Rochester vs. Jones, 4 N. Y., p. 497; Stearnes vs. Marsh, 4 Den., p. 229; Knapp vs. Alvord, 10 Paige, p. 205. As to the distinction between pledge and mortgage with reference to things in action, see Garlick vs. James, 12 Johns., p. 146; White vs. Platt, 5 Den., p. 269; Wheeler vs. Newbould, 16 N. Y., p. 392; Atlantic Fire and Marine Ins. Co. vs. Boies, 6 Duer, p. 583; Lewis vs. Graham, 4 Abb. Pr., p. 106; Wilson vs. Little, 2 N. Y., p. 443; Vaupell vs. Woodward, 2 Sandf. Ch., p. 143; Lewis vs. Varnum, 12 Abb. Pr., p. 305. In Brass vs. Worth, 40 Barb., p. 648, the defendants were stock brokers, in the City of New York, and the plaintiff entered into a general arrangement with them that they should purchase such stock as he should direct, and pay for the same with their own money, and hold such stock for him, for resale from time to time as he should direct. For their advances and services they were to receive interest and a commission; and for their security against depreciation the plaintiff' was to keep on deposit with them a margin of five per cent upon the par value of all purchases of stock made by them for him, which margin was constantly to be kept good. It was held that though the contract did not prescribe with certainty the rights and duties of the defendants in the event of the value of the deposited collaterals falling below the prescribed amount, the defendants were to be regarded as the pledgees of the plaintiff, both in respect to the stocks purchased and to those deposited as security for moneys advanced; and the contract being silent, the rights and duties of the parties were governed by the law of pledge. If a corporation is indebted to A for money advanced, and as security therefor issues to B, as trustee for A, shares of the capital stock of the corporation to be transferred to the corporation upon payment of the indebtedness, the transaction constitutes a pledge of the stock (Brewster vs. Hartley, 37 Cal., p. 15), the general property being in the pledgor.-Id. In a pledge, the title, after condition broken, does not pass to the pledgee, who has only a lien on the property; and in all cases the possession must accompany the pledge.-Wright vs. Ross, 36 Cal., p. 414. In case of a pledge, the title remains in the pledgor, with the right to redeem at any time before a sale of the property; and if sold by pledgee at any time he cannot become the purchaser (Id.), except at a judicial sale.-Id.

A PLEDGE IS A BAILMENT, reciprocally beneficial to both parties (Losky vs. Davidson, 6 Cal., p. 643), and

the pledgee must exercise ordinary diligence in its care and custody, and is responsible for ordinary negligence.

A LEASE ASSIGNED as security is a pledge which entitles the assignee not to the legal title in it, but under which he may receive and collect the rents, and apply them on the note secured.-Dewey vs. Bowman, 8 Cal., p. 145.

OWNER.-One assuming to be, and as such pledging property, is afterwards precluded from asserting that he did not own it; and if he afterwards acquires title it benefits the pledgee.-Goldstein vs. Hort, 30 Cal., p. 372.

ADVANCES ON PLEDGES must be paid from proceeds of specific pledged property, and that first made to be first paid.-Marziou vs. Pioche, 8 Cal., p. 522.

POSSESSION OF PLEDGED PROPERTY should rightfully be in the pledgee, and he may recover it from one wrongfully obtaining it.-Goldstein vs. Hort, id., supra. One pledging personal property warrants his title to it.Id. To perfect pledgee's right to possession, the thing pledged must be delivered to him as such.-Id.

SECURITIES which are transferable by delivery, once delivered to pledgee are his for all purposes, and he may assign or transfer them. The pledgee in such case is the agent of the pledgor, who is bound by his acts.Coit vs. Humbert, 5 Cal., p. 260. See Waldin vs. Dall, 29 Cal., p. 555, as to possession and lien for work and materials in the nature of mechanic's lien on personal property.

INCOME from the pledged property must be accounted for by the pledgee to the pledgor, and pay the same over to him, or so much thereof as exceeds that which pays the debt secured.-Hunsacker vs. Sturgis, 29 Cal., p. 142.

THE SUPREME COURT of this State, in the case of Donohoe vs. Gamble, 38 Cal., p. 340, reviews the New York cases herein before referred to, at some length. In this case there was a question whether the transaction, that of hypothecating a note of a third party for $12,000 as security for the payment of a $5,000 note by indorsing, transferring, and delivering it, constitutes a mortgage or a pledge. Justice Crockett, who delivered the opinion of the majority of the Court, after reviewing at some length many of the cases here referred to, including Wheeler vs. Newbould, 5 Duer, p. 29; and also in 16 N. Y., 2 Smith, p. 392; Brown vs. Ward, 3 Duer, p. 660; Atlantic F. & M. Ins. Co. vs. Boies, 6 Duer, p. 583; all holding that a distinction exists between commercial paper and bonds of corpora

tions pledged for a debt, says:

"I can per

ceive no valid reason for the distinction made by the New York Courts between the two classes of securities, and the rule which they establish will be found, I think, to be inconvenient and impracticable." After premising that to require the pledgee to sue for and recover a judgment against the payor of the note pledged, would make necessary a suit in New York in the case before him, and in Europe, if the payor happened to go or reside there, and that great hardships would be thereby worked, the learned Justice thus concludes: “We think he is under no obligation to incur this trouble and expense, but may go into equity for a foreclosure of and sale of the note for whatever it will bring in the market at a judicial sale. The pledgor has due notice of the proceeding, and if the security should bring an inadequate price at the sale, it will be his misfortune, which he might have guarded against by a proper stipulation in the contract." In this case the judgment of the District Court decided it to be a "pledge," and not a "mortgage," and that the holder had no right as such to foreclose and sell it. Judge Crockett seems to have held that either as mortgagee or pledgee he had this right, and reversed the judgment. Justice Rhodes at some length dissented, inclining to the opinion that the transaction constituted a pledge, and refers with great propriety and force to Sec. 246 of the old Practice Act (now Sec. 726 of the Code of Civil Procedure), providing for but one form of action for the recovery of a debt secured by mortgage, that of foreclosure and sale, whether the subject be real or personal property. In neither of these opinions is the case of Gay vs. Moss, 34 Cal., p. 125, referred to, but this may be for the reason that the answer of the defendant was virtually an admission that the subject was a pledge. Justice Sawyer, in Gay vs. Moss, refers approvingly to several cases referred to supra, including Wheeler vs. Newbould, 16 N. Y., p. 393; Stearns vs. Marsh, 4 Denio, p. 229; Wilson vs. Little, 2 N. Y., p. 443; and Dewey vs. Bowman, 8 Cal., p. 145; and uses this language: "The assignment was absolute in form, but the thing assigned is a chose in action, and the assignment and delivery are necessary to give the pledgee the full authority to readily control it and afford a prompt means of making the pledge available. For these reasons the fact that the title passes in form by the assignment in case of a chose in 37-vol. ii.

When con

tract is to

action, does not necessarily make it a mortgage. It is a pledge upon the facts disclosed within the principles declared in Dewey vs. Bowman, 8 Cal., p. 145, and Wilson vs. Little, Campbell vs. Parker, cited supra. It may be doubted whether Moss was authorized to sell a pledge of this character at all; whether he is not bound to collect the amount due on the contract and reimburse himself out of the proceeds."So, from all these cases the current of opinion seems to be, that when pledged as security for the payment of money, the right of the pledgee is to sue for and collect the money on the security pledged, when it is any evidence of debt other than the obligation of a Government, State, or corporation, which latter he may sell.-See Wheeler vs. Newbould, 16 N. Y., p. 397. By the provisions of Sec. 3006, post, "A pledgee cannot sell any evidence of debt pledged to him, except the obligations of Governments, States, or corporations; but he may collect the same when due." But in cases where the pledgee is authorized to sell the pledged property he may, under the provisions of Sec. 3011, post, proceed to such sale by foreclosure, in a competent Court, and be authorized to purchase at the sale. With these provisions the difficulties existing in the cases before our Courts are obviated.

2987. Every contract by which the possession of be deemed personal property is transferred, as security only, is to be deemed a pledge.

a pledge.

Delivery essential to

NOTE. This section places every mortgage of personal property, accompanied by a change of possession, upon the same footing with a pledge. This is in accordance with the rule of the civil law, and will greatly simplify the law in respect to pledges and mortgages. See Story Eq. Jur., Sec. 1005; Code Napoleon,

2071, 2117. It was held in the case of Payne vs. Bensley, 8 Cal., p. 267, that a pledge of personal property is a mortgage" within the meaning of the "Attachment Act," the word being there used in its most general signification, meaning "security."

- 2988. The lien of a pledge is dependent on posvalidity of session, and no pledge is valid until the property pledged is delivered to the pledgee, or to a pledge holder, as hereafter prescribed.

pledge.

NOTE.-Delivery is essential to a pledge.-Brownell vs. Hawkins, 4 Barb., p. 491; Goldstein vs. Hort, 30 Cal., p. 372. In all cases the possession of the property pledged must accompany it to the pledgee.Wright vs. Ross, 36 Cal., p. 414; see Edwards on Bailm., "Requisites of the Contract," p. 192. On p. 193 it is said: "The contract of pledge is completed on an actual delivery of the thing pledged," and refers to 2 Caines Cases in Error, p. 200. The question of delivery in all its phases is here discussed. There must be an actual delivery of the pledge to the pledgee (Story on Bailm., Sec. 297), it is of the essence of the contract. But actual manual delivery is not necessary.-Id.

thing.

2989. The increase of property pledged is pledged Increase of with the property.

NOTE. Where the relation of pledgor and pledgee exists, if the debt is paid, it is the duty of the pledgee to account for and pay over all the income, profits, and advantages derived from the bailment.-Hunsacker vs. Sturgis, 29 Cal., p. 142. "The fruits of the pledge are deemed to make part of it, and therefore they remain like the pledge, in the hands of the creditor; but he cannot appropriate them to his own use, and he is bound, on the contrary, to give an account of them to the debtor or to deduct them from what may be due him."-Civ. Code La., Art. 3135.

2990. One who has a lien upon property may Lienor may pledge it to the extent of his lien.

2991.

NOTE. This power was not fully recognized by the law prior to the adoption of the Code; but it is established in England, and seems just.-See Waldie vs. Dall, 29 Cal., p. 555.

One who has allowed another to assume the apparent ownership of property for the purpose of making any transfer of it, cannot set up his own title,

to defeat a pledge of the property, made by the other, to a pledgee who received the property in good faith, in the ordinary course of business, and for value.

NOTE. This section is an extension of the rule allowing a pledge by an agent intrusted with indicia of title to be sustained in favor of one who lends upon it without notice of the true owner's title.

pledge property to extent of his lien.