standing of the parties that delivery is not to be withheld. But suppose that subsequently to the agreement, the purchaser becomes insolvent and unable to pay. If the seller still has the chattel should he be allowed to retain it until paid in spite of the stipulation to the contrary? Under such circumstances the law implies a promise on the part of the buyer to keep his credit good and allows the seller to hold the property.29 Again suppose that at the time of the contract the buyer was insolvent, but the seller did not know of the buyer's inability to pay. Under those circumstances also the seller may retain, on the theory that the seller would not have granted credit if he had known of the insolvency, and the buyer, whether he knew or did not know, has no right to expect the benefits of credit. 22. Stoppage in transitu.-An extension of the vendor's lien on personal property is the right to stop it while in transit. Ordinarily when possession is parted with the lien is gone; but when goods are delivered to a carrier, while such carrier may be looked upon as the agent of the vendee or consignee for the purpose of taking title, he yet remains, under certain circumstances at least, the agent of the vendor or consignor for the purpose of retaining possession. If after shipping goods and before their arrival the seller learns that the buyer is insolvent, he has the right to give the carrier notice not to deliver without payment of the price. In that way the vendor may regain possession and its advan 29 Crummey v. Raudenbush, 55 Minn. 426, 56 N. W. 1113, LEADING ILLUSTRATIVE CASES. tages. This right of stoppage in transitu originated in courts of equity, but it has long been recognized by courts of law. Its equitable nature may be seen. from the rule that if the bill of lading which represents the goods is transferred while the goods are in transit to a purchaser for value without notice, a good title free from the right to stop is acquired.30 23. Pledges.-A pledge is a deposit of personal property as security for a debt. The title, unlike the case of a mortgage under the title theory, remains in the pledgor. Only possession or the control of the property passes to the pledgee. A pledge is created by the delivery of the goods. It always arises by express contract while the other retaining liens are usually implied by law. A "pawn" is another name for a pledge. Pawnbrokers are persons who loan money on the security of personal property pledged to them. Another class of transactions which are pledges are known as loans upon collateral security. That name is usually applied to loans by banks secured by the deposit of "paper," such as stock certificates, bonds, and notes. Only personal property can be pledged. Real property may be mortgaged, but not pledged. A pledge may be made of any kind of personal property including securities and choses in action. Necessity of delivery. Delivery of the goods in every case, either actual or symbolical, is absolutely necessary for a pledge. The very essence of a pledge is a change in possession, in control of the property. 30 Loeb & Bro. v. Peters & Bro., 63 Ala. 243, 35 Am. Rep. 17, LEADING ILLUSTRATIVE CASES. The law on this point, when the rights of third parties are concerned, is well settled. But what should be the rule between the parties to a contract to pledge? There is a conflict of authority on this point, but the better view seems to be that even as between the parties themselves, until delivery, the transaction should not be looked upon as a pledge, but merely as a contract to pledge, and the law of contract and not the law of pledge should govern.31 24. Same subject-What constitutes delivery.— In many cases it is an exceedingly difficult matter to determine whether or not there has been a change of possession. The rule is that the transfer must be accompanied by such change of possession as the nature of the thing will permit. Where the object is small and portable an actual handing over is required. But in the case of heavy objects not easily moved, for example, a pile of bricks,32 constructive or symbolical delivery is sufficient, something to indicate that there has been a change of control. To pledge choses in action the muniments of title should be given to the pledgee. Property stored in a warehouse may be pledged by transferring the warehouse receipt, and goods in transit by a delivery of the bill of lading. Property can be pledged only by the owner or by one authorized by him. When the pledge is made by an agent the usual rules as to implied and ostensible authority govern. Generally bailees, having only a special property in the goods in their posses 31 Huntington v. Sherman, 60 Conn. 463, LEADING ILLUSTRative Cases. 32 Macomber v. Parker, 14 Pick. 497 (Mass.). sion, have no authority to pledge them. But in a number of states, statutes have been passed making valid unauthorized pledges made by factors and other agents who have been entrusted by their principals with the possession of property or of documentary evidence of title to it. In most respects the rules as to pledges and other liens are similar. Where there are differences they will be pointed out in later chapters dealing with the law applicable subsequent to the time of acquisition. One of these should perhaps be mentioned here, because it is frequently given as the chief distinction between pledges and other common law liens. A pledge carries with it the power of sale if the debt is not paid, while other common law liens do not. 25. Liens given by persons other than owner.The consideration of the question of who may give a lien has been reserved until after innkeepers' liens were taken up, because the exceptions to the obviously general rule concern chiefly innkeepers. The general rule, of course, is that a person other than the owner or one authorized by him cannot give a lien good against the owner. A lien can be created good against the owner if an agent or person entrusted with the property has the ostensible authority to give the lien. Also actual authority may be implied in fact. A good example of the latter may be found in the case of White v. Smith, 33 cited in another connection. A husband 33 15 Vroom 105 (N. J.), 43 Am. Rep. 347, LEADING ILLUStrative Cases. See § 14. was put in charge of his wife's wagon to use it in a business which was carried on for the support of the family. It was held that a person who repaired the wagon upon the husband's order had a lien good against the wife. The question has arisen a number of times whether a mortgagor can give a lien binding on a mortgagee. The general rule is that the mortgagor can bind his own interest only. In the case of Wright v. Sherman,34 it was held that the lien of a chattel mortgage properly filed is paramount to that of an agistor for subsequently pasturing stock, unless it is shown that the mortgagee consented, either expressly or impliedly, that such stock might be so pastured and subjected to such lien; and that the fact that the mortgagor retains possession of the mortgaged property is not of itself proof of such consent. But in a number of cases it has been found that the mortgagees did expressly or impliedly consent, and of course under such circumstances the mortgagees were bound by the liens. 26. Same subject-Innkeepers.-In the leading case of Robinson v. Walter,35 it was held that an innkeeper has a lien on a horse brought to him by a person not the owner. The reason given was that the innkeeper was bound to receive the horse and hence was entitled to hold him until his keep was paid for. The law in this country is well established to the same effect. An American case so holding, already cited in another connection, is Singer Mfg. 34 3 S. D. 290, 17 L. R. A. 792, 52 N. W. 1093. 35 3 Bulst. 269 (Eng.), 81 Reprint 227, LEADING ILLUSTRATive Cases. |