Whitney . M. U. Express Co., 116 . Tibbitts, 413 Whitaker v. Kirby, 244 0. Sumner, 127 Whittaker v. Brown, 51, 52 . Charleston Gas Co., 114, 117, 119, 442, 444, 446 Whittemore v. Gibbs, 144 Whitten . Wright, 114, 257 Whitwell. Brigham, 104, 105, 108, 109, 110 Wicker . Hoppack, 224 Wickham. Morehouse, 75, 422, 431 Wichita Savings Bank v. A. T. & S. F. R. R. Co., 391 Wicks v. Hatch, 334, 366 v. Mitchell, 207 Wiggin's App., 207, 208 Wiggin 0. Dorr, 98 Wilber. Lynde, 74 Wilcocks, ex parte, 283 Wilcox . Fairhaven Bank, 217, 219, 238, 239 v. Todd, 207, 210 Wild, in re, 135 Wild . Howe, 248 Wildrich v. Swain, 29, 109 . Starbuck, 139 Wilhelm . Carr, 346, 349, 350 Wilkes . Ferris, 413 v. Jeffers, 91, 95 Williams v. Bosson, 33 v. Hancock, 207 v. Ingersoll, 423, 425, 430 v. Ins. Co., 312 v. Jackson, 147, 152 v. Little, 23, 28, 87, 164 v. Mechanics' Bank, 275, 295 v. Norton, 90 v. Owen, 212 v. Moore, 302 v. Mason, 410 v. Richards, 50, 58 v. Salamanca, 48 v. Senier, 258 v. Troup, 195 v. Williams. 54 v. Wright, 237 Winans v. Hassey 370 Winslow v. Vermont Ry. Co., 394 Winsted v. Bingham, 144 Winston v. State, 204 Wise v. Charlton 3 Wiseman v. Vanderpat, 382 Winters v. Belmont Mining Co., 263, Winthrop Savings Bank v. Jackson, 63, 104, 105 Wintle v. Crowther, 56 Winton v. Little, 180, 241 Witmer v. Ellison, 249 Wolfington v. Sparks, 215 Wolcott v. Heath, 348 Wood's App., 263, 265, 296, 302, 321, 322, 333 Wood v. Augustine, 156 v. Bank, 239 v. Fiske, 251 v. Hayes, 307, 369 v. Jefferson Co. Bank, 243 v. Mathews, 87, 93, 96, 114 v. Sherman, 253 v. Smith, 301, 320 v. Trask, 158 v. Wallace, 424 Woodruff v. Depue, 186 v. King, 144 v. Morristown Inst. 184, 186, 189 Woodward v. Matthews, 157 Woods v. Nat. Bank, 180 Woolford v. Dow, 247, 248 Word v. Morgan, 442 v. Brayton, 18 v. Kase, 34, 36 Worner v. Waterloo etc. Society, 214 v. Austin, 207, 210, 211 v. Campbell, 381 v. Crabbs, 361 v. Eaves, 144, 173 Wright v. Hooker, 52 v. Hunter, 238 v. Lang, 245 v. Morley, 217, 239, 255 v. Northern Cont. Ry. Co, 394 v. Simpson, 89, 153 v. Soloman, 407 v. Troutman. 144 v. Whiting, 224 Wrotten v. Armat, 64 Wyckoff v. Anthony, 62, 97, 131 Wyman v. Cochrane, 107 Wyman v. Robinson, 221 Wyne v. Macdonald, 397 Wynkoop v. Leal, 306, 327, 369 Yarborough v. Bank of England, 312 Yates v. Donaldson, 203 Yeatman v. Savings Inst., 278, 329 Yenni v. McNamee, 412, 421 Yerger v. Barz, 168 v. Jones, 302 Yerkes v. Salomon, 349, 350, 355 York County Ins. Co. v. Brooks, 246 v. Grote, 315, 316 v. Hobbs, 28. 29 v. Lee, 23. 27, 65, 92 v. Miller, 145, 147, 160 v. Morgan, 214 v. Scott. 407 Younge, ex parte, 202 Zabriskie v. Railroad Co., 44, 180, 260 Zimpleman v. Veeder, 87, 90, 96, 117, 118, 125, 175, 182 Zook Clemmer, 212 Zuel v. Bowen, 55 STANFORD LIBRARY PART I. NEGOTIABLE COLLATERAL SECURITIES. CHAPTER I. NEGOTIABLE COLLATERAL SECURITIES. $1. The use of negotiable instruments as collateral security. $1. THE USE OF NEGOTIABLE INSTRUMENTS AS COLLATERAL SECURITY.-The use of negotiable instruments, as bills of exchange and promissory notes made by third persons, as collateral security for the payment of the negotiable promissory note or other obligation of the pledgor, where the same are indorsed, where required, or by delivery merely, where indorsed in blank and made payable to bearer, so that the pledgee becomes a party thereto, conveys the absolute legal title to such collateral securities, and if such transfer be made bona fide, before maturity, for value, without notice of equities, and in the usual course of business, the pledgee's title cannot be impeached. Holding the legal title to the negotiable collateral securities, a bona fide pledgee for value stands in the same position as to rights, privileges and equities, as a bona fide purchaser for value of negotiable instruments. The pledgee, with title, is a purchaser for value, and is entitled as any bona fide holder for value to enforce the collection of such negotiable collateral secrities as against the parties to such notes for the full amount of their face. The presumption of law in favor of the pledgee is, that he gave full value for them, or that he received them from some holder for value, to collect them, and to pay the principal debt at maturity from the proceeds, and hold any surplus for the benefit of the pledgor, or persons beneficially interested in such proceeds. The transaction by which the negotiable collateral securities pass to the lender, vests the legal title, and the only right of the pledgor is to redeem his collateral securities upon payment of the debt, or to be paid any surplus arising from their collection, after satisfaction of the pledgee's claims. By commercial usage, not only negotiable instruments, but also documents of title, quasi or non-negotiable in character, are available as collateral security for loans of money, or discounts of paper. The terms adopted, both in commercial circles and by jurists, describing such transactions—“ collateral security" and "collateral," as distinguished from a mere pledge-illustrate the development of this special branch of the law, and emphasize the importance of the questions relative to the rights, duties, and liabilities incurred by parties to such contracts of loan, secured by collateral.' §2. DEFINITION OF THE TERMS "COLLATERAL SECURITY" AND "COLLATERAL."-"Collateral security" is a separate obligation, as the negotiable bill of exchange or promissory note of a third person, or document of title, or other representative of value, indorsed where necessary, and 1Railroad Co. v. National Bank, 102 U. S. 14; Swift v. Smith, Ib. 442; Collins v. Gilbert, 94 U. S. 753; Michigan Bank v. Eldred, 9 Wall. 544, 553; Gibson v. Stevens, 8 How, 384; Manhattan Co, v. Reynolds, 2 Hill, 140; Bank of New York v. Vanderhorst, 32 N. Y. 553; Crocker v. Crocker, 31 Ib. 507, 510; Farwell v. Importers' Bank, 90 Ib. 483; Chicopee Bank v. Chapin 8 Met. 40; DeWolf Gardner,[12 Cush. 19, 25; Logan v. Smith, 62 Mo. 455; Rice v. 554; Dillingham, 73 Me. 59; Pierce v. delivered by a debtor to his creditor, to secure the payment of his own obligation, represented by an independent instrument. Such collateral security stands by the side of the principal promise as an additional or cumulative means for securing the payment of the debt.1 The transfer, however, of the debtor's own negotiable promissory notes as collateral security for the payment of other notes made by him, does not come within any definition of collateral security; nor where the proposed collateral security is a negotiable promissory note of a person already liable on a bill of exchange, the payment of which is to be secured.3 "Collateral," in the commercial sense of the word, is a security given in addition to a principal obligation, and subsidiary thereto; and is used as generally descriptive of all choses in action, as distinguished from tangible personal property, including the usual negotiable instruments of commerce; the quasi-negotiable securities, as certificates of stock, bills of lading, and warehouse or cotton receipts; and the divers non-negotiable choses in action and equitable assignments available as collateral. $3. RECITAL OF COLLATERAL SECURITIES IN PRINCIPAL NOTE. The regular course of banks and bankers in discounting commercial paper, to receive the promissory notes of third persons as collateral security for the payment of the principal note given by their customers, is a recognized form of collateral security. Upon asking for such discount, it is 1 Judge Redfield, in his note to LeBreton . Pierce, 1 Am. Law Reg. (N. S), 38, says: "The etymology of collateral security indicates that it is something running along with, and as it were parallel to, something else of a similar character. It is collateral to the original indebtedness." Other definitions are found in Munn v. McDonald, 10 Watts, 273; Kramer v. Sandford, 4 W. & S. 328; Chambersburg Ins. Co. v. Smith, 11 Pa. St. 120; Shoemaker v. National Bank, 2 2 Miller v. Larned, 103 Ill. 562. 583. Michigan Bank v. Eldred, 9 Wall. 544, 553; Railroad Co. v. National Bank, 102 U. S. 14.; ex parte Schofield, L. R. 12 Ch. D. 337, 348. |