of title deeds in favor of a person who takes bona fide, and without notice, will give the latter a preferable equity, which will overreach the vendor's lien on the estate for any part of the purchase-money.1 Persons coming in under the purchaser by act of law, as assignees of a bankrupt, are bound by the lien; although they had no notice of it.2 The purchaser of an estate who has paid part of the purchasemoney, has a lien on it to that extent if the vendor cannot make title.3 357. The next equitable lien which deserves consideration is that which grows out of a deposit of title deeds. The primá facie effect of such a deposit would seem to be simply to create a lien upon the title deeds deposited, in the nature of a solicitor's lien upon papers in his possession; but it has been decided in England and in some of the United States, that the deposit will not operate merely to create a lien upon the papers, but will enure as a charge upon the land itself in the nature of a mortgage. The first case in England in which this doctrine seems to have been authoritatively settled was Russel v. Russel, decided by Lord Thurlow in 1783; and this decision, though strongly disapproved, has, nevertheless, been recognized by many cases as a binding authority; and the doctrine may, therefore, be considered as well established in spite of its apparent infringement upon the Statute of Frauds. While the effect of a deposit of title deeds in creating a lien upon the estate may be considered as definitely settled, the 12 Sugden V. and P. 396 (8th Am. ed.); Rice v. Rice, 2 Drew. 73; Schwarz v. Stein, 29 Maryl. 112. See Pierce v. Milwaukee and St. Paul R. R. Co., 24 Wis. 551, where a mortgage of subsequently acquired real estate was held to be a lien thereon in preference to the lien of the vendor of the real estate. 22 Sug. V. and P. 395. 3 Rose v. Watson, 10 H. L. Cas. 672; Aberaman Iron Works v. Wickens, L. R. 4 Ch. App. 101; 2 Sug. V. and P. 379. 41 Bro. C. C. 269; 1 Lead. Cas. Eq. 5 See Ex parte Coming, 9 Ves. 115; Pryce v. Bury, 2 Drew. 42; Fenwick v. Potts, 8 De G. M. & G. 506; Daw v. Terrell, 33 Beav. 218; 1 Lead. Cas. Eq. 543. 6 See Pryce v. Bury, 2 Drew. 42; Ferris v. Mullins, 2 Sm. & Giff. 378; and the remarks of Lord Abinger, in Keys v. Williams, 3 Y. & C. Ex. Ca. 55, 61. See Dixon v. Muckleston, L. R. 8 Ch. App. 155, where the deeds were accompanied by a letter which took the case out of the statute. ascertainment of the exact manner in which it operates is not unattended with difficulties. It has been decided that no agreement to execute a formal mortgage can be implied from such a deposit; and it has also been held that an agreement to give a legal mortgage, accompanied by a deposit of the title deeds for the purpose of preparing such a mortgage, will not constitute a valid equitable mortgage. On the other hand, a different conclusion from that reached in Norris v. Wilkinson was arrived at in several cases, and the balance of authority is, perhaps, in favor of the proposition that a delivery of deeds for the purpose of preparing a legal mortgage constitutes a valid equitable mortgage. Whether an equitable mortgage can be implied from the simple fact, without more, of the adverse possession of title deeds seems to be doubtful.1 The security by deposit of title deeds has been held to extend to subsequent advances made upon the understanding that they were to be secured by the deposit.5 The only remaining points upon this subject that seem to require to be stated are that a lien may be created by the deposit of part only of the title deeds; that it will be a charge only upon the interest of the party making the deposit; and that the mortgagee's appropriate remedy is foreclosure. Mortgages by deposit of title deeds have been sustained in several States of the Union, although they have not been of frequent occurrence. They have been disapproved of in Ken 1 Sporle v. Whayman, 20 Beav. 607. 2 Norris v. Wilkinson, 12 Ves. 192; Ex parte Hooper, 1 Meriv. 7; Ex parte Pearse, 1 Buck, 525. 3 See Edge v. Worthington, 1 Cox, Ch. 211; Ex parte Bruce, 1 Rose, 374; Hockley v. Bantock, 1 Russ. 141; Keys v. Williams, 3 Young & Col. Ex. Ca. 55; 1 Lead. Cas. Eq. 547. 4 See Ex parte Coming, 9 Ves. 115; Chapman v. Chapman, 13 Beav. 308; Smith v. Constant, 4 De G. & Sm. 213; Burgess v. Moxon, 2 Jur. N. S. 1059. 5 Ex parte Kensington, 2 V. & B. 69; James v. Rice, 5 De G. M. & G. 461; 1 Lead. Cas. Eq. 545. Lacon v. Allen, 3 Drew. 579; Roberts v. 7 Williams v. Medlicot, 6 Price, 495; Turner v. Letts, 20 Beav. 185. 8 Redmayne v. Forster, L. R. 2 Eq. 467; though see Tuckley v. Thompson, 1 Johns. & H. 126. 9 Rockwell v. Hobby, 2 Sand. Ch. 9; Chase v. Peck, 21 N. Y. 587; Stoddard v. Hart, 23 N. Y. 561; Welsh v. Usher, 2 Hill (Ch.) 167; Williams v. Stratton, 10 Sm. & Marsh. 418; Mounce v. Byars, 16 Georgia, 469; Robinson v. Urquhart, 1 Beas. 515; Hackett v. Reynolds, 4 R. Island, 512; Jarvis v. Dutcher, 16 Wis. 307; Richards v. Leaming, 27 Ill. 431; 6 See Ex parte Chippendale, 1 Deac. 57; Keith v. Horner, 32 Id. 524. tucky,' and rejected in Pennsylvania' and Ohio.3 In Vermont the question is undecided. In quite a number of cases agreements to give a mortgage have been held to create a lien." 358. The next class of liens requiring attention are those which grow out of mortgages and pledges of personalty. It has been stated in a former chapter that mortgages of personalty resemble, in most respects, mortgages of realty; so far, at all events, as the existence of the equity of redemption and of the remedy by foreclosure are concerned." There is, however, this distinction between mortgages of real and personal property, namely, that while in the former a foreclosure suit is necessary in order to enable the mortgagee to sell, in the latter a sale may be had without the necessity of filing a bill. After breach of condition, and upon giving due notice, the mortgagee of personalty may sell the property mortgaged, as he could at civil law; and the title, if the sale is made bona fide, will vest absolutely in the vendee.7 It may also be observed that just as absolute sales of personal property to be acquired in futuro, which would not have been considered good under the strict rules of common law, may be sustained in equity; so, also, mortgages of similar property, which would not be recognized in courts of law, may be upheld in courts of chancery. Thus the case of Holroyd v. Marshall, referred to in a former chapter, was the case of a mortgage (inter alia) of personalty which did not come into the possession of the mortgagor until after the date of the mortgage. Such a transfer would be invalid according to the strict doctrine of the common law, but is now thoroughly recognized in courts of 1 Vanmeter v. McFaddin, 8 B. Mon. Am. note to Russel v. Russel, 1 Lead. Cas. 435. Eq. 666. 2 Bowers v. Oyster, 3 Pen. & Watts, 239; Shitz v. Dieffenbach, 3 Barr, 233; Edward's Exrs. v. Trumbull, 14 Wright (Pa.), 509. 3 Probasco v. Johnson, 2 Disney, 96. 4 Bicknell v. Bicknell, 31 Verm. 498. 5 See Read v. Simons, 2 Desaus. 552; Matter of Howe, 1 Paige, 125; Bank of Muskingum v. Carpenter, 7 Ohio, 21; and other cases cited at the conclusion of 6 Ante, Part I., Chap. VII., p. 166, note 3. 7 Tucker v. Wilson, 1 P. Wms. 261; Hart v. Ten Eyck, 2 Johns. C. R. 100; Parker v. Brancker, 22 Pick. 46; De Lisle v. Priestman, 1 P. A. Browne, 176; Doane v. Russell, 3 Gray, 382; Story's Eq. Jurisp. & 1031. 8 10 H. L. Cas. 209. equity; and mortgages, or charges in the nature of mortgages, upon personal property which is not already in, but is to come into, the possession of the mortgagor, are of not unfrequent occurrence in modern times, and are constantly upheld. It is true, that, according to the rule established in Twyne's Case,2 transfers of personal property, unaccompanied by the delivery of possession, are to be considered fraudulent and void as against the creditors of the assignor; but even under the rule thus laid down it has been held that an exception exists in favor of articles which, at the time of the sale, are not susceptible of actual delivery, as, for example, merchandise at sea, or in the hands of a third person. Therefore it is no objection to a mortgage of property to be acquired in futuro that it is not delivered at once and is therefore liable to the rule in Twyne's Case, for the obvious reason that it falls entirely outside of the doctrine there enunciated. Indeed, the tendency in equity is not to regard the delivery of possession of personal property as always essential to a valid mortgage of the same; and hence mortgages of certain kinds of personal property, as, for example, of the rolling stock of a railroad, are of frequent occurrence. Such mortgages are, in many States, allowed and regulated by statute; but the same end is also attained through the modern equitable doctrines in regard to mortgages of personal property.5 359. Between a mortgage of personal property, and a pledge thereof, there are one or two points of difference of considerable importance. "A mortgage," it was said in Jones v. Smith," "is a pledge and more, for it is an absolute pledge to become an absolute interest if not redeemed at a certain time." A pledge, therefore, differs on the one hand from a lien, which 1 See ante, p. 170 et seq. 21 Sm. Lead. Cas. 33. quently created by debentures upon the "undertaking" of a company, by which 3 Notes to Twyne's Case, 1 Sm. Lead. the debenture holder acquires a charge Cas. 33. upon all the property of the company Walcott v. Keith, 2 Foster, 196; past and future, which he can enforce Whittle v. Skinner, 23 Verm. 531. 5 See Philadelphia, etc. R. R. Co. v. Woelpper, 14 P. F. Sm. 372; Ladley v. Creighton, 20 Id. 494; Morrill v. Noyes, 56 Maine, 465; 2 Redfield on Railways, 501, 508. In England liens are fre upon filing a bill, and which will entitle confers no right to sell, but only a right to retain until the debt in respect of which the lien was created has been satisfied; and, on the other hand, from a mortgage, which conveys the entire property of the thing mortgaged to the mortgagee conditionally, so that when the condition is broken the property remains absolutely in the mortgagee, whereas a pledge never conveys the general property to the pledgee, but only a special property in the thing pledged." According to the modern authorities, the remedy of the pledgee is twofold; he may either file a bill in chancery in the nature of a foreclosure bill, and proceed to a judicial sale; or he may sell without judicial process upon giving reasonable notice to the pledgor to redeem, and of the intended sale. It had, in former times, been the rule of common law, that the pledgee was obliged to have recourse to the process of law to call upon the pledgor to redeem; and that the right of redemption could not be destroyed by anything short of a judicial sale; but the rule now appears to be settled in favor of the right of the pledgee to sell upon notice, without resorting to a foreclosure bill. The right to sell upon notice, however, is one in the exercise of which a great deal of care is required; and the pledgee may be held responsible if he does not strictly follow all the requirements of the law by which this right is fenced in. The safer course in all cases would, therefore, be to file a bill, and obtain an order for a judicial sale. It has been held that a court of equity will entertain a bill by the pledgor to compel a delivery of the pledge after the debt is 1 Thames Iron Works Co. v. The Patent nard, 1 Smith's Lead. Cas. 384; Story on Derrick Co., 1 Johns. & H. 93. Bailments, 308, 310; 2 Kent's Com. 582. 2 American note to Coggs v. Bernard, 1 Sm. Lead. Cas. 384. 3 Stearns v. Marsh, 4 Denio, 227; Davis v. Funk, 3 Wright (Pa.), 243; Diller v. Brubaker, 2 P. F. Sm. 502; Tucker v. Wilson, 1 P. Wms. 261; Lockwood v. Ewer, 9 Mod. 278; Pigot v. Curbey, 15 C. B. (N. S.) 701, and note by the American editor; Wothington v. Tormey, 34 Maryl. 182; Strong v. Nat. Mech. Bank Ass., 45 N. Y. 718; note to Coggs v. Ber 4 Story on Bailments; 2 Kent's Com., ut sup. 5 As to the damages for a wrongful sale by the pledgee, see Johnson v. Stear, 15 C. B. (N. S.) 330, and note by the American editor. See, also, Donald v. Suckling, L. R. 1 Q. B. 585; Halliday v. Holgate, L. R. 3 Exch. 299; Fisher. v. Brown, 104 Mass. 259. |