surance policies 1 and corporate stock,82 and such well-known quasi negotiable instruments as the ordinary bills of lading " and warehouse receipts.**

DELIVERY

74. Delivery is absolutely essential to the creation of a pledge. Such delivery may be either—

(a) Actual; or

(b) Constructive.

Delivery with intention to create a pledge is sufficient to establish a pledge of any kind of property except corporate stock.

As a pledge is primarily a bailment, there can, of course, be no pledge without a delivery (in the sense in which it has already

son v. Culpepper, 16 Ala. 211, 50 Am. Dec. 175; President, etc., of Louisiana State Bank v. Gaiennie, 21 La. Ann. 555. A man may pledge his own note. Green v. Sinker, Davis & Co., 135 Ind. 434, 35 N. E. 262. A promissory note of a third person, deposited by a debtor with his creditor as collateral security for a debt, is a pledge in which the pawnee has merely a special property, the general ownership remaining in the pawnor. Garlick v. James, 12 Johns. (N. Y.) 146, 7 Am. Dec. 294. Coupon bonds payable to the bearer may be pledged by the party issuing them, because they are securities usually sold in the stock market, and understood by the parties to be designed for that use, and not because the party's ordinary bond or mortgage, deposited as a collateral, could be so regarded. Morris Canal & Banking Co. v. Fisher, 9 N. J. Eq. 667, 64 Am. Dec. 423.

81 Life insurance policies: Tateum v. Ross, 150 Mass. 440, 23 N. E. 230; Grant's Adm'rs v. Kline, 115 Pa. 618, 9 Atl. 150; Gilman v. Curtis, 66 Cal. 116, 4 Pac. 1094; Collins v. Dawley, 4 Colo. 138, 34 Am. Rep. 72. Fire insurance policies: Stout v. Yaeger Mill. Co. (C. C.) 13 Fed. 802; Merrill v. Colonial Mut. Fire Ins. Co., 169 Mass. 10, 47 N. E. 439, 61 Am. St. Rep. 268; East Texas Fire Ins. Co. v. Coffee, 61 Tex. 287.

82 Thompson v. Holladay, 15 Or. 34, 14 Pac. 725; Barse Live-Stock Co. v. Range Valley Cattle Co., 16 Utah, 59, 50 Pac. 630; Hasbrouck v. Vandervoort, 4 Sandf. (N. Y.) 74; Wilson v. Little, 2 N. Y. 443, 51 Am. Dec. 307; Fisher v. Brown, 104 Mass. 259, 6 Am. Rep. 235; Rozet v. McClellan, 48 Ill. 345, 95 Am. Dec. 551; Heath v. Silverthorn Lead Mining & Smelting Co., 39 Wis. 147; Appeal of Conyngham, 57 Pa. 474. It may be pledged by the corporation itself. Brewster v. Hartley, 37 Cal. 15, 99 Am. Dec. 237.

88 Lickbarrow v. Mason, 1 H. Bl. (Eng.) 357; Douglass v. People's Bank of Kentucky, 86 Ky. 176, 5 S. W. 420, 9 Am. St. Rep. 276; NEILL v. ROGERS BROS. PRODUCE CO., 41 W. Va. 37, 23 S. E. 702, Dobie Cas. Bailments and Carriers, 122; First Nat. Bank of Cincinnati v. Kelly, 57 N. Y. 34; Petitt v. First Nat. Bank of Memphis, 4 Bush (Ky.) 334.

84 Babcock v. Lawson, 5 Q. B. D. (Eng.) 284; Ammon v. Gamble-Robinson Commission Co., 111 Minn. 452, 127 N. W. 448; People's Sav. Bank v. Bates, 120 U. S. 556, 7 Sup. Ct. 679, 30 L. Ed. 754; Gibson v. Stevens, 8 How. 384, 12 L. Ed. 1123; Yenni v. McNamee, 45 N. Y. 614, 620; Vogelsang's Adm'r v. Fisher, 128 Mo. 386, 31 S. W. 13.

been used, viz., a transfer of possession) of the goods."

The

pledge exists only, and takes its beginning, from the time of such delivery. An agreement to deliver, however, does not (and cannot) create a pledge; it is, at best, merely a contract to create a pledge at some future time.86

The question as to the exact time when the pledge begins, involving the distinction between delivery and a contract to deliver, is not of primary importance as between the pledge parties.87 This for the reasons, first, that the contract to deliver, being based on a consideration, is enforceable at law; and, secondly, since, between the pledge parties, their rights are frequently worked out just as if there had been a complete delivery, creating a pledge, by virtue of the maxim "Equity treats that as done which ought to be done." 88

When, however, the rights of third parties are called into question (either where there has never been a delivery, or where these rights attach before such delivery), then somewhat different con

85 Boney & Harper Milling Co. v. J. C. Stevenson Co., 161 N. C. 510, 77 S. E. 676; Porter v. Shotwell, 105 Mo. App. 177, 79 S. W. 728; Robertson v. Robertson, 186 Mass. 308, 71 N. E. 571; Dunn v. Train, 125 Fed. 221, 60 C. C. A. 113; Farson v. Gilbert, 114 Ill. App. 17; AMERICAN CAN CO. v. ERIE PRESERVING CO., 183 Fed. 96, 105 C. C. A. 388, Dobie Cas. Bailments and Carriers, 114; Fletcher v. Howard, 2 Aikens (Vt.) 115, 16 Am. Dec. 686; Succession of Lanaux, 46 La. Ann. 1036, 15 South. 708, 25 L. R. A. 577; Cortelyou v. Lansing, 2 Caines, Cas. (N. Y.) 200; Barrow v. Paxton, 5 Johns. (N. Y.) 259, and note, 4 Am. Dec. 354; Brown v. Bement, 8 Johns. (N. Y.) 97; Ceas v. Bramley, 18 Hun (N. Y.) 187; Campbell v. Parker, 9 Bosw. (N. Y.) 322, 329; Haskins v. Kelly, 1 Rob. (N. Y.) 160, 172; Milliman v. Neher, 20 Barb. (N. Y.) 37, 40; Muller v. Pondir, 6 Lans. (N. Y.) 472, 480; Nevan v. Roup, 8 Iowa, 207; Gleason v. Drew, 9 Greenl. (Me.) 79, 82; Walcott v. Keith, 22 N. H. 196; Propst v. Roseman, 49 N. C. 130; Corbett v. Underwood, 83 Ill. 324, 25 Am. Rep. 392; Casey v. Cavaroc, 96 U. S. 467, 24 L. Ed. 779. Plaintiff leased a machine to defendant for certain work, under an agreement that plaintiff should receive one-fourth of the profits of the work, and pay one-fourth of the losses. Afterwards it was agreed that defendant should have a lien on the machine as security for plaintiff's agreement to pay one-fourth of the losses. It was then delivered to defendant. Held, that there was a pledge of the machine to defendant. Clark v. Costello, 79 Hun, 588, 29 N. Y. Supp. 937.

86 Cameron v. Orleans & J. R. Co., 108 La. 83, 32 South. 208; Copeland v. Barnes, 147 Mass. 388, 18 N. E. 65; Nisbit v. Macon Bank & T. Co. (C. C.) 12 Fed. 686; Rowell v. Claggett, 69 N. H. 201, 41 Atl. 173; Hitchcock v. Hassett, 71 Cal. 331, 12 Pac. 228; In re Automobile Livery Service Co. (D. C.) 176 Fed. 792.

87 Keiser v. Topping, 72 Ill. 226; Tuttle v. Robinson, 78 Ill. 332; City Fire Ins. Co. v. Olmsted, 33 Conn. 476.

88 But the mere contract to deliver the goods in pledge does not give the contract pledgee a lien on such goods. Hitchcock v. Hassett, 71 Cal. 331, 12 Pac. 228; Davenport v. City Bank of Buffalo and Marcy, 9 Paige (N. Y.) 12.

siderations apply." The delivery not only creates a pledge, but serves to give notice to the world of the rights of the pledgee in the pledged goods; but a mere agreement to deliver in no way serves this last purpose. Accordingly, as to innocent purchasers from the owner and those who innocently acquire in rem rights. to the goods, such as attaching creditors, in both cases, if this in rem right precedes the delivery to the pledgee, the latter's rights must yield. There is no little confusion as to the comparative rights of the general creditors of the intending pledgor and the intending pledgee before delivery. In such a case neither the creditor nor the intended pledgee has an in rem claim to the goods; but it would seem that, certainly before the creditors acquire a lien on the goods by an attachment or execution, the intending pledgee has in the absence of fraud the superior right to take possession of the goods and hold them against such general creditors."1

90

Actual and Constructive Delivery-Symbolical Delivery

It has been said: "In all cases the essence of delivery is that the deliveror, by some apt and manifest act, puts the deliveree in the same position of control over the thing, either directly or through a custodian, which he himself held immediately before that act." The question of what acts constitute a sufficient delivery to create a pledge, either when considered generally or with reference to specific kinds of property, is not an easy one. Mr. Schouler's phrase, "the modern mosaic of pledge delivery," " is both accurate and happy.

The most perfect form of delivery, known as actual delivery,

89 Nisbit v. Macon Bank & T. Co. (C. C.) 12 Fed. 686; AMERICAN CAN CO. v. ERIE PRESERVING CO., 183 Fed. 96, 105 C. C. A. 388, Dobie Cas. Bailments and Carriers, 114; Rowell v. Claggett, 69 N. H. 201, 41 Atl. 173; Copeland v. Barnes, 147 Mass. 388, 18 N. E. 65.

90 Cameron v. Orleans & J. R. Co., 108 La. 83, 32 South. 208; Parshall v. Eggert, 54 N. Y. 18; American Pig Iron Storage Warrant Co. v. German, 126 Ala. 194, 28 South. 603, 85 Am. St. Rep. 21; Nisbit v. Macon Bank & T. Co. (C. C.) 12 Fed. 686; AMERICAN CAN CO. v. ERIE PRESERVING CO., 183 Fed. 96, 105 C. C. A. 388, Dobie Cas. Bailments and Carriers, 114; Rowell v. Claggett, 69 N. H. 201, 41 Atl. 173; Casey v. National Park Bank, 96 U. S. 492, 493, 24 L. Ed. 789; Cotton v. Arnold, 118 Mo. App. 596, 95 S. W. 280.

91 See Schouler, Bailm. § 199. "As between the pledge parties and general creditors, such transactions can only be attacked by the latter for fraud upon them; and if there be a bona fide pledge contract, ineffectual for want of delivery, the pledgee may, at any time, take full possession and maintain his priority over them." Parshall v. Eggert, 54 N. Y. 18; Succession of Hiligsberg, 1 La. Ann. 340. See, also, Jones, Collateral Securities (3d Ed.) § 38; Prouty v. Barlow, 74 Minn. 130, 76 N. W. 946.

92 Pollock, Possession, p. 46.

98 Schouler, Bailm. § 199.

consists in the real physical transfer of the manual control of the goods by the pledgor to the pledgee," as where the pledgor takes a watch from his pocket and puts it in the hands of the pledgee. About such a delivery there could be no question, and, when it is possible and practicable, it is always safest for the pledgee to resort to such a delivery. To constitute a valid delivery of part of a larger quantity of goods, the part to be pledged should be separated from the rest and delivered."

97

In some cases, however, an actual delivery is not necessary for the creation of a pledge; " in other cases, an immediate actual delivery is either impracticable or impossible. Here all that is necessary is what is called a "constructive delivery." This is a term of comprehensive meaning, and includes those acts which, though not conferring manual control of the goods (or approximating real possession in that sense), are yet held by law to be the equivalent in legal effect to such acts of real delivery." Thus, when property is in the possession of a third person, an actual delivery to the pledgee will not be required; but an order by the pledgor upon the keeper is sufficient to constitute a constructive delivery." Where goods are lying in a warehouse, notice to the warehouse keeper, when all the other essential requisites of a pledge are proved, is equivalent to a delivery; for after such notice 94 Black, Law Dict. pp. 349, 350. Of course, an effective delivery may be made by an agent of the pledgor. Cartwright v. Wilmerding, 24 N. Y. 521. Or such delivery may be made to an agent of the pledgee. City Bank of New Haven v. Perkins, 29 N. Y. 554, 86 Am. Dec. 332; Johnson v. Smith, 11 Humph. (Tenn.) 396; McCready v. Haslock, 3 Tenn. Ch. 13; Brown v. Warren, 43 N. H. 430; Tibbetts v. Flanders, 18 N. H. 284; Boynton v. Payrow, 67 Me. 587; Weems v. Delta Moss Co., 33 La. Ann. 973.

95 Collins v. Buck, 63 Me. 459; Sholes v. Western Asphalt Block & Tile Co., 183 Pa. 528, 38 Atl. 1029.

96 FIRST NAT. BANK OF PARKERSBURG v. HARKNESS, 42 W. Va. 156, 24 S. E. 548, 32 L. R. A. 408, Dobie Cas. Bailments and Carriers, 109; Dubois v. Spinks, 114 Cal. 289, 294, 46 Pac. 95; Jewett v. Warren, 12 Mass. 300, 7 Am. Dec. 74.

97 Goods during shipment by land or water furnish excellent examples of this.

98 Black, Law Dict. p. 350, and cases cited. As to what will not be effective as a constructive delivery, see Thurber v. Oliver (C. C.) 26 Fed. 224 (delivery of samples of goods); Brown v. Warren, 43 N. H. 430 (owning the shop in which the goods are used). In Huntington v. Sherman, 60 Conn. 463, 466, 22 Atl. 769, the court, in a case similar to Brown v. Warren, supra, said: "The circumstances ordinarily furnishing a basis for constructive delivery are wholly wanting; the goods are not at sea, nor in a warehouse, nor were they too ponderous to be readily moved, nor were they placed within the power and control of the plaintiffs."

99 Whitaker v. Sumner, 20 Pick. (Mass.) 399; Tuxworth v. Moore, 9 Pick. (Mass.) 347, 349, 20 Am. Dec. 479.

the keeper ceases to be the agent of the pledgor, and becomes the agent of the pledgee; and thus the goods are placed under the effective control of the pledgee, practically to the same extent that they would be by an actual delivery. The pledgee may himself be in possession when the pledge is created, as where goods already pledged are, by agreement of the parties, made security for a further loan. Or possession may be held by the pledgee jointly with others. Actual delivery is not necessary in such cases. The delivery of the key to the warehouse in which the goods are stored has been held to be an effective delivery of the goods.

When the goods are cumbersome or inaccessible, a delivery is often effected by the physical transfer of some symbol or representative of the goods, which is conventionally recognized as standing for the goods and furnishing a method of dealing with them. Thus, a transfer of the bill of lading of goods in the course of shipment would constitute such a delivery. This form of constructive delivery is called a symbolic delivery."

Incorporeal Property

A pledge of incorporeal property is made by delivery, just as in other cases-that is, the delivery of the evidence or symbol, as the most apt delivery of which this kind of property is capable, creates a pledge of the property-and such a delivery is necessary. Though a pledge of this kind of property is generally made by an assignment in writing, and should be so made, such an as

1 Whitaker v. Sumner, 20 Pick. (Mass.) 399, 403; Hathaway v. Haynes, 124 Mass. 311; First Nat. Bank of Cincinnati v. Kelly, 57 N. Y. 34; Cartwright v. Wilmerding, 24 N. Y. 521; Michigan Cent. R. Co. v. Phillips, 60 Ill. 190; Western Union R. Co. v. Wagner, 65 Ill. 197; Burton v. Curyea, 40 Ill. 325, 89 Am. Dec. 350; Newcomb v. Cabell, 10 Bush (Ky.) 460; Whitney v. Tibbits, 17 Wis. 369; Dows v. National Exch. Bank, 91 U. S. 618, 23 L. Ed. 214; First Nat. Bank of Cincinnati v. Bates (D. C.) 1 Fed. 702; Freiburg v. Dreyfus, 135 U. S. 478, 10 Sup. Ct. 716, 34 L. Ed. 206; Harris v. Bradley, 2 Dill. 284, Fed. Cas. No. 6,116.

2 Herber v. Thompson, 47 La. Ann. 800, 17 South. 318; Van Blarcom v. Broadway Bank, 37 N. Y. 540; Brown v. Warren, 43 N. H. 430; Clark v. Costello, 79 Hun, 588, 29 N. Y. Supp. 937.

3 Hilton v. Tucker, 39 Ch. D. (Eng.) 669; Ryall v. Rolle, 1 Atk. (Eng.) 165. 4 Moors v. Wyman, 146 Mass. 60, 15 N. E. 104; Gibson v. Stevens, 8 How. 384, 12 L. Ed. 1123; Peters v. Elliott, 78 Ill. 321; Meyerstern v. Barber, 36 L. J. C. P. (Eng.) 48. The same is true of warehouse receipts. In re Cincinnati Iron Store Co., 167 Fed. 486, 93 C. C. A. 122; Hoor v. Barker, 8 Cal. 609; National Exch. Bank v. Wilder, 34 Minn. 149, 24 N. W. 699. Black, Law Dict. p. 350.

• Jones, Collateral Securities (3d Ed.) § 80; Casey v. Cavaroc, 96 U. S. 467, 24 L. Ed. 779; Atkinson v. Foster, 134 Ill. 472, 25 N. E. 528; Farm Inv. Co. v. Wyoming College and Normal School, 10 Wyo. 240, 68 Pac. 561; Cotton v. Arnold, 118 Mo. App. 596, 95 S. W. 280.