lation of the contract determine the time, and thus the measure of his liability for its breach. As has already been stated, no offer was made by the pledgor, at any time, to pay the debt he owed the bank, nor was any demand made for the return of the iron held in pledge; and after it was bid off by the president of the bank on the 5th day of November, 1883, it remained in the control of the bank, as it had been before, without change in any respect, up to the 7th day of February, 1887, when, under the sale that day made, part of the iron passed into other hands; so that, until that time, the bank's possession was lawful and it was able to perform its obligation to the pledgor by returning the iron to him, upon payment of his debt. It had, up to that time, exercised no actual dominion or control over the property inconsistent with the pledgor's right to redeem; and the sale of November 5, 1883, being ineffectual to transfer the title, did not, we think, constitute a conversion of the property, which, in legal contemplation, was still held under the contract of pledge.

991

§ 571b. A nominal transfer of a pledge which does not put the property beyond the control of the pledgee does not amount to a conversion of the pledge. Such is the case when a pledgee transfers stock which he holds as collateral into the hands of another for the purpose of avoiding liability as

'Glidden v. Mechanics' Nat. Bank, 53 Ohio St. 588, 602, 42 N. E. Rep. 995, per Williams, J.; First Nat. Bank v. Rush, 85 Fed. Rep. 539, 71 Fed. Rep. 102; Waring v. Gaskill, 95 Ga. 731, 22 S. E. Rep. 659; Van Arsdale v. Joiner, 44 Ga. 173. See, also, Rosenzweig v. Frazer, 82 Ind. 342; Douglas v. Carpenter, 17 App. Div. (N. Y.) 329, 45 N.Y. Supp. 219; Kilpatrick v. Dean, 19 N. Y. St. Rep. 837, 3 N. Y. Supp. 60; Stearns v. Marsh, 4 Denio (N. Y.) 227; Luckey v. Gannon, 37 How. Pr. (N. Y.) 134; Read v. Lambert, 10 Abb. Pr. N. S. (N. Y.) 428; Moore v. Prentiss Tool & Supply Co., 133 N. Y. 144,

30 N. E. Rep. 736; Felt v. Heye, 23 How. Pr. (N. Y.) 359; Sheridan v. Presas, 18 Misc. (N. Y.) 180, 186, 41 N. Y. Supp. 451; Ainsworth v. Bowen, 9 Wis. 349; Work v. Bennett, 70 Pa. St. 484; Sanborn v. Colman, 6 N. H. 14, 23 Am. Dec. 703; Walley v. Deseret Nat. Bank, 14 Utah 305, 47 Pac. Rep. 147; Lucketts v. Townsend, 3 Tex. 119, 49 Am. Dec. 723; Johnston v. Whittemore, 27 Mich. 463, 469; Grant v. King, 14 Vt. 367; Swift v. Moseley, 10 Vt. 208, 33 Am. Dec. 197.

2 Jeanes's Appeal, 116 Pa. St. 573, 11 Atl. Rep. 862; Donnell v. Wyckoff, 49 N. J. L. 48, 7 Atl. Rep. 672.

a stockholder, taking certificates in the name of the transferee with a power of attorney to transfer them at his will.' Such is the case also where a pledgee transfers mining stock to another for the purpose of relieving himself from supposed damage to his credit by reason of holding so much of that stock, the stock remaining within his control ready for delivery to the pledgor on payment of his indebtedness."

The fact that a pledgee attempts to assert a larger right in the property than he can maintain does not of itself constitute. a conversion of it, it being clear that he is entitled to possession as a pledgee.*

§ 572. No formal demand or tender by the pledgor after an unauthorized sale by the pledgee is necessary, if he has substantially offered to redeem, by paying whatever is due. Thus, a watch having been pledged for the payment of a loan made without a specified time for repayment, the creditor subsequently notified his debtor that he must redeem the watch or it would be sold. The latter thereupon deputed an agent to effect a redemption. The agent called upon the defendant a number of times, with money sufficient for the purpose, and offered to pay even more than the amount which the creditor claimed to be owing him, but, upon one and another pretense, the agent was put off for several months, when the creditor declared that he had disposed of the watch in exchange for another and a sum of money. It was held that the debtor could maintain a suit for the conversion of the watch without any formal demand, and without a formal tender of the money due.*

The pledgor may maintain a suit for the conversion of the pledge which the pledgee has sold without giving notice or demanding payment of the debt without making tender of the amount of it, where the pledge is of greater value than the debt. Thus where the pledgee executes an absolute trans

1 Heath v.

Griswold, 18 Blatchf. 555,

5 Fed. Rep. 573.

"Day v. Holmes, 108 Mass. 563.

Radigan v. Johnson, 174 Mass. 68, 54 N. E. Rep. 358.

Rosenzweig v. Frazer, 82 Ind. 342.

fer of a bond and mortgage without giving the pledgor notice or demanding repayment of the loan, and the mortgage is subsequently foreclosed and the property sold, the pledgor is entitled, without tendering to the pledgee the amount of the debt, to maintain an action against the latter to recover the difference, if any, between the face value of the bond and mortgage and the amount of the debt for which they were pledged.'

§ 573. A tortious conversion by the pledgee through an illegal sale of the pledge may be waived, by the debtor's presenting a statement showing the amount he claimed to be due and offering to receive the same in full satisfaction."

Where, upon maturity and non-payment of the loan, the pledgee, with assent of the pledgor, transfers the stock pledged to a third person, for a less sum than it was pledged to secure, and there is no proof that the stock pledged was worth more than that sum, the pledgee is not liable for a conversion of the stock, the debt still remaining unpaid.'

§ 573a. An unauthorized sale of the pledged property by the pledgee does not cause him to lose the lien of his pledge and render him liable for the value of the property, if no damage is sustained by the pledgor. In an action by pledgors against pledgees for an unauthorized sale of the pledge the supreme court of Massachusetts, deciding to this effect, say: "The plaintiffs admit in substance that the defendants used good judgment and diligence in selling, and that the sales were effected at favorable prices, and it does not appear that the proceeds were more than enough to pay what was due the defendants. Under such circumstances we fail to see how the plaintiffs have sustained any damage. It would be singular if, having a right to foreclose the pledge, the defendants

1 Barber v. Hathaway, 47 App. Div. (N. Y.) 165, 62 N. Y. Supp. 329.

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

McClintock v. Central Bank, 120 Mo. 127, 24 S. W. Rep. 1052.

should be held to have lost their lien and to be liable for the value of the bicycles, because, without inflicting any damage thereby on the pledgor, they went the wrong way about the foreclosure or claimed a greater right than they actually had. We do not think that such is the law.""

§ 574. Measure of damages.-The value of the property at the date of the conversion is the true criterion of damages.

If at the maturity of the debt for which the pledge was made the debtor tenders payment of it, and demands the return of the security, and this is not returned, the conversion is made. at that time, and the valuation of it in a suit for such conversion should be made as of the time of such demand and refusal.'

§ 575. A conversion of negotiable paper by one who holds it as collateral security renders him liable to the general owner for its value at the time; and this value is, prima facie, the sum represented upon the face of the paper, with interest according to its terms, but it may be shown, in reduction of damages, that the maker of the note is insolvent; and so may

1 Whipple v. Dutton, 175 Mass. 365, citing Dahill v. Booker, 140 Mass. 308, 5 N. E. Rep. 496; Farrar v. Paine, 173 Mass. 58, 53 N. E. Rep. 146, and cases cited; Halliday v. Holgate, L. R. 3 Ex. 299; Johnson v. Stear, 15 C. B. N. S. 330; Baltimore Marine Ins. Co. v. Dalrymple, 25 Md. 269; Wheeler v. Pereles, 43 Wis. 332; Belden v. Perkins, 78 Ill. 449; Gruman v. Smith, 81 N. Y. 25; Smith v. Reeves, 33 How. Pr. (N. Y.) 183; Van Schaick v. Ramsey, 90 Hun 550, 552, 35 N. Y. Supp. 1006.

2 First Nat. Bank v. Boyce, 78 Ky. 42; August v. O'Brien, 50 App. Div. (N. Y.) 626, 63 N. Y. Supp. 989; Newcomb v. Baskett, 14 Bush (Ky.) 658, 667; Harrell v. Citizens' Banking Co., 111 Ga. 846, 36 S. E. Rep. 460; Fisher v.

Geo. S. Jones Co., 108 Ga. 490, 34 S. E. Rep. 172; Robinson v. Hurley, 11 Iowa 410, 79 Am. Dec. 497; Ainsworth v. Bowen, 9 Wis. 348; Loomis v. Stave, 72 Ill. 623; Eisendrath v. Knauer, 64 Ill. 396; Iler v. Baker, 82 Mich. 226, 46 N. W. Rep. 377; Fifth Nat. Bank v. Providence Warehouse Co., 17 R. I. 112, 118, 20 Atl. Rep. 203; Jamison's Estate, 163 Pa. St. 143, 29 Atl. Rep. 1001.

any other fact impugning the value of the security be shown.' If the property be negotiable bonds, the measure of damages is the value of the bonds, and of the mature coupons at the time of the conversion, with interest from that time."

If a creditor holding a mortgage note as collateral security pledge it as his own, he is liable to the owner for the full amount of the note, unless he clearly proves that the note was worth less than its face. The burden is upon him to prove that the note is not worth what it calls for.

If a pledgee of a note does not return it to his debtor after the payment of the debt, and he shows no legal reason for not doing it, he is liable in damages to the full amount of the note. It might be a defense in such case that the maker of the note is not able to pay it, or that it is barred by the statute of limitations; but it is no ground for reducing the damages, that the pledgee has filed in court an obligation to indemnify the pledgor against any act done or to be done by the pledgee in respect to the note, unless he is able to prove the loss of the note.*

§ 576. It may be shown in mitigation of damages in an action by the pledgor for the conversion of a pledge, that the pledgee has applied the proceeds thereof to the use of the pledgor in payment of the debt secured or of other debts due from him to the pledgee. This is upon the principle that the owner of property, who has received the value of the property wrongfully converted or kept from him, shall not recover that value a second time in an action therefor.

5

1 Griggs v. Day, 136 N. Y. 152, 32 N. E. Rep. 612, 48 N. Y. St. Rep. 853, reversing 46 N. Y. St. Rep. 967, 18 N. Y. Supp. 957; Garlick v. James, 12 Johns. (N. Y.) 146, 7 Am. Dec. 294; Vose v. Florida R. Co., 50 N. Y. 369.

2 Merchants' & Planters' Nat. Bank v. Masonic Hall, 62 Ga. 271.

8 Laloire v. Wiltz, 29 La. Ann. 329.

4

Thomas v. Waterman, 7 Metc. (Mass.) 227.

5 Hathaway v. Fall River Nat. Bank, 131 Mass. 14, 17, per Soule, J.; Bailey v. Godfrey, 54 Ill. 507, 5 Am. Rep. 157; Baldwin v. Bradley, 69 Ill. 32; Belden v. Perkins, 78 Ill. 449; Loomis v. Stave, 72 Ill. 623.