of the contract the railroad were to return the steamboat to the plaintiff at the end of a certain time in good condition, paying reasonable compensation for the use of the same. While the steamboat was making a passage from Davenport to Port Byron and had landed at Hampden, on the Iowa side, an explosion took place, and this action was brought to recover compensation for the damages sustained in consequence of the explosion, and the inability thereby of the railroad company to return the boat, on the ground that the explosion was the result of the negligence and want of due care and skill of the employees of the company.

§ 13. The bailee for hire of a steamboat, by an acceptance thereof, without ob jection, waives all known and visible defects.

The contract provided that the boat was in good condition, and that two persons named in the contract might or should determine whether the boat was or was not in good condition. It turned out, in point of fact, that these persons from some cause never did determine whether the boat was in the condition named in the contract, but the boat was delivered to and received by the defendant without objection. If there was any defect which was known to or could be seen by the servants of the defendant, and without making objections in consequence of the defect, then the defendant is estopped from setting it up as a defense to this action. The time to make that objection was when the boat was delivered, and that might have been urged as a reason for nonacceptance.

§ 14. A bailee for hire is bound to use reasonable care. If an injury results from a hidden defect, he is not liable.

It was the duty of the defendant to return the boat according to the terms of the contract, unless prevented from so doing by a misfortune that skill, care and diligence could not prevent. In the use of the boat the defendant was bound to exercise all reasonable skill, and I leave it as a question for the jury to determine whether the explosion was one which human skill could have prevented. If it was the result of some hidden, unknown defect, the defendant is discharged. The contract provides that for extraordinary repairs the plaintiff, the lessor, should be chargeable.

§ 15. Interest may be allowed as a part of the damages.

The question arises as to the right to recover interest. Although as a matter of law you are not obliged to give interest, yet if you find for the plaintiff, and fix upon the value of the boat at the particular time as the compensation due the plaintiff, you may, by way of additional damages, give interest. It is optional with you.

§ 16. Of the contract of bailment.- In every bailment or letting for hire a price or compensation for the hire is essential. The amount may not be stipulated; it may be a reasonable compensation or a quantum valebat, but the contract must contemplate payment for the use of the thing let or bailed. Thus where & contract stipulated that certain property was let to A. "for hire," no price for the hire being mentioned; and security was taken for the return of the property within a stipulated time, on demand, A. having the right within that time to purchase, it was held that the contract was not a bailment. Heryford v. Davis, 12 Otto, 244. § 17. A bank made application to another bank to loan some money for it, taking collateral security therefor, and requesting it to make a proper charge for its service. The latter bank made the loan as requested, but determined, inasmuch as the former bank was a large depositor, not to make any charge, but this determination was not communicated to the former bank. The collaterals received were deposited in the burglar-proof safe of the latter bank, from which they were stolen by burglars. Held, that the bank, in making the loan, was not a gratuitous bailee; that as the first bank coupled the request to transact the business with a promise to pay a reasonable charge therefor, and the latter bank accepted the agency without

communicating the fact that it declined compensation, it was proper to assume that the position of an agent for hire was accepted. Second National Bank v. Occan National Bank,* 11 Blatch., 862.

§ 18. Where A. and B. entered into a contract under which B. was to manufacture a certain article for A., the raw material for such manufacture to be furnished by A., the profits to be divided, etc., held, that raw material delivered to B. became his property, subject to execution against him, and that the transaction did not constitute a bailment. Powder Co. v. Burkhardt, 7 Otto, 116. See §§ 75, 77.

§ 19. Where a bank, in consideration of a party's keeping a deposit in the bank, receives a box for safe keeping, there is a sufficient consideration to make the contract an obligatory contract of bailment. A special depositor in a bank is not bound by a by-law of which he had no notice. He is entitled to such security, neither less nor greater, than the course of business between him and the depositary shows to have been mutually intended and expected between them. White v. Bank,* 4 Brewster, 234. See § 89. § 20. Bailor's title. The title of the bailor is not divested by a sale of the property by the bailee. Stump v. Roberts,* 1 Cooke (Tenn.), 350. So where goods are entrusted to a broker to sell, he has no power to pledge them; and if he pledges them to raise money, the owner may recover them from the pledgee. Although the possession of personal chattels is said to be prima facie evidence of property, and consequently of an apparent power of disposition, yet it is no less true, that when property does not in fact exist, possession confers no right either on the holder himself or a vendee under him who pays a valuable consideration on the faith of such possession. The only exception to this rule at common law is that of sale in market overt. Bragg v. Meyer, McAl. 408. See § 86.

§ 21. A bailee cannot avail himself of the title of a third person for the purpose of keeping the property for himself, nor in any case where he has not yielded the paramount title; but if he has performed his legal duty by delivering the property to its true owner, at his demand, he is not answerable to the bailor. And there is no difference in this particular between a common carrier and other bailees. It is not true that, by accepting the bailment, the bailee has estopped himself from questioning the right of the bailor; the contract raises a strong presumption that the bailor is entitled, but the contract is to do with the property what the bailor has directed — to restore it, or to account for it—and he does account for it when he has yielded it to the claim of one who has right paramount to that of the bailor. The Idaho, 3 Otto, 578.

§ 22. Liability of bailee.- A bailee for hire is bound to ordinary care and diligence. Reeves v. The Constitution, Gilp. 585. If he uses due care, he is not liable if the goods are stolen. White v. Bank, 4 Brewster, 234. The reward paid for the thing hired is presumed to include not merely a compensation for its use, but also for the ordinary wear, and the risk attending the employment, unless it be produced by an abuse of it, or by such negligence as brings responsibility upon the hirer. Reeves v. The Constitution, Gilp. 585. See § 85.

§ 23. A bailee is responsible for delivering goods to a wrong person; but if care has been used in the selection of officers and clerks, he is not responsible for a wrong delivery not made in the course of the business of the officer or clerk. White v. Bank,*4 Brewster, 234. § 24. Where an agent was authorized to collect money, and transmit it by mail, or some responsible person, receiving a compensation for his trouble; and he collected it and delivered it for transmission to a trustworthy youth of eighteen years of age, from whom the money was stolen, held, that the agent was not liable. Pelham v. Pace, Hemp. 223.

§ 25. A receiver of public money is not a mere ordinary bailee, and it is no defense to an action on his bond that the money was taken from him by irresistible force. His liability is measured by his bond, and that binds him to pay the money; a cause, therefore, which renders it impossible for him to pay is of no importance, for he has assumed the risk. Boyden v. United States, 13 Wall. 21. See § 90.

§ 26. Every bailee may hold any one responsible for destroying or injuring goods in his possession, but it cannot be maintained that he is responsible for such destruction or injury unless he, by his negligence, contribute to the same. Bank of Ky. v. Adams Express Co. 1 Flip. 256. See $$ 75-92.

2. Gratuitous Bailee.

TRACY v. WOOD.

(Circuit Court for Rhode Island: 3 Mason, 132-136. 1822.)

STATEMENT OF FACTS.-The facts in this case are these: The defendant, who was a money broker and who was about to take a trip from New York to Boston, was entrusted with two bags of gold to be carried as bailee without reward.

On the evening preceding the voyage he brought his valise containing both bags on board of the steamer, and put it in a berth, where he left it while he attended the theater that evening. He made inquiries on board, if the valise would be safe, and was informed if it contained articles of value he had better put it in charge of the captain's clerk, who would put it under lock and key. In the morning, while the steamer was still lying at the dock in New York, one of the bags was found to be missing, and the other was left by the defendant on a table, in his valise in the cabin, for a few minutes while he went on deck to send information of the supposed robbery to the plaintiffs. The loss was generally known, and there was a number of passengers on board. On his return to the cabin the other bag was also missing, and after a thorough search the missing property was not found.

§ 27. Gratuitous bailees are liable only for gross negligence. (a)

Opinion by STORY, J. I agree to the law as laid down at the bar, that, in cases of bailees without reward, they are liable only for gross negligence. Such are depositaries, or persons receiving deposits without reward for their care; and mandataries, or persons receiving goods to carry from one place to another without reward. The latter is the predicament of the defendant. He undertook to carry the gold in question for the plaintiff, gratuitously, from New York to Providence, and he is not responsible unless he has been guilty of gross negligence. Nothing in this case arises out of the personal character of the defendant, as broker. He is not shown to be either more or less negligent than brokers generally are; nor if he was, is that fact brought home to the knowledge of the plaintiffs. They confided the money to him as a broker of ordinary diligence and care, having no other knowledge of him; and, therefore, no question arices as to what would have been the case if the plaintiffs had known him to be a very careless or a very attentive man. Jones' Bail. 46.

§ 28. Gross negligence defined.

The language of the books, as to what constitutes gross negligence, or not, is sometimes loose and inaccurate from the general manner in which propositions are stated. When it is said that gross negligence is equivalent to fraud, it is not meant that it cannot exist without fraud. There may be very gross negligence in cases where there is no pretense that the party has been guilty of fraud; though certainly such negligence is often presumptive of fraud. In determining what is gross negligence, we must take into consideration what is the nature of the thing bailed. If it be of little value, less care is required. than if it be of great value. If a bag of apples were left in a street for a short time, without a person to guard it, it would certainly not be more than ordinary neglect. But if the bag were of jewels or gold, such conduct would be gross negligence. In short, care and diligence are to be proportional to the value of the goods, the temptation and facility of stealing them, and the danger of losing them. So Sir William Jones lays down the law. "Diamonds, gold, and precious trinkets," says he, "ought from their nature to be kept with peculiar care, under lock and key; it would, therefore, be gross negligence in a depositary to leave such deposit in an open ante-chamber; and ordinary neglect, at least, to let them remain on the table, where they might possibly tempt his servants." Jones' Bail. 38, 46, 62. So in Smith v. Horne, 2 Moore's R. 18, it was held to be gross negligence in the case of a carrier, under the usual notice of not being responsible for goods above £5 in value, to send goods in a cart with one man, when two were usually sent to see to the delivery of them. So

(a) Same point, Worthington v. Preston, 4 Wash. 463.

in Booth v. Wilson, 1 Barn. & Ald. 59, it was held gross negligence in a gratuitous bailee to put a horse into a dangerous pasture. In Batson v. Donovan, 4 Barn. & Ald. 21, the general doctrine was admitted in the fullest terms.

§ 29. A bailee without hire is guilty of gross negligence if he omits to use ordinary prudence.

It appears to me that the true way of considering cases of this nature is to consider whether the party has omitted that care which bailees without hire, or mandataries of ordinary prudence, usually take of property of this nature. If he has, then it constitutes a case of gross negligence. The question is not whether he has omitted that care which very prudent persons usually take of their own property, for the omission of that would be but slight negligence; nor whether he has omitted that care which prudent persons ordinarily take of their own property, for that would be but ordinary negligence. But whether there be a want of that care which men of common sense, however inattentive, usually take, or ought to be presumed to take, of their property, for that is gross negligence. The contract of bailees without reward is not merely for good faith, but for such care as persons of common prudence in their situation usually bestow upon such property. If they omit such care, it is gross negligence.

$30. Money delivered to a bailee without reward is to be kept with more care than common property.

The present is a case of a mandatory of money. Such property is by all persons, negligent as well as prudent, guarded with much greater care than common property. The defendant is a broker, accustomed to the use and transportation of money, and it must be presumed he is a person of ordinary diligence. He kept his own money in the same valise; and took no better care of it than of the plaintiffs'. Still if the jury are of opinion that he omitted to take that reasonable care of the gold which bailees without reward in his situ ation usually take, or which he himself usually took of such property, under such circumstances, he has been guilty of gross negligence.

§ 31. Gratuitous bailee.- Where a gratuitous bailee loans money, takes a mortgage, and delivers the same to his principal, who has abundant opportunity to record it, and a loss occurs by reason of non-recording, the bailee is not liable. Turton v. Dufief, 6 Wall. 420.

§ 32. Certain record books were stolen from a county, and the county officers placed a sum of money in the hands of A., to be paid to the person causing a return of the property, stipulating that a failure to return some small paper or papers should not invalidate the agreement. Held, that A. was a gratuitous bailee, and was justified in paying over the money on a return of the books, although some of the books were damaged. Eldridge v. Hill, 7 Otto, 92. See § 85.

II. OF THE LAW OF PLEDGE.

SUMMARY - Delivery of pledge, §§ 33-35.- Surrender to military officer, § 36.- Sale to bona fide purchaser, § 37.

§ 33. Possession by the pledgee is of the very essence of a pledge. The pledge may be redelivered to the pledgor for a temporary purpose without defeating the rights of the pledgee; but if the pledgee never had possession, as in a case merely of an agreement for a pledge, or the pledge be delivered back to the pledgor absolutely, with power to substitute other property or securities, the pledgee has no further rights as against third persons. Casey v. Cavaroc, $$ 38-47. See § 62.

§ 34. There must be a delivery before the pledgee's lien will attach, but the delivery may be either actual or constructive; the possession may be held by an agent, and the agent may be the pledgor, the only question being whether the transaction is bona fide.— A bill of sale intended for security operates as a pledge, and need not be recorded. Ex parte Fitz, $$ 48-50. § 35. A decree of a probate court, holding a bailment void because the thing pledged had never been delivered, will not bar a suit by the pledgee against the executor of the pledgor to compel a delivery of the pledge. Myers v. D'Meza, §§ 51, 52.

§ 36. Where a bank is put in liquidation by a military officer, and securities held in pledge are taken and sold at less than their value, the bank yields to superior force, and is not liable. McLemore v. Louisiana State Bank, § 53.

§ 37. Where the pledgee sells the pledge to a bona fide purchaser, without notice of the claim of the pledgor, the pledgor cannot recover the pledge without tendering the amount due. And it seems that it would not be material that the note, to secure which the pledge was given, remained in the hands of the pledgee, especially if it had matured when suit was brought. Talty v. Freedman's S. & T. Co. §§ 54, 55. See § 58.

[NOTES.-See §§ 56-64.]

CASEY v. CAVAROC.

(6 Otto, 467-491. 1877.)

APPEAL from U. S. Circuit Court, District of Louisiana.

STATEMENT OF FACTS.-The National New Orleans Banking Association failed October 4, 1873, and about that time Cavaroc, its president, took $325,000 of its notes and bills and deposited them with his firm, C. Cavaroc & Son, who claimed to hold them as agents for the Société de Crédit Mobilier of Paris, as security or pledge to secure the society for certain acceptances in July previous by the society for the bank. The question was whether these securities constituted a valid pledge, or whether the arrangement was a fraudulent preference of creditors. The bill in this case was filed by the receiver to subject these assets to the general debts of the bank, and upon the hearing was dismissed. Further facts appear in the opinion of the court. Opinion by MR. JUSTICE BRADLEY.

The substance of the agreement in this case, so far as necessary to be considered, was that the Credit Mobilier should accept the drafts of the banking association to the amount of a million of francs at ninety days, the bank agreeing to furnish funds to pay the drafts at maturity, with the privilege of a renewal; and it was stipulated that this obligation of the bank should be guarantied by Cavaroc & Co., and by a deposit with them, for the use of the Credit Mobilier, of first-class securities, of which deposit the latter was to be advised. This arrangement was immediately telegraphed to New Orleans, and the drafts were drawn on the 12th of July; but the weight of the evidence is, that none of the collateral securities were delivered until the 19th of August,which might raise a question whether the accommodation acceptances of the Credit Mobilier could be considered as a contemporary consideration therefor; or, if not, whether the bank was at that time, in the apprehension of Cavaroc (the common agent), in a condition of solvency and good credit,— as to which an affirmative answer could not well be given, since the proof is quite clear that the bank was then struggling with serious financial difficulties, from which it never recovered. Waiving this question, however, for the present, we will proceed to examine whether, supposing that no objection arises from the time when this transaction took place, it amounted to such a transfer or pledge of the securities in question as to entitle the Credit Mobilier to a preference upon them over the other creditors of the bank at the time of its failure. Was there such a delivery and retention of possession of the collateral securities as to constitute a valid pledge by the law of Louisiana? Clearly they were never out of the possession of the officers of the bank, and were never out of the bank for a single moment, but were always subject to its disposal in any manner whatever, whether by collection, renewal, substitution, or exchange; and collections, when made, were made for the benefit of the bank, and not that of the Credit Mobilier. The case has some features in common with, though differing in others from, that of Clarke v. Iselin, 21 Wall. 360, in which this