conditions of the pledge or mortgage; but the officer shall not take such property out of the possession of the pledgee or mortgagee when the judgment debtor is not entitled to the possession thereof, unless the judgment creditor or purchaser shall have first complied with the terms and conditions of such pledge or mortgage.

§ 392a. Wyoming.'-In all cases where the share or shares of the capital stock of any corporation shall have been pledged in good faith, or hypothecated as collateral security to any loan or debt, and the certificate thereof shall have been delivered upon such pledge or debt, such share or shares shall not be liable to be taken on execution against the pledgor, except for the excess of value thereof over and above the sum for which the same may have been pledged, and the certificate thereof delivered.

R. S. 1887, § 2779.

CHAPTER XI.

THE PLEDGEE'S RIGHTS AND LIABILITIES BEFORE DEFAULT.

I. His right to the use and profits of III. His right to assign the pledge, the thing pledged, 393-402. 418-428.

II. His duty to care for the thing IV. His right of action for a converpledged, 403-417. sion of the pledge, 429-436.

I.

His Right to the Use and Profits of the Thing Pledged.

§ 393. All collateral security, of whatever it may consist, is held in trust, first to apply the proceeds of it towards the payment of the debt; and secondly, upon the payment of the debt in full from other funds, to restore the property, or any proceeds thereof which may have been received, to the pledgor.' Upon this subject the Code of Louisiana well expresses not only the civil law but the common law as well. It declares that until the debtor be divested of his property he remains the proprietor of the pledge, which is in the hands of the creditor only as a deposit to secure his privilege on it. The creditor is answerable for the loss or decay of the pledge which may happen through his fault. On his part the debtor is bound to pay to the creditor all the usual and necessary expenses which the latter has made for the preservation of the pledge. The fruits of the pledge are deemed to make a part of it, and therefore they remain, like the pledge, in the hands of the creditor; but he can not appropriate them to his own use; he is bound, on the contrary, to give an account of them to the debtor or to deduct them from what may be due to him.

If it is a credit which has been given in pledge, and if this

1 Felton v. Brooks, 4 Cush. (Mass.) wood v. Brown, 34 Mich. 4; Union 203, per Shaw, C. J.; and see Black- Trust Co. v. Regdon, 93 Ill. 458.

credit brings interest, the creditor shall deduct this interest from that which may be due to him; but if the debt for the security of which the claim has been given brings no interest itself, the deduction shall be made on the principal of the debt. If the credit which has been given in pledge becomes due before it is redeemed by the person pawning it, the creditor, by virtue of the transfer which has been made to him shall be justified in receiving the amount and in taking measures to recover it. When received, he must apply it to the payment of the debt due to himself, and restore the surplus, should there be any, to the person from whom he held it in pledge.1

§ 394. A pledgee has no right to use the pledged chattel, if his use of it will wear or injure it, so as to lessen its value.' Thus if clothes be pawned the pawnee can not wear them, because they will be the worse for the wearing. And so if the thing held in pawn be peculiarly liable to loss, though with careful use its value might not be impaired, the use of it by the pledgee is practically prohibited, because he can only use it at his peril. Thus jewels held in pawn may be worn, if the pawnee takes care not to lose or injure them. But the pawnee would be responsible for a loss through theft or otherwise, which might happen in the wearing; for a pawn is so far in the nature of a depositum, that it can not be used but at the peril of the pawnee. A pledgee of diamond rings, whether he

1 R. Civ. Code 1870, arts. 3166-3170. McArthur v. Howett, 72 Ill. 358 (case of a sewing machine); Thompv. Patrick, 4 Watts (Pa.) 414 (case of a harness). See Lawrence v. Maxwell, 53 N. Y. 19.

son

The Code of the State of Georgia, 1873, § 2141, Code 1895, § 2959, provides that the pawnee may use the goods pawned, provided the use does not impair their real value.

3 Story on Bailm., § 330.

doubts whether there is any foundation for the doctrine that in case of a deposit of things which are not hurt by use, the depositary may, at his peril, use them. Bailm., § 330.

5 Coggs v. Bernard, 2 Ld. Raym. 909, 917. Chief Justice Holt said: "If the pawn be such as it will be the worse for using, the pawnee can not use it, as clothes, etc.; but if it be such as will be never the worse, as if jewels for the purpose were pawned

'Jones on Bailm., 81. Judge Story to a lady, she might use them. But

has the right to wear them or not, certainly has no right to change the setting.' But the property may be of such a nature that a reasonable use of it by the pledgee may be not only justifiable, but necessary for the proper care of it; and in that case a use of it will be a duty on his part.2

3

§ 395. If the pledge be of such a nature that it is an expense to the pledgee to keep it, says Chief Justice Holt, as if it be a horse or a cow, he may use the horse, or milk the cow, by way of recompense for the keeping. But although such use of the pledge is spoken of as a recompense for the keeping, the consistent course is to require the pledgee to account to the pledgor for the use he has made of the pledge, and at the same time to allow the pledgee to charge the pledgor for the reasonable expense of keeping and maintaining the pledge."

then she must do it at her peril; for whereas, if she keeps them locked up in her cabinet, if her cabinet should be broken open, and the jewels taken from thence she would be excused; if she wears them abroad and is there robbed of them she will be answerable. And the reason is, because the pawn is in the nature of a deposit, and as such is not liable to be used." Judge Story criticises this reasoning, saying that instead of showing that a pawnee may lawfully use the jewels, it shows that he has no right to do so. Bailm., § 330.

agreeable to principle and analogy than that laid down by Lord Holt. Bailments, 82. In Hawkins v. Hubbard, 2 S. D. 631, 51 N. W. Rep. 774, the statutes of South Dakota were regarded as prohibiting the use of pledged property, either as compensation for its keeping or otherwise.

In Forrester v. Spencer, 3 U. C. Q. B. O. S. 47, it appeared that A., having been arrested at the suit of a third person, placed a mare in B.'s hands on an agreement that B. should go surety, and if the party arresting proved a demand against A. by his

1 Sheridan v. Presas, 18 Misc. (N. Y.) own oath or by that of others, B. was 180, 41 N. Y. Supp. 451. to pay it and keep the mare until re

3 Coggs v. Bernard, 2 Ld. Raym. 909, 917; Mores v. Conham, Owen 123, Bac. Abr. Bailments (B), Salk. 522; Thompson v. Patrick, 4 Watts (Pa.) 414.

2 Jones on Bailm., 81; Story on paid. B. did pay 10 pounds, but withBailm., § 329. out showing he did so in consequence of oath of any one; and the mare remaining with him, he used her once in the plow. A. thereupon, without demand, brought trover, alleging this use of the mare was a conversion, and obtained a verdict. The court granted a new trial. Per Robinson, C. J.: "It seems to be clearly settled that the

Such is the Roman and French law, according to Sir William Jones, who declares this rule to be more

In Georgia it is provided by the code that the pawnor must pay all necessary expenses and repairs upon the property, but if the pawn itself has been profitable, or if the pawnee has used it to his own advantage, the pawnor may require him to account for such profits.'

§ 396. The pledgee is accountable for whatever profit may accrue to him from the use or possession of the pledge. Thus he is accountable for the value of the labor of a slave held in pledge.2

A pledgee is entitled to hold the natural increase of the thing pledged. Thus if he has taken in pledge domestic animals, he will hold in pledge the young of such animals afterwards born. He is accountable also for any moneys he may receive or collect by virtue of his holding the pledge. Thus, if a policy of insurance upon mortgaged property be assigned to the mortgagee as further security for the mortgage debt, upon the payment of that debt, the policy reverts to the original owner; and if the assignee of the policy afterwards collects a return premium thereon, the pledgor may recover the amount from him."

§ 397. If money be pledged, and the pledgee loan it, he is accountable for the interest received therefor. Although the pledgee has given his receipt in writing for the money received in pledge, if this contains no provision in regard to interest, parol evidence is admissible to show the facts that create such