for money lent or other consideration which has been received by the pledgor; and the creditor may therefore sue for the debt without first tendering the security.67 Though the pledgor is entitled to sell the pledged property without application to a court, equity will aid him in the enforcement of his right in the security if desired.68 If the pledgee sells without order of court he must give reasonable notice to the pledgor of his intent to sell, and of the time and place of sale, unless the contract of pledge otherwise provides.70 Frequently statutes have protected the pledgee by requiring stricter formalities than those established by the common law.71 § 1044. Rights and duties of pledgor and pledgee. It is generally said that a pledgee acquires a special property in the pledge, but this expression seems used merely to account for the fact that a pledgee may sell the pledged property if the pledgor makes default in the payment of the debt.72 It has always troubled the English Court to admit the power of one who neither owns property, nor is specially authorized to sell by the owner, to transfer title to a third person. But since an unpaid vendor of chattels after title has passed may resell them if the vendee is in default in payment of the price, though he is customarily spoken of as having merely a lien, and certainly has no ownership of the goods,73 there seems no reason why one should hesitate to say that a pledgee has merely possession of the goods coupled with a power to sell them on default by the pledgor.74 67 Lawton v. Newland, 2 Stark. 72; Scott v. Parker, 1 Q. B. 809; Sonoma Valley Bank v. Hill, 59 Cal. 107, 110; Foster v. Purdy, 5 Met. 442; Donald v. Wyckoff, 49 N. J. L. 48, 7 Atl. 672; Spencer v. Drake, 84 N. Y. App. D. 272, 82 N. Y. S. 573; Security Title & Trust Co. v. Stewart, 154 N. Y. App. D. 434, 437, 139 N. Y. S. 74; First Nat. Bank v. Gidden, 175 N. Y. App. D. 563, 162 N. Y. S. 317; Bank of Rutland v. Woodruff, 34 Vt. 89. See also Wagner v. Kohn, 225 Fed. 718, 721, 140 C. C. A. 592. 68 Jones, Pledges, §§ 640 et seq. 70 Id., § 631 b. 71 Id., §§ 616 et seq. 72 Pothonier v. Dawson, Holt. 385; Lockwood v. Ewer, 9 Mod. 278; Martin v. Read, 11 C. B. 730; France v. Clark, 26 Ch. D. 257; Thwing v. Clifford, 136 Mass. 482; Lewis v. Mott, 36 N. Y. 395; King & Co. v. Texas Banking & Ins. Co., 58 Tex. 669; Ainsworth v. Bowen, 9 Wis. 348. 73 See Williston, Sales, § 543. 74 In Halliday v. Holgate, L. R. 3 76 Unless forbidden by special contract the pledgor during the continuance of the contract of pledge may sell the pledged property subject to the pledgee's right, and the purchaser from the pledgor will be entitled to acquire the pledged property on paying the debt,75 and can otherwise hold the pledgee to the performance of his duties. Similarly the pledgee may assign, either by way of absolute sale or to secure his own debt, the claim which the pledge secures and the assignment will carry with it as an incident the right to the pledge." Even a wrongful sale of the pledged property by the pledgee, though it will not give even a bona fide purchaser title to the property," will give the purchaser all the rights which the pledgor had prior to the sale.78 But without express authority the pledgee has no right to separate by a sale or a repledging the pledged property from the debt for which it was pledged.79 If the pledgee sells the property when the pledgor is not in default or repledges it for a greater amount than the original obligation, it is a wrong; but the pledgee or the purchaser from him is entitled to the benefit of the debt actually due from the pledgor in any suit brought by him to redress the wrong. 80 A pledgor impliedly warrants that he has such Exch. 299, Willes, J., said: “There are three kinds of security: the first, a simple lien; the second, a mortgage passing the property out and out; the third, a security intermediate between a lien and a mortgage, viz., a pledge, where by contract a deposit of goods is made a security for a debt, and the right to the property vests in the pledgee so far as is necessary to secure the debt. It is true the pledgor has such a property in the article pledged as he can convey to a third person, but he has no right to the goods without paying off the debt, and until the debt is paid off the pledgee has the whole present interest." See also Minge v. Clark, 193 Ala. 447, 69 So. 421. 75 Loughborough v. McNevin, 74 Cal. 250, 14 Pac. 369, 15 Pac. 773, 5 Am. St. Rep. 435; Faulkner v. Hill, 104 Mass. 188; Brown v. Hotel Ass'n of Omaha, 63 Neb. 181, 88 N. W. 175; Van Blarcom v. Broadway Bank, 37 N. Y. 540. 76 Cumming v. McDade, 118 Ga. 612, 614, 45 S. E. 479; Belden v. Perkins, 78 Ill. 449; Jarvis v. Rogers, 15 Mass. 389; Proctor v. Whitcomb, 137 Mass. 303; Lewis v. Mott, 36 N. Y. 395. 77 Talty v. Freedman's Sav. & Trust Co., 93 U. S. 321, 324, 23 L. Ed. 886. Unless the pledgor has given such indicia of title to the pledgee as to estop himself. Williams v. Ashe, 111 Calif. 180, 43 Pac. 595. 78 Talty v. Freedman's Sav. & Trust Co., 93 U. S. 321, 23 L. Ed. 886. 79 Commonwealth v. Althause, 207 Mass. 32; Warfield v. Adams, 215 Mass. 506, 102 N. E. 706. See also Haber v. Brown, 101 Cal. 445, 35 Pac. 1035. 80 Donald v. Suckling, L. R. 1 Q. B. 585; Halliday v. Holgate, L. R. 3 title as justifies him in pledging the goods,81 and if a pledgor having no title at the time the pledge was made subsequently acquires title, he is estopped to set it up.82 As in the case of other bailments for mutual benefit the pledgee is bound to use ordinary or reasonable diligence in care of the pledge;83 and, therefore, if unmatured indorsed negotiable paper is held as collateral, the creditor must make due presentment at maturity, and give notice to the indorsers of the maker's default.83 a Even if there are no secondary liabilities to be established, reasonable diligence must be used to obtain payment of obligations of third persons held as collateral.836 But a failure on the part of the pledgee in his duty of care whereby the pledgor is injured, will not relieve the latter from liability on the debt, but will only justify the allowance of such damage as he may have suffered.84 And if the injury to the pledge was not caused by negligence of the pledgee, the pledgor must pay the full amount of the debt and also bear the loss of his security.85 § 1045. Hired service or storage of property. Whether a bailment for which the bailee is paid involves Exch. 299; Talty v. Freedman's Savings & Trust Co., 93 U. S. 321, 23 L. Ed. 886; Williams v. Ashe, 111 Calif. 189, 43 Pac. 595; Brittan v. Oakland Sav. Bank, 124 Calif. 282, 57 Pac. 84, 71 Am. St. Rep. 58; Belden v. Perkins, 78 Ill. 449; Lynn v. McCue, 94 Kan. 761, 147 Pac. 808, 96 Kan. 114, 150 Pac. 523; First Nat. Bank v. Boyce, 78 Ky. 42, 39 Am. Rep. 198; Schaaf v. Fries, 90 Mo. App. 111. Cf. Sherman v. Connecticut Mut. L. Ins. Co., 222 Mass. 159, 110 N. E. 159. 81 Mairs v. Taylor, 40 Pa. St. 446 See also Uniform Warehouse Receipts Act, § 44; Uniform Bills of Lading Act, § 35; Uniform Sales Act, § 36. 82 Goldstein v. Hort, 30 Cal. 372. 83 Coggs v. Bernard, 2 Ld. Ray. 909; Syred v. Carruthers, E. B. & E. 469. 83a Peacock v. Pursell, 14 C. B. (N. S.) 728; Coleman v. Lewis, 183 Mass. 485, 67 N. E. 603, 66 L. R. A. 482, 97 Am. St. 450; City Bank of York v. Rieker, 262 Pa. 28, 31, 104 Atl. 804. 836 Lawrence v. McCalmont, 2 How. 426, 454, 11 L. Ed. 326; Hawley Hardware Co. v. Brownstone, 123 Cal. 643, 56 Pac. 648; Aldrich v. Goodell, 75 Ill. 452; Griggs v. Day, 136 N. Y. 152, 32 N. E. 612, 18 L. R. A. 120, 32 Am. St. 704; Betterton v. Roope, 3 Lea, 215, 31 Am. Rep. 633. Cf. Loeb v. German Nat. Bank, 88 Ark. 108, 113 S. W. 1017; City Bank of York v. Rieker, 262 Pa. 28, 104, Atl. 804. 84 May v. Sharp, 49 Ala. 140; Faulkner v. Hill, 104 Mass. 188; Coleman v. Lewis, 183 Mass. 485, 67 N. E. 603, 66 L. R. A. 482, 97 Am. St. 450. 85 Winthrop Sav. Bank v. Jackson, 67 Me. 570, 573, 24 Am. Rep. 56. the performance of work upon the chattel or merely storage of it, the fundamental principles are the same, unless the bailment is to an innkeeper or common carrier. The bailor is bound to pay the agreed compensation and the bailee is bound to ordinary diligence in caring for the bailed property.86 The care, however, which the bailee must exercuse is the reasonable care of one qualified to perform the duties of the bailment. This degree of skill, the bailee warrants that he possesses.87 The business of storing goods for hire is one of great importance and the receipts of warehousemen given to bailors on the storage of goods have great importance as mercantile symbols of the property which they represent. A uniform statute has been passed in the majority of the United States which codifies the rights and duties not only of the bailor and bailee under such receipts, but also the rights of third persons who may acquire the receipts. In the main this statute enacts rules of the common law except that it gives a degree of negotiability to receipts made out to the order of the bailee beyond that which is given by the common law. The text of this act therefore may serve as a statement of the rules governing the contract between bailor and bailee expressed in a warehouse receipt.88 86 Best v. Yates, 1 Vent. 268; Clarke v. Earnshaw, 1 Gow, 30; Brabant v. King, [1895] A. C. 632, 640; Cheshire v. Bailey, [1905] 1 K. B. 237, 241; National Bank v. Graham, 100 U. S. 699, 704, 25 L. Ed. 750; Fairmont Coal Co. v. Jones & Adams Co., 134 Fed. 711, 67 C. C. A. 265; Russel v. Koehler, 66 Ill. 459; William J. Newman Co. v. Sanitary District, 210 Ill. App. 395; Jones v. Morgan, 90 N. Y. 4, 43 Am. Rep. 131; Kash v. Krebs (N. Y. Misc.), 167 N. Y. S. 1035; Safe Deposit Co. v. Pollock, 85 Pa. 391, 27 Am. Rep. 660; Robinson v. Southern Cotton Oil Co., 108 S. Car. 92, 93 S. E. 395; Kelton v. Taylor & Co., 11 Lea, 264; Gleason v. Beers, 59 Vt. 581. As to the liability of the bailee for the wrongful act of his servant see Firemen's Fund Ins. Co. v. Schreiber, 150 Wis. 42, 135 N. W. 507, 45 L. R. A. (N. S.) 314, Ann. Cas. 1913 E. 823, and cases cited. 87 Lincoln v. Gay, 164 Mass. 537, 42 N. E. 95, 49 Am. St. Rep. 480. 88 It has been enacted in Alabama, Alaska, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Idaho, Illinois, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Philippine Islands, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming. § 1046. The issue and form of warehouse receipts. Section 1. [PERSONS WHO MAY ISSUE RECEIPTS.] Warehouse receipts may be issued by any warehouseman.89 Section 2.-[FORM OF RECEIPTS. ESSENTIAL TERMS.] Warehouse receipts need not be in any particular form, but every such receipt must embody within its written or printed terms— (a) The location of the warehouse where the goods are stored, (b) The date of issue of the receipt, (c) The consecutive number of the receipt, (d) A statement whether the goods received will be delivered to the bearer, to a specified person, or to a specified person or his order. (e) The rate of storage charges, (f) A description of the goods or of the packages containing them, (g) The signature of the warehouseman, which may be made by his authorized agent, (h) If the receipt is issued for goods of which the warehouseman is owner, either solely or jointly or in common with others, the fact of such ownership, and (i) A statement of the amount of advances made and of liabilities incurred for which the warehouseman claims a lien. If the precise amount of such advances made or of such liabilities incurred is, at the time of the issue of the receipt, unknown to the warehouseman or to his agent who issues it, a statement of the fact that advances have been made or liabilities incurred and the purpose thereof is sufficient. A warehouseman shall be liable to any person injured thereby, for all damage caused by the omission from a negotiable receipt of any of the terms herein required.90 89 This should be read in connection with the definition of warehouseman in section 58. On account of varying local conditions and laws it seemed impracticable in an act intended to be passed in many States to fix limits as to who might carry on the business of warehousing. 90 This section is in accordance with business custom except (h) and (i). As some abuses have arisen from warehousemen issuing receipts on their |