§ 185. When given to secure the payment of money, the mortgage of either real or personal estate is but an accessory or incident to the debt; and hence a change in the form of the debt does not affect its validity. An assignment of the debt passes the interest in the mortgage. If by a special agreement the mortgage is not to accompany the debt assigned, it is extinguished and ceases to be a subsisting security.2 Where a mortgage was given to secure a note payable to order, and the holder indorsed the note over, and at the same time delivered the mortgage to the indorsee, but made no assignment of it in writing, it was held that the transfer of the note carried with it the mortgage. The debt is the principal, and the security the incident; and the assignment of the principal draws after it the incident.3 For the same reason, the creditor my assign the principal debt to a third person, and give him the benefit of a pledge which he holds to secure the payment of the debt. The pledgor is not injured by this; he retains his right to redeem on payment of the amount due on the debt, the same as before the assignment; and the assignee acquires precisely the rights of the pledgee subject to the same obligations.5 § 186. Though formerly much blended in the books, there is now a clear discrimination established between a chattel mortgage and a pledge. A pledge of goods or chattels is completed by a delivery of them; it does not transfer the title; it only gives to the pledgee a lien upon them. The form of the contract is not controlling; if there be a transfer of the property, it is more than a pledge, it is a mortgage. There is no difficulty in tracing this line of discrimination between a mortgage and a pledge, in contracts relating to goods and chattels, Giving a bill of sale of chattels, with the intention of securing the payment of a debt, or to be held as collateral security for moneys to become due, is to be treated as a mortgage; it is a transfer of the property, to become void on payment of the debt thereby secured. The law gives ' Hill v. Beebe; 13 N. Y., 556; Gregory v. Thomas, 20 Wend., 17. 2 Jackson v. Willard, 4 John. R., 41, 43; Jackson v. Blodget, 5 Cowen, 202; Martin v. Mowlin, 2 Burr., 979; Green v. Hart, 1 John. R., 581. 3 Pattison v. Hull, 9 Cowen, 747, 754. 4 Chapman v. Brooks, 31 N. Y., 75, 84. 5 Kemp v. Westbrook, 1 Vesey, 178; Ratcliff v. Vance, 2 Const. Rep., S. C., 239; Brown v. Warren, 43 N. H., 430. 6 Brownell v. Hawkins, 4 Barb., 494; Cortelyou v. Lansing, 2 Caines' Cas., 200; Brown v. Bement, 8 John. R., 96; McLean v. Walker, 10 John. R., 471, 474. 7 Langdon v. Bush, 9 Wend., 80; Bunacleugh v. Poolman, 3 Daly, 236. * Barrow v. Paxton, 5 John. R., 258; Marsh v. Lawrence, 4 Cowen, 461. effect to the intention with which the bill of sale is executed and delivered; a separate written or verbal defeasance will convert the bill of sale into a mortgage. And the effect of the transfer will not be changed by a stipulation on the part of the assignee, to prepare the goods for market.2 § 187. The difference between an absolute conveyance and a mortgage of lands, is broad enough; and yet there is a class of cases in which a deed is converted into a mortgage; e. g., when the deed is given on account of a present loan, or precedent debt, with a concurrent agreement in writing, or by parol, for a redemption at a future time upon payment of the debt.3 The law looks through the forms of the transaction, and seeks to carry into effect the real intent of the parties; and as a rule, where the conveyance is made on an application for a loan of money, it will be deemed a mortgage in case the grantee agrees to receive back his money and interest, or a larger sum, and reconvey the property within a specified time thereafter, whatever form the writings may assume, the real object being a loan of money. Where the conveyance is not in truth made as a security for a loan, an agreement to reconvey at a future time, at the election of the grantor, affords no evidence that the deed was intended as a mortgage. A collateral agreement by the grantor to repay the money, tends to show that the conveyance was intended as a mortgage; and the absence of such an agreement tends to prove that it was not so intended." § 188. A discrimination must be made between a conditional sale and a mortgage of goods or chattels. A sale and delivery on condition that the purchaser is to acquire the title to the property on payment of the purchase money, does not vest the title in him until the condition is fulfilled. By the very terms of the sale, the seller is here to continue the owner until the price is paid, and the transfer takes effect on the payment; it is not a present sale, with a mortgage back to secure the 1 Brown v. Bement, supra; Hall v. Tuttle, 8 Wend., 375. 2 Smith v. Beattie, 31 N. Y., 542, 544. 3 Strong v. Stewart, 4 John. Ch., 167; Henry v. Davis, 7 John. Ch., 40; Clark ▼. Henry, 2 Cowen, 324; Roach v. Cosine, 9 Wend., 227, 231; Horn v. Keteltas, 46 N. Y., 605. 4 Holmes v. Grant, 8 Paige's Ch. R., 243; Robinson v. Cropsey, 6 Paige's Ch., 480. Glover v. Payn, 19 Wend., 518. 6 Conway's Exrs. v. Alexander, 7 Cranch, 218; Flagg v. Mann, 4 Pick., 467. 'Herring v. Hoppock, 15 N. Y., 409; Ballard v. Burgett, 40 N. Y., 314; Sargent v. Metcalf, 5 Gray, 506; Hart v. Carpenter, 24 Conn., 427. purchase money'-a form of contract which includes first a sale, and second an agreement in the nature of a chattel mortgage for the price to be paid. The collateral agreement here does not prevent the transfer of the title; and though informal, it is to be treated and must be filed as a chattel mortgage.3 CONTRACT. I. Capacity to make. II. Right or power to create a pledge. III. Subject of pledge. IV. Mode of making a pledge. V. Relation of pledge to the original contract. VI. Pledgee's duty in preserving. VII. What Property in the Pledgor and Pledgee; and resulting VIII. Sale or foreclosure. IX. Restitution. X. Remedies. § 189. I. Capacity to Make. The general rule that the deeds and contracts of an infant are not void, but only voidable, supplemented by the rule that the defence of infancy is a personal privilege, renders it quite plain that an infant may be a party to a contract of pledge.* If he delivers goods or chattels in pledge, to secure the payment of his debt, the pledge must remain valid until he repudiates the transaction. Would a sale of the chattels by him operate as a disaffirmance of the contract of pledge? It would not of itself, because the sale is not inconsistent with the pledge: it does not repudiate the pledge. Moreover, if the chattels were delivered in pledge at the time his debt was contracted, it would be necessary for him to rescind the whole transaction, and restore the consideration received by him when he incurred the debt. The debt having been incurred for property still in his possession, he 1 Brewster v. Baker, 20 Barb., 364; Grant v. Skinner, 21 Barb., 581; Strong v. Taylor, 2 Hill, 326; Barrett v. Pritchard, 2 Pick., 512; Herring v. Willard, 2 Sandf., 418. 2 Dunning v. Stearns, 9 Barb., 630; McComber v. Parker, 14 Pick., 497. 3 Thompson v. Blanchard, 4 Comst., 4 N. Y., 303. 4 Slocum v. Hooker, 13 Barb., 536. This case involves both of the rules re ferred to; see also Blake v. Supervisors of L. Co., 61 Barb., 149. Palmer v. Miller, 25 Barb., 399; the case of a deed of premises covered by a mortgage made by the infant. cannot both keep the property and take back that which he has delivered as security for its payment.1 The pledge takes effect by delivery of his hand like a sale and delivery, and hence a rescision will not be implied from a doubtful act;2 nor can it be so readily made, as it can where he gives a mortgage but does not deliver the chattels covered by it; a subsequent absolute sale and delivery of the chattels, disaffirms the contract evidenced by the mortgage.3 § 190. The legal incapacity of a married woman under the common law to contract, was not based upon the theory of personal incapacity to transact business; she was always allowed to act as his agent, with authority. And her act, with her husband's authority, binds him; he cannot recall it after it has been executed.5 Her act binds him on the theory of agency, and not on the ground of the marital relation subsisting between them." 8 Under our recent remedial statutes a married woman may now take and acquire a separate property, and enjoy and transfer the same as freely as an unmarried woman; and she may carry on any business on her separate account. Entering upon a business, she acts for herself; she is treated as a feme sole. And as she may make all manner of contracts relating to the business, she can undoubtedly bind herself by a pledge or mortgage of goods, to secure the payment of debts incurred by her, in the line of the business. As she may charge her separate property as surety for the debt of her husband, there is no reason why she may not directly pledge her goods or chattels for his debt." Under the first statute, a married woman was empowered to take and hold property to her sole and separate use, and convey the same; she was not in terms authorized to bind herself by contract; and though her separate property was a legal estate, her engagements in reference to it were necessarily enforced on principles of equity.10 Under the more recent statute, 1 Bartholomew v. Fennimore, 17 Barb., 428; Kitchen v. Lee, 11 Page's Ch., 107; Gray v. Lessington, 2 Bosw., 257; 33 Conn., 201. 2 Merchants, Fire Ins. Co. v. Grant, 2 Edw. Ch., 544. 3 Chapin v. Shafer, 49 N. Y., 407. Goodwin v. Kelly, 42 Barb., 194. Griffen v. Banks, 37 N. Y., 621, 624; Edgerton v. Thomas, 5 Seld., 9 N. Y., 40 6 Kowing v. Manly, 49 N. Y., 192. 7 Lindner v. Sohler, 51 Barb. 322; Peak v. Lemon, 1 Lansing, 295; see Anderson v. Mather, 44 N. Y., 249. * Talmon v. Hawxhurst, 4 Duer, 221. 9 Corn Exchange Ins. Co. v. Babcock, 42 N. Y., 613. 10 Hauptman v. Catlin, 20 N. Y., 247; Yale v. Dederer, 18 N. Y., 265; 22 N. Y., 450; Ballin v. Dillaye, 37 N. Y., 35; see the statute of 1848 as amended in 1849. she may also acquire property from her earnings or business, and may make sales and transfers of the same, and may carry on any business on her separate account; and is liable on her contracts in the business, and for the manner in which she transacts her business, like an unmarried woman.1 § 191. II. Right to make a Pledge. It is of course necessary that the person making a pledge of goods as security for a debt, should own them, or at least have the authority to deposit them in pledge. The contract passes a certain interest or special property in the goods to the pledgee ; and the pledgor impliedly stipulates that he possesses the right which he assumes to transfer.2 To the extent of that right or interest, he in fact warrants the title as much as does the vendor on an absolute sale;3 especially where the debt is contracted at the time the pledge is delivered. If he undertake to pledge property that belongs to another, without his consent, he cannot afterwards, so long as the owner does not intervene, claim to have it restored until his debt is discharged. So, too, though he is not the owner at the time the pledge is made, if he subsequently acquire the property, by what title soever, his ownership will be deemed to relate back to the time of the contract, and the pledge will stand good. Though the right of the true owner is not affected by a pledge made without his consent, the party making the pledge will not be permitted to assert his own want of title. The civil and common law agree that an implied warranty is annexed to every sale of personal chattels, in respect to the title of the vendor; and the reason of the rule applies to the case where there is a transfer of goods in pledge, on the creation of a debt." 8 § 192. As no one can convey the title to another man's property without his consent, so it is quite clear, that as a rule he cannot pledge it or encumber it without some authority. E. g., a partner cannot pledge securities or goods belonging to the firm to secure the payment of money advanced to him as an individual. And a trustee cannot pledge stocks 1 Anderson v. Mather, 44 N. Y., 249; Rowe v. Smith, 45 N. Y., 230; Fairbanka v. Mothersell, 60 Barb., 403; Warner v. Warren, 46 N. Y., 228. 2 Mairs v. Taylor, 40 Penn. St., 466. 3 Burt v. Dewey, 40 N. Y., 233; Rew v. Barber, 3 Cowen, 272, 280; Defreeze v. Trumper, 1 John. R., 274. 4 He is estopped from setting up a title to the goods subsequently acquired: Goldstein v. Hart, 30 Cala., 372. Code of Louisiana, Arts. 3109 to 3114. 6 Jarvis v. Rogers, 13 Mass. R., 105; Duell v. Cudlipp, 1 Hilt., 166. 7 Defreeze v. Trumper, supra; 2 Bl. Comm., 471; Burt v. Dewey, supra; Mairs v. Taylor, 40 Penn. St., 466. 8 Swett v. Brown, 5 Pick., 178, 9 Ex parte McKenna, in re Mortimer, 7 Jur. N. S., 588; 27 How. Pr., 161. |