the bailee, or lost through his default or neglect, trover will lie. The right to use as well as the right to retain the pledge ceases the instant the lien is discharged by the tender or payment of the debt, or the performance of the covenant or engagement for which the security is given.

There may be a conversion of a chose in action which has been pledged, as well as a conversion of a corporeal chattel, and trover will lie for such conversion."

After a suit for a conversion of securities and a recovery in such action, the pledgor can not maintain an action to recover possession of the securities. He has made an election of his

remedies and is bound by such election."

§ 562. Trover may be maintained for the conversion of bank bills specially pledged. During the civil war a customer of a bank in South Carolina left with the bank four thousand dollars in its own bills as security for the return of a like sum in confederate treasury notes, borrowed for a short limited time. Within this time he tendered this sum in treasury notes, and demanded the return of the bank bills, and upon refusal of the bank to deliver them brought trover for their conversion. It was held that his right to recover was not prejudiced by the fact that the property pledged was money, or the bills of the bank itself; but that the same principle was to govern as if the article deposited had been a watch or a jewel.*

§ 563. A sale by a pledgee for non-compliance with a demand which he has no right to make, or after tender of the debt actually due, is a conversion. Thus, a broker having purchased gold for a customer upon a pledge of bank stock as collateral security, the customer gave an absolute order to the

'Lawrence v. Maxwell, 53 N. Y. 19, per Allen, J.; Iler v. Baker, 82 Mich. 226, 46 N. W. Rep. 377.

2 Campbell v. Parker, 9 Bosw. (N. Y.) 322; Luckey v. Gannon, 37 How. Pr. (N. Y.) 134, 1 Sweeny 12; Decker v. Mathews, 12 N. Y. 313; Baltimore

Marine Ins. Co. v. Dalrymple, 25
Md. 269.

Deitz v. Field, 10 App. Div. 425, 41 N. Y. Supp. 1087.

+ Abrahams v. South Western R. R. Bank, 1 S. C. 441, 7 Am. Rep. 33, Willard, J., dissenting.

broker to sell the gold at a stipulated price, at which it might have been sold; but the broker, claiming the order to be discretionary, failed to do so, and the gold was subsequently sold for a less price; the customer thereupon tendered the broker a sum sufficient to pay the balance of the account, if the gold had been sold in pursuance of his order. After such tender the broker sold the bank stock. It was held that this was a conversion of the stock, and that the customer was entitled to recover its value after deducting the actual indebtedness for which the stock stood in pledge.'

If one delivers cattle to another to be kept and fed, with power to sell them to pay for their keeping, the pledgee has the right to sell only so much of the stock as is necessary to pay what may be due him for the keeping and feeding, and if he proceeds to sell all of them, when this was not necessary to pay the expense of such keeping, it is a conversion of the portion of the stock sold by him which was not necessary to pay the debt due for keeping, for which trover will lie."

§ 564. A pledge obtained by false representations of the creditor vests no title in him, and the pledgor may recover it without redeeming it by paying the debt. The pledgee is liable as for a conversion of the property in such case if he does not surrender it upon demand. The contract, though perfect in form, being obtained by fraudulent means, is void in law. The omission of the pledgor to make inquiries as to the truth of the representations, can not be imputed to him as negligence, and is no defense to his recovery of the pledge by such false representations."

§ 565. A principal is liable for a misappropriation of negotiable collaterals by his agent, through whom the transaction was made. The test of the principal's liability in such a case is found in the answer to the inquiry, whether the fraudulent act of the agent was done in the course of his agency, and by

1 Hope v. Lawrence, 1 Hun (N. Y.) 317.

2 Whitlock v. Heard, 13 Ala. 776, 48 Am. Dec. 73.

8 Mead v.

Bunn, 32 N. Y. 275.

1

virtue of his authority as agent. If it was, then the principal is responsible, whether the act was merely negligent or fraudulent. If the agent misappropriates collateral security which he has possession of by virtue of his agency, his principal is liable for his fraudulent act.1

§ 566. A conversion of the pledge occurs immediately upon the creditor's refusal of a proper tender of the debt upon the day of its maturity or afterwards. To lay the foundation for an action for conversion of a thing pledged as security for a debt payable on a fixed day, the debtor's tender and demand should be made on the day of the maturity of the debt, though a tender and demand made after default would be sufficient to enable the pledgor to redeem. But if the tender as made is insufficient, or does not include lawful charges upon it paid by the creditor, such, for instance, as an assessment rightfully paid by the creditor upon stock which is the subject of the pledge, a refusal of the tender does not constitute a conversion, especially if the creditor offer to accept the tender and restore the pledge, if the charges upon it be also paid. After payment of the specific debt for the security of which a pledge is made, and a demand and refusal to surrender the pledge, the pledgee's retention of it as security for another debt is a conversion.5

§ 567. Even if the pledgee has been sued by a third person claiming title to the property pledged, or the pledged property has been attached as the property of the pledgor after he has assigned it, his refusal to return it to the pledgor, or to his as

1 Reynolds v. Witte, 13 S. C. 5, 36 Am. Rep. 678.

2 McCalla v. Clark, 55 Ga. 53; Ratcliff v. Vance, 2 Mill's Const. (S. C.) 239; Loughborough v. McNevin, 74 Cal. 250, 14 Pac. Rep. 369, 15 Pac. Rep. 773; Dodge v. Meyer, 61 Cal. 405, 420; Niles v. Edwards, 90 Cal. 10, 27 Pac. Rep. 159; Fitzgerald v. Blocher, 32 Ark. 742, 29 Am. Rep. 3.

3 Butts v. Burnett, 6 Abb. Pr. N. S. (N. Y.) 302.

McCalla v. Clark, 55 Ga. 53. But see Ponce v. McElvy, 47 Cal. 154; Flowers v. Sproule, 2 A. K. Marsh. (Ky.) 54.

Luckey v. Gannon, 1 Sweeny (N. Y.) 12, 37 How. Pr. 134, 6 Abb. Pr. N. S. 209; Hardy v. Jaudon, 1 Robt. (N. Y.) 261.

signee, upon a tender of the debt, amounts to a conversion.' In a case where the pledgor, in a suit against him for the debt, set up a counter claim for the conversion of the pledged prop. erty by the pledgee, it appeared that the pledgor offered payment and made demand for the property, after the pledgee had been sued by a third person for a portion of the property, and the pledgee, upon the tender, offered to return the property not claimed by the third person, but refused to return the property so claimed. It was held by the supreme court of New York that, under these circumstances, such refusal did not amount to a conversion. The court, upon this point, said: "In the action brought by the third party against the present plaintiff the title was in dispute, and as the defendant in this action was made a party defendant to that, the question of the title was, of course, at issue in that action. Under such a state of facts, there was, we think, no conversion by the plaintiff. He offered, as it appears, on payment of the note, interest and costs, all the property pledged, except that portion for which the action was pending, and this, we think, under the circumstances, was all he was bound to do. To deliver the whole property to the present defendant would have been a conversion as against the other claimant, if she could establish that she had title to the portion she had sued for. But as the present defendant, as well as the plaintiff, was impleaded in the action in which the question of title was to be tried, we think the court below was correct in holding that, under such circumstances, no such conversion was shown as entitled the defendant to counter claim the value of the property pledged. He should have received the portion of the property pledged, which was offered to be returned, and paid the amount of the note, interest, and costs, which would have disposed of the present action. But, standing in his position as guarantor of the title to the plaintiff as pledgee, and knowing of the pendency of the action in which he was bound to defend that title, he could not, we think, by a simple demand, put the present

1 Loughborough v. McNevin, 74 Cal. 250, 14 Pac. Rep. 369, 15 Pac. Rep. 773.

plaintiff in the position of a wrong-doer, in converting the property for which the other action was pending.""

This decision was, however, reversed by the court of appeals, Miller, J., delivering the judgment of this court, saying: "It only remains to be considered whether the conceded facts in the pleadings and the proof upon the trial show a conversion of the property. Unless the refusal to return the property was justified, there was clearly a conversion of the same by the plaintiff, and the defendant had a right of action for the recovery of the value thereof or of the property itself, or to interpose the defense set up by him as a counter claim to the plaintiff's demand. We are unable to discover any ground upon which the plaintiff could establish a right to retain the property after a demand, if the defendant was entitled to the same as the owner thereof. The fact that a portion of the property was claimed by another person, and that a suit had been brought for a recovery thereof, and that the defendant had been made a party defendant in said action, furnishes no justification for the refusal. If the defendant was the owner of the property he had a right to it, and the plaintiff was not justified in refusing to comply with his demand, for the reason that it was claimed by, and a suit had been brought for the recovery thereof by a third person. If he unlawfully refused to surrender the goods to the true owner, when demanded, he must abide the consequences of his own act. So long as the plaintiff retained possession without right he was liable to the owner for the same or the value thereof. A delivery to the true owner would have been an entire protection to the plaintiff and a complete defense to the action brought against him.

"The plaintiff, as bailee, had no right to deny the title of the defendant as bailor, if he, the bailor, was the true owner of the property. If there were conflicting claims to the same, the plaintiff had a complete remedy by bringing an action in the nature of a bill of interpleader, making the claimants parties

'Cass v. Higenbotam, 27 Hun (N. Y.) 406, 408, 15 N. Y. Weekly Dig. 135.