CHAPTER III. PLEDGE. SECTION 2936. Pledge, what. 2987. When contract is to be deemed a pledge. 2989. Increase of thing. 2990. Lienor may pledge property to extent of his lien. 2991. Real owner cannot defeat pledge of property transferred to 2992. Pledge lender, what. 2993. Pledge holder, what. 2994. When pledge lender may withdraw property pledged. 2995. Obligations of pledge holder. 2996. Pledge holder must enforce rights of pledgee. 2997. Obligation of pledgee and pledge holder, for reward. 2998. Gratuitous pledge holder. 2999. Debtor's misrepresentation of value of pledge. 3000. When pledgee may sell. 3001. When pledgee must demand performance. 3002. Notice of sale to pledgeor. 3003. Waiver of notice of sale. 3004. Waiver of demand. 3005. Sale must be by auction. 3006. Pledgee's sale of securities. 3007. Sale on the demand of the pledgeor. 3008. Surplus to be paid to pledgeor. what. SEC. 2986. Pledge is a deposit of personal property by Pledge, way of security for the performance of another act. NOTE. Our statute on "Pawnbrokers" will be found, a little condensed, in the form of a note at the end of this chapter. It can be substituted, if thought best, for this, which is a copy from the New York Civil Code. SEC 2987. Every contract by which the possession of personal property is transferred, as a security only, is to be deemed a pledge. It is intended, by this section, to place every mortgage of personal property, accompanied by a change of possession, upon the same footing with a pledge. This is in accordance with the rule of the civil law, and will greatly simplify the law of this State in respect to pledges and mortgages (see Story Eq. Jur., Sec. 1005; Code Napoleon, 2071, 2117). N. Y. C. C., Sec. 1648. When condeemed a tract is to be pledge. Delivery essential to validity of pledge. Increase of thing. Lienor may pledge prop. erty to extent of his lien. Real owner cannot defeat pledge of property transferred to apparent owner for purpose of pledge. Pledge lend. er, what. Pledge holder, what. When pledge lender may property SEC. 2988. The lien of a pledge is dependent on possession, and no pledge is valid until the property pledged is delivered to the pledgee, or to a pledge holder, as hereafter prescribed. N. Y. C. C., Sec. 1649. SEC. 2989. The increase of property pledged is pledged with the property. N. Y. C. C., Sec. 1650. SEC. 2990. One who has a lien upon property may pledge it to the extent of his lien. This power is not fully recognized by our existing law; but it is established in England, and seems just. N. Y. C. C., Sec. 1651. SEC. 2991. One who has allowed another to assume the apparent ownership of property for the purpose of making any transfer of it, cannot set up his own title, to defeat a pledge of the property, made by the other, to a pledgee who received the property in good faith, in the ordinary course of business, and for value. This section is an extension of our present rule allowing a pledge by an agent intrusted with indicia of title to be sustained in favor of one who lends upon it without notice of the true owner's title. N. Y. C. C., Sec. 1652. SEC. 2992. Property may be pledged as security for the obligation of another person than the owner, and in so doing the owner has all the rights of a pledgeor for himself, except as hereinafter stated. N. Y. C. C., Sec. 1653. SEC. 2993. A pledgeor and pledgee may agree upon a third person with whom to deposit the property pledged; who, if he accepts the deposit, is called a pledge holder. N. Y. C. C., Sec. 1654. SEC. 2994. One who pledges property as security for withdraw the obligation of another, cannot withdraw the property pledged otherwise than as a pledgeor for himself might; and, if he receives from the debtor a consideration for the pledge, he cannot withdraw it without his consent. pledged. Obligations N. Y. C. C., Sec. 1655. SEC. 2995. A pledge holder for reward cannot exonholder. erate himself from his undertaking; and a gratuitous of pledge pledge holder can do so only by giving reasonable notice. to the pledgeor and pledgee to appoint a new pledge holder, and, in case of their failure to agree, by depositing the property pledged with some impartial person, who will then be entitled to a reasonable compensation for his care of the same. N. Y. C. C., Sec. 1656. SEC. 2996. A pledge holder must enforce all the rights of the pledgee, unless authorized by him to waive them. N. Y. C. C., Sec. 1657. SEC. 2997. A pledgee, or a pledge holder for reward, assumes the duties and liabilities of a depositary for reward. N. Y. C. C., Sec. 1658. SEC. 2998. A gratuitous pledge holder assumes the du- Gratuitous ties and liabilities of a gratuitous depositary. N. Y. C. C., Sec. 1659. SEC. 2999. Where a debtor has obtained credit, or an extension of time, by a fraudulent misrepresentation of the value of property pledged by or for him, the creditor may demand a further pledge to correspond with the value represented; and in default thereof may recover his debt immediately, though it be not actually due. N. Y. C. C., Sec. 1660. pledge Debtor's misrepre sentation of pledge. value of pledgee may sell. SEC. 3000. When performance of the act for which a when pledge is given is due, in whole or in part, the pledgee may collect what is due to him by a sale of property pledged, subject to the rules and exceptions hereinafter prescribed. N. Y. C. C., Sec. 1661. SEC. 3001. Before property pledged may be sold, and after performance of the act for which it is security is due, the pledgee must demand performance thereof from the debtor. N. Y. C. C., Sec. 1662. When demand per pledgee must formance. to pledgeor. SEC. 3002. A pledgee must give actual notice to the Notice of sale pledgeor of the time and place at which the property pledged will be sold, at such a reasonable time before the sale as will enable the pledgeor to attend. N. Y. C. C., Sec. 1663. Waiver of notice of sale. Waiver of demand. Sale must be by auction. sale of secu SEC. 3003. Notice of sale may be waived by a pledgeor at any time; but is not waived by a mere waiver of demand of performance. N. Y. C. C., Sec. 1664. SEC. 3004. A debtor or pledge or waives a demand of performance as a condition precedent to a sale of the property pledged, by a positive refusal to perform, after performance is due; but cannot waive it in any other manner except by contract. SEC. 3005. N. Y. C. C., Sec. 1665. The sale by a pledgee, of property pledged, must be made by public auction, in 'he manner and upon the notice to the public usual at the place of sale, in respect to auction sales of similar property; and must be for the highest obtainable price. It is of course to be understood that this section may be overruled by agreement of the parties. N. Y. C. C., Sec. 1666. Pledgee's SEC. 3006. A pledgee cannot sell any evidence of debt rities. pledged to him, except the obligations of Governments, States or corporations; but he may collect the same when due. Sale on the demand of Of course a different agreement may be made by the parties. N. Y. C. C., Sec. 1667. SEC. 3007. Whenever property pledged can be sold for the pledgoor. a price sufficient to satisfy the claim of the pledgee, the pledgeor may require it to be sold, and its proceeds to be applied to such satisfaction, when due. Surplus to be paid to pledgeor. This provision is new, or, at least, it is very doubtful whether such a right now exists. But its justice is very clear (Story Bailm., Sec. 320). It is not proposed to extend the same privilege to mortgages, as they are used as permanent securities. A pledge should be used only as a transient security. N. Y. C. C., Sec. 1668. SEC. 3008. After a pledgee has lawfully sold property pledged, or otherwise collected its proceeds, he may deduct therefrom the amount due under the principal obligation, and the necessary expenses of sale and collection, and must pay the surplus to the pledgeor, on demand N. Y. C. C., Sec. 1669. SEC. 3009 When property pledged is sold before the Same. claim of the pledgee is due, he may retain out of the proceeds all that can possibly become due under his claim, until it becomes due; with the proper rebate of interest. N. Y. C. C., Sec. 1670. SEC. 3010. A pledgee, or pledge holder, cannot pur- Pledgee's chase the property pledged except by direct dealing with of property the pledgeor. Story on Bailm., Sec. 319; see also Dykers vs. Allen, 7 Hill, 497, and the Title on Trusts. But (prior to Laws of 1857, Chap. 414, somewhat enlarging the powers of a special partner) it was held that a special partner of a firm with whom property is pledged is not incapacitated from purchasing it at a sale made by the firm. As he was prohibited from transacting any business on account of the partnership, and could not be employed as agent, attorney or otherwise, no duty devolved upon him in reference to the bailment. He could not aid or direct in the sale; and, hence, was not within the rule that one shall not be permitted to purchase who has a duty inconsistent with the character of purchaser (Lewis vs. Graham, 4 Abb. Pr., 106). N. Y. C. C., Sec. 1671. SEC. 3011. Instead of selling property pledged, as herein before provided, a pledgee may foreclose the right of redemption by a judicial sale under the direction of at competent Court; and in that case may be authorized by the Court to purchase at the sale. N. Y. C. C., Sec. 1672. NOTE. The following is our statute on "Pawnbrokers" (Stats. 1861, 184): SECTION 1. Every person carrying on the business of a pledgee, in this State, must keep a register, wherein must be entered, in the English language, the date, duration, amount, and rate of interest, of every loan made by him, an accurate account and description of the property pledged, and the name and residence of the pledgeor, and, at the same time, deliver to the pledgeor a written or printed memorandum signed by him, containing a copy of the entry, and must also keep an account of all sales made by him. SEC. 2. The rate of interest which may be charged by any pledgee shall not exceed four per cent. per month, in advance, on all loans exceeding twenty dollars, which shall include all charges for discount, commissions, storage, brokerage, wastage, and all charges. The interest must not be compounded. SEC. 3. Any pledgee who charges or receives any interest greater than four per cent. per month, or attempts to increase the interest by charging commissions, discount, brokerage, storage, wa tage or other charge, or shall compound the interest, forfeits three times the value of the article pledged, or to be pledged, to be recovered by the owner or pledgeor in a civil action. SEC. 4. No pledgee must sell or dispose of any article pledged to him and unredeemed, until it has remained in purchase pledged. |