Where stock is pledged to a stockbroker, and a note given with it, stating that the stock was deposited as collateral security, with authority to sell the same at the board of brokers, if the note was not paid at maturity, evidence was offered of a uniform usage of brokers to dispose of stock so pledged at their pleasure, and at any time, before or after the maturity of the note, and when the debt was paid, return an equal number of shares of the same kind; but this evidence was rejected as contrary to the law regulating these transactions, and inconsistent with the express terms of the contract. (d) Nor could the broker, in any event, sell the stock privately, but only at the board of brokers, and openly, stating how it was held. (e) although such a transfer operates as a pledge and not as a mortgage, it was nevertheless held, that the legal title passes to the pledgee, so as to entitle the pledgor to bring his bill to redeem and to have an account of the profits of the stock. Hasbrouck v, Vandervoort, 4 Sandf. 74. See also Hardy v. Jandon, 1 Hob. 261; Diller v. Brubaker, 62 Penn. 498.

(d) Allen v. Dykers, 3 Hill (N. Y.), 593; s. c. 7 id. 497; The Hull of a New Ship, Daveis, 199. See also, Langton v. Horton, 1 Hare, 649.

(e) Upon this point, Walworth, C, remarked : "The authority to sell the stock in question at the board of brokers, for the payment of the debt, if such debt was not paid when it became due, did not authorize the pledgees, even if they had retained the stock in their own hands, to put the same up secretly. But they should have put up the stock openly, and offered it for sale to the highest bidder, at the board of brokers; stating that it was stock which had been pledged for the security of this debt, and with authority to sell it at the board of brokers if the debt was not paid. In this way only the stock would be likely to bring its fair market value at the time it was offered for sale. And in this way alone could it be known that it was honestly and fairly sold, and that it was not purchased in for the benefit of the pledgees by some secret understanding between them and the purchasers. It is a well-known fact that shares of stock are constantly sold at the board of brokers, which shares exist only in the imagination of the nominal buyers and sellers. Such sales, as everybody knows, are not legally binding upon either party. When a real sale, therefore, is to be made at the board of brokers, of shares of stock which have an actual existence, and which have been pledged for the payment of a debt, with authority to sell them at that board, the stock should be specifically described at the time of such sale, as so many shares standing in the name of the pledgee, and sold on account of the pledgor; so that if a full price is obtained for it on such sale, the pledgor of the stock may know that he is entitled to the benefit of the sale. For without such specification, the sale, if an advantageous one, may be put down as a sale of stocks of the pledgee, and which have been sold on his own account. Secret sales, therefore, cannot be sustained under such an agreement or authority." It should be observed, however, that Mr. Justice Vanderpoel, in the case of Wilson v. Little, already cited, was inclined to doubt the soundness of these views of the learned Chancellor. He says: "In Dykers v. Allen, 7 Hill (N. Y.), 498, Walworth, Chancellor, intimates or directs how stock, which is pledged, should be sold at the board of brokers. The soundness of his views as to the mode of selling does not, perhaps, come in question here. Were it presented by this case, I should incline very strongly to the opinion, that this part of the learned

It has, however, been held that a pledgee, if not forbidden by the terms of the pledge, may exchange the collateral securities held by him; but he does this on his own responsibility for any injury to the pledgor. (ee) And a recent decision in New York holds, that, in the absence of any special agreement, the broker in whose hands stocks pledged to him fall in value, must give notice to the pledgor that he may increase his margin, before the broker sells them. (ef)

♦The pledgee may have his action of trover for the pledge against a third party who takes it from him, and recover its full value, because he is responsible over to the pledgor, (f) but in an action against one who derives title from the pledgor, he can recover only the amount of his debt. (g) And the pledgor retains sufficient property in the pledge to transfer it, subject to the pledgee's right, to any buyer, who, after a tender of the amount of the debt due, may maintain an action of trover against the pledgee. (h) Nor does such pledgee acquire an absolute title simply by the failure of the pledgor to pay the debt; there is no forfeiture until the pledgee's rights are determined by what is equivalent to a foreclosure. (i)

The holder of negotiable paper, even though it be accommodation paper, is not in contemplation of law a pledgee. He may, therefore, sell, discount, or pledge it, at his pleasure. (j) For when one has sent negotiable paper into the world, and given it credit and currency, he cannot protect himself against a bond fide holder for a valuable consideration, on the ground that he did not authorize it to be used except for some particular purpose. It has been held, however, that this rule with regard to negotiable paper, does not extend to a bill of lading. (k) And it has been said, in a peculiar case, however, that pledgees of negotiable paper must wait until it is mature, and then collect it, and cannot in the mean time sell it. (l) 1 And it has also been held,

Chancellor's judgment was uncalled for by the case, and has not, therefore, the weight of authority."

(ee) Girard Int. Co. v. Marr, 46 Penn.

St. 604.

(ef) Ritter v. Cushman, 7 Rob. 291 (f) Harker v. Dement, 9 Gill, 7.

(g) Brownell v. Hawkins, 4 Barb. 401. (h) Franklin v. Neate, 13 M. & W. 481. (i) Brownell v. Hawkins, 4 Barb. 491. (j) Appleton v. Donaldson, 3 Penn. St. 381; Jarvis v. Rogers, 13 Mass. 106. (k) Newsom v. Thornton, 6 East, 17. (l) Brown v. Ward, 8 Duer, 660.