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may make a valid pledge of the certificate to an innocent party, who will hold it without reference to the equities between the payee and his pledgee. The last pledgee is authorized to infer absolute ownership and full right in the holder to pledge the certificate; though, as against the payee, his recovery would be limited to the amount of his loan upon the certificate.1

A recital, however, in an assignment of a chose in action by the apparent owner, that it was made for value received, is not evidence in favor of the assignee against the real owner that it was for value, although he himself introduce the assignment in evidence. The assignee must prove affirmatively that he is a bona fide purchaser for value."

§ 135a. A contract may be assigned in pledge. A contract for the construction of a sea-wall and wharf assigned by the contractor as collateral security, accompanied by a power of attorney to the assignee to collect the money to become due under the contract, is merely a pledge of the contract, creating a lien thereon, subject to which the title and general property in the pledge remains in the pledgor; and such pledge and lien imply no obligation on the part of the pledgee to perform or to pay for the work which the pledged contracts required to be performed by the pledgors, and the pledgee is not liable to an action of assumpsit by employes of the pledgors for work and labor performed.

A cause of action for the recovery of the value of property

1 International Bank v. German Bank, 71 Mo. 183, 36 Am. Rep. 468; Weirick v. Mahoning Co. Bank, 16 Ohio St. 296; and also Combes v. Chandler, 33 Ohio St. 178.

2 Moore v. 55 N. Y. 41.

Commissioners, 14 Colo. 371, 23 Pac.
Rep. 338. So a contract for the con-
struction of a railroad. Reynolds v.
Louisville, New Albany & Chicago R.
Co., 143 Ind. 579, 40 N. E. Rep. 410.

Metropolitan Nat. Bank, A lease of real property for a term of

Stone v. Owens, 105 Cal. 292, 38 Pac. Rep. 726. So a contract for the sale of land. Butler v. Rockwell, 14 Colo. 125, 23 Pac. Rep. 462. So an order for wages due the pledgor. Lewis v.

years. Penney v. Lynn, 58 Minn. 371, 59 N. W. Rep. 1043. A legacy or an interest in the estate of a deceased person. McKie v. Gregory, 175 Mass. 505, 56 N. E. Rep. 720.

entrusted to a carrier is assignable and may therefore be pledged.' And so in an action for the recovery of money obtained by false pretenses or wrongfully converted."

One having a lien upon property may assign the lien as collateral security, and may maintain an action for its enforcement, making the assignee of the lien a party; or the assignee may enforce it in the name of the assignor."

Book accounts may be pledged by an assignment of them, but a mere statement of the accounts is not a pledge of them.* The fact that one who has made a loan upon an indorsed note is induced by the maker or indorsers to take further collateral security which is forbidden by a rule of public policy, such as an assignment by the maker of future fees to accrue from the county to him as a public officer, does not affect the lender's right to enforce the note against the maker or the indorsers. The latter are not discharged because the collateral was illegal.'

A cause of action for a personal tort can not be assigned, and therefore can not be pledged."

§ 136. The assignment of a chose in action as security is valid without notice to the debtor of the assignment. The assignment is complete upon the mutual assent of the parties to it, followed by delivery; and it does not gain additional validity as against third persons by notice to the debtor."

§ 136a. An assignment by a contractor as security for a debt of all moneys to become due to him from a city, is not rendered

2

1 Merrill v. Grinnell, 30 N. Y. 594. Byxbie v. Wood, 24 N. Y. 607; McKee v. Judd, 12 N. Y. 622, 64 Am. Dec. 515.

3 Ridgway v. Bacon, 72 Hun (N. Y.) 211, 25 N. Y. Supp. 651, 55 N. Y. St. Rep. 345.

'Cornwell v. Baldwin's Bank, 12 App. Div. 227, 43 N. Y. Supp. 771; Freeman v. Rich, 64 Hun (N. Y.) 478, 19 N. Y. Supp. 498, 46 N. Y. St. Rep. 731.

5 Bowery Bank v. Gerety, 153 N. Y.

411, 47 N. E. Rep. 793, affirming 91 Hun 539, 36 N. Y. Supp. 254. See Oneida Bank v. Ontario Bank, 21 N. Y. 490; Bath Gas Light Co. v. Claffy, 151 N. Y. 24, 45 N. E. Rep. 390.

6 Zabriskie v. Smith, 13 N. Y. 322, 334, 64 Am. Dec. 551; People v. Tioga, 19 Wend. (N. Y.) 73.

7 Thayer v. Daniels, 113 Mass. 129.

Otherwise in England: Dearle v. Hall, 3 Russ. 1; Loveridge v. Cooper, 3 Russ. 30; Meux v. Bell, 1 Hare 73.

void by a provision in the contract against assignment, such as a provision that neither the contract nor any of the moneys payable under it shall be assigned without the consent of the city in writing, but is for the protection of the city, and can be availed of only by the city; a junior assignee of the moneys can not avail himself of this provision to obtain a more favorable position in the order of payment. When an assignment, in form an absolute assignment of all the contractor's rights and interest under such a city contract, is in fact made as collateral security for a debt, the assignee, in the distribution of the fund payable under the contract and where no claim is made against the city, comes within the rule that, as between different assignees of a chose in action by express agreement from the same person, the one prior in point of time will be protected, although he has given no notice of such assignment to either the subsequent assignee or the debtor.'

II. Pledges of Mortgages.

§ 137. A mortgage with the note or bond secured by it may be the subject of a pledge by the mortgagee or holder. Though the transfer be by an absolute assignment, yet if it be accompanied by the debtor's note, which gives his creditor authority to sell the mortgage upon the debtor's default in paying his debt, the transaction is a pledge of the mortgage, and not a sale or mortgage of it. The assignee in such a case has only a special property in the mortgage, and is subject to all the duties and obligations of a pledgee. Thus, if such assignee without demand or notice transfer the mortgage to a third person for a grossly inadequate price, and the latter cancels it, the creditor is liable to his debtor in trover for a conversion of the mortgage."

1 Fortunato v. Patten, 147 N. Y. 277, 41 N. E. Rep. 572; Lowry v. Inman, 46 N. Y. 119; Williams v. Ingersoll, 89 N. Y. 508; Fairbanks v. Sargent, 104 N. Y. 108, 9 N. E. Rep. 870, 117 N. Y. 320, 22 N. E. Rep. 1039.

2

Campbell v. Parker, 9 Bosw. (N. Y.) 322; Haskins v. Kelly, 1 Rob. (N. Y.) 160, 1 Abb. Pr. N. S. 63.

Campbell v. Parker, 9 Bosw. (N. Y.) 322.

In some early cases an assignment of a bond or note and mortgage is spoken of as in itself a mortgage.' "Whether a particular transaction is a mortgage or a pledge is often a very nice question; and being a question of difficulty, courts have in many instances used the terms 'mortgage' and 'pledge' indifferently, when it was not necessary to observe the distinction between them. But when the real character of the transaction is manifested by the language of the parties to the contract, disclosing their purpose and intention, all that a court has to do is to recognize its real and true character, and to carry into effect by an appropriate decree the parties' declared intention."" Accordingly a note and mortgage may be the subject of either a pledge or a chattel mortgage.

§ 138. If the form of the assignment of a chose in action be that of a mortgage of it with a condition of defeasance, the transaction, in the absence of any other decisive characteristic, should be regarded as a mortgage rather than a pledge. Thus, if a life insurance policy be assigned by an instrument having throughout the form of a mortgage, or if the assignment on the one side and the receipt on the other, taken together, are such in form, the purport and substance of the contract, and the intention of the parties as disclosed by the language used to express it, indicate a mortgage rather than a pledge."

§ 139. To institute a valid pledge of a mortgage or other lien, there must be either a legal transfer by signing and delivering a written assignment of it, or there must be some other actual or symbolical delivery of possession; such for instance as the delivery of the mortgage and note, or the note alone. A mere agreement of the parties that there shall be a pledge of the mortgage, without any such transfer or delivery,

1

Henry v. Davis, 7 Johns. (N. Y.) Ch. 40, 2 Cow. 324; Slee v. Manhattan Co., 1 Paige (N. Y.) 48.

2 Wright v. Ross, 36 Cal. 414, 429, per Currey, C. J., and see Dungan v. JONES PLEDGES-10

Mut. Benefit L. Ins. Co., 38 Md. 242, 252, per Miller, J.

3

Dungan v. Mut. Benefit L. Ins. Co., 38 Md. 242.

is insufficient.' The same rule applies to the pledge of any other like security; such for instance as a policy of insurance. A contract or promise to transfer or deliver it in pledge does not avail to make it a pledge unless it be transferred or delivered in pursuance of such contract or promise."

3

§ 140. An ordinary absolute assignment of a mortgage with the note, made by way of security for another debt, is a pledge rather than a mortgage. Probably such a transfer would generally, in the absence of controlling circumstances, be regarded as a pledge. But there may be a mortgage of a mortgage, and this is the legal effect of an assignment of a mortgage, upon the express condition that the assignment shall be void, if default be made by the assignor in the payment of the draft secured by the assignment. An assignment of a note and mortgage of real property made in the usual form of a chattel mortgage, expressed to be for the purpose of securing a sum of money, and providing that if the assignee collects the money he is to account for any surplus there may be, may be regarded as a chattel mortgage, especially if the instrument be so denominated in the terms of it."

§ 141. Generally the fact that a mortgage is assigned as collateral security does not appear on the face of the assignment. If the assignment be absolute in form, the fact that it was made as collateral security may be shown by parol evidence, just as an absolute conveyance of real property may by such evidence be shown to be a mortgage; or as an absolute bill of sale may be shown to be a mortgage or pledge of personal property.

Sevin v. Caillouet, 30 La. Ann. 528; Caffin v. Kirwan, 7 La. Ann. 221.

35.

2 Succession of D'Meza, 26 La. Ann.

Fraker v. Reeve, 36 Wis. 85. See, also, Gay v. Moss, 34 Cal. 125, where

an absolute assignment of a contract was so regarded.

Wright v. Ross, 36 Cal. 414. And see Dewey v. Bowman, 8 Cal. 145, 150; Wendell v. New Hampshire Bank, 9 N. H. 404.

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