10. Termination of bailment for sole benefit of one general rule is that when a bailment is made for the benefit of one party only, it may be ter minated by either at any time.
The bailment may be determined or ended if the bailee, the depository in the case we are considering, acts inconsistently with the terms of the bailment.
It is said that when a bailment is made for the sole benefit of the bailor, it is terminated by the death or insanity of either party. The same rule would apply when the bailment was made for the sole benefit of the bailee, except that if the bailment had been made for a definite period, the death or insanity of the bailor would not interrupt the bailment until the period fixed had elapsed.
11. Creation, of a pledge or pledge is a contract by which a thing is placed in the hands of a creditor, or being already in his possession, is retained by him with the owner's consent as security for his debt. The words pledge and pawn are synonymous, tho pledge includes pawn which is generally used in a particular sense. A pawnbroker is a pledgee, but the word pawnbroker is usually used to describe a person who carries on the trade of pawnbroking. The word pledge is frequently applied to the article which is pledged. When the customer of a bank hands over securities to the bank to guarantee a loan, the pledge is known as collateral security.
It has been held that the relation of pledgor and pledgee arises between a broker and his customer when the former buys stock for the latter, and the lat ter puts up margin which he agrees to keep good. The same relation does not arise between a commis sion merchant and his customer for whom he buys grain for future delivery on margin, which the custo mer promises to keep good up to the time of delivery. In the former case the stocks are actually bought by the broker, but in the second case the merchant has a mere executory contract of sale. In an ordinary stock transaction on margin, the broker buys the stock outright; if he does not do so it is a bucket-shop transaction.
12. Construction and operation of pledge.—It is clear from the definition already given that a pledge is a delivery of goods to a creditor as security for his debt. The right to the property vests in the creditor
only in so far as it is necessary to secure the debt. The general property remains in the pledgor; the spe cial property is in the pledgee until the debt is paid. The pledge, therefore, is a privilege or lien over the goods pledged for the payment of the debt, together with interest and reasonable expenses incurred in car ing for the goods pledged. The lien or privilege sub sists only while the thing pledged remains in the hands of the creditor or person appointed by the par ties to hold it, unless it is otherwise agreed, when the particular debt is paid which the pledge was given to secure, that the creditor can retain it to secure some other debt. Naturally, the pledgor warrants that he has a title to the thing pledged, otherwise the security would be illusory.
13. Rights and duties of the bailor.—The person who rents goods and chattels is presumed to warrant his title and peaceable possession. He must furnish things which are reasonably fit and proper for the purpose intended. Generally speaking, he is an in surer against all defects or against such defects as can be guarded against by reasonable care and skill. Thus, if A rents a carriage and it breaks down on the journey, he is liable and not the person who is using it. He is supposed to have rented a carriage fit and proper for the journey.
The bailor is bound to exercise vigilance and care to discover defects in the thing rented, and if defects exist, should notify the bailee of any danger or risk unapparent to the bailee. Thus, in an On tario case, in which a person rented a portable engine and boiler to another, which exploded as soon as it was first used, and while it was in charge of a compe tent engineer, it was held that, as the lettor of the chat tel for hire impliedly warrants that it is reasonably fit for the purpose for which it is let, the plaintiff (the lettor, who sued for the value of the engine and boiler) , in the absence of negligence on the part of the defendant, could not recover.