Pawn (Lat. pignus), any article of personal property given in pledge, or by way of security for the payment of a debt or the discharge of an obligation. The word is also used as a verb, and signifies to give such article in pawn or in pledge. It is a bailment, because the essence of the transaction is the delivery of the pawn by the pawner to the pawnee. The first question that arises is, therefore: In what class of bailments is a pawn to be placed, in reference to the obligations of care on the part of the bailee? The answer is obvious: the bailment of pawn is a bailment for the benefit of both parties. The pawnor obtains credit or delay or other indulgence, and the pawnee obtains security. Therefore the bailee (or pawnee) is bound only to ordinary care, that is, not to the extreme care to which he would be bound if the benefit were all his own; but it is not enough if he takes the slight care of which it would discharge his duty and shield him from responsibility if the benefit were all the bailor's, the bailee himself deriving none from the transaction.

Hence a pawnee is answerable for the loss of the pawn or for injury to it only when there has been an absence on his part of ordinary care, which the law defines as that care which a man of ordinary prudence would take of his own property of like kind and under similar circumstan-ces. If therefore the pledge be lost by some intrinsic defect, the operation of which might possibly have been prevented, or by some casualty which might possibly have been avoided, or by a superior force or violence which might have been resisted, the pawnee is nevertheless not responsible, unless he was wanting in the ordinary care above described. - A pawnee has a property in the pledge, but it is special, not absolute. It is sufficient to maintain an action against a third party for injury to or abduction of the pledge; and a judgment in such an action, when brought either by the pawnor or the pawnee, would be a bar to another action brought by the other. - A pawnee has only a right to hold the pledge; therefore, if he uses it, he does so at his own peril; and if the thing be lost or injured during such use, the pawnee is responsible, although the loss occurs wholly without neglect on his part.

So, too, if he derive a profit from this use, he must account for this use of it unless it was equally for the benefit of the pawnor. Thus, if the pawn be a horse, the pawnee may use it enough to preserve the health of the horse, and for this use make no compensation; but if he take a journey with the horse, he must allow the usual price. In all cases the pawnee must account for income or profits derived from the pledge; and if he is put to extraordinary expense or trouble for the benefit of the pledge, or to preserve its value, although this would be for his own benefit also, he may charge the owner and pawnor for all this, unless there be a bargain to the contrary express or implied. - From what has been said it will be seen that if the pledge be stolen, the pawnee is not liable unless there was neglect on his part; but the question is at once important and difficult as to the legal presumption of neglect or care. By the civil law, the presumption was against the pawnee; that is, if the pledge was stolen from him, he was responsible unless he could prove that there had been no neglect on his part.

There are reasons for supposing that the law of England and of the United States is otherwise; and that if a pawnee can prove that the pledge was stolen from him, this will make it the loss of the owner, unless the owner can prove neglect or default on the part of the pawnee. - The distinction between a mortgage and a pledge is of very great importance. Nothing is more common now than the giving of personal property, and especially of choses in action, as promissory notes, and of stock or scrip of incorporated companies, by way of security for loans or debts. Now this giving of security may be regarded as a mortgage or as a pledge. But if it be a mortgage, the parties acquire one set of rights, and come under one set of obligations; and if it be not a mortgage, but a pledge, their rights and their obligations are very different. A pawnor retains the ownership of the pledge, but places it in the possession of the pawnee as his security; but a mortgageor transfers at once the ownership of the property, retaining only a right to annul and defeat this transfer by payment of a certain debt. (See Mortgage.) The practical effect of this difference, which gives to it its importance, is this.

A mortgagee, who acquires the property in or the ownership of the thing mortgaged, may do with that thing whatever he may do with his own. He may sell it, or mortgage it, or keep it in his own hands, always subject however to the mortgageor's right to redeem it; and it makes no difference to the mortage-or whether, when he comes to pay the debt and redeem the thing mortgaged, he finds it in one hand or another. But as a pawnee acquires no ownership whatever, he cannot sell the thing pawned, nor pledge it over, nor transfer it in any way. His whole right consists in the right of possession. He may keep the pawn as a security for his debt, because the owner has lost, not the right of property, but the right of possession; but the pawnee can do nothing else with it. Nor is this all; for he not only may, but must keep the pawn in his possession. This is his bargain with the pawnor by construction of law; and he holds the pawn only on this condition. If therefore the pawnee, for any reason or in any way, voluntarily parts with the possession of the pawn by transferring it to a third person, his lien or right of possession is at once gone; the pawnor at once recovers his right of possession, and may demand and repossess himself of the pawn, although the debt to secure which it was given remains wholly unpaid.

The custom of brokers and others, who lend money or give other accommodation on the security of pledged stocks, has been the reverse of this. One holding such stock by way of security has regarded himself only as bound to have that stock ready to be returned when the debt is paid, and in the mean time he does what he pleases with it; that is, he sells it, or transfers it by way of pledge, or makes use of it as of his own. But recent decisions have declared that by such use the right of the pledgee to hold the stock is wholly lost. The pledger may therefore demand it at once, although his debt be not paid; and if it be not forthwith redelivered to him, he may have his action for damages, and in this action recover its value at the time of the demand, and perhaps (for this is not quite settled) any higher value it may have reached at any time while in the pawnee's hands. For this severe and somewhat technical rule there is this substantial reason. If a pawnee may use in this way stock pledged to him, he forces upon the pawnor the risk of his insolvency at the time when the stock should be redelivered. For if the pawnee be then insolvent, without the stock in his hands, the pawnor has only a claim against him for its value, and must take his dividend with other creditors.

But if the pawnee retains in his hands the stock as the pawnor's stock, the pawnor then retakes it as his property. - A pledger may always transfer the pawn, but subject to the pawnee's claim; and if the transferee pay the debt, the pawnee must deliver the pawn to the transferee. The pawnee holds the pawn only as security, nor does it become absolutely his even if the debt be not paid at maturity. There is no forfeiture of the pawnor's right to redeem, until something has been done which is the same thing in its effect that foreclosure is in a case of mortgage. What this thing is may not be, in all cases and in all respects, quite certain. There is no doubt that the pawnee may apply to a court of equity and have a decree of sale, and may thereupon sell the pawn in compliance with the terms of the decree. Some authorities hold, or rather intimate, that this, which was the ancient and regular way, if not the only one, remains at this day the best and safest. But we are satisfied that it is not necessary, and certainly it is not usual. We consider it as now established law, that a pawnee, after the maturity of the debt, and after unsatisfied demand, may sell the pawn, provided he do so in good faith and with all reasonable precautions in favor of the pawnor's interest.

There is perhaps no other way of doing this, which satisfies the law, than a sale by public auction; and at all events this is the surest and most proper way. Nor will a sale by auction be conclusive against the pawnor, unless it is conducted, as to time, place, advertisement, notice to the pawnor, and in all other respects and circumstances, in such wise as to indicate perfect good faith, and to secure a due regard to the rights of the pawnor. The proceeds must be applied to the payment of the debt. If any balance remains over, that must be given forthwith to the pawnor. If any portion of the debt remains unpaid, the pawnee has an equally valid claim to that amount as he had originally for the whole. It is not unfrequent for the parties to agree, when the pledge is made, as to what shall be done with it; as, for exam-pie, that the pawnee may, if the debt be unpaid at a certain time, sell the pawn, if it consist of stocks, at the brokers' board. But any such agreement must be complied with literally and accurately. It should be remarked, however, that negotiable bills and notes come under an exceptional rule. When they are pledged, it is said that the pledgee has much more power as to the use and disposition of them than of stocks; but this exception is not very accurately defined.

So it should be said, that although delivery of possession is absolutely essential to the contract of pledge, and if the pledgee voluntarily parts with his possession he loses all lien or right to hold the pawn, this does not apply where the pawnee, in good faith, for a special reason, and for a limited time, returns the pawn to the pawnor, reserving all his rights over it. The pawnor may in that case be regarded as the agent of the pawnee, and as holding it for him. A pawnee, who takes a pawn as security for a specific debt or debts, cannot hold it as security for other debts from the pawnor, unless by a bargain between them. - Until a comparatively recent date, nothing seems to have been given in pawn, at least within the recognition of the common law, but personal chattels. But now all personal property, all choses in action, and even patent rights or copyrights, and policies of insurance, may be given either in pawn or in mortgage.