courts of law and equity have a concurrent jurisdiction. Thus, the assignee of a factor having a legal remedy, may file a bill for a settlement of accounts between him and his principal.2

§ 315. A general pledge given to a creditor to secure a running account, or all demands that may become due to him from the debtor, authorizes a suit in equity for an account. And where the collaterals have been transferred, the purchasers or assignees must be made parties to the action; otherwise the court cannot make a proper decree authorizing a redemption. In some cases, as in a pledge of negotiable paper or stocks with a power to sell, a transfer will convey the title disencumbered, and thus defeat a specific redemption; leaving the court to make a decree adjusting the equities between the parties, upon principles applicable to the transaction and present situation of the parties.

§ 316. When the general owner sells the property held in pledge, the purchaser necessarily takes it subject to the rights of the bailee; that is to say, he acquires the title to the property, including the remedies given by law for its protection. As purchaser he is entitled to redeem, on the same terms as the original owner: on a tender of the amount due, the pledgee must deliver up the property to him; a refusal to do so on demand, is a conversion. The owner's right to sell the goods, pending the pledge, draws after it these rules of law."

If the general owner become bankrupt, his assignee succeeds to his title and rights; the bailee retaining his lien unaffected. The same rule holds good, where the bailee is summoned as a trustee of the general owner, or where an attachment is procured against him; the process takes effect subject to the rights of the bailee; it enables the plaintiff to reach the interest of the general owner, and nothing more." The of

1 Mayne v. Griswold, 3 Sandf., 463; Foot v. Farrington, 41 N. Y., 164.

2 Wilson v. Mallett, 4 Sandf., 112; 7 Robt., 564.

3 Conyngham's Appeal, 57 Penn. St., 474; Beatty v. Sylvester. 2 Nev., 223, 52 Penn. St., 498.

4 Lewis v. Varnum, 12 Abbott, 305.

Franklin v. Neate, 13 Mees., and Wels., 431; plaintiff bought a chronometer under a pledge for £15, and tendered the amount due and demanded the watch; held he could recover in the action of trover; see also Hunt v. Hotton, 13 Pick., 216; and Magee v. Toland, 8 Porter, 36.

6 Hodges v. Hurd, 47 Ill., 363.

▾ Raleigh v. Atkinson, 6 Mees. and Wels., 670.

White M. Bank v. West, 46 Me., 15.

9 Giles v. Nathan, 5 Taunt., 558; Curtis v. Norris, 8 Pick., 280; Bank of S. C. v. Levy, 1 McMullen, 430; Nolan v. Crook, 5 Humph., 312; Black v. Zacha, 3 How. U. S., 483; Cook v. Kelly, 9 Bosw., 358.

ficer cannot, unless authorized by statute, scize and sell the property.' A factor under advances, is a pledgee entitled to hold the goods; so that an attachment binds only the surplus.2

3

§ 317. The pledgee's right to file a bill and have a judicial sale of the pledge is settled; and it has been enforced so as to enable the creditor to regain the possession of the pledge, obtained from him through a fraudulent device, and thus to secure a sale and the benefit of his lien." Here the pledgee has a right to bring an action of trover for the property; a remedy which is less efficient under many circumstances." At law the pledgee can only recover his lien by a recovery of the specific property; because we have no form of action at law, under which a lienholder can regain his lien, as a thing distinct from the property. Based on a right to detain the property, the lien is not necessarily defeated by a loss of possession, where the creditor does not voluntarily part with the goods, or intentionally surrender his lien."

§ 318. The remedy depends upon the circumstances and the nature of the transaction. A renewal or change in the form of the debt secured, does not affect the pledge. The recovery of a judgment for the amount of the debt, does not release the pledge; nor does the taking of a higher security therefor." Indeed, it is quite common to give a judgment or a bond and mortgage to secure either an existing debt, or future advances; and the collateral stands good until the debt or the advances are paid. The purpose for which the security is given may be shown by parol testimony; and necessarily the action taken or payments made

1 Brownell v. Carnley, 3 Duer, 9.

2 Patterson, v. Parry, 5 Bosw., 518.

3 Demandray v. Metcalf, Prec. in Chan., 419; Kemp v. Westbrook, 1 Ves. Sen., 278; Tucker v. Wilson, 1 P. Wms. R., 261; 2 Kent's Comm., 582; ante § 297.

+ Coleman v. Shelton, 2 McCord's Ch., 126. In this case a slave was delivered in pledge to work out a debt; and the pledgor enticed away the slave. See Donohoe v. Gamble, supra.

Hutton v. Arnett, 51 Ill., 193. Ante, § 269.

6 Allen v. Spencer, 1 Edm. R., 117; McCaffery v. Wooden, 62 Barb., 316; 5 Denio, 269; 1 Sandf., 248. It can only be created by a delivery of the possession: Muller v. Pondir, 6 Lansing, 472.

7 Dunham v. Dey, 15 John. R., 555; Bank of Utica v. Finch, 3 Barb. Ch., 293; Curtis v. Leavitt, 15 N. Y., 14, 162; Day v. Leal, 14 John., 404; Brinkerhoff v. Lansing, 4 John. Ch., 65.

Truscott v. King, 6 N. Y., 147; Mead v. York, 6 N. Y., 449. When a creditor holds a note and a bond and mortgage for the same debt made by the same parties, his remedy is upon the higher security. Miller v. Watson, 5 Cowen, 195; Tylee v. Yates, 3 Barb., 222; Lane v. Shears, 1 Wend., 433.

under the arrangement.' Thus the collateral is made to accomplish the intent of the parties, with but little embarrassment arising from artificial rules.

3

2

A second security of the same degree, given for the same debt, does not release the first; as where a second bond or second mortgage is given for the same debt. A security of a higher nature like a bond, extinguishes one of a lower nature like a note; when both are given for the same debt. A judgment recovered upon a judgment, does not extinguish it; both being of the same grade. But these rules relating to the doctrine of merger, do not apply where the higher security is taken as additional or collateral security for the payment of the debt. The rule that a security of a higher nature extinguishes inferior securities, only applies to the state or condition of the debt itself, and means no more than this: that when an account is settled by a note, or a note changed to a bond, or a judgment taken upon either, the debt, as to its original or inferior condition, is extinguished or swallowed up in the higher security; and that all the memorandums or securities by which such inferior condition was evidenced lose their validity. It has never been applied to the extinguishment of distinct collateral securities, whether superior or inferior in degree. These are to be cancelled by satisfaction of the debt, or voluntary surrender alone."

§ 319. The creditor's failure to appropriate the collateral to the satisfaction of the debt, or to preserve its validity and value, does not operate upon the debt itself. The neglect may be available as a defence to an action on the debt, or made the basis of an action to recover the damages sustained by a breach of the contract of pledge, or by the breach of another contract under it made with a third party. To illustrate: a debtor delivers to his creditor an indorsed note made by a third party as a collateral security for the payment of the debt, the creditor deposits it with his bank for collection, and the bank neglects to charge the indorsers thereon; here the creditor as pledgee of the note has a

1 McKinster v. Babcock, 26 N. Y., 378; 6 Duer, 208.

2 Gregory v. Thomas, 20 Wend., 17.

3 Miller v. Watson, 5 Cowen, 195; Tylee v. Yates, 3 Barb., 222.

4 Andrews v. Smith, 9 Wend., 53, 54; see Millard v. Whittaker, 5 Hill, 408; Jackson v. Shaffer, 11 John. R., 513, 516.

5 Day v. Leal, 14 John., 404; Youngs v. Stahelin, 34 N. Y., 258; Bank of Chenango v. Hyde, 4 Cowen, 567, 575; Taggard v. Curtenius & Jones, 15 Wend., 155, 157; Kelsey v. Western, 2 N. Y., 500, 510; Barts v. Peters, 9 Wheat., 556; Hill v. Beebe, 13 N. Y., 556.

6 Butler v. Miller, 1 Denio, 407; S. C., 5 Denio, 159; S. C., 1 N. Y., 496. 7 Taggard v. Curtenius & Jones, supra.

cause of action against the bank, and his recovery against the bank is to be applied upon the debt secured. But if the debtor, before suit against the bank, comes forward and pays his debt and takes up the collateral note, he is entitled to recover his damages against the bank.1 The creditor holds all collaterals as a trustee, to be collected for the benefit of the debtor; and whenever he transfers them absolutely, without authority, he takes them at their face, in satisfaction to that extent of the principal debt. The debtor can ask nothing more, and he is not

obliged to accept anything less."

§ 320. When a creditor receives a collateral note for collection, the proceeds to be applied upon his demand, he assumes the duty of a collecting agent; and is liable for any failure in diligence, upon the same principle as if the two contracts were entirely separate. IIe is bound like an attorney to use reasonable diligence by suit, to collect on the note; he is bound by the terms of his contract, or by the necessary legal effect of those terms.5 A suit must be brought and prosecuted with diligence; as it must to charge a guarantor of the collection. It is not enough to place the demand in the hands of an attorney; diligence must be used in the effort to collect, according with the contract, and fulfilling the duty assumed.

9

§ 321. We have seen that a creditor is entitled to retain a pledge, after his demand has been barred by the statute of limitations; on the same ground that a mortgagee in possession cannot be dispossessed, without satisfying the debt due to him.10 In its early form, the statute did not in terms apply to suits in equity; and the practice in courts of equity was to apply the principle of the statute so as to defeat stale and deserted claims; 11 in a court of equity the statute was adopted as a rule of reason.12 In its recent form the statute applies to suits for relief

1 McKinster v. Bank of Utica, 9 Wend., 46, 48; S. C., 11 Wend., 473; Whitney v. M. Un. Ex. Co., 104 Mass., 152.

2 Hawks v. Hinchcliffe, 17 Barb., 492, 502.

3 Townsend v. Borgy, 57 N. Y., 665.

4 Buckingham v. Payne, 33 Barb., 81.

5 Morris v. Wadsworth, 11 Wend., 104; S. C., 17 Wend., 112; Hoard v. Garner, 10 N. Y., 261.

6 Craig v. Parkis, 40 N. Y., 181.

Hoard v. Garner, supra; Eddy v. Stanton, 21 Wend., 255.

8 Miller v. Proctor, 20 Ohio St., 442.

9 Jones v. Merchants' Bank of Albany, 6 Robt., 162; see dissenting opinion,

4 Robt., 221; 14 N. Y., 16.

10 Phyfe v.

Riley, 15 Wend., 248; 21 N. Y., 581; 3 Barb., 305.

11 Huntington v. Mather, 2 Barb., 538; Ray v. Bogart, 2 John. Cas., 432; 3 John. Ch., 579, 586.

12 Troup v. Smith, 20 John. R., 33, 47.

in equity, as well as to suits at law; and it is interpreted as a statute of repose. An action to redeem against a mortgagee in possession, is a suit in equity, and it is to be brought within the time limited for such actions after the defendant enters into possession-claiming the title.2 But the statute does not commence running where the mortgagee enters and continues in possession avowedly as mortgagee, for the reason that it is a continuing right of the owner to discharge the mortgage and thus regain the possession of the land. Does not the same rule, based on the same reason, apply in favor of the pledgor so long as the pledgee retains the pledge and does nothing inconsistent with the contract? The pledgee here cannot gain the shadow of a right by prescription, because there is here no foundation on which to base the right; and the statute does not commence to run until a present right of action to redeem accrues.3 Can it be held that the action to redeem accrues before the bailor demands a return of the property and tenders a satisfaction of the debt? It seems not; the action of trover may be maintained within six years after a refusal to restore on demand.4

§ 322. After a long lapse of time it often becomes inequitable to allow the debtor to redeem; it is so where the pledge does not exceed in value the debt when it becomes due, and both parties tacitly assume for many years that the pledge shall be taken in payment of the debt.5

1 Foot v. Farrington, 41 N. Y., 164.

2 Miner v. Beekman, 50 N. Y., 337; Knowlton v. Walker, 13 Wis., 264; 14 Id., 286.

3 Jones v. Thurmond's heirs, 5 Texas, 318, 321; holds that the statute does not commence to run until the pledgee does some act which shows a determination to dissolve the relation of pledgor and pledgee.

4 Roberts v. Berdell, 61 Barb., 37; S C., 52 N. Y., 644; Purdy v. Sistare, 2 Hun., 123.

5 Waterman v. Brown, 31 Pean. St., 161. An action to redeem cannot be sustained after the lapse of many years. In this caso a loan of $6,932 was made on a pledge of bank stock as a collateral security, the stock being transferred to the lender, with authority to sell it and pay the note. For eleven years after the note fell due nothing was done by the debtor. The notes outlawed in six years, and the stock was than actually worth less than the amount due on the notes. Five years afterward, the stocks having risen in value, a suit was brought by the debtor to redeem; and the court refused a decreo in his favor and intimated an opinion that his suit was barred by a delay of six years after the debt fell due: Henry v. Tupper, 3 Williams, 29 Vt., 358. A court of equity may grant relief from a forfeiture; for example, from the forfeiture of an estate conditioned for the maintenance and support of the grantee, where the forfeiture was accidental and unintentional, and not attended with irreparable injury. But it rests in the sound discretion of the court when relief shall bo granted in this class of cases.