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a clause in the policy which prohibits a transfer of it without the consent in writing of the insurers does not apply to a deposit of the policy by way of pledge.' The interest of the insurers can not be affected by any transfer which does not also transfer the title to, and a control over, the property assured; and therefore such restrictions have not been understood to apply to assignments in which the underwriters can have no interest, and to control which they can have no motive.2
§147a. A pledge of a fire insurance policy may be made by an assignment of it without a transfer of the property insured, unless a by-law of the insurance company or the policy itself provides that the policy shall not be assignable for purposes of collateral security. The consent of the company to such assignment given in the form used for an assent to an absolute transfer and without inquiry whether the property had been transferred to the assignee is valid and binding. Proof of loss may be made by the insured for the benefit of the pledgee.3
A policy of insurance against loss by fire provided that "this policy is not assignable for purposes of collateral security, but for such purpose it is to be made payable in case of loss by indorsement on its face. In cases of actual sale and transfer of title, leave having been previously obtained, the form subjoined may be used, which must be executed at the time of said transfer." Then followed an assent to an assignment signed by an agent of the company. This was in turn followed by an assignment by the insured of "all his title and interest in this policy, and all advantages to be derived therefrom." The assignment in fact was made as collateral security for a debt, which was also secured by a mortgage of the insured property executed a few days after the policy was as
'Dickey v. Pocomoke City Nat. Bank,89 Md. 280, 43 Atl. Rep. 33; Ellis v. Kreutzinger, 27 Mo. 311; Griffey v. New York Cent. Ins. Co., 100 N. Y. 417, 3 N. E. Rep. 309; True v. Manhattan F. Ins. Co., 26 Fed. Rep. 83.
2 Ellis v. Kreutzinger, 27 Mo. 311, 62 Am. Dec. 270.
Merrill v.Colonial Mut. F. Ins. Co., 169 Mass. 10, 47 N. E. Rep. 439; East Texas F. Ins. Co. v. Coffee, 61 Tex. 287.
signed. The agent who signed the assent had no authority to assent to an assignment by way of collateral security, and neither knew that this was such an assignment, nor gave the assignee any reason to suppose that he knew it. It was held that the assignee could not maintain an action upon the policy.'
§ 147b. If a pledgee at his own expense and without any agreement or understanding with the pledgor insures the property pledged and after a loss collects the money from the insurer, he is not bound to account for it to the pledgor. This rule was affirmed in Massachusetts in a case where one as "trustee" took a bill of sale of an interest in a schooner as security for a debt, agreeing in writing as "trustee" to reconvey the same when the debt should be paid. After the debtor's death the creditor took charge of the vessel, and without any agreement with the debtor or his representative, insured such. interest as "trustee," and after a loss collected insurance. money in excess of the debt, and he was held not to be accountable to the debtor's representative for any part of the insurance money."
IV. Pledges of Savings Bank Books.
§ 148. The delivery of a savings bank book as collateral security for a debt, although unaccompanied by a written assignment, transfers an equitable title to the deposit represented by the book, which will prevail against a creditor subsequently attaching the deposit." "A savings bank book has a peculiar character. It is not a mere pass-book, or the statement of an account; it is issued to the person in whose name the deposit is made, and with whom the bank has made its contract; it is his voucher, and the only security he has, as evidence of his debt. The bank is not obliged to pay the depositor the money in its hands except upon presentation of the book; and if in
1 Lynde v. Newark F. Ins. Co., 139 Mass. 24, 26 N. E. Rep. 232, Allen, Mass. 57, 29 N. E. Rep. 222. J., and Field, C. J., dissenting.
Burlingame v. Goodspeed,
3 Taft v. Bowker, 132 Mass. 277; Boynton v. Payrow, 67 Me. 587.
good faith and without notice it pays the money deposited to the person who presents the book, although the book has been obtained fraudulently by him, the bank is not liable to the real depositor.
"The book is the instrument by which alone the money can. be obtained, and its possession is thus some evidence of title in the person presenting it at the bank. It is in the nature of a security for the payment of money; it discloses the existence and amount of the fund to the person receiving it, and affords him the means of obtaining possession of the same.""
The delivery of a savings bank book by a debtor to a third person for delivery to his creditor as security for a debt, creates a valid pledge of the book and of the deposit represented by it. An heir can not make an effectual pledge of a savings bank book or of the deposit, as against the administrator of the depositor's estate."
V. Pledges of Judgments.
§ 149. An assignment of a sum due on a judgment, stipulating that when collected it shall be applied on a bond and mortgage held by the assignee against the assignor with a covenant by the latter not to collect it, is on its face an assignment as collateral security, and parol evidence to show this is not required.*
A claim in suit may be pledged by the owner of it, but the evidence of the debt should be delivered to the pledgee, who should prosecute the action, though he may be obliged to do this in the pledgor's name."
VI. Pledges of Land Certificates.
§ 150. Land certificates issued by a state, such as certificates of school lands in the state of Wisconsin, though by statute made transferable by written assignment, are not a proper subject of pledge.' If such certificates be deposited by a debtor with his creditor as security for a note, which provides that the creditor may sell them on the non-payment of the note, the debtor's interest in the land and certificates can not be extinguished or converted by a sale as in the case of a pledge of goods. A deposit of them under such an agreement is not a pledge of personal property, but an equitable mortgage of the debtor's interest in the lands; and the only mode in which the creditor can enforce the security is by a suit in equity for the purpose. Therefore, in case such certificates be deposited as collateral security with a power to sell them upon default, a sale under the power is ineffectual.
Moreover, as such certificates are not negotiable instruments, and the indorsement thereof is not conclusive evidence of the holder's ownership, an agent can not effectually pledge them unless he has express authority to make such pledge; therefore, if such certificates have been placed in his hands to sell, and he pledges them to secure his own debts, his pledgee acquires no title to them as against the real owner. A general agent has no authority to pledge his principal's property, unless this be in the form of negotiable securities standing absolutely in his own name, as security for his own debts; and though the agent be clothed with the insignia of title, any one taking such certificates in pledge is bound to inquire as to the agent's authority.3
Whitney v. State Bank, 7 Wis. 620; Smith v. Mariner, 5 Wis. 551, 68 Am. Dec. 73. See Jones on Mortgages, § 176. An assignment as security of a land contract issued by a railroad company for the conveyance of specific land, was regarded as a mortgage in Scharman v. Scharman, 38 Neb. 39, 56 N. W. Rep. 704. See
Dimick v. Grand Island Banking Co., 37 Neb. 394, 55 N. W. Rep. 1066; Folsom v. McCague, 29 Neb. 124, 45 N. W. Rep. 269.
2 Mowry v. Wood, 12 Wis. 413; in effect overruling Ainsworth v. Bowen, 9 Wis. 348.
3 Whitney v. State Bank, 7 Wis. 629.
PLEDGES OF CORPORATE STOCKS.
I. Corporate stocks a proper subject of pledge, 151–154.
II. Parol evidence to show an absolute transfer to be a pledge, 155-157.
III. What constitutes an effectual transfer of stock at common law, 158-162.
IV. Transfers in blank, 163-167.
1 Wagner v. Marple, 10 Tex. App. 505, 31 S. W. Rep. 691. Lawler v. Kell, 6 Ohio Dec. 311.
V. Transfer by delivery of certificate as between the parties, 168-171.
I. Corporate Stocks a Proper Subject of Pledge.
§ 151. Whether stock of a corporation can be the subject of a pledge was formerly doubted, for the reason that, in order to constitute a pledge, possession must be given of the thing pledged, and possession of shares in a corporation can not be transferred except by a written transfer, which apparently passes the legal title and general property in the stock, which are the characteristics of a mortgage, and not merely a special property, which is the characteristic of a pledge. A delivery of a certificate merely does not transfer the stock, but a written transfer is necessary. Yet a transfer of stock as collateral security is now generally regarded as a pledge rather than a mortgage, because this view is considered to be more in accordance with the intention of the parties, and it is no objection
VI. Such transfers as between the parties and the corporation, 172-176a.
VII. Such transfers as between the parties and their creditors, 177-220.
VIII. Liens upon stock in favor of the corporation, 221–226.
Newton v. Fay, 10 Allen (Mass.), 505, 507, per Chapman, J.; Wilson v. Little, 2 N. Y. 443, 1 Sandf. 351, 51