On the other hand, where a pledge by a factor is sought to be sustained upon the ground that he was intrusted with the possession of the goods, it must appear: 1. That he had actual as distinguished from constructive possession. Goods stored in bonded warehouse before payment of duties, are not in possession of the factor within the meaning of the statute. 2. That the change of possession was made at the time of the advance which the pledge was intended to secure. See on this subject, Bonito v. Mosquera, 2 Bosw., 401; Walther v. Wetmore, 1 E. D. Smith, 7; Covell v. Hill, 6 N. Y., 374. The effect of the act is that one who has such documentary evidence of the title to merchandise as gives him the exclusive control of the possession, is deemed the true owner of the property for certain purposes, it the true owner has intrusted him with such evidence for the purpose of disposing of the property. A factor so situated can sell or pledge the whole or a part of the property; or give a lien upon it for advances. If he misappropriates the property his principal must suffer; not the person who has dealt with the factor on the faith of the position in which the owner has placed him. Thus one who has made advances to a factor upon the faith of a warehouseman's receipt of imported goods, given to the factor in consequence of his being intrusted with an invoice of the goods, is protected, though the invoice showed that the goods belonged to the shipper. To bring a case within the act, it is not necessary that the true owner should have intrusted the factor with the identical evidence of title on the faith of which the factor procures the loan. Intrusting him with primary documents out of which others, in the usual course of trade, grow, is equivalent to intrusting him with the latter. Nor is it strictly necessary that the documentary evidence of title should be delivered at the very time when the loan is made. If good faith is shown, the loan may be made at one time, and the pledge created afterwards (Cartwright v. Wilmerding, 24 N. Y., 531). It will be observed that our present act is limited to disposition by a "factor or other agent." The Commissioners propose to extend it to all persons allowed to assume the apparent ownership. This will not, however, extend the rule to all cases of mere possession. Mere possession of goods is not evidence to the world of an unlimited authority to sell them; so as to preclude the owner from showing, as against a purchaser, that they were intrusted to him, not for sale, but for a different purpose · such as transportation or temporary custody (Cook v. Beal, 1 Bosw., 497. Compare Zachris- It is clear that one who takes from the factor or agent, lender, $1653. Property may be pledged as security for Pledge the obligation of another person than the owner, and what. in so doing the owner has all the rights of a pledgor ⚫ for himself, except as hereinafter stated. Code Napoleon, 2077. holder, S1654. A pledgor and pledgee may agree upon a Pledge third person with whom to deposit the property what. pledged; who, if he accepts the deposit, is called a pledgeholder. Code Napoleon, 2076. S1655. One who pledges property as security for the obligation of another, cannot withdraw the property pledged otherwise than as a pledgor for himself might; and, if he receives from the debtor a consideration for the pledge, he cannot withdraw it without his consent. When pledge fender may property pledged. withdraw of pledge S1656. A pledgeholder for reward cannot exoner- obligations ate himself from his undertaking; and a gratuitous holder. pledgeholder can do so only by giving reasonable notice to the pledgor and pledgee to appoint a new pledgeholder, and, in case of their failure to agree, by depositing the property pledged with some impartial person, who will then be entitled to a reasonable compensation for his care of the same. S1657. A pledgeholder must enforce all the rights of the pledgee, unless authorized by him to waive them. S 1658. A pledgee, or a pledgeholder for reward, assumes the duties and liabilities of a depositary for reward. Pledgeenforce holder must rights of pledgee. Obligation of pledgee and pledge holder for reward. Gratuitous pledgeholder. Debtor's misrepre sentation of value of pledge. When pledgee may Bell. When pledgee must de mand performance. Notice of sale to the pledgor. S1659. A gratuitous pledgeholder assumes the duties and liabilities of a gratuitous depositary. § 1660. Where a debtor has obtained credit, or an extension of time, by a fraudulent misrepresentation of the value of property pledged by or for him, the creditor may demand a further pledge to correspond with the value represented; and in default thereof may recover his debt immediately, though it be not actually due. Code of La., 3141. S1661. When performance of the act for which a pledge is given is due, in whole or in part, the pledgee may collect what is due to him by a sale of property pledged, subject to the rules and exceptions hereinafter prescribed. § 1662. Before property pledged may be sold, and after performance of the act for which it is security is due, the pledgee must demand performance thereof from the debtor. Wilson v. Little, 2 N. Y., 443; aff'g S. C., 1 Sandj., 351; S1663. A pledgee must give actual notice to the pledgor of the time and place at which the property pledged will be sold, at such a reasonable time before the sale, as will enable the pledgor to attend. Notice to the pledgor of the sale is an essential prerequi site (Lewis v. Graham, 4 Abb. Pr., 106; Castello v. City Bank, 1 N. Y. Leg. Obs., 25; Brass v. Worth, 40 Barb., 648; Brown v. Ward, 3 Duer, 660). And this notice must apprise the pledgor of the time and place of sale. For the object of the notice is, not merely to enable the pledgor to redeem, but also to enable him to be present at the sale, and see that it is fairly conducted (Wheeler v. Newbould, 16 N. Y., 392). And where notice cannot be given to him personally, e. g., where he has absconded, the pledgee cannot dispose of the pledge without notice, but must resort to judicial proceedings (Garlick v. James, 12 Johns., 146). An advertisement in the newspapers is not sufficient notice (Stearns v. Marsh, 4 Den., 227). notice of S1664. Notice of sale may be waived by a pledgor Waiver of at any time; but is not waived by a mere waiver of sale. demand of performance. Milliken v. Dehon, 27 N. Y., 364; Wilson v. Little, 2 id., 443. demand. S1665. A debtor or pledgor waives a demand of Waiver of performance as a condition precedent to a sale of the property pledged, by a positive refusal to perform, after performance is due, but cannot waive it in any other manner except by contract. See Wilson v. Little, 2 N. Y., 443. S1666. The sale, by a pledgee, of property pledged, must be made by public auction, in the manner and upon the notice to the public usual at the place of sale, in respect to auction sales of similar property; and must be for the highest obtainable price. Wheeler v. Newbould, 16 N. Y., 392; Brown v. Ward, 3 S 1667. A pledgee cannot sell any evidence of debt pledged to him, except the obligations of governments, states, or corporations; but he may collect the same when due. Wheeler v. Newbould, 16 N. Y., 397, limited by the S1668. Whenever property pledged can be sold for a price sufficient to satisfy the claim of the pledgee, the pledgor may require it to be sold, and its proceeds to be applied to such satisfaction, when due. Sale must tion. be by ano Pledgee's curities. sale of se Sale on the the pledgor. demand of Surplus to be paid to pledgor. Id. Pledgee's purchase of property pledged. Pledgee may fore of redemp tion. This provision is new, or, at least, it is very doubtful whether such a right now exists. But its justice is very clear (Story Bailm., § 320). It is not proposed to extend the same privilege to mortgages, as they are used as permanent securities. A pledge should be used only as a transient security. S 1669. After a pledgee has lawfully sold property pledged, or otherwise collected its proceeds, he may deduct therefrom the amount due under the principal obligation, and the necessary expenses of sale and collection, and must pay the surplus to the pledgor, on demand. S 1670. When property pledged is sold before the claim of the pledgee is due, he may retain out of the proceeds all that can possibly become due under his claim, until it becomes due; with the proper rebate of interest. S 1671. A pledgee, or pledgeholder, cannot purchase the property pledged except by direct dealing with the pledgor. Story on Bailm., § 319; see also Dykers v. Allen, 7 Hill, 497, and the Title on TRUST But (prior to Laws of 1857, ch. 414, somewhat enlarging the powers of a special partner) it was held that a special partner of a firm with whom property is pledged is not incapacitated from purchasing it at a sale made by the firm. As he was prohibited from transacting any business on account of the partnership, and could not be employed as agent, attorney or otherwise, no duty devolved upon him in reference to the bailment. He could not aid or direct in the sale; and, hence, was not within the rule that one shall not be permitted to purchase who has a duty inconsistent with the character of purchaser (Lewis v. Graham, 4 Abb. Pr., 106). $1672. Instead of selling property pledged, as close right hereinbefore provided, a pledgee may foreclose the right of redemption by a judicial sale under the direction of a competent court; and in that case may be authorized by the court to purchase at the sale. See Garlick v. James, 12 Johns., 146. |