that the transfer passes the legal title and general property in the stock.

§ 152. A written transfer of some kind which shall pass the legal title is essential in a pledge of stock, though this transfer may be informal, such as a blank indorsement of the certificate, or a power of attorney signed in blank. There must be a transfer on the books of the company, or a power of attorney authorizing a transfer, or some assignment or contract in writing by which the holder may assert title, and compel a transfer when desired.'

A delivery of a certificate of stock without a transfer or a writing which will enable the holder to make a transfer of the stock to his own name, is not a complete delivery; it does not place the stock in the full control of the pledgee. But a mere delivery of a certificate of stock without any transfer of it is not regarded as a sufficient transfer of it to constitute a pledge;" though such a delivery has in a few cases been held to be sufficient to vest an equitable title.3

Am. Dec. 307; Allen v. Dykers, 3 Hill (N. Y.) 593, 7 Hill (N. Y.) 497; Vaupell v. Woodward, 2 Sandf. (N. Y.) Ch. 143; Hasbrouck v. Vandervoort, 4 Sandf. 74; Lewis v. Graham, 4 Abb. Pr. 106; Gilmer v. Morris, 80 Ala. 78, 60 Am. Rep. 85; Spreckels v. Macfarlane, 9 Hawaii 166; White v. Platt, 5 Denio (N. Y.) 269; Gilpin v. Howell, 5 Pa. St. 41, 45 Am. Dec. 720; Morris Canal & Banking Co. v. Fisher, 9 N. J. Eq. 667; Morris Canal & Banking Co. v. Lewis, 12 N. J. Eq. 323, 64 Am. Dec. 423; Mechanics' Building & Loan Ass. v. Conover, 14 N. J. Eq. 219; Murdock v. Columbus Ins. Co., 59 Miss. 152, per Campbell, J.; Dayton Nat. Bank v. Merchants' Nat. Bank, 37 Ohio St. 208; Brewster v. Hartley, 37 Cal. 15, 99 Am. Dec. 237; Thompson v. Holladay, 15 Ore. 34, 14 Pac. Rep. 725; Barse Live Stock

Co. v. Range Val. Cattle Co., 16 Utah 59, 50 Pac. Rep. 630.

1 Cumming v. Prescott, 2 Young & C. (Exch.) 488; Nisbit v. Macon Bank & Trust Co., 12 Fed. Rep. 686, per Pardee, J. Succession of Lanaux, 46 La. Ann. 1036, 15 So. Rep. 708; Lallande v. Ingram, 19 La. Ann. 364; Wagner v. Marple, 10 Tex. Civ. App. 505, 31 S. W. Rep. 691.

Wagner v. Marple, 10 Tex. Civ. App. 505, 31 S. W. Rep. 691.

Brewster v. Hartley, 37 Cal. 15, 99 Am. Dec. 237; Robinson v. Hurley, 11 Iowa 410, 79 Am. Dec. 497; City F. Ins. Co. v. Olmsted, 33 Conn. 476, 480; Platt v. Hawkins, 43 Conn. 139; Platt v. Birmingham Axle Co., 41 Conn. 255.

The civil code of Louisiana apparently authorizes a pledge of stock by the mere delivery of the certificate.

Where two members of a banking firm were also president and cashier of a bank and trust company, and the firm being indebted to the company, they agreed with the directors of the company to deposit certificates of stock to secure such indebtedness, and accordingly certificates standing in the firm's name, not indorsed or accompanied by any power to transfer, were deposited with the cashier, and it appeared that the firm retained and exercised the right to withdraw such certificates and substitute others, without consulting the directors of the bank, it was held that there was no such delivery of the stock as would constitute a pledge of it, because the firm had full control of it and could transfer it without consulting the bank, and the bank, not holding any transfer of the stock, could not control it without the consent of the firm, and the execution by them of a power of transfer.1

§ 152a. A pledge of corporate stock made by a written assignment on a separate paper, the certificate remaining in the possession of the pledgor, is ineffectual as against the pledgor's receiver who takes possession of the certificates. If, however, no certificate has been issued such assignment by a separate instrument is sufficient to create a pledge."

2

A declaration in writing by a debtor placed in a tin box in a safe deposit vault that certain securities owned by him are held as collateral security for the benefit of a certain creditor to secure a debt described does not create a pledge of the securities for the payment of such debt.*

It provides that "when a debtor wishes to pawn promissory notes, bills of exchange, stocks, obligations or claims upon other persons, he shall deliver to the creditor the notes, bills of exchange, certification of stock, or other evidences of the claims or rights so pawned, and such pawn so made, without further formalities, shall be valid as well against third persons as against the pledgers thereof if made in good faith." Civ. Code, art. 3158. 'Nisbit v. Macon Bank & Trust Co.,

12 Fed. Rep. 686. See, also, Cross v. Zellerbach, 10 Pac. Coast L. J. 123; Sigourney v. Zellerbach, 55 Cal. 431. 2 Atkinson v. Foster, 134 Ill. 472, 25 N. E. Rep. 528.

3 First Nat. Bank v. Gifford, 47 Iowa 575; Harris's Appeal (Pa.), 12 Atl. Rep. 743; Thorp v. Woodhull, 1 Sandf. Ch. (N. Y.) 411. And see Brigham v. Mead, 10 Allen 245.

4 Girard Trust Co. v. Mellor, 156 Pa. St. 579, 27 Atl. Rep. 662. See Hook v. Ayers, 80 Fed. Rep. 978.

§ 153. A transfer of the legal title is not inconsistent with the existence of a pledge.' On the contrary, it is true that incorporeal property, being incapable of manual delivery, can not generally be pledged without a written transfer of the title. Collateral securities, such as negotiable instruments, stocks in incorporated companies, and choses in action generally, are pledged in this mode. "Such transfer of the title performs the same office that the delivery of possession does in case of a pledge of corporeal property. The transfer of the title, like the delivery of possession, constitutes the evidence of the pledgee's right of property in the thing pledged."" In such case, although the pledgee receives the apparent legal title, the general property in the security remains in the pledgor.3 Whenever it appears by the terms of the contract that the debtor has a legal right to the restoration of the security, on payment of the debt, he may be said to have the general property in it. This general property is nothing more than a legal right to the restoration of the thing pledged on payment of the debt. Thus, an absolute transfer of stock in a corporation as collateral security for the payment of a note, which states that the stock was so deposited, is a pledge and not a mortgage; for, by a fair construction of the transfer and note, taken together, the general property in the stock remains in the pledgor. Such was also held to be the effect of a transfer by a corporation of its own stock as security for a debt, upon an agreement that the stock should be transferred back upon payment of the debt. In general, it may be said that any trans

1 Wilson v. Little, 2 N. Y. 433, 51 Am. Dec. 307; overruling Huntington v. Mather, 2 Barb. 538.

2 Rice v. Gilbert, 173 Ill. 348, 50 N. E. Rep. 1087; Brewster v. Hartley, 37 Cal. 15, 25, 99 Am. Dec. 237, per Rhodes, J.

3 Garlick v. James, 12 Johns. (N. Y.) 146, 7 Am. Dec. 294; Evans v. Darlington, 5 Blackf. (Ind.) 320.

Wilson v. Little, 2 N. Y. 443, 448, 51 Am. Dec. 307, per Ruggles, J.

5 Wilson v. Little, 2 N. Y. 443, 448, 51 Am. Dec. 307, per Ruggles, J.; Hasbrouck v. Vandervoort, 4 Sandf. (N.Y.) 74, 78; Lewis v. Graham, 4 Abb. (N.Y.) Pr. 106; Mechanics' Building & Loan Ass. v. Conover, 14 N. J. Eq. 219; Merchants' Bank v. Cook, 4 Pick. (Mass.) 405; Doak v. Bank of the State, 6 Ired. L. (N. C.) 309.

fer as collateral security of shares in a corporation, made in the ordinary form of an indorsement of a certificate, or by delivery of it with a power of attorney to make a transfer upon the books of the corporation, or by an actual transfer upon the books, is a pledge and not a mortgage; and it is immaterial in this respect whether such transfer appear to be absolute, or is expressed to be made as security; though a transfer made in the usual form of a mortgage, with a defeasance, would doubtless be regarded as a mortgage.1

A chattel mortgage of corporate shares is valid between the parties though there is no transfer of the certificates, and as against the mortgagor the mortgagee upon a foreclosure of the mortgage may compel a transfer of the certificates to himself."

§ 153a. A chattel mortgage of corporate stock is not effectual as against a transferee of the certificate without notice, nor as against the mortgagor's creditor attaching the stock in the usual manner, nor as against the corporation without actual notice of the mortgage. That such a mortgage, though duly recorded, is of no avail as against a bona fide purchaser or pledgee of the certificate of stock is well shown by a decision of the supreme court of Kentucky in which Prior, J., for the court, said: "Much of the business of the country is conducted on the faith of the pledge of such stock as collaterals; and to adjudge that the holder of the stock by transfer on the books of the corporation, or by indorsement and delivery by the owner, is subordinate in his claim to the mortgagee, upon the doctrine of constructive notice, would paralyze trade and

1 Hasbrouck v. Vandervoort, 4 Sandf. (N. Y.) 74; Nabring v. Bank of Mobile, 58 Ala. 204; Brewster v. Hartley, 37 Cal. 15, 99 Am. Dec. 237; Dungan v. Mutual Benefit L. Ins. Co., 38 Md. 242; Ede v. Johnson, 15 Cal. 53; Smith v. Quartz Mining Co., 14 Cal. 242; Gilmer v. Morris, 80 Ala. 78, 85, 60 Am. Rep. 85; Williamson v. New Jersey R. Co., 26 N. J. Eq. 398; Manns v. Brookville Nat. Bank, 73 Ind. 243;

open a wide field for the fraudulent disposition of such valuable interests at the expense of honest and confiding purchasers.""

The recording of a chattel mortgage of shares of stock is not notice to a creditor of the owner such as to prevent his attachment of the shares in the form provided by statute from taking effect and having precedence of the mortgage.'

A chattel mortgage of corporate stock is effectual if the certificate is indorsed and delivered to the mortgagee or to a trustee for his use."

§ 153b. A pledge by a husband of corporate stock, which he purchased with his wife's money, but in his own name contrary to her directions, is valid as against the wife, where the certificate recites that he is the owner and the pledgee accepted the stock as collateral security for a loan to the husband, and, at the time of the loan, had no notice that the stock had been purchased with the wife's money, or that she claimed it as her separate property. For the purpose of security the pledgee held both the legal and the equitable title to the stock. The wife, at most, had only a right in equity to compel her husband to transfer the stock to her; therefore, the bank and she each having an equity, and the bank having, in addition, secured the legal title as collateral for its loan, its claim must prevail over hers."

§ 154. But if the original contract was not in substance and in fact a security for a loan, but an option to resell, it can not. be held to be a pledge. Thus, if a contract with an insurance 1Spalding v. Paine, 81 Ky. 416. 544, 7 So. Rep. 773; Machinists' Nat. Bank v. Field, 126 Mass. 345; Pratt v. Taunton Copper. Mfg. Co., 123 See, however, Manns v. Brookville Mass. 110, 25 Am. Rep. 37; MandleNat. Bank, 73 Ind. 243. baum v. North American Min. Co., 4

2 Cates v. Baxter, 97 Tenn. 443, 37 S. W. Rep. 219.

Toler v. East Tennessee, Va. & Ga. Mich. 465; Hill v. Moore, 62 Tex. R. Co., 67 Fed. Rep. 168, 178. 610; Edwards v. Brown, 68 Tex. 329, 4 S. W. Rep. 380, 5 S. W. Rep. 87.

Anderson v. Waco State Bank, 92 Tex. 506, 71 Am. St. Rep. 867, 49 S. W. Rep. 1030, citing Winter Montgomery Gas Light Co., 89 Ala.

V.

5 Simmons v. London Joint Stock Bank (1891), 1 Ch. 270; Crimp v. McCormick Const. Co., 71 Fed. Rep. 356.