Where a bankrupt trustee finds in the es tate certificates for shares of particular stock, subject to the demand of the for whom shares of that stock were bought by the bankrupt, the customer is entitled to the same, though the certificates may not be the identical ones purchased for hint; there are enough shares of such stock to sat isfy the legal demand of such customer, those certificates, will be presumed to be the certificates held by the bankrupt for such, customer. It is the bankrupt's duty use his own funds to replace such securities with others of the same kind, and in doing so he does not deplete the estate against other creditors; the presumption is that' such eel.-' tificates were paid for out of his own funds to replace of his customer and not that he embezzled the latter; Gorman v. Lit tlefield, 229 U. S. 19, 33 Sup. Ct. 690, 57 Ed. 1047.
He is bound by anything which should amount to notice that the pledgor is with out authority to pledge ; Gottberg v. Bank, 131 N. Y. 595, 30 N. E. 41; Clemens v. Heck scher, 185 Ea. 47,6, ,40 Atl. 89; Commercial 'Bank v. Hurt, 99 Ma. 130, 12 South. 568, 19 L. R. A. 701, 42 Am. St. Rep. 38; Thurber v. Bank, 52 Fed. 513; 20 Can. S. C. R. 481. But in dealing with one in possession of the se curities and having the apparent right to dispose of them he will be protected, though the pledge be a fraud on the real owner; Nelson v. Owen, 113 Ala. 372, 21 South. 75. Of course if the true owner has been de prived of possession by what amounts to em bezzlement he can recover from the pledgee; O'Herron v. Gray, 168 Mass. 573, 47 N. E. 429, 40 L. R. A. 498, 00 Am. St. Rep. 411. And a ,pledgee from one who has no au thority either to sell or pledge acquires no lien on the property as against the true owner; Patton v. Joliff, 44 W. Va. 88, 28 S. E. 740. As holder of a note to which there is a valid defence against the payee be is protected, but only to the extent of his interest, i. e. to the amount which he has advanced; Wright v., Hardie, 88 Tex. 653, 32 S. W. 885. See Haas v. Bank, 41 Neb. 754, 60 N. W. 85.
Factors and Agents. A factor cannot, at common law, pledge his principal's goods; and the principal 'may recover them from the pledgee's hands; 6 Maule & S. 1; [1893] 1 Q. B. 62; Hoffman v. Noble, 6 Mete. (Mass.) 68, 39 Am. Dec. 711 ; Buckley v. Packard, 20 Johns. (N. Y.) 421; Benny v. Pegram, 18 Mo.. 191, 59 Am. Dec. 298; War ner v. Martin, 11 How. (V. S.) 209, 226, 13 L. Ed, 667;',Thurber v. Bank, 52 Fed. 513; and this is so .whether entrusted with the goods themselves or with the symbol of them, as a bill of lading; Allen v. Bank, 120 U. S. 20. 7 Sup. Ct. 460, 30 L. Ed. 573. But the Factors' Acts in England, to remedy the intolerable condition which would exist if an unknown owner were permitted to repudiate transactions of ,a factor, have provided that a pledge by a factor having a power of sale shall be valid. Similar acts have been pass ed in many of the states. See Aogrrrs; FAC TOR ; FACTORS' ACTS.
Co-Pledgees. A pledgee may hold a pledge for another pledgee also, and it will be a good pledge to both; Levy v. Winter, 43 La. Ann. 1049, 10 South. 198. If the pledge be not large enough for both debts after sale, and other arrangement be made, the prior pledgee will have the whole of his debt paid before any part of the proceeds is applied to the subsequent pledge. If there is no priority of time, they will divide rat ably. But an agreement between the parties will always determine the right of two or more pledgees; Marshall v. Bryant, 12 Mass.
321. Where possession is given to one of three pledgees, to hold for all three, the oth er two have a constructive possession, is equally good, for the purpose of sharing, with an actual possession. Hence the mere manual possession of one pledgee will not give a right to discharge the whole debt of the holder and a ,part .only of ,that of his co pledgee's. So, by the rule of constructive possession, if the holder should lose the pledge by his own negligence, he would be liable to his co-pledgees out of actual pos session, as well as to his pledgor.
Substituted collateral is held on the same terms as that originally •pledged. the sur render of that given up being sufficient con sideration for the new deposit; Hoffman v. Schoyer, 143 Ill. 598, 28 N. E. 823; Midland Nat. Bank v. Ry. Co., 132 Mo. 492, 38 S. W. 521, 53 Am. St. Rep. 505; Blydenstein v. Security & T. Co., 67 Fed. 469, 15 C. C. A. 14. Collateral deposited- on a demand by the pledgee for additional "margin" would probably be held to be security given for an existing debt. The point does not appear to have been decided. When the pledgee changes the form of the collateral he con tinues to hold under the terms of tfie pledge, e. g. where he forecloses a mortgage and buys in the land; Lathrop v. Adkisson, 87 Ga. 339, 13 S. E. 517. See McArthur v. Magee, 114 Cal. 126, 45 Pac. 1008; Montague v. R. Co., 124 Mass. 242; Dalton v. SMith, 86 N. Y. 176; Hopkins v. Remit', 159 Ill. 416, 42 N. E. 848.
But see infra under sub-title ,Remedies of Pledgee.
Other debts. A pledge cannot, in general, be held for any other debt than that which it was given to secure, except ou the spe cial agreement and consent- of the parties; 6 Ves. 226; Armstrong 'v., McLean, ma Iv. Y. 490, 47 N.• E. 912; Hallowell v. Bank, 154 'Mass. 359; 28 N. E. 281, 13 L. R. A. 315; Cross v. Brown (R.. I.) 33 Atl. 370. (The civil and SCotch law are otherwise; 2 Bell, Com. 22.) Unless the intention is clear to the contrary it will be held that this special agreement applies only to subsequent debts; Clymer v. Patterson, 52 N. J. Eq. 188, 27 Atl. 645; and the court was equally divided where a custom of brokers was set up to justify the application to existing • debts; Bacon's A.dm'r v. Bacon's Trustees, 94 Va. 686, 27 S. E. 576. Where a judgment has been paid the parties may lawfully agree that it shall remain as collateral for a new loan made, or to be made; Merchants N. Bk. v. Mosser, 161 Pa. 469, 29 Atl. 1.
The renewal of the note or obligation of pledge does not affect the pledgee's rights in regard to the Collateral's, it a mere extension of the original contract; Case v. Fent, 53 Fed. 41, 3 C. C. A. 418, 10' U. S. App. 415; Colebr. Collat. Secur. § 14.
Assignment by the pledgee is valid, in the absence of an agreement to the contrary, and carries with it all the collaterals pledged as security. The pledgor is not injured thereby, his right to . redeem remaining un impaired; Drake v.. Cloonan, 99 Mich. 121, 57 N. W. 1098. 41 Am. St. Rep. 586; Waddle v. Owen, 43 Neb. 489, 61 N. W. 731; Hallack L. &,Mfg. Co. v. Gray, 19 Colo. 149, 34 Pac. 1000. The pledgor may transfer his right to a third party, who may bring trover against the pledgee if the latter, after tender of the amount of the debt, refuse to deliver the pledge; Bush v. Lyon, 9 Cow. (N. Y.) 52;