thereto, and in that form of an action it could be determined who was the true owner of the property."

Though the pledge to the

§ 568. The pledgee may show in defense to an action for the conversion of the pledge that it was the property of a third person, to whom he has returned it. pledgee impliedly undertakes to return the pledgor, the latter, in the first place, impliedly warranted the property to be his own; and if this warranty turns out to be false, the pledgee is absolved from his undertaking to restore the property to the pledgor, but should restore it to the true owner. "My impression is," said Chief Baron Pollock," "that if a person pledges with another property to which he has no title, and which he has no right to pledge, the real owner may interpose and get possession of the property. In the administration of the criminal law it constantly occurs that where stolen property has been pledged the pawnbroker is called upon to deliver it to the rightful owner. If a servant illegally pledges his master's plate, the servant can not recover it by an action, since the pawnbroker may inquire who is really the true owner, and deliver it to him." And Baron Parke, in the same case, said: "In the ordinary case of a pledge, the pledgee impliedly undertakes to deliver back the property to the pledgor, when the sum for which it is pledged is paid. On the other hand, the pledgor impliedly undertakes that the property pledged is his own property, and may be safely returned to him.”

The true ground on which a pledgee or other bailee may set

1 Cass v. Higenbotam, 100 N. Y. Cal. 573; Palmtag v. Doutrick, 59 Cal. 248, 254, 3 N. E. Rep. 189.

2 Ogle v. Atkinson, 5 Taunt. 759; Wilson v. Anderton, 1 B. & Ad. 450; Dixon v. Yates, 5 B. & Ad. 313; Watson v. Lane, 11 Exch. 769; Sheridan v. New Quay Co., 4 C. B. N. S. 618; Biddle v. Bond, 6 Best & S. 225; Thorne v. Tilbury, 3 H. & N. 534; The Idaho, 93 U. S. 575, 579; Bates v. Stanton, 1

Duer (N. Y.) 79; Hayden v. Davis, 9

154, 8 Pac. Coast L. J. 884, 43 Am. Rep. 245; Dodge v. Meyer, 61 Cal. 405, 10 Pac. Coast L. J. 169, 182; Pitt v. Albritton, 12 Ired. (N. C.) 74.

3 Cheesman v. Exall, 6 Exch. 341. The contract in this case, however, was held not to be a pledge, but the dicta of the learned judges deservedly have great weight.

up the right of a third person to the thing bailed is that indicated in a case decided in the fourteenth year of the reign of Elizabeth,' namely, that the estoppel which arises against the bailee, through his contract with the bailor, ceases when the bailment on which it is founded is determined by what is equivalent to eviction by title paramount.❜

A second pledgee may discharge himself from liability to the owner of the thing pledged by showing that he returned it to his own pledgor before the owner offered to redeem.3

§ 569. A pledgee in setting up the right of a third person to the thing pledged, of course takes upon himself the burden of proof that such third person is the rightful owner. Ordinarily he will have the aid of such third person in establishing the title of the latter; for the pledgee can only set up such title by the authority of such third person."

§ 570. A tender is generally necessary to a recovery of the securities. Except in case there has been a wrongful conversion of collateral securities, the owner can not recover them without first paying or tendering the amount due on the pledge. Such a tender is equally necessary whether the securities be in the hands of the original pledgee, or have been repledged or sold by him to one who has loaned upon them or purchased them in good faith without notice of the owner's rights. If the owner can enforce any right whatever to them he can

1 Shelbury v. Scotsford, Yelv. 23.

2 Biddle v. Bond, 6 Best & S. 225, per Parke, B. This is the view approved in Palmtag v. Doutrick, 59 Cal. 154, 43 Am. Rep. 245, per Thornton, J.

Jarvis v. Rogers, 15 Mass. 389. Cheesman v. Exall, 6 Exch. 341; Sheridan v. New Quay Co., 4 C. B. N. S. 618; Biddle v. Bond, 6 Best & S. 225.

3 Palmtag v. Doutrick, 59 Cal. 154, 168, 43 Am. Rep. 245, per Thornton, J.

Donald v. Suckling, L. R. 1 Q. B 585; Talty v. Freedman's Savings & Trust Co., 93 U. S. 321; Amos v. Sinnott, 4 Scam.(Ill.) 440; Henry v. Eddy, 34 Ill. 508; Cooper v. Ray, 47 Ill. 53; Jarvis v. Rogers, 15 Mass. 389, 13 Mass. 105; Hancock v. Franklin Ins. Co., 114 Mass. 155; Hathaway v. Fall River Nat. Bank, 131 Mass. 14; Cumnock v. Newburyport Sav. Inst., 142 Mass. 342, 346, 7 N. E. Rep. 869; Glidden v. Mechanics' Nat. Bank, 53 Ohio St. 588, 601, 42 N. E. Rep. 995.

only do so after tendering the debt secured. One so taking the securities from the pledgee acquires at least the latter's lien and interest, whatever that may be. A mere offer by the original pledgor to pay the assignee the amount due on the securities, unattended with an actual tender of the original debt secured, is insufficient to extinguish the lien and entitle such pledgor to a return of the securities. Such offer to pay is not equivalent to an actual tender.'

A tender is not excused by the fact that the pledgor's note is in the hands of his pledgee. If the note has matured, the pledgor can safely pay the amount of it to the purchaser or second pledgee taking the security in good faith, because he could successfully defend a suit upon the note, whether brought by the original pledgee, or by his indorsee taking it after maturity. The pledgor may, also, after making tender, instead of suing at law for the recovery of the securities, file a bill in equity, making his pledgee and the second pledgee or purchaser defendants, and thus settle the rights of all parties in that litigation.'

§ 571. An unauthorized sale of the pledge by the pledgee is not of itself a conversion, and does not, against the will of the pledgor, create a cause of action in his favor. His cause of action does not arise until he tenders payment and demands a return of the pledge, and the pledgee neglects or refuses to return it. Such a sale is not so far tortious as to render the contract void ab initio. "Outside of authority, the rule that a sale by the pledgee is not ipso facto a conversion, seems to be good sense. The rights of the parties are based upon the contract. The sale by the pledgee is wrongful. If that sale in

1 Lewis v. Mott, 36 N. Y. 395, 401. The securities were canal scrip of the state of Illinois; overruling Lewis v. Graham, 4 Abb. Pr. (N. Y.) 106. Talty v. Freedman's Savings & St. 588, 600, 42 N. E. Rep. 995. Trust Co., 93 U. S. 321.

(N. Y.) 34, 38; Butts v. Burnett, 6 Abb. Pr. N. S. (N. Y.) 302, 304; Jarvis v. Rogers, 15 Mass. 389, 408; Glidden v. Mechanics' Nat. Bank, 53 Ohio

2

3 Halliday v. Holgate, L. R. 3 Exch. 299; Hopper v. Smith, 63 How. Pr. JONES PLEDGES-39

First Nat. Bank v. Boyce, 78 Ky. 42, 19 Am. L. Reg. (N. S.) 503, 39 Am. Rep. 198.

and of itself determines the contract without more, then the pledgee by his wrongful act may rescind his contract in spite of the wish of the other party to it. I am not aware of any other case in which this can be done, and I can conceive of no reason for permitting it in this case. It may be for the interest of the pledgor to keep his contract alive, and, if it is so, I can not see why he may not do it. The maxim that no one shall take any advantage by his own wrongful act, may fairly apply to this case, and we may hold that, although the unlawful sale does not per se operate as a conversion, yet the pledgor may, at his option, so consider it, and that he may regard the contract as at an end, tender or offer to pay his debt and demand his pledge, or may sue for damages for the sale. I think the cases sustain that rule, and that it reconciles the cases which otherwise appear to conflict, but do not in fact.' I do not think that the plaintiff was called upon to notify defendant of his disaffirmance of the sale at the time defendant told him of it. There is no pretense of any estoppel. Nothing has occurred to give defendant reason to believe that the contract was waived, and he took no action afterwards on the strength of plaintiff's silence. As long as the contract was in force both parties were bound by it. The plaintiff might rely upon it, and the defendant must keep ready to perform it. Neither party by his own act simply could free himself from its obligations.""

A pledgee of mortgage notes sold them without authority at public auction to himself for a sum sufficient to pay the pledgor's note and to leave a balance in addition. He returned the note and the surplus money to the pledgor, who refused to recognize the sale, but retained the note and the surplus money. The pledgor, without tendering the amount due on his original note, sued the pledgee as for a conversion of the collateral mortgage notes which the pledgee still held.

1 Strong v. Nat. Mechanics' Banking Asso., 45 N. Y. 718; Bryan v. Baldwin, 52 N. Y. 232.

2 Hopper v. Smith, 63 How. Pr. (N. Y.) 34, 38, per Rumsey, J.

It was held that the sale of the collateral notes was a nullity, but that the pledgor not having paid or tendered his debt, he could not maintain the suit. The court said: "While there may be some conflict on the subject, we think the great weight of authority is that such sale being invalid, and the pledgee being the purchaser at the sale, and retaining the possession of such property, and having the power to return it to the pledgor, that this does not amount to a conversion by the pledgee, but that the parties occupy towards each other precisely the same relation as before the invalid sale, unless the pledgee elects to treat it as a valid sale, which he has a right to do, in which event the settlement would be made upon the basis of such sale, so ratified. But if the sale is not so ratified, then the pledgee continues to hold the collateral as security for his debt, and is entitled to do so until the debt is paid or payment thereof is tendered, so as to entitle the pledgor to its return.""

§ 571a. If a pledgee by an unauthorized sale puts it out of his power to restore the property upon payment or tender of the debt secured, he is liable for its conversion without a demand and tender of performance by the pledgor. "The observation sometimes met with in the opinions of judges, and in text-books, that the pledgor is at liberty to treat an unauthorized sale of the pledged property as a conversion by the pledgee, must be taken to refer to such a sale as puts the property beyond the control of the pledgee. In cases of that kind the pledgor may charge the pledgee as for a conversion of the property without demand or tender of performance, though he is not bound to do so, but may, by subsequent tender and demand, require the pledgee to account for the market value of the property at that time. And, of course, it is not the right of the pledgee to insist that his wrongful sale constitutes a conversion, for that would enable him, if he were allowed to do so, to take advantage of his own wrong, and by his own vio

1 Leighton v. Burkham, 7 Ohio C. C. 487, 488, per Smith, J.