PLEDGE, PAWN. A bailment of per sonal property as security for some debt or engagement.
A pledge or pawn (Lat. pignus), according to Story, is a bailment of personal property as security for some debt or engagement. Story, Bailm. 286, which see for the less comprehensive defini tions of Sir Wm. Jones, Lord Holt, Pothier, ete. Domat broadly defines it as an appropriation of the thing given for the security of an engagement But the term is commonly used as Sir Wm. Jones defines it : to wit, as a bailment of goods by a debtor to his creditor, to be kept till the debt is discharged. Jones, Bailm. 117 ; 2 Ld. Raym. 909 ; Pothier, de Naut. art. prelim. 1; Code, Civ. 2071; Domat, b. 3, tit. 1, 1, n. 1; La. Civ. Code, 3100 ; 6 Ired. No. C. 309. The pledgee secures bis debt by the bailment, and the pledgeor obtains credit or other advantage. See 1 Parsons, Contr. 591 et seg.
2. Delivery. The first essential thing tc L be done is a delivery to the pledgee. Without his possession of the thing, the transaction is not a pledge. 37 Me. 543. But a construct ive possession is all that is required of the pledgee. Hence, goods at sea or in a ware house pass by transfer of the muniments of title, or by symbolic delivery. Stocks and equitable interests may be pledged ; and it will be sufficient if, by proper transfer, the property be put'within the power and control of the pledgee. 12 Mass. 300 ; 20 Pick. Mass. 405 , 22 N. H. 196 ; 2 N. Y. 403 ; 7 Hill, N. Y. 497. Stocks are usually pledged by delivery of the company's certificate, leav ing the actual transfer to be made subse quently. But here, as in England, the joint stock company must be notified of the trans fer.
Prima facie, if the pledgee redeliver the pledge to the pledgeor. third parties without notice might regard the debt as paid. Still, this presumption can be rebutted, in most states. In some states, courts in effect hold that even in case of sale, as well as in case of pledge, possession of the vendor is fraud per se, and refuse to admit explanatory evi dence. In such states, therefore, a vendee
may always take the pledge if found in the vendor's possession. 5 N. H. 345 ; 14 Pick. Mass. 509 ; 4 Jones, No. C. 40, 43. The pre vailing rule is, however, that a temporary re delivery to the pledgeor makes him only the agent or bailee of the pledgee, and the latter does not lose his special property or even his constructive possession. 5 Bingh. N. c. 136 ; 11 Eng. L. & Eq. 584 ; 3 Whart. Penn. 531 • 5 Humphr. Tenn. 308 ; 32 Me. 211 ; 1 Sandi. N. Y. 248.
3. Subject of pledge. Any tangible perty may be pledged. Hence, not only goods and chattels and money, but, also, tiable paper, may be put in pledge. So may choses in action, patent-rights, coupon bonds, and manuscripts of various sorts. 1 Yes. Ch. 278 • 2 Taunt. 268 ; 15 Mass. 389, 534; 2 Black/. Ind. 198 • 7 Me. 28 ; 4 Den. N. Y. 227 2 N. Y. 443 ; Stockt. N. J. 667 ; Story, 290. Incorporeal things could be pledged immediately, probably, under the civil law, and so iu the Scotch law, or, at all events, by assignment. 1 Domat, b. 3, tit. 1, 1 ; Pothier, de Naut. n. 6 ; 2 Bell, Comm. 23. The laws of France and Louisiana quire a written act of pledge, duly registered and made known, in order to be made good against third parties. In the civil law, perty of which the pledgeor had neither sent possession nor title could be pledged,— though this was rather a contract for pledge, called a hypothecation. The pledge became complete when the property was acquired by the pledgeor. The same rule holds in our law, where a hypothecary contract gives a lien which attaches when the property is vested. 1 Hare, Ch. 549 ; 13 Pick. Mass. 175; 14 id. 497 ; 21 Me. 86 ; 16 Conn. 276 ; Dav. Dist. Ct. 199. And it has been held that a pledge may be made to secure an obligation not yet risen into existence. 12 La. Ann. 529. In an agreement to pledge a vessel not then completed, the intent of the parties governs in determining when the property passes. 8 Pick. Mass. 236 ; 24 Eng. L. & Eq. 220.