STOCKBROKER'S LOANS. \Vhen a stockbroker lends money to a client who desires to purchase stocks and shares, the securities are usually deposited with the broker as cover for the advance, and the broker is often authorised to transfer them to a banker as security when it is necessary to obtain an advance from him. In such cases the broker's interest in the securities is limited to the money he has lent to his client, and if they are given to a hanker as security for the genera/ indebtedness of the broker various questions arise. The results of several important cases which have come before the Courts show (1) that if a banker has definite knowledge when he takes certain securities from a broker that the broker is dealing with them beyond his authority—that is, that they are being given to the banker to cover a greater sum than the amount lent by the broker to the client—the client will be entitled to redeem them from the banker, even if transferred into the banker's name, on paying the amount due by him to the broker ; (2) that if the banker has no reason to suppose that the securities are not the broker's own property, the client will not be entitled to redeem them except by payment of the debt due from the broker to the banker.
When negotiable securities are pledged by a broker, there is no obligation upon a banker to inquire whether they are the property of the broker or not. If there is anything to arouse suspicion the banker would be put upon inquiry, but, apart from that, any " person taking a negotiable instru ment in good faith and for value obtains a title valid against all the world." \Vhen a banker has notice that a broker has power to pledge a client's securities only to a limited extent, the banker's advance to the broker upon any such securities should not, of course, exceed that limit. The banker should receive a letter or memoran dum from the broker's client agreeing to the broker charging the securities to the extent of the client's indebtedness to the broker.