waive the tort, and require the money so received to be applied in payment of the debt secured, and may recover any balance of the same by action for money had and received, or by set-off; but he can only avail himself of these remedies when money, or its equivalent, has been actually received from the tortious sale; and he must be content with the money received as his measure of damages.

* *

*

The evidence adduced does not tend to support the defendant's plea, but rather shows that the plaintiff wrongfully, and without receiving any consideration therefor, surrendered the securities pledged to a stranger, who claimed to own the same. In no way have the securities been applied in the payment of the debt. The parties have not agreed to so apply them, nor have they been so dealt with by the plaintiff that the law so applies them.

* * *

A. pledges to B. an overcoat, to secure payment of a note for $10. On A.'s failure to pay the note, B. sells the overcoat for $25, having incurred expenses amounting to $1 in the preservation and sale of the overcoat. B. must pay A. $14. B. is entitled only to payment of his debt, which includes interest, if interest has been stipulated, and reasonable expense incurred in preserving the article and making the sale. The only purpose of this bailment is to afford security for the payment of the debt.

NAGEL v. HAM, YEARSLEY & RYRIE et al.

(Supreme Court of Washington, 1915. 88 Wash. 99, 152 P. 520.) Action by F. H. Nagel against Ham, Yearsley & Ryrie, a corporation, and others. Judgment for plaintiff, and defendants appeal.

MAIN, J. This action was instituted against Ham, Yearsley & Ryrie, a corporation, Wilbur S. Yearsley, its vice president, and Kenneth Murry, its secretary, for the purpose of compelling the officers of the corporation to transfer to the plaintiff upon the books of the corporation 1212 shares of its capital stock. After the issues were framed the cause was tried to the court without a jury, and resulted in a judgment directing that the shares of stock be transferred upon the books of the corporation to the plaintiff. From this judgment, the defendants have appealed.

The facts are as follows: On September 4, 1912, one Donald Ryrie, being indebted to one Frank A. Ross in the sum of $880, executed and delivered to Ross a promissory note for the amount of the indebtedness, due 90 days after date. As security for the payment of this note Ryrie assigned certificate of stock No. 22 for 1212 shares of the capital stock of the appellant corporation. The assignment was made in the usual form which appears on the back of certificates of corporate stock, and was in the following language: "For value received

hereby sell, transfer, and assign to the shares of stock within mentioned, and hereby authorize to make the necessary transfer on the books of the corporation.

Witness

hand and seal this

day of

A. D. 19-. "D. Ryrie."

The note not being paid when due, Ross, on June 6, 1913, notified Ryrie that unless the same was paid before June 13, 1913, the 122 shares of capital stock which he held as security would be sold, and the proceeds thereof applied upon the amount due upon the note. On September 25, 1913, the note nor any part thereof having been paid, Ross notified Ryrie that he would sell the certificate of stock on September 29th at the hour of 1:30 o'clock p. m., at his office, room 1018 in the Paulsen Building, in the city of Spokane. The notice to Ryrie was by letter delivered to him personally. No public notice of the sale was given. On September 29, 1913, the shares of stock which were evidenced by the certificate were sold at the time and place mentioned in the notice.

Prior to the time the sale was held, and on the 11th day of October, 1912, Ryrie had made an assignment of all his right, title, and interest to Henry Madigan and John Pattison, as trustee for certain creditors. And on December 23, 1912, Ryrie made an assignment of the stock represented by the certificate, and other property, to Wilbur S. Yearsley, for the purpose of permitting Yearsley to manage and dispose of the property thus assigned, and out of the proceeds arising therefrom pay pro rata the obligations of Ryrie and of the appellant corporation which had been incurred by Ryrie.

At the time the sale of the shares of stock occurred Ross had notice of the assignment to Madigan and Pattison and to Yearsley. Prior to the sale Yearsley by letter had notified Ross that any sale or attempted sale held pursuant to the notice given by Ross would be invalid. At the sale the stock was purchased by the plaintiff through his agent and attorney for the sum of $100, and the certificate of stock was delivered to him. Thereafter he made a demand upon the appellant corporation that it transfer the stock to him as the owner upon the books of the corporation, which demand was refused. Thereafter the present action was brought, and resulted in a judgment directing the transfer as above stated.

Two questions are here presented: First, did title to the stock pass to the respondent by virtue of a valid sale; and second, if the sale was invalid, does the respondent, notwithstanding that fact, have the right by reason of holding the certificate assigned in blank by Ryrie with a power of attorney in blank, authorizing the transfer, to have it made.

I. There appears to be no statute in this state defining the procedure. by which a pledge of personal property may be sold for the purpose of satisfying the debt which it secures. This being true, recourse must be had to the common law. The common-law rule is that, in the absence of an agreement between the parties controlling the manner of the disposition of the pledge, two remedies are open to the pledgee; He may begin an action for the foreclosure and sale of the pledge; or he may exercise his implied authority and sell the pledge at public auction after having given reasonable notice of the time and place of such sale to the pledgor. * * *

In the case last cited it was said: "When the debt for which shares of stock are pledged matures and is unpaid, the pledgee may file a bill in equity for a foreclosure of the pledge and a sale under the order of the court, or he may exercise the implied power to sell without resorting to judicial proceedings. If he elects to pursue the latter

remedy, the law requires, in the absence of an agreement, that the sale shall be made at public auction, and reasonable notice of the time and place given to the pledgor, that he may have opportunity to redeem the pledge."

One of the necessary incidents of a public sale is that notice thereof shall be given to the public in order that the purchasers may advise themselves of the terms of sale and the title to the property, and be enabled to bid intelligently. * * *

In the Hagan Case [182 Mo. 319, 81 S. W. 171] upon this question it was said: "But a public sale also implies a notice to the public, in order that purchasers may advise themselves of its terms and the title to the property, and be enabled to bid intelligently.'

In the present case no notice of any kind or character was given to the public. The only notice of the sale was the letter which was delivered personally to the pledgor. There being no public notice, the sale was not held in the manner required by law, and was therefore invalid. * * *

A person who has no interest in the stock cannot ask a court of equity to decree a transfer to him. In Second Nat. Bank of Grand Forks v. First Nat. Bank of St. Thomas, 8 N. D. 50, 76 N. W. 504, it is said: "As plaintiff failed to show any existing indebtedness, it failed to show any present interest in the stock; hence it cannot ask a court of equity to decree a transfer to it."

If the person demanding the transfer has acquired title from a pledgee contrary to the terms of the pledge, he has no right to a transfer. In 4 Clark & Marshall, Private Corp. p. 3627, it is said: "Nor can a corporation be held liable for refusal to make record of transfer to a pledgee who has assumed to acquire title to the stock contrary to the terms of the pledge."

Applying these rules to the present case, we think that the sale by the pledgee was invalid, because no public notice was given of such sale, and that the corporation had the right to refuse to transfer the stock upon the books of the company.

In the case of Brown v. Hotel Association of Omaha, 63 Neb. 181, 88 N. W. 175, there is dictum to the effect that the purchaser of stock at an invalid sale thereof would have a right to a transfer upon the books of a company if there was a blank power of attorney on the certificate signed by the pledgor at or before the time of making the pledge. But this dictum, it would seem, is out of harmony with the well-settled rules of law above stated, which seem to us not only to be supported by ample authority, but to be founded in reason. In this case we express no opinion upon whether the pledgee of the stock prior to the sale by virtue of the power of attorney would have had a right to have the stock transferred to him upon the books of the corporation. We only hold that the purchaser at an invalid sale of the stock evidenced by such a certificate has not the right to a transfer. The judgment will be reversed, and the cause remanded, with directions to the superior court to dismiss the action.

Reversed.

MORRIS, C. J., and ELLIS and FULLERTON, JJ., concur.

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5.

Necessity for Recording or Retention of Possession.

6. Waiver of Mortgage Lien.

7. Rights of Mortgagee at Time of Foreclosure.

SECTION 1.—NATURE OF A CHATTEL MORTGAGE

A mortgage of chattels or personal property is created by contract between the debtor and creditor, whereby the debtor passes to the creditor his property in the chattels for the purposes of security only. The mortgagee gets a special interest only, which is in the nature of a lien. It differs from the old common-law lien in that possession of the chattel by the lienholder is not essential. Third parties are protected by means of statutes in the various states requiring mortgages to be recorded. Many questions arise in regard to chattel mortgages. What property is subject to a chattel mortgage? Does it include any increase? Are fixtures properly covered by a chattel mortgage? Inasmuch as fixtures will be treated in a subsequent chapter, under property, the validity of a mortgage on fixtures will not be discussed here.

GANDY v. COLLINS, Sheriff.

(Court of Appeals of New York, 1915. 214 N. Y. 293, 108 N. E. 415.)

Action by George S. Gandy against John J. Collins, Sheriff of Richmond County. From a judgment of the Appellate Division (160) App. Div. 525, 146 N. Y. Supp. 89) confirming a judgment of the Trial Term for plaintiff, defendant appeals.

CARDOZO, J. The action is for conversion. In May, 1908, the plaintiff's assignor, G. S. W. Brubaker & Co., obtained a loan of money from the Franklin Trust Company of Philadelphia. It received the money to enable it to become the buyer of electric cars; and it agreed to store the cars in the name of the trust company until the loan was paid. In the following month it delivered to the trust company a bill of sale by which, in consideration of the loan, it assigned to the trust company all its right, title, and interest in the cars, and undertook upon a sale to turn over the proceeds. The cars remained in New York. They were left on the tracks of Milliken Bros., Incorporated, under an agreement between the receivers of that corporation and the Brubaker Company. The agreement gave the receivers a lien on the cars for the cost of storage. A year later $8,000 of the loan was still due

BAU.& DIL.B.L.

to the trust company. The Brubaker Company then made a collateral note for that amount, payable on demand. The note states that there has been deposited as security the following property: "Assignment of interest in 17 electric motor cars stored at Milliken Bros. yard, Staten Island, New York." It gives the holder the right to repledge the collateral, and it gives the right also, in case of the nonpayment of the debt, to sell the collateral, at public or private sale, with or without notice.

Two years later, on September 20, 1911, the trust company called the loan, and gave notice that, in default of payment by September 21st, it would, on September 22, 1911, at 11 a. m., at a stated place in Philadelphia, expose the cars for sale. It also published a notice of sale in two newspapers. On September 22, 1911, payment had not been made, and the trust company attempted to sell the cars at auction. The president of the Brubaker Company was present and protested against the sale. The cars were bought in by the trust company itself. It did not obtain possession of them, for they were still in Staten Island. In November, 1911, it began an action of replevin in this state. It named as sole defendant Milliken Bros., Incorporated, on whose tracks the cars were stored. The sheriff seized the cars under the requisition in replevin. The Brubaker Company served him with an affidavit that it claimed the ownership of the cars, and demanded that he return them. The sheriff refused to comply with the demand, but delivered the cars to the trust company at whose instance he had seized them. It is conceded that the trust company indemnified him against loss or liability by reason of the adverse claim. The Brubaker Company thereupon assigned to the plaintiff all its interest in the cars and in any cause of action for conversion growing out of their seizure. This action followed.

In the view of the court below, the transaction was an inchoate pledge, invalid because never perfected by delivery (Casey v. Cavorac, 96 U. S. 467, 24 L. Ed. 779), with the result that the trust company's interest was thought to be of the nature of an equitable lien. In our view, the transaction was intended, not as a pledge of chattels, but as a mortgage, with the result that the trust company after default had the legal title and with it the right to regain possession through replevin. The Brubaker Company delivered to the trust company an assignment of all its right, title, and interest in the cars. The assignment, as the court has found, "was executed and delivered as collateral security for the loan made." Such an instrument is not a pledge but a mortgage. The plaintiff relies on another finding to the effect that the assignment was not intended as a transfer of title. If by this it was meant that an absolute title was not transferred, the finding is correct, for the assignment was given as security. If, however, it was meant that there was not even the transfer of a defeasible title, the finding must be rejected. Viewed as a finding of fact, it is inconsistent with other findings which establish the terms of the assignment and the purpose of delivery. Viewed as a conclusion of law, it is an erroneous deduction from the facts found. We conclude, therefore, that the title of the trust company and its right to maintain replevin are established by the decision.

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The plaintiff is not helped by the mortgagee's omission to comply with the statute, which requires either that the mortgage, or a copy, be filed, or that it be accompanied by a change of possession. Lien Law,