the property in him, a bonâ fide transferee from the latter is preferred (m). Where one of two innocent parties has enabled the third party to commit the fraud, he must suffer (m). (6.) For what debts or engagements a pledge may be made. It is of the essence of the contract that the thing should be delivered as a security for some debt or engagement of the pledgor or some other person, and it may be for any debt past or future, and upon condition or absolutely, and for a limited or indefinite time (n) and it may be express or implied, and for any engagement or contract whatever (o). (7.) Rights of pledgee. The pawnee acquires by the common law a special property in the thing (p), and is entitled to the exclusive possession of it during the time, and for the objects, for which it is pledged. If the owner or a stranger obtains wrongful possession of it, he may sue for its restitution or damages, even to the full value from a stranger, although pledged for less, as he is accountable over to the owner for the excess (9). (h) Roberts v. Wyatt, 2 Taunt. 268. (k) Reeves v. Capper, 5 Bing. N. C. (m) Babcock v. Lawson, 4 Q. B. D. 394; affirmed, 5 ib. 284. (n) Story, Bailm. s. 300, ed. 8; Exp. Ockenden, 1 Atk. 236; Coles v. Jones, 2 Vern. 692. (0) Story, ib. (p) Jones, Bailm. 80; Ratcliff v. Davis, 1 Bulstr. 29; S. C. Yelv. 178; Cro. Jac. 244; Coggs v. Bernard, 2 Ld. Raym. 909, 916; Bac. Abr. Bailm. B. (9) 2 Saund. 47, n.; Suire v. Leach, 18 C. B. N. S. 479; Donald v. Suckling, 1 L. R. Q. B. 585. |