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curity for all advances that the creditor may make applies not only to unsecured advances, but also to those for which a special security is also taken; and in that case the creditor may rely upon either security or both; and it lies solely with him, and not with the debtor or anyone claiming under him, to determine in any instance which security he will enforce.' Whether a pledge covers existing debts or is limited to those that may thereafter arise, depends upon the terms of the agreement of hypothecation. Thus a pledge of stock to a bank “as security for the payment of any demands it may from time to time hold against" a debtor named, in terms includes all demands the bank held against him at that time, as well as those that might arise afterwards." "The agree

ment does not in terms name or describe debts made before the pledge. It does not in terms name or describe acts that were done or could have been been done, only before the pledge. It does speak of acts which, though begun before the agreement, could be continued and thus be acts done after its making. When it provides for demands that the bank may from time to time have and hold against the debtor, it speaks of the act of having and holding a demand; and that is an act that could be done after the making of the agreement, though the demand arose before, and though as an act of having and holding it, it was begun before. If the debtor had, before the date of the agreement, made his note to a stranger, and after that date the bank had become the assignee of the note, the bank would have had and held it after the making of the pledge. The demand thereon would have fallen within the language of the agreement; whether within the intention of the parties to the agreement is another question. It would have been a demand had and held by the bank from time to time (that is, at any or some time during the running of the agreement) against the debtor, and so would have been

1 Buchanan v. International Bank, 78 Ill. 500; Moors v. Washburn, 147 Mass. 344, 7 N. E. Rep. 884.

'Merchants' Nat. Bank v. Hall, 83 N. Y. 338; affirming 18 Hun 176, 178, 38 Am. Rep. 434.

literally one of the demands spoken of by the instrument. It is plain that the date of origin of the demand is not the test whether the pledge applies to it. The act of having and holding is.'"

§ 361a. The pledge may secure in addition to a specific debt the pledgor's future liabilities to the pledgee, but not a past or prior liability. Thus, one borrowed a sum of money from a bank, for which he executed and delivered to the bank a demand note, depositing at the same time as collateral security for its payment, certain stocks and bonds. The note contained this provision: "It is also agreed that if I shall come under any other liability, or enter into any other engagement, with said bank, while it is the holder of this obligation, that the net proceeds of sale of the above securities may be applied either on this note or any other of my liabilities or engagements held by said bank, as its president or cashier may elect." The pledgor afterwards became insolvent, and made an assignment of his property to trustees for the benefit of his creditors. The assignees of the pledgor tendered the amount of the note, with interest to the date of tender, and demanded the note and the securities which had been deposited as collateral. The bank, however, refused to make a surrender of the securities, claiming to hold them as collateral for a demand note of a third person indorsed by the pledgor, several months before this transaction. In an action of trover brought by the assignees of the pledgor against the bank, it was held that the plain and obvious meaning of the contract, and that which was contemplated by the parties at the time of its execution, was to cover liabilities made after the execution of the note, and those entered into at the time of its delivery, and the stock could not be held as security for a responsibility incurred by the pledgor nearly five months prior to the depositing of the stock.*

Per Folger, C. J., in Merchants' Nat. Bank v. Hall, 83 N. Y. 338, 341, 38 Am. Rep. 434.

2 Harris v. Franklin Bank, 77 Md. 423, 26 Atl. Rep. 523.

§ 361b. An agreement for a continuing security in a note by a customer to his bank prepared by the bank is to be liberally construed in favor of the customer. Thus, where an agreement, in a printed form of note furnished by the bank and signed by a customer on obtaining a loan for the amount of the note, by which the customer pledged certain property as collateral security for the payment of the note "or any other liability or liabilities of the undersigned to the said bank, due or to become due, or which may hereafter be contracted or existing," is properly construed, in accordance with the reasonable intention of the parties, as referring only to liabilities of the customer to the bank in the ordinary course of its banking business, the bank is not entitled to retain the pledged property for the purpose of applying it upon a note of the customer to a third party, which, although drawn payable at the customer's bank, was not paid by it or charged to the customer's account, but was dishonored, and then purchased, by the bank. The court of appeals of New York so deciding, said: "It seems clear, when this agreement is construed in the light of the principles and authorities cited, and in view of the circumstances and transactions existing between the parties, that the most the defendant can properly claim for this provision is that it was intended to secure the liabilities of the assignors to the bank arising out of the business transactions or relations existing, or which should subsequently exist, between them as bank and customer, or which came into its hands in the ordinary course of its banking business, whether past, present or future. Under this language the bank could not hold the property pledged as security for a claim, unless it was a liability of the assignors to the bank, or obtained in the usual course of business. The agreement was obviously intended to include those liabilities only."

1 Gillet v. Bank of America, 160 N. Y. 549, 556, 55 N. E. Rep. 292, reversing 21 App. Div. 392, 47 N. Y. Supp.

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558. The term "any other liabilities" of the pledgor includes rediscounts of other notes previously discounted for

§ 362. In determining what debts are secured by an absolute assignment of property as collateral security, the whole transaction between the parties is to be looked to.' A general assignment may cover all claims of the assignee against the assignor, although a previous special assignment was limited to securing liabilities incurred for the consignor's accommodation."

If a pledge be made by a written instrument for a loan of a definite amount then made, the pledgee can not by parol evidence show that it was agreed between the parties at the time of making the pledge that the property should be held as security, not only for that sum but also for such further advances as the pledgee might afterwards make; for a written agreement can not be enlarged by parol.'

§ 363. A pledge which secures an interest-bearing debt, secures the interest as much as the principal of the debt. The parties may as between themselves increase the rate of interest, just as they may in any other way increase the debt secured by the pledge. But as against a subsequent pledgee or purchaser, the prior pledgee, after notice of subsequent rights in the property, can not as against them increase the rate of interest, any more than he could increase the principal of the debt secured.*

the pledgor by the pledgee. Hanover Nat. Bank v. Brown (Tenn. Ch. App.), 53 S. W. Rep. 206.

1 Boardman v. Holmes, 124 Mass. 438; Charles v. Coker, 2 S. C. 122; Hilton v. Sims, 45 Ga. 565.

'Boardman v. Holmes, 124 Mass.


Hamilton v. Wagner, 2 Marsh. (Ky.) 331, 332.

4 Jones on Mortgages, § 361.



I. Right to sell or assign his interest, II. Liability of his interest to attachment and execution, 372-392a. 364-371.

I. Right to Sell or Assign his Interest.

§ 364. Property under pledge may be transferred by the general owner, subject only to the lien, by a proper contract and upon a good consideration.' "In such case, as the actual custody and possession of the goods for the time being is in the hands of the party having the lien, it follows that a constructive or symbolical delivery is sufficient to pass the property. An order by the vendor upon the keeper, or if the contract of sale or conveyance be in writing, proper and satisfactory notice of the conveyance by the vendee to the holder, constitutes such constructive delivery. Where goods are lying in a warehouse, although subject to a lien for keeping, notice to the warehousekeeper, where all the other requisites of a sale are proved, is equivalent to a delivery. After such notice the keeper ceases to be the agent of the vendor, and becomes the agent of the vendee, and thus the goods are placed under the effective control of the vendee, as they would be by an active delivery.'


1 Franklin v. Neate, 13 M. & W.481; Whitaker v. Sumner, 20 Pick. (Mass.) 399; Tuxworth v. Moore, 9 Pick. (Mass.) 347, 20 Am. Dec. 479; Fettyplace v. Dutch, 13 Pick. (Mass.) 388, 47 23 Am. Dec. 688; Cooper v. Ray, Ill. 53; Sanders v. Davis, 13 B. Mon. (Ky.) 432; Bush v. Lyon, 9 Cow. (N.


Y.) 52; Ratcliff v. Vance, 2 Mills
Const. (S. C.) 239; Brent v. Miller, 81
Ala. 309, 8 So. Rep. 219; National
Hudson River Bank v. Chaskin, 28 N.
Y. App. Div. 311, 51 N. Y. Supp. 64.

2 Per Shaw, C. J., in Whitaker v. Sumner, 20 Pick. (Mass.) 399.


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