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tled to have the property of the principal first applied to the discharge of the obligation.

N. Y. C. C., Sec. 1571.

ARTICLE IV.

RIGHTS OF CREDITORS.

SECTION 2854. Creditor entitled to benefit of securities held by surety.

entitled to

benefit of

securities

SEC. 2854. A creditor is entitled to the benefit of Creditors everything which a surety has received from the debtor by way of security for the performance of the obligation; and may, upon the maturity of the obligation, compel the application of such security to its satisfaction.

N. Y. C. C., Sec. 1572.

held by

surety.

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2866. The credit given must agree with the terms of the letter.

SEC. 2858. A letter of credit is a written instrument, addressed by one person to another, requesting the latter to give credit to the person in whose favor it is drawn.

N. Y. C. C., Sec. 1573.

SEC. 2859. A letter of credit may be addressed to several persons in succession.

N. Y. C. C., Sec. 1574.

Letter of credit, what,

How addressed.

the writer.

gave

credit in

SEC. 2860. The writer of a letter of credit is, upon the Liability f default of the debtor, liable to those who compliance with its terms.

N. Y. C. C., Sec. 1575.

SEC. 2861. A letter of credit is either general or spe-
When the request for credit, in a letter, is addressed

cial.

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Nature of general letter of credit.

Extent of general letter of credit.

A letter of credit may

uing

guaranty.

to specified persons by name or description, the letter is special. All other letters of credit are general.

N. Y. C. C., Sec. 1576.

SEC. 2862. A general letter of credit gives any person to whom it may be shown authority to comply with its request, and by his so doing it becomes, as to him, of the same effect as if addressed to him by name.

N. Y. C. C., Sec. 1577.

SEC. 2863. Several persons may successively give credit upon a general letter.

N. Y. C. C., Sec. 1578.

SEC. 2864. If the parties to a letter of credit appear, be a contin- by its terms, to contemplate a course of future dealing between the parties, it is not exhausted by giving a credit, even to the amount limited by the letter, which is subse quently reduced or satisfied by payments made by the debtor; but is to be deemed a continuing guaranty. N. Y. C. C., Sec. 1579.

When notice to the writer necessary.

The credit given must agree with

the terms of the letter.

SEC. 2865. The writer of a letter of credit is liable for credit given upon it without notice to him, unless its terms express or imply the necessity of giving notice.

N. Y. C. C., Sec. 1580.

SEC. 2866. If a letter of credit prescribes the persons by whom, or the mode in which, the credit is to be given, or the term of credit, or limits the amount thereof, the writer is not bound except for transactions which, in these respects, conform strictly to the terms of the letter.

N. Y. C. C., Sec. 1581.

TITLE XIV.

LIEN.

CHAPTER I. LIENS IN GENERAL.

II. MORTGAGE.

III. PLEDGE.

IV. BOTTOMRY.

V. RESPONDENTIA.

VI. OTHER LIENS.

VII. STOPPAGE IN TRANSIT.

Although the arrangement of this subject is novel, the Commissioners believe that its propriety and advantages will be perceived at a glance. Mortgages are liens, and, under the provisions of this Code, nothing more. They are subject, therefore, to all the general rules of liens.

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2877. Contracts subject to provisions of this chapter.

SEC. 2872. A lien is a charge imposed upon specific Lien, what. property, by which it is made security for the perform

ance of an act.

A lien is commonly defined as a right to retain possession of a specific thing, until some charge attached to it is satisfied. (Story Eq. Jur., Sec. 506; 3 Pars. Cont., 5th ed., 234). This definition is a very narrow one, and applicable only to common law liens, exclusive of mortgages, bottomry and respondentia bonds, etc.

In equity, possession was not essential. There might be an equitable lien upon a fund or subject in the hands of another, which could be maintained and enforced without the lienor's having possession, if the identity of the subject could be distinctly traced (Grinnell vs. Suydam, 3 Sandf., 132). The Commissioners wish to preserve, under one name, both the common law and the equitable liens, and have sought to bring under one head all the general principles which affect liens by possession or mortgage.

N. Y. C. C., Sec. 1582.

NOTE.-Definition of Lien, Sec. 1180, constituting Chap. I, Tit. IV, Part III, Code of Civil Procedure, should be omitted from that Code.

Liens, gener. al or special.

General lien, what.

Special
lien, what.

Prior liens.

Contracts subject to

SEC. 2873. Liens are either general or special.

N. Y. C. C., Sec. 1583.

SEC. 2874. A general lien is one which the holder thereof is entitled to enforce as a security for the performance of all the obligations, or all of a particular class of obligations, which exist in his favor against the owner of the property.

See McFarland vs. Wheeler, 26 Wend., 467; Houghton vs. Matthews, 3 Bos. & P., 485.

N. Y. C. C., Sec. 1584.

NOTE.-See Sec. 1114. It may be general, with respect to reaching all property.

SEC. 2875. A special lien is one which the bolder thereof can enforce only as security for the performance of a particular act or obligation, and of such obligations as may be incidental thereto.

N. Y. C. C., Sec. 1585.

SEC. 2876. Where the holder of a special lien is compelled to satisfy a prior lien for his own protection, he may enforce payment of the amount so paid by him, as a part of the claim for which his own lien exists.

SEC. 2877. Contracts of mortgage, pledge, bottomry provisions of or respondentia, are subject to all the provisions of this

this chapter.

chapter.

N. Y. C. C., Sec. 1586.

ARTICLE II.

CREATION OF LIENS.

Lien, how created.

No lien for claim not due.

SECTION 2881. Lien, how created.

2882. No lien for claim not due.

2883. Lien on future interest.

2884. Lien may be created by contract.

SEC. 2881. A lien is created

1. By contract of the parties; or,
2. By operation of law.

N. Y. C. C., Sec. 1587.

SEC. 2882. No lien arises by mere operation of law until the time at which the act to be secured thereby ought to be performed.

N. Y. C. C., Sec. 1588.

SEC. 2883. An agreement may be made to create a lien upon property not yet acquired by the party agreeing to give the lien, or not yet in existence. In such case the lien agreed for attaches from the time when the party agreeing to give it acquires an interest in the thing, to the extent of such interest.

N. Y. C. C., Sec. 1589.

SEC. 2384. A lien may be created by contract, to take immediate effect, as security for the performance of obligations not then in existence.

N. Y. C. C., Sec. 1590.

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ARTICLE III.

EFFECT OF LIENS.

SECTION 2888. Lien, or contract for lien, transfers no title.

2889. Certain contracts, void.

2890. Creation of lien does not imply personal obligation.
2891. Extent of lien.

2892. Existence of lien does not affect the right of creditor.
2893. Holder of lien not entitled to compensation.

SEC. 2888. Notwithstanding an agreement to the contrary, a lien or a contract for a lien transfers no title to the property subject to the lien.

N. Y. C. C., Sec. 1591.

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tracts, void.

SEC. 2889 All contracts for the forfeiture of property Certain consubject to a lien, in satisfaction of the obligation secured thereby, and all contracts in restraint of the right of redemption from a lien, are void, except in the case specified in Sec.

N. Y. C. C., Sec. 1592.

lien does not

imply

SEC. 2890. The creation of a lien does not of itself Creation of imply that any person is bound to perform the act for which the lien is a security.

N. Y. C. C., Sec. 1593.

personal obligation.

lien.

SEC. 2891. The existence of a lien upon property does Extent of not of itself entitle the person, in whose favor it exists, to a lien upon the same property for the performance of any other obligation than that which the lien originally secured.

N. Y. C. C., Sec. 1594.

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