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thing pledged," with the exception of certificates of corporate

stock.50

Since the certificate is merely evidence of certain rights in the corporation, the return of a similar (though not the identical) certificate, showing that the pledgor is entitled to the same rights, results in no loss to the pledgor." And the nature of the whole transaction is foreign to the idea that the specific stock certificate should be an object of personal attachment or should have any unique value in the estimation of the pledgor. There are a few cases, however, holding the contrary view,"

Conversion by the Pledgee

As it is the duty of the pledgee to redeliver the pledged goods upon redemption, if he wrongfully sells or otherwise disposes of them, he is guilty of a conversion." The pledgor, in such a case,

is not limited to his (1) right to sue either the pledgee

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or the

v. Fitzpatrick, 9 Dana (Ky.) 117; Hunsaker v. Sturgis, 29 Cal. 142; Geron v. Geron, 15 Ala. 558, 50 Am. Dec. 143; Houton v. Holliday, 6 N. C. 111, 5 · Am. Dec. 522.

55 The pledgee must redeliver the identical article pledged, where it is distinctive in its character, and for a failure to do so renders himself liable in trover. Ball v. Stanley, 5 Yerg. (Tenn.) 199, 26 Am. Dec. 263. And equity may be invoked for this purpose where the law fails. Bryson v. Rayner, 25 Md. 424, 90 Am. Dec. 69. See, also, the cases cited in note 59.

56 Gilpin v. Howell, 5 Pa. 41, 45 Am. Dec. 720; Horton v. Morgan, 19 N. Y. 170, 75 Am. Dec. 311; Gruman v. Smith, 81 N. Y. 25; Stewart v. Drake, 46 N. Y. 449; Worthington v. Tormey, 34 Md. 182; Atkins v. Gamble, 42 Cal. 86, 10 Am. Rep. 282; Hawley v. Brumagim, 33 Cal. 394. And, as to redelivery of the identical bonds deposited in pledge, see Stuart v. Bigler's Assignees, 98 Pa. 80.

57 Hubbell v. Drexel (C. C.) 11 Fed. 115; Lecroy v. Eastman, 10 Mod. (Eng.) 499, 88 Eng. Reprint, 285; Hayward v. Rogers, 62 Cal. 348.

58 See 2 Thompson, Comm. Corp. §§ 2651-2653; Fay v. Gray, 124 Mass. 500; Langton v. Waite, L. R. 6 Eq. (Eng.) 165; Allen v. Dubois, 117 Mich. 115, 75 N. W. 443, 72 Am. St. Rep. 557.

59 Radigan v. Johnson, 174 Mass. 68, 54 N. E. 358; Romero v. Newman, 50 La. Ann. 80, 23 South. 493; Toplitz v. Bauer, 161 N. Y. 325, 55 N. E. 1059; Brown v. First Nat. Bank, 132 Fed. 450, 66 C. C. A. 293; Richardson v. Ashby, 132 Mo. 238, 33 S. W. 806. The pledgee may recoup the amount of his debt when sued for the conversion of the pledged property, or for any tort with respect thereto. Stearns v. Marsh, 4 Denio (N. Y.) 227, 47 Am. Dec. 248. Where assignors for benefit of creditors, before the assignment, convert stock pledged to them as security, the pledgor is not entitled to payment in full for his claim for the value of the stock converted out of the assigned estate, on the ground that the conversion was a breach of trust, which entitled him to follow the proceeds specifically. In re Jamison & Co.'s Estate, 163 Pa. 143, 29 Atl. 1001. The fact that the transferee of pledged securities converts them does not render the original pledgee liable in trover. Waddle v. Owen, 43 Neb. 489, 61 N. W. 731.

60 Harrell v. Citizens' Banking Co., 111 Ga. 846, 36 S. E. 460; Hurst v. Coley (C. C.) 15 Fed. 645; Hays v. Riddle, 1 Sandf. (N. Y.) 248.

purchaser for the conversion; but the pledgor may (2) recover the goods from such purchaser or any other party into whose hands they may have come,2 or (3) waive the tort and sue the pledgee in assumpsit for such purchase money, while the latter may use the amount of the pledged debt as an offset."9

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The question of the measure of damages, when the pledgor sues the pledgee for conversion of the pledged goods, is not without difficulty. The usual measure in cases of conversion is the fair value of the goods at the time of the conversion; and this, ordinarily, in the case in question, would be both fair and easy to apply, allowing the pledgee to offset the amount of the debt secured. When, however, the pledged goods are subject, like corporate stocks, to rapid fluctuations in value, and particularly when some time elapses before the pledgor learns of the conversion, then different considerations apply, and this measure might work either undue advantage or great prejudice to the pledgor.

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Some courts, however, have clung to the old rule of the value of the goods at the time of the conversion, even though it might compel the pledgor practically to stand by a sale made at a low price, at a time when he would never have consented to sell. Other courts fix the damages at the value of the goods at the time of the pledgor's demand. This is objectionable in allowing the pledgor, by postponing demand, thus to speculate as to the rise or fall in the value of the goods. Still more objectionable is the rule that the pledgor can recover the highest value between the time of the con

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61 Gregg v. Bank of Columbia, 72 S. C. 458, 52 S. E. 195, 110 Am. St. Rep. 633; Usher v. Van Vranken, 48 App. Div. 413, 63 N. Y. Supp. 104.

62 Johnson v. Succession of Robbins, 20 La. Ann. 569; Winston v. Rawson, 38 Ill. App. 193; German Sav. Bank of Baltimore City v. Renshaw, 78 Md. 475, 28 Atl. 281.

63 Union Nat. Bank v. Post, 192 Ill. 385, 61 N. E. 507; Mayo v. Peterson, 126 Mass. 516; Brown v. First Nat. Bank, 132 Fed. 450, 66 C. C. A. 293; Hinckley v. Pfister, 83 Wis. 64, 53 N. W. 21.

64 Dimock v. United States Nat. Bank, 55 N. J. Law, 296, 25 Atl. 926, 39 Am. St. Rep. 643; Robinson v. Hurley, 11 Iowa, 410, 79 Am. Dec. 497; Blood v. Erie Dime Savings & Loan Co., 164 Pa. 95, 30 Atl. 362; Loomis v. Stave, 72 Ill. 623; Belden v. Perkins, 78 Ill. 449; Fowle v. Ward, 113 Mass. 548, 18 Am. Rep. 534; Newcomb-Buchanan Co. v. Baskett, 14 Bush (Ky.) 658; Rosenzweig v. Frazer, 82 Ind. 342; Hudson v. Wilkinson, 61 Tex. 606; Grimes V. Watkins, 59 Tex. 140.

65 Stearns v. Marsh, 4 Denio (N. Y.) 227, 47 Am. Dec. 248.

66 Fisher v. George S. Jones Co., 108 Ga. 490, 34 S. E. 172; Third Nat. Bank of Baltimore v. Boyd, 44 Md. 47, 22 Am. Rep. 35; Sterling v. Garritee, 18 Md. 468; Union Trust Co. v. Rigdon, 93 Ill. 458.

67 Pinkerton v. Manchester & L. R. R., 42 N. H. 424; Reynolds v. Witte, 13 S. C. 5, 36 Am. Rep. 678; Baltimore City Pass. Ry. Co. v. Sewell, 35 Md. 238, 6 Am. Rep. 402; Fowle v. Ward, 113 Mass. 548, 18 Am. Rep. 534.

version and the trials for this would tempt the pledgor to postpone unduly bringing suit, in the hope that the value might reach in the future a higher figure than it had yet done.

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The fairest rule, which is most consonant with reason, fixes the damages at the highest value of the goods within a reasonable time after the pledgor learns of the conversion." This is the rule in New York To (where such transactions are most frequent), and has the support of the United States Supreme Court." This involves no speculative elements, but contemplates restoring the pledgor to the position in which he would have been, had not his rights been violated, and presumes that, after learning of the conversion, the pledgor would act reasonably to restore himself to that position.

RIGHTS AND DUTIES OF THE PLEDGEE AFTER DEFAULT-IN GENERAL

85. Default by the pledgor in the debt or engagement secured confers unique rights on the pledgee, who then becomes more than a mere bailee. The pledgee's chief concern then becomes the realization of such debt or the performance of such engagement, and the methods of dealing with the pledged goods to encompass this end.

In General

The rights and duties of the pledgor were considered in some detail without distinctive reference to the question of default on the obligation secured." As to the pledgee, however, so great a

68 See Gregg v. Columbia Bank, 72 S. C. 458, 52 S. E. 195, 110 Am. St. Rep. 633, holding that the court may instruct the jury that they may fix the damages as the value at the time of the conversion or as the highest value up to the time of the trial. As to the measure of the highest intermediate value between the conversion and demand, see Bank of Montgomery v. Reese, 26 Pa. 143; Page v. Fowler, 39 Cal. 412, 2 Am. Rep. 462; Wilson v. Little, 2 N. Y. 443, 51 Am. Dec. 307.

69 Smith v. Savin, 141 N. Y. 315, 36 N. E. 338; Baker v. Drake, 53 N. Y. 211, 13 Am. Rep. 507; Wright v. Bank of Metropolis, 110 N. Y. 237, 18 N. E 79, 1 L. R. A. 289, 6 Am. St. Rep. 356; GALIGHER v. JONES, 129 U. S. 195, 200-202, 9 Sup. Ct. 335, 32 L. Ed. 658, Dobie Cas. Bailments and Carriers, 126. The rule of higher intermediate value is discussed at great length, with an elaborate review of the cases, in 2 Sedgwick, Damages (9th Ed.) c. 22, § 507-525. See, also, Jones, Collateral Securities (3d Ed.) §§ 750-757a.

70 Baker v. Drake, 53 N. Y. 211, 13 Am. Rep. 507; Wright v. Bank of Metropolis, 110 N. Y. 237, 18 N. E. 79, 1 L. R. A. 289, 6 Am. St. Rep. 356.

71 GALIGHER v. JONES, 129 U. S. 193, 200-202, 9 Sup. Ct. 335, 32 L. Ed. 658, Dobie Cas. Bailments and Carriers, 126.

72 Ante, § 75.

DOB.BAILM.-15

change is wrought in his position and attitude by the default of the pledgor that the pledgee's duties and rights must necessarily be treated as revolving about this important fact.

Those rights and duties accruing before default have just been considered. Those arising on the pledgor's default in the obligation secured next demand attention. It is then that the distinctive features of the pledge, and the peculiar rights that accrue to pledgees apart from other bailees, are brought into being. These questions naturally turn about the pledgee's dealing with the pledged goods to protect himself from the consequences of such default, for it is in contemplation of that contingency that the pledge relation owes its very inception. The pledgee's rights are varied, but cumulative."

SAME HOLDING THE PLEDGED GOODS

86. The pledgee may, if he so sees fit, continue to hold the pledged goods as security, without taking any other action.

After the pledgor is in default as to the debt secured or the undertaking to be performed, the pledgee may ordinarily continue to hold the pledged goods as security for such payment or performance. He may be content with this right, without taking any other action. Whether, besides holding the goods, he shall pursue any other of his remedies, is a matter which he may decide. Such additional remedies are cumulative, and he has his option as to whether he shall resort to any of them. Simply holding the pledged goods, as the lienor does, is the least effective of his remedies; but still the pledgee, if he so wishes, may elect that remedy, and that alone, and decline to sell, even though so requested by the pledgor. 76

78 Ante, §§ 77-84.

74 Emes v. Widdowson, 4 Car. & P. (Eng.) 451; Beckwith v. Sibley, 11 Pick. (Mass.) 482; Barnes v. Bradley, 56 Ark. 105, 19 S. W. 319; Mitchell v. Roberts (C. C.) 17 Fed. 776; Whitwell v. Brigham, 19 Pick. (Mass.) 117.

75 Robinson v. Hurley, 11 Iowa, 410, 79 Am. Dec. 479; Rozet v. McClellan, 48 Ill. 345, 95 Am. Dec. 551. A contract may make it the duty of the pledgee to sell within a specified time, and his failure to do so is then such breach of duty as will render him answerable to the pledgor. Cooper v. Simpson, 41 Minn. 46, 42 N. W. 601, 4 L. R. A. 194, 16 Am. St. Rep. 667.

76 Simonton v. Sibley, 122 U. S. 220, 7 Sup. Ct. 1351, 30 L. Ed. 1225; Furness v. Union Nat. Bank, 147 Ill. 570, 35 N. E. 624; MINNEAPOLIS & N. ELEVATOR CO. v. BETCHER, 42 Minn. 210, 44 N. W. 5, Dobie Cas. Bailments and Carriers, 128. Hence the pledgee is not liable for depreciation in value of the pledged goods, though he might have avoided this by selling

But the duty of exercising ordinary care as to the pledged goods may require a sale by the pledgee," as in the case of perishable goods. And, in exceptional cases, where the goods may decrease in value, a court of equity might force the pledgee to sell. Subject to these qualifications, however, the pledgor cannot compel a sale; his only right is to redeem by paying the debt or performing the engagement secured."

SAME SUIT ON THE DEBT OR ENGAGEMENT SECURED 87. The pledgee, without in any way impairing his rights in the pledged goods, may bring suit against the pledgor on the debt or undertaking secured.

The pledge is a security for the debt, not a substitute therefor. It is a cumulative remedy, conferring added rights, without impairing those already existing. Accordingly, the pledgee creditor can bring suit personally on the debt against the pledgor debtor, without affecting his lien and rights in the pledged goods." Nor is

promptly on default. O'Neill v. Whigham, 87 Pa. 394; Rozet v. McClellan, 48 Ill. 345, 95 Am. Dec. 551; Field v. Leavitt, 37 N. Y. Super. Ct. 215.

77 Franklin, etc., Inst. v. Preetorious, 6 Mo. App. 470; Field v. Leavitt, 37 N. Y. Super. Ct. 215.

78 Colquitt v. Stultz, 65 Ga. 305; Newsome v. Davis, 133 Mass. 343; Mueller v. Nichols, 50 Ill. App. 663.

79 Savings Bank v. Middlekauf, 113 Cal. 463, 45 Pac. 840; Lormer v. Bain, 14 Neb. 178, 15 N. W. 323; Ketcham v. Provost, 156 App. Div. 477, 141 N. Y. Supp. 437; Emes v. Widdowson, 4 Car. & P. (Eng.) 151; Commercial Sav. Bank v. Hornberger, 140 Cal. 16, 73 Pac. 625; Butterworth v. Kennedy, 5 Bosw. (N. Y.) 143; Rogers v. Ward, 8 Allen (Mass.) 387, 85 Am. Dec. 710; Darst v. Bates, 95 Ill. 493; Whitwell v. Brigham, 19 Pick. (Mass.) 117; Beckwith v. Sibley, 11 Pick. (Mass.) 482; Sonoma Val. Bank v. Hill, 59 Cal. 107; Jones v. Scott, 10 Kan. 33; SMITH v. STROUT, 63 Me. 205, Dobie Cas. Bailments and Carriers, 129; Ehrlick v. Ewald, 66 Cal. 97, 4 Pac. 1062; Grand Island Sav. & Loan Ass'n v. Moore, 40 Neb. 686, 59 N. W. 115; Ambler v. Ames, 1 App. D. C. 191. The person holding collateral securities is not bound to resort to them before suing upon his principal claim; but, when that claim is satisfied, he may be compelled to release or reassign the collaterals. Wallace v. Finnegan, 14 Mich. 170, 90 Am. Dec. 243. If a pawn is lost or injured, the pledgor can set off against the debt for which it stood as security the loss or injury attributable to any want of necessary care and diligence upon the pledgee's part. Crocker v. Monrose, 18 La. 553, 36 Am. Dec. 660; Cooper v. Simpson, 41 Minn. 46, 42 N. W. 601, 4 L. R. A. 194, 16 Am. St. Rep. 667. Of course, when the contract specifies that the pledgee is to look alone to the pledged goods for the debt, then the pledgor cannot be personally sued. Archibald v. Argall, 53 Ill. 307; Wilhelm v. Schmidt, 84 Ill. 183; Cornwall v. Gould, 4 Pick. (Mass.) 444; Beckwith v. Sibley, 11 Pick. (Mass.) 482; Bigelow v. Walker, 24 Vt. 149, 58 Am. Dec. 156.

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