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the assignee for the benefit of creditors, but must be surrendered to the pledgee or pledgor according to the right of the parties.
Upon the bankruptcy of the pledgee, the subject of the pledge must be returned to the pledgor upon the satisfaction of the debt or claim to secure which the pledge was made. When a special deposit of money was made with a bank as a pledge to secure it from loss in furnishing bail, the title to the deposit, subject to the liability secured, remains in the pledgor, and after the cessation of the liability an action by the pledgor lies to recover the deposit; and in case of the insolvency of the bank the pledgor is not remitted to the rights of a general creditor, but may recover the entire sum deposited out of the assets of the bank. The fact that moneys specially deposited in the bank by way of pledge were afterward wrongfully commingled and used as funds of the bank, without the knowledge or consent of the pledgor, can not be urged by the bank in defense as effecting any change in the contractual relations and rights of the parties.'
1 Anderson v. Pacific Bank, 112 Cal. 598, 44 Pac. Rep. 1063.
REMEDIES OF THE PLEDGEE AFTER DEFAULT.
I. Suit upon the debt, 589-598. II. Attachment of the pledged property, 599-601.
III. Sale of the pledge at common law, 602-615.
IV. Statutory provisions regulating sales of property held in pledge, 616–630.
V. Sales under powers of sale, 631639a.
VI. Sales under proceedings in equity, 640-648.
VII. Surplus proceeds of sales, 649, 650.
I. Suit Upon the Debt.
§ 589. In general.-As with a mortgage so with a pledge, the creditor may upon default pursue any or all of his several remedies. The remedies upon a pledge are also similar to those upon a chattel mortgage. They are, 1, by action upon the debt secured; 2, by sale of the pledge at common law without judicial proceedings; 3, by sale under statutory provisions; 4, by sale under a decree of a court of chancery; 5, by sale under a special power of sale.'
The remedy by sale, however, does not apply in case of pledges of negotiable paper and other choses in action, which have no recognized market value, unless a special power of sale be given."
§ 590. The holding of collateral security for a debt does not impair or suspend the right of action upon the debt, unless so agreed upon by the parties, whether the collateral be given at the time the debt was contracted or afterwards. "If I pawn
11 Codes 1895, Civ. Code, § 3904. 2 See Chapter xvii.
3 South Sea Co. v. Duncomb, 2 Str. 919; Emes v. Widdowson, 4 Car. & P.
151; Whitwell v. Brigham, 19 Pick. (Mass.) 117; Beckwith v. Sibley, 11 Mass. 482; Cornwall v. Gould, 4 Mass. 444, 448; Whitaker v. Sumner, 20
goods to A for such a sum," says Chief Justice Holt, "A may have debt for the money, notwithstanding his having a pawn." The pledgee may also have his remedy against the person of the debtor and arrest and imprison him upon execution for the debt, where that remedy is given, without impairing his right to enforce the pledge. He may attach and levy upon other property of the debtor without forfeiting his pledge. In short, in the case of a pledge just as in the case of a mortgage, the creditor may use any remedy he has against the debtor or his property for the collection of the principal debt, without destroying or impairing his security for the debt until it is actually paid. A creditor is entitled
to hold his securities, whatever they may be, until he gets his The securities belong to him, and he may enforce the debt without surrendering them.
§ 591. The recovery of a judgment upon the principal debt does not affect the pledgee's right to hold and enforce a pledge taken to secure that debt. Though the original debt is merged in the judgment, and is thenceforth evidenced by a higher security, the debt in fact remains in a new form and the property pledged for its payment still remains liable therefor.
Pick. (Mass.) 399; Darst v. Bates, 95 Ill. 493; Wilhelm v. Schmidt, 84 Ill. 187; Cushman v. Hayes, 46 Ill. 145, 153; Rozet v. McClellan, 48 Ill. 345, 95 Am. Dec. 551; Archibald v. Argall, 53 Ill. 307; Dugan v. Sprague, 2 Ind. 600; Kemmil v. Wilson, 4 Wash. C. C. 308; Jones v. Scott, 10 Kan. 33; Bank v. Woodruff, 34 Vt. 89; Robinson v. Hurley, 11 Iowa 410, 79 Am. Dec. 497; Lormer v. Bain, 14 Neb. 178, 15 N. W. Rep. 323; Butterworth v. Kennedy, 5 Bosw. (N. Y.) 143; Langdon v. Buel, 9 Wend. (N.Y.) 80, 83; Elder v. Rouse, 15 Wend. (N. Y.) 218; Sonoma Valley Bank v. Hill, 59 Cal. 107, 9 Rep. 68, 8 Pac. Coast L. J. 666; French v. McCarthy, 125 Cal. 508, 58 Pac. Rep. 154; Savings Bank
3 Taylor v. Cheever, 6 Gray (Mass.) 146. Cleverly v. Brackett, 8 Mass. 150, to the contrary, is without support and is not good law.
See Jones on Mortgages, § 1215; Jones on Chattel Mortgages, § 758. 5 Lincoln v. Linde, 27 Abb. N. C. (N. Y.) 278, 280, 16 N. Y. Supp. 106, quoting text.
Jones v. Scott, 10 Kan. 33; Smith v. Strout, 63 Me. 205; Charles v. Coker, 2 S. C. 122; Sonoma Valley Bank v. Hill, 59 Cal. 107, 9 Rep. 68, 8 Pac. Coast L. J. 666; Barnes v. Bradley,
The judgment for the debt need not contain a provision that the property pledged shall be surrendered upon satisfaction of the judgment.'
Neither does the creditor lose his right to hold the collateral security by suing the principal debt, recovering execution, and arresting the debtor thereon. It is of the very nature of collateral security that it may be resorted to for a satisfaction of the principal debt, if its payment shall not otherwise be obtained."
The pledgee need not first exhaust the subject of the pledge before suing to recover the debt secured. If the security of the pledge is first applied upon the debt, and a part of it then remains unpaid, an action to recover the remainder of the debt may be maintained, and other property attached, though it be provided by statute that there shall be no attachment when the debt is secured by a pledge.*
§ 591a. No mere change in the form of the debt secured releases the collateral securing it. Thus the renewal of the note evidencing the debt leaves the security unimpaired. But if the note secured is renewed, and at the same time a new contract of pledge is made of the same security which was pledged in the original transaction, the surrender of the old note and the giving of the new contract of pledge afford prima facie evidence that the old note was paid and the old contract of pledge released in favor of the new note and the new pledge securing it.6
dlekauff, 113 Cal. 463, 45 Pac. Rep. 840; Sonoma Valley Bank v. Hill, 59 Cal. 107.
56 Ark. 105, 19 S. W. Rep. 319; West v. Carolina Life Ins. Co., 31 Ark. 476; Fairbank v. Merchants' Nat. Bank, 132 Ill. 120, 22 N. E. Rep. 524; Jenkins v. International Bank, 111 Ill. 462; Schneider v. Kirkpatrick, 80 Mo. App. 145.
4 Williams v. Hahn, 113 Cal. 475, 45 Pac. Rep. 815.
5 Fairbank v. Merchants' Nat. Bank, 132 Ill. 120, 22 N. E. Rep. 524; Flower
1 French v. McCarthy, 125 Cal. 508, v. Elwood, 66 Ill. 438; Rogers v.
School Trustees, 46 Ill. 428.
58 Pac Rep. 154.
2 Smith v. Strout, 63 Me. 205; Morse v. Woods, 5 N. H. 297.
3 Ehrlich v. Ewald, 66 Cal. 97, 4 Pac. Rep. 1062; Savings Bank v. Mid
6 Fairbank v. Merchants' Nat. Bank, 132 Ill. 120, 22 N. E. Rep. 524; Tucker v. Conwell, 67 Ill. 552.
The pledgor can not while the debt exists maintain an action. for the recovery of the property pledged.'
§ 592. The debt may be enforced though the pledge has been discharged by a tender of the debt at its maturity, unless the debt be payable in specific articles of personal property, when a tender of such articles may discharge the debt, and the articles tendered will become the property of the creditor, and may afterwards be kept at his risk and expense. But ordinarily a tender does not relieve the debtor from his personal liability to pay the debt."
§ 593. The return of the pledge is not a condition to be performed before or concurrently with the payment of the debt secured.' If one loans money upon the security of a gun, the lender may recover the amount of the loan, without first returning the gun. Even an agreement that upon a partial payment of the debt a proportionate part of certain shares pledged to secure it shall be given up, is construed to mean that the shares are to be returned after the money is paid. The creditor may bring suit upon the debt without first returning the shares; though of course if he should not return the shares after payment of the debt or after judgment recovered upon it, trover would lie against him for their value.5
Even a covenant on the part of the pledgee not to sue until the securities shall be given up, can not be set up in bar to a suit by him brought before giving up the securities. The damages to be recovered for a breach of covenant not to sue within a limited time, may be much less than the demand; and it would therefore be unjust to allow the covenant to bar
1 Hendrix v. Harman, 19 S. C. 483. 2 § 542; Mitchell v. Roberts, 17 Fed. Rep. 776.
3 Scott v. Parker, 1 Q. B. 809; Chapman v. Clough, 6 Vt. 123; Morse v. Woods, 5 N. H. 297, 300; Taylor v. Cheever, 6 Gray (Mass.) 146; First JONES PLEDGES-41
Nat. Bank v. O'Connell, 84 Iowa 377, 51 N. W. Rep. 162, quoting text; Burhans v. Squires, 75 Iowa 59, 39 N. W. Rep. 181; Donnell v. Wyckoff, 49 N. J. L. 48, 49, 7 Atl. Rep. 672.
4 Lawton v. Newland, 2 Stark. 72. 5 Scott v. Parker, 1 Q. B. 809.