word "lien" has acquired, we may add that courts often speak of the lien of an attachment; and that judgments are likewise regarded in the light of a lien upon the judgment debtor's real estate.1 Moreover a pledgee's security is often somewhat loosely stated as a lien in our modern reports. While, therefore, to conclude, we commonly understand that a creditor whose debt is secured by a lien on personal property holds the chattel as security for his debt, with the right of retaining possession until the debt is paid, we also find that, in a larger sense, wherever property either real or personal is charged with the payment of some debt, claim, or demand, every such charge, however it may be enforced in the courts, is termed a lien upon the property, as being in the nature of a privileged claim.

CHAPTER V.

DEBTS SECURED BY PLEDGE; COLLATERAL SECURITY.

§ 394. What is a Pledge or Pawn; Collateral Security. The topic of pledge or pawn is usually considered under the general head of bailments, by common-law writers, though it is usually connected with debts or loans and like bailment title itself constitutes part of the law of personal property. From

1 Williams v. Benedict, 8 How. 107; Metcalf's Yelv. 67 i; 4 Kent Com. 173; Ex parte Foster, 2 Story, 131.

The writer is not aware of any modern text-book of practical usefulness to professional men, which treats of liens as they exist at the English and American law, so far as relates to personal property. This subject may be studied, however, in Schouler Bailments, §§ 122-127, 326, 542550, with especial reference to hired workmen upon a chattel, innkeepers, and common carriers. And as to the lien of common carriers see also

Angell and other writers on that special subject. For the lien of factors, attorneys, and agents, generally, the latest edition of Story Agency, §§ 351-390, may be read. Story and other writers on Equity Jurisprudence consider the equitable lien; while works on Shipping (see c. 1, supra, note at end) treat of maritime liens.

Mr. Leonard A. Jones (1888) has published a comprehensive work of two volumes on the subject of liens, in which this whole subject may be studied in detail; and the above paragraph stands modified.

debts secured by lien we advance a step when we come to those which have the more ample common-law security furnished by a pledge of chattels. A debt frequently arises in these days from the loan of money; and when the loan is accompanied, as we frequently find it, by a pledge of some other kind of incorporeal personal property, for the purpose of assuring more completely the performance of the principal engagement, it is usually in these days called among business men, though not with logical exactness, a loan on collateral security. Thus, a man borrows one thousand dollars, for which he gives his promissory note, and also deposits with the lender, by way of collateral security, certificates of stock, or the promissory note of a third person; and in consequence, for repayment of this loan with interest, the capitalist avails himself not only of the borrower's credit, but of the property deposited with him in addition.1

A pledge or pawn, then, consists in the bailment of personal property as security for some debt or engagement; and by bailment we denote a delivery upon the understanding (or at least a rightful possession under the obligation) that the property shall be held according to the special purpose of

1 The law of pledge, together with the history and modern growth of such transactions, may be found treated at length in the writer's volume on Bailments. Only a brief summary of that law can be attempted within the limits of the present chapter. See Schoul. Bailm. part iv. c. 4. "Collateral security" or "collateral" alone are mercantile expressions which have no precise legal significance. As a chancery phrase, collateral security" long ago, in other connections, came to signify a security given in addition to the principal security. Where one borrows money on mortgage and deposits bonds, there may arise a strict loan on collateral security. But the colloquial use of these words is not so precise. See 16 Ch. D. 211, 217; 11 Penn. St. 120. Giving one's

simple promissory note for the loan, and bonds, stock, &c., as security, might to many seem a proper instance under the same head; and hence, perhaps, the true origin of this mercantile use of such words. But there is practically no such rigid construction applied, even from the bench; and semble, unless the note given for the loan were indorsed, it could not fairly of itself be called "a principal security." As an expression not confined to strict pledge, by way of contrast with chattel mortgage, &c., "collateral security seems sometimes to be preferred in the courts for its very vagueness. Mr. Jones thinks the term a convenient one to designate a pledge of incorporeal personal property. Jones Pledge, § 1.

the delivery or taking, and restored or delivered over when that purpose is fully accomplished. This pawn or pledge corresponds to the pignus of the civil law where the thing was delivered to the creditor; while if its possession remained with the debtor, although the property was pledged as security, the civil law called it hypotheca; though some considered that the difference between pignus and hypotheca was one of sound only.2 Like our pledge, the pignus seems to have been confined to personal property.3 In our language the terms "pawn" and "pledge" seem to be interchangeable, and are used indifferently by law-writers; yet out of regard to the well-known business of pawnbrokers, which never was thought to be of an elevated character, we often find that the word "pawn" is confined in parlance to those petty transactions concerning things corporeal which characterize this particular business; while persons who deal in those moneyed or incorporeal securities which a mercantile community favors, generally apply the comprehensive term "pledge" in preference, or else characterize the loan as one upon collateral security. For pledge transactions are found altogether too convenient in the modern business world to be confined to mean lenders and small borrowers; and pledge rather than pawn is the favored generic term of the transaction.

§ 395. What Things may be the Subject of Pledge. What things may be the subject of pledge? As we have already intimated, the transaction is confined to personal property; and of personal property, all kinds which are visible and tangible may be pledged, and, besides, as modern cases fully establish, the various incorporeal species, so far at least as concerns those which are evinced by instruments in writing, which writing may itself be delivered. In old times the business of loaning on pledge or pawn was chiefly in the hands of the Jewish pawnbrokers; and in the leading case

1 Story Bailm. §§ 7, 286; 2 Kent Com. 577; Bouv. Dict. "Bailment," "Pledge; " 2 Bl. Com. 452; Schoul. Bailm. §§ 13, 162.

22 Kent Com. 577. See Dig. lib. 20, tit. 1, cited in Story Bailm. § 286; Pothier de Nant. art. Prelim. n. 2; Schoul. Bailm. § 166.

3 Ib.

of Coggs v. Bernard we find Lord Holt laying down the law with particular reference to jewels, wearing apparel, and domestic animals. But in these days no such narrow application of principles would be deemed suitable; and bills and notes, government and municipal securities of various kinds, coupon bonds, shares of stock, title-deeds, savings-bank books, judgments, chattel or real estate mortgages, insurance policies, leases, and patent rights, are constantly interchanged in our business community for the purpose of pledge.2 It is the giving in pledge of incorporeal property of various kinds with their various incidents, by some voucher or muniment of title, that so greatly obscures the law of the present day. Chattels incapable of delivery cannot, logically speaking, be the subject-matter of pledge; but since choses in action or money rights may at least be assigned, delivery of the muniment or voucher obviates all practical difficulty.3

Chattels of any kind, which are available in the holder's hands, may in this manner be delivered as security for a debt; provided they be in existence at the time of the pledge transaction. But a technical objection arises where the attempt is made to make property not in existence the subject of a pledge; since the present pledge of property to be

12 Ld. Raym. 917.

2 See Morris Canal Co. v. Lewis, 1 Beasl. 667; Donald v. Suckling, L. R. 1 Q. B. 585; Wilson v. Little, 2 Comst. 443; Story Bailm. 9th ed. § 290; 2 Kent Com. 577, 578, and n.; Houser v. Kemp, 3 Penn. St. 208; Swift v. Tyson, 16 Pet. 1; Talty v. Freedman's Savings Co., 93 U. S. 321. For late decisions as to these various kinds of personal property, see Schoul. Bailm. §§ 172, 173. Not only are leases thus reckoned by a deposit of deeds, but a mortgage of real estate likewise, which before foreclosure is personal property. Jerome v. McCarter, 94 U. S. 734; 9 Bosw. 322; 8 Cal. 145; English v. McElroy, 62 Ga. 413. A pledge may be made of rails laid down by agree

ment for a temporary purpose upon another's land, as well as of the railway rolling stock, since they are all personal property. Woodward v. Exposition R., 39 La. Ann. 566; § 131.

3 Talty v. Freedman's Savings Co., 93 U. S. 321; Schoul. Bailm. § 173; supra, §§ 72-76, as to assignment. Under mercantile usage of the present day, the pledge of a bill of lading of goods in transit by land or water effects a pledge of the goods. Schoul. Bailm. § 173; Hathaway v. Haynes, 124 Mass. 311; Marine Bank v. Fiske, 71 N. Y. 353. The pledge of goods in a warehouse may be similarly affected under a warehouse receipt. Schoul. Bailm. § 173.

See Schoul. Bailm. §§ 174, 175.

hereafter acquired gives no immediate delivery of possession to the pledgee, and is rather an hypothecation than a strict pledge. Modern decisions on this point appear to leave the subject in some uncertainty. But just as equity sustains the sale and transfer by assignment of expectant and reversionary interests, so is the judicial disposition strong in many States to sustain a pledge transaction where not a mere possibility but a potential actual interest is given in security.1 And thus has a pledgor's interest been gained not only in the principal thing pledged, but in certain accessions thereto besides. If a pledge contract undertakes to put in security that which, as a subject-matter, is not actually in existence, there can be no immediate bailment to the pledgee, technically speaking, for there is nothing to deliver; and non-existence excludes attachment by the pledgor's creditors none the less. But we may perhaps correctly assume that the pledge contract of after-acquired chattels or chattels by accession, so far as courts sustain the arrangement, gives the pledgee a right strong as to the pledgor himself, because of their mutual agreement, but which as against third parties he must perfect when opportunity offers, and so that actual or constructive delivery and acceptance shall follow the accession or production of the new thing, before adverse rights. can bona fide attach thereto.2

It is laid down justly as a doctrine borrowed from the Roman law, that, by the pledge of a thing, not only the thing itself passes, but the natural increase thereof as accessory; thus, if a flock of sheep are pledged, the young afterwards born during the continuance of the bailment become pledged also. In like manner dividends or interest pay

1 Schoul. Bailm. §§ 174, 175; Bellows v. Wells, 36 Vt. 599; Goodenow v. Dunn, 21 Me. 86; 10 Met. 481; 30 La. Ann. 943.

2 See, as to a brickmaker's agreement with lessees of a brick yard, Macomber v. Parker, 14 Pick. 497. Also Smithurst v. Edmunds, 14 N. J. Eq. 408, the case of added furniture to be security for a landlord's rent;

Ayers v. Banking Co., L. R. 3 P. C. 548. And see Schoul. Bailm. §§ 174, 175. But as to a crop growing, see Schoul. Bailm. § 175; 86 Ill. 591; 7 Wis. 159. Here the rule is strict against a pledgee, unless he gets possession before other rights can intervene.

81 Domat. b. 3, tit. 1, § 1, arts. 7-10; Story Confl. Laws, § 292; La.