2 Whitwell v. Brigham, 19 Pick. 117.

3 Comstock v. Smith, 23 Me. 202.

4 Foote v. Brown, 2 McLean, 369; In the matter of Dyott's Estate, 2 Watts & Serg. 463; Roberts v. Thompson, 14 Ohio St. 1; Girard Ins. Co. v. Marr, 46 Penn. St. 504; Wakeman v. Gowdy, 10 Bosw. 208.

5 Buck v. Ingersoll, 11 Met. 226; Arendale v. Morgan, 5 Sneed, 703.

6 South Sea Co. 9, Duncomb, 2 Str. 919; Anon., 12 Mod. 564; Elder v. Rouse, 15 Wend. 218; Langdon v. Buel, 9 Wend. 80, 83; Case v. Boughton, 11 Wend. 106; Cleverly v. Brackett, 8 Mass. 150; Glanville, Lib. 10, ch. 6; Cortelyou v. Lansing, 2 Caines, Cas. 200.

7 Story on Bailm. § 308 to 311, 345.

§ 874. A pledgee has, however, no right to dispose of a pledge by sale before the debt for which it is given as security is due, unless there be an express or implied stipulation in the contract allowing him such a right.4 Where, therefore, shares of bank stock are deposited to secure the payment of a note due at a certain date, the pledgee ordinarily has no authority to dispose of those shares.6 Yet, if a general usage be proved and be known to the parties, allowing the pledgee to transfer the collateral stock by hypothecation, and not binding him to hold the specific shares, it would seem that he would have a right so to use the stock pledged, provided he kept himself ready on the payment of the original debt to retransfer to the pledgor an equal number of shares of the same stock.6 But this modification would only apply in cases where the subject pledged was in the nature of money or shares of stock, where the holding of the specific pledge is not essential. But if there be an express or implied stipulation, that the specific stock shall be retained, as if the pledgee be authorized to "sell the same on non-performance of this promise," which is an implied stipulation that he shall not sell before non-performance, he must retain the specific stock.1 When a stockbroker buys stock for another party, but in his own name and with his own funds, the principal depositing a "margin" of ten per cent, which is to be "kept good," and the broker is to "carry" the stock for him, the principal is to be regarded as the real owner of the stock pledged to the broker as security for his advances, and he cannot sell the stock except upon judicial proceedings, or after demand and notice to the principal; and a usage allowing such a sale is illegal and void.2

1 1 Story, Eq. Jur. § 308-323. See Donald v. Suckling, Law R. 1 Q. B. 587 (1866).

2 Middlesex Bank v. Minot, 4 Met. 329. See also Hatch v. Hatch, 9 Ves. 292; Farnam v. Brooks, 9 Pick. 212.

3 Kemp v. Westbrook, 1 Ves. 278.

4 Johnson v. Stear, 15 C. B. (n. 8.) 330.

5 Allen v. Dykers, 3 Hill, 597; 7 Hill, 498. But see Hasbrouck v. Vandervoort, 4 Sandf. 74; Wilson v. Little, 1 Sandf. 351; 2 Comst. 443. 6 Ibid.; Nourse v. Prime, 4 Johns. Ch. 490; 8. C. 7 Johns. Ch. 69.

§ 875. If, however, the time at which the debt is to be paid, or the engagement to be fulfilled, be indefinite, the pledgee may, after the lapse of a reasonable time, either demand payment, and, upon neglect or refusal thereof by the pledgor,3 may, after giving proper notice,4 proceed to sell the pledge; or he may file a bill in equity against the pledgor, for a foreclosure and sale.1 So, also, if several things be pledged, each may be sold seriatim, until the whole debt is discharged. But he cannot sell, after the proceeds of the sale are sufficient to . satisfy his claims; and if, in any case, there be a surplus, it enures to the benefit of the pledgor. So, also, if the proceeds of the sale be insufficient to satisfy his demand, the surplus is still due from the pledgor, and may be recovered from him.2

1 Allen v. Dykers, 3 Hill, 595. A pledgee with power to sell does not lose his lien by employing the pledgor as his agent to make the sale, and in his own name. Thayer v. Dwight, 104 Mass. 254 (1870), qualifying any thing apparently contrary in Kimball v. Hildreth, 8 Allen, 167. And see Walker v. Staples, 5 Allen, 34.

2 Markham v. Jaudon, 41 N. Y. 235 (1869); Morgan v. Jaudon, 40 How. Pr. 363 (1869). See also Brass v. Worth, 40 Barb. 648; Clarke v. Meigs, 22 How. Pr. 340. Hanks v. Drake, 49 Barb. 186, and Sterling v. Jaudon, 48 Barb. 459, earlier than Markham v. Jaudon, seem contrary.

3 If the pledge be a negotiable note of a third person, it is said the pledgee has no right to sell it, even if there be a usage to that effect, but he should use all reasonable means to collect it. See Wheeler v. Newbould, 16 N. Y. 392; Markham v. Jaudon, 41 N. Y. 235; Fletcher v. Dickinson, 7 Allen, 23; Lamberton v. Windom, 12 Minn. 232; Nelson v. Edwards, 40 Barb. 279. Contra in California, Donohoe v. Gamble, 38 Cal. 341 (1869). A pledgee of negotiable securities is not liable for want of diligence in collecting, unless he has entered into a time contract to collect, but is liable only for the amount collected by him or his agents. Rice v. Benedict, 19 Mich. 132 (1869). If a negotiable note pledged be lost by the neglect of the pledgee to collect it, and the maker becomes insolvent, the pledgee must bear the loss. Lamberton v. Windom, 12 Minn. 232 (1867).

4 And a stipulation that if the pledge be not redeemed in a certain time, the right of the pledgee shall become absolute, has been held of none effect. Luckett v. Townsend, 3 Tex. 119.

§ 876. A sale before default is a conversion;3 but a wrongful sale by the pledgee has been held to pass the title to a bond fide purchaser, as against the pledgor, so that he cannot maintain detinue or trover for it against the purchaser;4 and if any action would lie, the damages to the pledgor would be only the excess of the value of the pledge above the debt for which it was pledged.6 The sale should be at public auction,6 and a local custom to sell at private sale is immaterial, it being contrary to a public law;7 and a due and correct notice of the intention to sell is generally necessary.8