and an issue of the stock to a third party as an exercise of the option, and might sue to recover the price.'

If, however, a pledgee transfer the collateral stock in such a way that he retains control of it and is able to deliver it at once whenever the pledgor should call for it, there is no conversion of it. Such was the case where the pledgee assigned the collateral stock to third persons, in order not to injure his credit by appearing to own too much of it, taking back from the transferees assignments in blank, so that the stock remained actually in his control and ready for delivery to the owner. The pledgor's rights were not violated or injuriously affected."

And such also was the case where a pledgee of corporate shares transferred them to another person to hold for him in order to protect himself against personal liability. There was no real conversion of the stock by the pledgee because by such transfer he did not apply it to his own use. He did not exercise any dominion over it in defiance of the rights of the owner. He put it into the hands of a third person to hold for him, in order that what was intended for a security might not be a burden. The stock remained under his control.3

§ 508. Return of identical stock. A broker carrying stock upon a margin, according to the usual custom, is not bound to keep the stock separate from other stock of the same kind owned by himself, but only to keep in possession and ready for delivery on demand an amount of stock equal to that purchased. Ordinarily, a pledgor of personal property is entitled

2

1Upham v. Barbour, 65 Minn. 364, 7Johns.Ch 69,11 Am. Dec.403; Gruman 68 N. W. Rep. 42. v. Smith, 81 N.Y. 25, 9 Rep.748; Levy v. Loeb, 15 J. & S. 61, 6 Duer 56, 85 N. Y. 365; Thompson v. Toland, 48 Cal. 99; Allen v. Dykers, 3 Hill 593; Hardy v. Jaudon, 1 Robt. (N. Y.) 261; Gilpin

Day v. Holmes, 103 Mass. 306; Fay v. Gray, 124 Mass. 500; Terry v. Birmingham Nat. Bank, 93 Ala. 599, 9 So. Rep. 299. Heath v. Griswold, 5 Fed. Rep. v. Howell, 5 Pa. St. 41, 45 Am. Dec.

573.

Horton v. Morgan, 19 N. Y. 170, 75 Am. Dec. 311; Nourse v. Prime, 4 Johns. Ch. (N.Y.) 490, 8 Am. Dec. 606,

720; Stewart v. Drake, 46 N. Y. 449, per Allen, J.; Worthington v. Tormey, 34 Md. 182; Chamberlain v. Greenleaf, 4 Abb. N. C. (N. Y.) 178; Genin

to have the specific property pledged returned to him upon payment of the debt, and can not be compelled to accept other property of the same kind and equal value in place of it; but shares in a corporation stand upon a different footing, because one share represents the same interest in the business of the corporation that another does, and, all the shares being of equal value, there can be no reason for preferring one from another, or for distinguishing one from another.' The reasons for this distinction are obvious. Two visible, tangible chattels, though apparently precisely similar, may yet, in fact, be of different values. Moreover, the owner of a specific article of personal property may attach a peculiar value to it beyond the value of other articles of a precisely similar kind; and, having pledged it, he can not be compelled to take back any other article of the same kind and equal value, in lieu of that which was converted."

The rule in regard to the return of the identical stock pledged has recently been stated by the supreme court of

v. Isaacson, 6 N. Y. Leg. Obs. 213; Salters v. Genin, 7 Abb. Pr. (N. Y.) 193, 3 Bosw. 250; Taussig v. Hart, 58 N. Y. 425, 49 N. Y. 301; Price v. Gover, 40 Md. 102; Worthington v. Tormey, 34 Md. 193; Hubbell v. Drexel, 11 Fed. Rep. 115; Noyes v. Spaulding, 27 Vt. 421; Wood v. Hayes, 15 Gray (Mass.) 375; Berlin v. Eddy, 33 Mo. 426, 430.

1Atkins v. Gamble, 42 Cal. 86, 10 Am. Dec. 282; Hawley v. Brumagim, 33 Cal. 394.

2 Per Crockett, J., in Atkins v. Gamble, 42 Cal. 86, 101: "It is impossible that any sane person sbonld have centered his affections upon a particular stock certificate, or that any violence could be done to his feelings by requiring him to accept another certificate of precisely similar character in lieu of it. His own certificate was only the evidence that he owned an undivided interest

in the capital and business of the cor poration. Another certificate of the same kind, for the same amount of stock, would entitle him to precisely the same rights as the former certificate. Each would be a precise equivalent of the other, and it is certain he could suffer no pecuniary loss by the transaction, whilst the nature of the property, or rather of his interest in it, forbids the idea that it could be the object of personal attachment or have a peculiar value in his estimation, as contradistinguished from any other equal number of shares in the same company."

There may be a stipulation in a pledge of stock expressly excusing the pledgee from returning the identical certificate. Hardy v. Jaudon, 1 Robt. (N. Y.) 261. But such a stipulation is only useful by way of abundant caution.

Connecticut: "Shares of stock have no individuality, no earmarks. One share does not differ from another share of like stock, in form, characteristic or value. Each share represents simply an undivided, proportionate interest in the ownership of the corporation. It entitles its owner to a certain right in the management, profits and ultimate assets of the corporation, precisely like that which every other share owner enjoys. Certificates of stock, which have earmarks, are not the stocks. They are only the evidence of the ownership of the stocks. They are muniments of title, like title deeds. They have no value save as evidence of the thing owned, which has nothing individual, distinguishable or peculiar about it. Courts have therefore said that no good reason existed for requiring that a pledgee of stocks should at all times preserve a careful separation of distinguishable certificates connected with each transaction of pledge, and maintain the identity of each certificate distinct and unbroken. They have said that the essential thing was that he hold at all times the required shares of stock ready to be delivered when called for, and in recognition of this fact and of the right enjoyed by the pledgee to transfer the stocks held by him in pledge into his own name, they have held that a pledgee fully preserves the rights of the pledgor if he at all times until the termination of the pledge retains similar stock in amount equal to that pledged. This has been held of pledges in their ordinary forms as well as of those incidental to margin transactions.""

For the same reason it would seem that a pledgee of negotiable bonds of a private or municipal corporation, or of government bonds, would not be required to retain the identical bonds deposited with him, if he has always had other bonds of precisely the same kind which he could return to the pledgor on demand.2

§ 509. When shares of stock are pledged without any agreement that they shall be kept separate from other shares of the

'Skiff v. Stoddard, 63 Conn. 198, 218, 23 Atl. Rep. 104, 26 Atl. Rep. 874.

2 Stuart v. Bigler, 98 Pa. St. 80.

same stock, and no certificate is delivered to the pledgee expressing the trust upon its face, the pledgee may properly have the stock placed to his credit upon the transfer books of the company; and it does not matter that he has other shares of the same stock, or that he buys and sells such stock, and is afterwards unable to identify the shares received in pledge, provided that at all times he has shares of the stock standing in his name or under his rightful and absolute control to an amount equal to the number held in pledge, and is ready and able at any time to redeliver the shares on payment of the debt for which they were pledged.' If he sells all the stock

standing in his own name, but has stock sufficient to meet the demand of the pledgor standing in the name of another person, but absolutely within the pledgee's control, he is not liable for a conversion of the stock.'

If a pledgee of corporate shares be himself the owner of other shares in the same corporation, it does not matter that, in selling the shares under a power to satisfy the debt, he is unable to tell whether the stock sold be the identical shares delivered to him as collateral security; such shares not being distinguishable from each other, a sale of one parcel answers the purpose of crediting the debtor with the proceeds of the stock as well as the sale of the specific shares."

But, of course, if there be different kinds of stock of the same corporation, the pledgee is bound to keep within his control, and to restore upon payment, the same kind of stock as that received in pledge. If, for instance, he has received in pledge "consolidated" Erie, he can not fulfill his obligation by keeping on hand and returning "converted" Erie, a stock of a different kind and value."

§ 510. But it is essential that the pledgee of stock should always have enough of the stock on hand ready for delivery.' In a suit for the conversion of stock pledged by a collateral note, which authorized the creditor to sell the stock on the non-payment of the note, the defendant, being a stock-broker

fiction of law, that residuum shall be presumed to be the portion he put

in."

The case of Ex parte Dennison, 3 Ves. 552, is not in conflict with the rule above stated, for this case was decided with reference to a rule of the Stock Exchange on this subject; and moreover, it is evident that the pledgee in that case did not keep on hand a sufficient number of shares to enable him to return the security at any time on demand.

3 Wilson v. Little, 2 N. Y. 443, 51 Am. Dec. 307.

4 Chamberlain v. Greenleaf, 4 Abb. N. C. (N. Y.) 178; Horton v. Morgan, 19 N. Y. 170, 75 Am. Dec. 311, 6 Duer 56; Allen v. Dykers, 7 Hill (N. Y.) 497, 42 Am. Dec. 87, 3 Hill 593; Baker v. Drake, 66 N. Y. 518; Douglas v. Carpenter, 17 N. Y. App. Div. 329, 45 N. Y. Supp. 219; Taussig v. Hart, 58 N. Y. 425; Hardy v. Jaudon, 1 Robt. (N. Y.) 261, affirmed, 41 N. Y. 619; Thompson v. Toland, 48 Cal. 99;

1 Le Croy v. Eastman, 10 Mod. 499. Parsons v. Martin, 11 Gray (Mass.) 'Berlin v. Eddy, 33 Mo. 426.

111, 117.