ing left without any special instructions, he has an implied right to sell for his reimbursement.' And the owner has the right to control the sale; to prescribe the price, time and conditions of the sale, subject only to the factor's lien.2 As an agent, the factor must follow his instructions, whether given before or after the advances are made; and he cannot depart from them and sell for his own benefit, without first calling upon his principal to reimburse his advances. His authority to sell is coupled with an interest in the goods, and it cannot be wholly revoked; hence it is held that the factor may sell even contrary to instructions, and for his own benefit, after having given the owner a reasonable notice of his intention to do so, with an opportunity to reimburse his advances. His position is like that of a pledgee, after his authority to sell has been recalled; he must demand payment, and notify his principal of his intention to sell; but need not, it would seem, notify him of the time and place of the intended sale.'

§ 291. A trustec or agent is not allowed to assume a position in which his interest will come in conflict with his duty; where he sells as a trustee, he is not permitted to purchase as an individual, directly or indirectly. The doctrine is of equitable origin, designed to close the door against temptation; it allows the injured party to set aside the sale and take the property; it applies to sales of both personal and real estate. But we have one important exception to this general rule; the practice in this State, continued from a very early day, allows mortgagees to become purchasers at sales conducted by them, under powers contained in mortgages of real estate. The statute allows the mortgagee to purchase

1 Blackman v. Thomas, 28 N. Y., 67.

5

2 Raleigh v. Atkinson, 6 Mees. & Wels., 670; Bell v. Palmer, 6 Cow., 128; Marshfield v. Goodhue, 3 N. Y., 62.

3 Marshfield v. Goodhue, supra; Blot v. Boiceau, 3 N. Y., 78; Raleigh v. Atkinson, 6 Mees. & Wels., 670.

4 Frothingham v. Evertson, 12 N. H., 239, 242; Parker v. Brunker, 22 Pick., 40. It has been suggested that the factor is not bound to observe instructions given after advances made; Brown v. McGrau, 14 Peters, 479. But the rule is otherwise, as stated in the text; Smart v. Sanders, 54 Eng. Com. Law, 379; unless there be an agreement between the parties: Milliken v. Dehon, 27 N. Y., 364.

* Davoue v. Fanning, 2 John. Ch., 252; De Caters v. Le Ray De Chaumont, 3 Paige Ch., 178; a party entitled to the income of an estate for life cannot pledge it to the trustee holding the estate. Van Epps v. Van Epps, 9 Paige Ch., 238; Bank of Orleans v. Torrey, 9 Paige, 649; S. C., 7 Hill, 260; Iddings v. Bruen, 4 Sandf. Ch., 223, 263; Moore v. Moore, 5 N. Y., 256. Bain v. Brown, 56 N. Y., 285.

6 Bergen v. Burnett, 1 Caines' Cas., 1-19; Slee v. Manhattan Co., 3 Paige, 48, 73; Jackson v. Colden, 4 Cowen, 266, 275.

the premises fairly and in good faith. The same thing is allowed, where a sale is had under a decree in an action of foreclosure; the exception does not, however, extend to a sale made and conducted by a trustee.' The trustee is not allowed to acquire and hold the property, through a sale made by himself; the law does not suffer him to take advantage of his position, which is one of confidence, and purchase the property in his own name or in the name of another person. Though the purchase be not void at law, it is voidable at the suit of the party for whom the trustee acts.

§ 292. The pledgee holds the property in his hands on a trust, and where he proceeds to sell on notice, he is not allowed to become the purchaser; and if he does, the sale is a nullity, and the bailment continues unaffected. A slightly different rule has been held, where a mortgagee purchases on a sale had in the foreclosure of a chattel mortgage. Admitting that the sale does not cut off the equity of redemption, it is upheld as valid in law in all collateral actions." And it appears that a purchase by a trustee at a public sale, stands valid in law until some action is taken to set it aside; and it is voidable only at the election of the persons whose interests are affected by the purchase-voidable by a suit in equity to be brought within the time prescribed by the statute of limitations. Is there any valid reason why a purchase by a pledgee should not be treated in the same manner? held good as between third parties, and ineffectual as a foreclosure against the pledgor?* There can be none; the sale is only voidable, and hence capable of being ratified and rendered valid.10

§ 293. We have seen in passing that a pledgee has no implied right to sell notes and ordinary choses in action; and it is settled that where

13 R. S., 851, 5th ed.

2 Rules of Court, No. 73.

3 Slade v. Van Vechten, 11 Paige Ch., 21.

4 Gardner v. Ogden, 22 N. Y., 327 ; Jewett v. Miller, 10 N. Y., 402.

Md. Fire Ins. Co. v. Dalrymple, 25 Md., 242; Middlesex Bank v. Minot, 4 Met., 325; Bank of Old Dominion v. Dubuque &c. R. R. Co., 8 Iowa, 277. Á special partner may purchase on a sale of a pledge held by the firm: Lewis v. Graham, 4 Abbott N. Y. Pr. R., 105; see Fulton v. Whitney, 5 Hun., 16.

6 Olcott v. Tioga Railroad Co., 27 Ñ. Y., 546, 564; S. C., 40 Barb., 179, 199. 7 Idem, Jackson v. Van Dalfson, 5 John. R., 47; Davoue v. Fanning, 2 John. Ch., 237; Harrington v. Brown, 5 Pick., 519 ; Case v. Carroll, 35 N. Y., 385.

8 Hubbell v. Medbury, 53 N. Y., 98; Hubbell v. Sibley, 50 N. Y., 468; ten years is the time prescribed by the Code.

9 Martin v. Somerville Water Power Co., 17 How. Pr. R., 161, 170-173; 40 Barb., 179, 190; Whitlock v. Heard, 13 Ala., 776.

10 Bryan v. Baldwin, 52 N. Y., 232, 235.

the contract of pledge is silent on the subject, he has no right to sell them at public or private sale. The right to sell and apply the proceeds of goods and chattels and stocks, is based upon the presumed intention of the parties; and this exception is based upon the same ground, namely, that it cannot have been the intention of the parties to subject to the hazards of a sale, a species of property for which there is no reliable market. The law therefore infers that the true intent of the transaetion is, that the pledgee shall receive the moneys on the securities as they fall due, or collect them by suit at his option; a right which he has under the contract, where he is expressly authorized to sell the security. The contract imports an authority to collect the collaterals;3 and hence the pledgee may sue and recover upon a note held as a pledge, though not indorsed over to him by the pledgor; the same rule now held in favor of the donee of like securities. The right to collect the original debt remains unaffected by the pledge; unless restrained by the contract the creditor may prosecute all the remedies given to him by law, at the same time. After paying the amount due to him, with the costs and expenses of collection, the surplus, when more is collected, belongs to the pledgor."

§ 294. Under an assignment of property to indemnify a surety, the assignee is bound to take charge of the property and convert it into money, in the due execution of the trust. The surety and also the creditor is entitled to have the property and all collaterals applied towards the payment of the debt; and may enforce this right by a bill in equity. The assignee has an implied power to sell; and it is his duty to proceed with diligence. Unless authorized to sell at private sale, his true course is to sell at auction, on a reasonable notice of

1 Wheeler v. Newbold, 16 N. Y., 392; S. C., 5 Duer, 29; 45 N. Y., 720; ante, 238. The rule does not apply to government bonds or the bonds of a corporation. Morris Canal &c. Co. v. Lewis, 12 N. J. Eq. R., 323; 3 Duer, 660; Jesup v. City Bank, 14 Wis., 331; Moody v. Andrews, 39 N. Y. (S. C.), 302. 2 Nelson v. Eaton, 26 N. Y., 410.

3 Nelson v. Wellington, 5 Bosw., 178; Nelson v. Edwards, 40 Barb., 279. 4 Louisiana State Bank v. Gaiennie, 21 La. Ann. R., 555; White v. Phelps, 14 Minn. R., 27.

5 Sessions v. Moseley, 4 Cush., 87; Bates v. Kempton, 7 Gray, 382; Chase v. Redding, 13 Gray, 418; Brown v. Brown, 18 Conn., 410; 36 N. Y., 340.

6 Plants &c. Co. v. Falvey. 20 Wis. R., 200; Hilton v. Waring, 7 Wis., 492; 98 Mass., 303; 99 Mass., 338; Stevens v. Bell, 6 Mass., 339; 53 N. Y., 19. Keyes v. Brush, 2 Paige, 311.

* Pratt v. Adams, 7 Paige, 615, 627 ; Ward v. Lewis, 4 Pick., 518; Pitts v. Congdon, 2 N. Y., 352.

9 Hart v. Crane, 7 Paige, 37.

the time and place; for cash, unless authorized by statute to sell on a credit.1

Where a mortgage is assigned as a collateral security for the payment of a smaller debt, the assignee takes the title with the power of sale contained in the mortgage, and may foreclose in his own name; and a third person purchasing under the foreclosure sale, will acquire an absolute title; but the assignee cannot by purchasing the property, hold it discharged of his liability to account for its value. The assignor's equitable interest has not been foreclosed; an interest equivalent to that of a mortgagor of the security.3

295. When a pledge is delivered or a chattel mortgage is given to one person, as a security to two or more persons, the pledgee or party holding the security, is bound to fulfill the terms of the contract; it is his duty to convert the property into money within a reasonable time, and apply it upon the debts according to the agreement of the parties. He is not at liberty to postpone the sale, or hold the property at his pleasure.

. § 296. The party holding a pledge as security for a debt due to himself, is not obliged to proceed and sell it within any given time; it is for the debtor to initiate active measures, and unless he does so he cannot complain of the pledgee on account of a loss happening from mere delay.5 The creditor is not bound in the first instance to resort to the property for the payment of the debt. Neither is he prevented from collecting his debt, by attaching or levying upon and selling the property. Without doubt he is bound to take all proper steps to preserve the pledge, and this duty may include the bringing of a suit where that becomes essential to its preservation.8

1 Nicholson v. Leavitt, 6 N. Y., 510.

2 Slee v. Manhattan Co., 1 Paige, 48, 52, 79; Hoyt v. Martense, 16 N. Y., 231.

3 See an analogous case, Stoddard v. Whiting, 46 N. Y., 627; 36 N. Y., 385; Murray v. Walker, 31 N. Y., 399.

4 Norton v. Squire, 16 John. R., 225; Marshall v. Bryant, 12 Mass. R., 321; Pothonier v. Dawson, Holt's N. P. R., 386; ante, § 273.

Granite Bank v. Richardson, 7 Met., 407; Word v. Morgan, 5 Sneed, 79. 6 Butterworth v. Kennedy, 5 Bosw., 143; Elder v. Rouse, 15 Wend., 218; Case v. Boughton, 11 Wend., 105; Bank of Rutland v. Woodruff, 34 Vt., 89; Townsend v. Newell, 14 Pick., 332; Rozett v. McCellan, 48 Ill., 345 ; 37 Super. Ct. (5 J. & S.), 215; 39 Id., 302.

7 Arendale v. Morgan, 5 Sneed, 704; Buck v. Ingersoll, 11 Met., 226. It is held in Massachusetts that the creditor by attaching the goods on other demands, does not lose his lien as a pledgee where he gives the officer notice of his intention to retain it: Townsend v. Newell, supra, and Whitaker v. Sumner, 20 Pick., 399, 406.

8 Ante, §§ 238, 240-244.

A party who sells under a power, is not bound to sell at once all the property covered by the power, and in many cases it would be an act of great oppression to do so. This is clearly the rule where the power is to sell real estate; and there does not appear to be any reason why it should not apply where the power is to sell personal property. The mortgagee or pledgee of goods exercises a trust in the act of selling them, and is responsible as a trustee for the way in which he conducts the sale. The authority is exhausted, as soon as a sufficient sum is realized to satisfy the debt secured.1

§ 297. Instead of selling on his own responsibility, the pledgee has a right to file a bill in equity and proceed to a judicial sale of the pledge; and this is clearly the proper course to pursue, where a demand cannot be made or notice given of the sale. For a different reason, it is also the true remedy where the pledge is given to secure the performance of a contract, or to secure the payment of an unliquidated demand; 3 or where for any reason an account must be taken to ascertain the amount due to the pledgee. A foreclosure in equity is sometimes advisable for the purpose of securing an equitable sale or disposition of the property;5 and it is necessary to enable the pledgee to purchase the property-a permission which a court of equity may give in its decree, acting on the same principle which permits the mortgagee to purchase at a sale decreed in the foreclosure of a mortgage upon real estate.

§ 298. Restitution. The creditor's duty to restore the pledge on receiving satisfaction of his demand, does not arise out of the contract of pledge; is it the dictate of law, based on the equity of the situation." Hence a stipulation in a contract of pledge, defeating or waiving the right to redeem after a certain day, is invalid; our courts will not enforce it. Public policy does not permit the debtor to bargain away

1 Charter v. Stevens, Denio, 333; the remedy for an unfair sale is by a bill to redeem; Stoddard v. Dennison, 2 Sweeny, 54; 38 How. Pr., 296; 7 Abbott Pr. (N. S.), 309.

2 Cortelyou v. Lansing, 2 Caines' Cas., 201; Garlick v. James, 12 John. R., 159; Stearns v. Marsh, 4 Denio, 227; Strong v. National Mechanics' Banking Association, 45 N. Y., 718, 720.

3 Vaupell v. Woodward, 2 Sand. Ch. R., 143.

* See Bartlett v. Johnson, 9 Allen (Mass.), 530; and the transaction disclosed in Van Blarcom v. Broadway Bank, 9 Bosw., 532; 37 N. Y., 540; and in Oneida Bank v. Ontario Bank, 21 N. Y., 490.

Donohoe v. Gamble, 33 Cal., 340.

6 Kingsbury v. Phelps, Wright (Ohio), 370; Beatty v. Sylvester, 2 Nev., 228; Merrifield v. Baker, 9 Allen, 23; 31 N. Y., 542; 13 Barb., 629.

Clark v. Henry, 2 Cowen, 324, 330-333; Houser v. Kemp, 3 Penn. St., 208; Williamson v. Culpepper, 16 Ala., 211; Bright v. Wagle, 3 Dana (Ky.),