§ 248. Both the pledge and the mortgage of goods and choses in action are incident and accessory to the original debt or obligation, for which they are respectively given as a collateral security. The assignment of the principal debt draws after it the incident; as, if a note secured by a mortgage be assigned, it carries with it the mortgage of its own force and without any words to that effect;2 for it could not continue to exist as an independent security in the hands of one person, while the note belonged to another. Even where it does not in fact accompany the assignment, the assignee, it seems, is entitled to the aid of the mortgage; so long as that is not extinguished, it may be appealed to in aid of the creditor who holds the original debt. Separated from the principal debt, it has no determinate value, and is not properly assignable." The mortagee of goods or chattels has no occasion, in order to acquire the legal title, to foreclose the equity of redemption; his legal title becomes absolute on the failure of the mortgagor to discharge the conditions of the mortgage. But there is a right of redemption in equity left, which it is necessary to foreclose; for this right of redemption is one that cannot be waived beforehand by any agreement between the parties. It may, however, be foreclosed, without judicial proceedings, by a sale of the property, as in the case of a pledge, upon reasonable notice to the mortgagor.7 § 249. The pledge is in no respect an estate resting upon condition; the title to the property does not therefore vest or become perfect in the pledgee by any mere lapse of time. The common law treats it as a security, to be held by the pledgee until the debt is paid; it does not countenance the opinion that the pledge can become forfeited by a failure to pay the debt; on the contrary, it holds that the right to redeem continues in the pledgor until it is legally foreclosed or barred by the statute of limitations. a statute which operates upon the remedy 305. 1 Jackson v. Blodget, 5 Cowen R., 202; Green v. Graham, 46 N. II., 169. * Green v. Hart, 1 John. R., 580; 39 Barb., 163. 3 Martin v. Mowlin, 2 Burr., 978; Merritt v. Bartholick, 36 N. Y., 44. 4 Jackson v. Willard, 4 John. R., 43 ; see Lewis v. Varnum, 12 Abbott Pr., 5 Jackson v. Blodget, 5 Cowen R., 202; Powell on Mortg., 1115. 2 Kent's Comm., 583, 3d ed. 7 Patchin v. Pierce, 12 Wend. R., 61; 2 John. Ch. R., 100; 1 Ves., Sen,, 278; Powell on Mortg., 1041. * Cortelyou v. Lansing, 2 Caines' Cas. in Error, 200; 9 Albany Law Journal, 184; 2 Kent's Comm., 51, 582; Stearns v. Marsh, 4 Denio, 227; Walter v. Smith, 1 D. & R., 1; 5 B. & A., 439. of both parties, and does not affect the obligation or binding force of the contract.1 § 250. The law does not enforce a penalty, stipulated for under the name of liquidated damages;2 and for the same reason it should not enforce a contract by which a debtor delivers property of greater value to secure the payment of his debt, on an agreement that in case he does not pay it on the day it becomes due, the pledge shall become the absolute property of his creditor, the pledgee. The effect of such a contract is to bind the debtor in terms to pay a penalty, equal to the difference between the pledge and the debt, for his failure to fulfill his agreement; and the law does not enforce the contract. That is to say, it does not hold a stipulation valid by which a man engages to pay a greater sum, as a penalty for his failure to pay a less sum. No doctrine of the common law is more firmly settled than this.5 § 251. The rights of the parties in the goods pledged are not changed by the death of either of them, but descend to their representatives. This was held in one of the earliest cases reported, in an action of trover. The special verdict stated that the plaintiff had pawned a hatband, set with jewels, unto one Whitlock, a goldsmith, for twenty-five pounds, and no day was set to redeem. The pawnee on his death-bed delivered the pledge to the defendant, with a request to keep it till the money was paid, and then to deliver it to the plaintiff. The pawnee then died, and the plaintiff tendered the debt to his executor, who refused to receive the money, and then applied to the defendant and after a demand and refusal brought his suit. The court gave judgment for the plaintiff; and of course decided all the points arising out of the verdict, which were, that the tender to the executor was well made; that by the tender and refusal the special property revested in the plaintiff; that the general property had been constantly in him; that the death of the pawnee did not destroy the right of redemption; that the refusal by the defendant after tender to the executor, was a con 1 Roberts v. Sykes, 30 Barb., 173; see Calkins v. Calkins, 3 Barb., 305; S. C., 20 N. Y., 147; and as to the creditor's right to hold the pledge after his debt is outlawed, see Johns v. Merchants' Bank of Albany, 4 Robt., 221. 227; S. C., 6 Robt. 162. 2 Bage v. Millard, 12 N. Y. Leg. Obs., 57; Bagley v. Peddie, 16 N. Y., Colwell v. Lawrence, 38 N. Y., 71. 3 Gray v. Crosby, 18 John. R., 219. 469; Kemble v. Farren, 6 Bing., 141; Orr v. Churchill, 1 H. Black., 232; in point, Lucketts v. Townsend, 3 Texas R., 119. 5 In the early common law practice it was usual to enter a judgment for the penalty, in an action of debt on a bond. 6 Sir John Ratcliffe v. Davis, S. Jac. I. in K. B. version, and that the defendant had only the bare custody of the pawn. In delivering the opinion in this case the court observe, extra-judicially, that if the time be limited to redeem, the death of either party, previous to that time, could not prejudice the right; but that if no time was limited, the pawnor had his whole life, and if he died before he redeemed, the right was gone, and his executors could not redeem. But it is now well settled that on the deposit of a pledge, where Lo day of redemption is limited, the right of redemption descends to the personal representatives of the pawnor; if the pawnee sell the pledge without notice before application to redeem, he is answerable for the value of the pledge at the time of the application, and it is not necessary in such case to make an actual tender of the balance due.' There is, indeed, absolutely no reason why the death of either party to the contract should affect the right of redemption, or prevent it from descending entire and unimpaired to the representative of the pawnor. The pledgee can acquire no right of property in the goods bailed by prescription, and the mere lapse of time confers upon him no new right of any kind. § 252. While it is true that the mere lapse of time works no change in the right of property, it is also true that a failure for a long time to assert either an equitable or legal right does often impair or defeat the remedy; the right is lost by laches. The action for relief in equity is barred by the statute of limitations,3 unless it is brought within ten years after it accrues; and it is adjudged that a suit in equity to redeem against a mortgagee in possession, does not necessarily accrue when the money secured by the mortgage becomes due; that in equity he has a continuing right to relief from the cloud upon his title, not to be denied. him so long as he continues liable to an action of foreclosure. Aside from this special situation, the action to redeem accrues as soon as it can be brought. And the action to redeem a pledge may be brought as soon as the debt it is given to secure, becomes due." Thus interpreted, 1 Caines' Cases in Error, 200. 2 Henry v. Eddy, 34 Ill., 508; see Booth v. Terrell, 18 Geo., 570; Farrow v. Bragg, 30 Ala., 261. 3 Bell v. Beman, 3 Murph., R., 273, 277; see Henry v. Tupper, 29 Vt., 358. Miner v. Beekman, 50 N. Y., 337; a proceeding to foreclose lets in the mortgagor to redeem; Calkins v. Isbell, 20 N. Y., 147. Hubbell v. Libbey, 5 Lansing, 51, 58; Bennett v. Cook, 45 N. Y., 268; Cleveland Ins. Co. v. Reed, 24 How. U. S., 284; Waterman v. Brown, 31 Penn. St., 161; and see Bruce v. Tilson, 25 N. Y., 194. See also Coleman v. Second Ave. R. R. Co., 33 N. Y., 201; and Wells v. Yates, 44 N. Y., 525. Roberts v. Sykes, 20 Barb., 173; but see post § § 321, 322. the statute would operate rather unequally in favor of the party in pos session; the pledgee being allowed to hold his security, after the debt to secure which it is given, is barred by the statute.' § 253. The practical application of the statute works more advantageously to the pledgor when he brings a different form of action; such as the action of assumpsit or trover. The contract of pledge is of a continuing nature; it is a species of trust; and the contract is not broken, there is no violation of the trust, so long as the pledgee merely holds the security. It is like an ordinary deposit of money in a bank; the action of assumpsit does not accrue to recover it, until after a demand has been made; 2 or until after a payment or tender of the debt, accompanied with a demand for a return of the pledge. A refusal to restore the pledge on a tender of the debt within six years after it becomes due, will support an action of trover brought within six years thereafter.* The action lies if brought within six years after the conversion; and it is clear that the pledgee does not convert the property by continuing to hold it pursuant to the terms of the contract. There must be some act of appropriation, inconsistent with the bailee's duty to hold the property as a security, like a wrongful sale. In replevin or in the action to recover possession of personal property under the Code, permissive possession by the defendant for a long time, establishes no defence; it does not tend to establish a title in the defendant; his possession must be adverse, or it cannot ripen into a title. The same principles apply as in the action of trover; there must be a demand before suit, where it appears that the defendant acquired possession of the goods lawfully. 7 1 Jones v. Merchants' Bank, 4 Robert, 221; 6 id., 162. 2 Downes v. Phoenix Bank, 6 Hill, 297. 3 See Payne v. Gardner, 29 N. Y., 146; 39 Barb., 642; Sweet v. Irish, 36 Barb., 457; Thorpe v. Coombe, 8 Dow & Ryl., 347. 4 Hoffman v. Van Nostrand, 42 Barb., 174, 176; it is like an occupation or use with the owner's consent; Rider v. Union India Rubber Co., 28 N. Y., 379. Roberts v. Berdell, 61 Barb., 37; Luckey v. Gannon, 37 How. Pr., 134 ; 6 Abbott N. S., 209; Harvey v. Epes, 12 Gratt., 153; Wellington v. Wentworth, 8 Met., 548; see post §§ 321-323; Cortelyou v. Lansing, 2 Caines' Cases, 200. The action here was one of assumpsit, on a written contract of pledge, the pledge to be delivered up on payment of the principal debt. The statute runs from the time an action for the conversion can be brought. Bucklin v. Ford, 5 Barb., 393; see Murray v. Coster, 20 John. R., 576, 585. 6 Spaulding v. Barnes, 4 Gray, 330; Purdy v. Sistare, 2 Hun., 126; Edwards v. Hooper, 11 M. & W., 353; see Carroll v. Cone, 40 Barb., 220. 7 Mayor of New York v. Lent, 51 Barb., 19; Gerber v. Monis, 56 Barb., 652 8 Sluyter v. Williams, 1 Sweeny, 215. 3 § 254. On an ordinary loan of a certain number of shares of stock, one share being just as good as another, it is only necessary to return the same amount of stock in kind. The loan in such a case is in substance a sale, to be repaid in kind and quantity, and the title to the stock loaned is immediately transferred to the borrower; whereas upon a loan of specific articles to be returned in species, the title remains in the lender, and the borrower is only entitled to the temporary use thereof. But such articles as are capable of being estimated generally by weight, number or measure, do not when deposited as a pledge, become the property of the bailee, as they do upon a loan of them; because the pledge is not for use, but merely held as a security. If the pledgee, therefore, sell the pledge without authority, it is a violation of his trust, and he cannot afterwards replace the articles sold with others of a like kind and value.2 But where the contract of pledge permits the pledgee to sell or to hypothecate the pledge and afterwards replace it, with a security of the same kind and value, the agreement is to be enforced according to its terms. If under a pledge of stocks, the pledgee be authorized to use them as collaterals in his business, he must regain the possession and restore them on demand as soon as the original debt is paid; and unless he does so he is liable for their value.3 § 255. As one share of stock in a corporation does not differ from another, the identity of a given number of shares can only be traced through the title. Hence where stocks are purchased for a customer by a broker, properly in his own name, to be carried on a margin, the agent fulfills his duty by keeping an amount of stock equal to the purchase, ready for delivery to his principal on demand.5 Under the contract the broker holds the stock as a pledge; and he is liable for a conversion of the stock, where he sells the same or appropriates it to his own use unlawfully; and the owner is entitled to recover as damages the market price of the stock at the time of the conversion, or up to the time he might have repurchased the stock, after notice of the sale. A custom among brokers cannot be appealed to, as an authority to enlarge the power of sale; it can only be resorted to for the purpose of shew 13 Ersk. Inst., tit. 1, § 18. 2 Nourse v. Prime, 4 John. Ch., 490, and Dykers v. Allen, 7 Hill R., 497; Berlin v. Eddy, 33 Mo., 426. 3 Lawrence v. Maxwell, 53 N. Y., 19; Franklin v. Neate, 13 M. & W., 481. • Horton v. Morgan, 19 N. Y., 170; 6 Duer, 56. 6 Markham v. Jaudon, 41 N. Y., 235; Stenton v. Jerome, 54 N. Y., 480. 1 Baker v. Drake, 53 N. Y., 211. In this case the Court of Appeals reconsid ers the rule of damages previously acted upon in like cases, in this State. |