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Upon the pledgee's refusal of a tender of the whole amount of the debt secured, the debtor may maintain trover for the property, and he is entitled to damages to the full value of the property, without any abatement for the amount for which the property was pledged. The creditor must resort to an action to recover the debt. The refusal of the tender discharges the lien upon the property and places the parties, in relation to the property, in the same position as if the debt had been paid and no pledge had ever existed.'

§ 544. Upon tender or payment of the specific debt secured by pledge, the creditor has no power over the collateral security except to hold it, and deliver it to the debtor upon demand. The fact that shares of stock have been pledged to secure a promissory note which provided that the holder might sell the collateral on default, "he giving me credit for any balance of the net proceeds of such sale, and paying all sums then due from me to said holder," does not give the holder any right to retain the stock as security for any other debt after payment or tender of payment of the note. The event upon which the holder was authorized to credit the pled gor with the proceeds of the collateral and to pay therewith other debts due from him, does not occur when payment or tender is made before the creditor exercises his power of sale. Upon payment or tender the pledgor or any one standing in his place is entitled to receive the stock discharged of the lien created by the pledge. The pledgor's assignee in insolvency or his trustee for the benefit of his creditors would be entitled to his rights in such case, so that in an action to redeem the pledged stock, the creditor could not set off other debts due him from the pledgor at the time the note matured.' More

1 Ball v. Stanley, 5 Yerg. (Tenn.) 199, 26 Am. Dec. 263; Hyams v. Bamberger, 10 Utah 3, 36 Pac. Rep. 202, 205, quoting text; Loughborough v. McNevin, 74 Cal. 250, 14 Pac. Rep. 369; Mitchell v Roberts, 17 Fed. Rep. 776; Norton v. Baxter, 41 Minn. 146, 42 N. W. Rep. 865; Tom Boy Gold Mines

Co. v. Green, 11 Colo. App. 447, 53
Pac. Rep. 845.

2 Hathaway v. Fall River Nat. Bank, 131 Mass. 14.

3 Hathaway v. Fall River Nat. Bank, 131 Mass. 14; Stetson v. Exchange Bank, 7 Gray (Mass.) 425.

over, it would be no defense to a bill by such assignee that the creditor had applied the pledged stock in payment of other debts due from the pledgor.' Cases in which it is held that the damages in trover may be mitigated by proof that the goods converted have been restored to the owner, or their proceeds applied to his use or to payment of his debts, would have no application as against such assignee, because he represents not merely the pledgor but his creditors.

§ 545. A tender, to have the effect of discharging the lien of a pledge, must be absolute and unconditional, and must in all other ways conform to the general rules relating to the mode of making a tender. The money need not be actually produced, if the debtor has it ready and offers to pay it, but the creditor dispenses with the production of it in any manner, as for instance, by expressly saying to the debtor that he need not produce the money, as he would not accept it. But a bare refusal to receive the sum offered, and a demand of a larger sum are not enough to excuse an actual tender of the money. Thus, where a debtor met his creditor for the purpose of redeeming stock held in pledge, and the amount due upon it having been agreed upon, the debtor's agent and broker was about to fill up a check for the amount, when the creditor requested that the business should be postponed to the next day, and demanded the whole value of the stock, amounting to much more than the sum liquidated, under the pretense that he was responsible as surety for the debtor, on another and separate account, the tender was held to be ineffectual.3

A tender accompanied with a demand for a receipt, or a discharge of a lien or a return of securities, is not an unconditional tender. A tender should not be accompanied with a demand for anything more than the production and delivery of any negotiable paper representing the debt which is sought

'Hathaway v. Fall River Nat. Bank, cock v. Franklin Ins. Co., 114 Mass. 131 Mass. 14. 155.

Thomas v. Evans, 10 East 101; Kraus v. Arnold, 7 Moore 59; Han

3 Dunham v. Jackson, 6 Wend. (N. Y.) 22.

to be paid. Moreover, the tender must at all times be kept good; that is, the debtor must constantly keep on hand the money tendered, separate from his other money, ready to pay over to the creditor whenever he might be ready to take it, and must bring the money into court.

If the pledgee at the time of the tender admits its sufficiency, he can not afterwards object to it on the ground that it was accompanied by conditions to which he was not bound to accede; and he can not afterwards object to the tender on the ground that the sum tendered was insufficient. Thus, if the pledgor makes a tender, and the pledgee does not inform him that the sum is insufficient, and then refuses to deliver the collateral securities on the ground that the sum is insufficient to redeem them, the pledgor is entitled to recover possession of the securities, or a judgment for their value.*

Whether a tender after maturity of the debt secured must be kept good, or the money paid into court in order to discharge the lien of mortgage of real property is a question upon which the authorities are not agreed. In some states the rule on this subject is not the same in respect to mortgages of personal property as it is in respect to mortgages of real property, because a mortgage of personal property vests the legal title, while in many states a mortgage of real property is merely a lien. In a pledge the title generally remains in the pledgor, and accordingly it is generally held that a tender need not be kept good in order to discharge the lien."

Although a statute provides that an offer in writing to pay a particular sum of money is, if not accepted, equivalent to the actual production and tender of the money, such a tender does.

1 Cass v. Higenbotam, 27 Hun (N. Y.) 406; Brooklyn Bank v. De Grauw, 23 Wend. (N. Y.) 342, 35 Am. Dec. 569.


August v. O'Brien, 61 N. Y. Supp. 720, 30 Misc. Rep. (N. Y.) 54.

5 See Jones on Mortgages, §§ 892, 893. Mitchell v. Roberts, 17 Fed. Rep.

2 Cass v. Higenbotam, 27 Hun (N. 776; Loughborough v. McNevin,74 Cal.

Y.) 406.

250, 14 Pac. Rep. 369, 15 Pac. Rep.

3 Barnhart v. Fulkerth, 73 Cal. 526, 773; Cass v. Higenbotam, 100 N. Y. 15 Pac. Rep. 89.

248, 3 N. E. Rep. 189.

not have the effect of an actual tender, unless made in good faith, with the ability to produce the money.'

§ 545a. The tender must be made in good faith with the in-" tention to make an actual payment of the debt, and the refusal must be without a just and reasonable cause, to have the effect of discharging the lien. Where notes were pledged under an agreement that they should be surrendered on the payment of a sum named, and the pledgor tendered this amount to the attorneys of the pledgee who held the debt secured for collection, but not the notes pledged, the attorneys replied that they had not possession of the notes and could not deliver them. A few days after the pledgee offered to deliver the notes on the payment of the amount named, which was refused. held that there was no unreasonable or absolute refusal by pledgee to deliver the notes, nor any offer in good faith by the pledgor to pay them, and that the lien was not lost."

§ 546. A tender need not include interest upon the debt if none was contracted for, and none has accrued by way of damages after a demand. Thus, upon a pledge of a watch by way of a sale of it for eighty-two dollars, with an agreement that the seller should have it again in thirty days, upon the payment of eighty-seven dollars, a tender of the latter sum was held sufficient, the five dollars bonus being regarded as in lieu of interest.3

§ 547. Upon the tender of the amount of a debt for which an accommodation note is held as security, the maker of such

1 Hyams v. Bamberger, 10 Utah 3, To hold otherwise would be to turn 36 Pac. Rep. 202. the statute, which was intended as a mere convenience into an instrument of fraud to hinder and delay creditors in the collecting of their claims.”

Per Bartch, J.: "Where a person makes a tender in writing, the statute excuses him from actually producing the money at the time of making the tender, but it excuses no other act or requirement on his part which would be necessary to make a valid tender, independently of the statute.

Malone v. Wright, 90 Tex. 50, 36 S. W. Rep. 420; Hyams v. Bamberger, 10 Utah 3, 36 Pac. Rep. 202.

3 Hines v. Strong, 46 How. Pr. (N. Y.) 97; affirmed, 56 N. Y. 670.

note, being in effect a surety, is discharged. The creditor by a tender from the principal debtor has in his hands the means of payment, and by his refusal to accept it discharges the surety; and in an action by the creditor upon the collateral note, the maker of that need not plead the tender, or bring the amount into court.'

II. Application of Payments.

§ 548. Where a pledge covers several distinct debts, contracted at divers times, the moneys arising from the pledge should be applied to the discharge of the debts, in the order in which they were contracted, provided the circumstances are such that neither the debtor nor creditor has the right to determine the application of the proceeds, and the pledge was made in security of the several debts in such a way that the debtor pledged for each debt what remained of the pledge, after payment of the next previous debt 2

The rule is general that the application should be made upon the oldest unsecured debts, with the exception that if there is a surety upon any debt, the application will first be made upon that debt for the surety's relief.3

Where a debtor executed a mortgage to secure a note and advances to be made, and after advances were made, but before maturity, the mortgagee assigned the note as collateral security, and thereafter made an assignment of all his property, including the mortgage, for the benefit of creditors, and the mortgagor delivered to the assignee for creditors' part of the crop covered by the mortgage, which the latter converted into money, the pledgee was entitled to have the money applied on the note in preference to the account for future advances.*

1 Appleton v. Donaldson, 3 Pa. St. 277, 39 S. W. Rep. 229; Pardee v. 381. Markle, 111 Pa. St. 548, 555, 5 Atl. Rep. 36, 56 Am. Rep. 299; 2 Daniel on Negotiable Instruments, § 1252.

Walton v. Davis, 114 N. C. 104, 19 S. E. Rep. 159.

'Jones v. Benedict, 83 N. Y. 79, affirming 17 Hun 128, 11 N. Y. Weekly Dig. 428. See Pattison v. Hull, 9 Cow. (N. Y.) 747, and note, 777.

Blackmore v. Granbery, 98 Tenn.

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