Court Opinion

ID: 3591512
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:40:04.376716+00
Date Added: 2024-06-11T13:57:35.951205
License: Public Domain

Possession is of the essence of the contract of pledge. If the pledgee voluntarily part with the possession he loses the benefit of his security. The right of retainer until the debt is paid, or engagement fulfilled, enters into and forms an essential part of such contract. (Story on Bailments, § 287 and cases cited; 1Atk. 165, 5 Bing. N.C. 140; 1 Smith's Leading Cases 223.) The pledgor may voluntarily dispose of his interest in the pledge, but the purchaser secures no right to the possession until the terms and conditions of such pledge are complied with.
At common law goods pledged were not liable to be taken in execution in an action against the pledgor, until an extinguishment of the pledgee's title. (Story on Bailments § 353 and cases cited.) Formerly, it seems to have been conceded by the courts of this State, where chattels were bona fide pledged or assigned in trust for the payment of debts or other specified purposes, the residuary interest of the pledgor or assignor, after the purposes of the pledge or trust were satisfied, was not a subject for sale on a fi. fa. Therefore, to enable the creditor of the pledgor to reach his interest the Revised Statutes provided that such interest may be sold on execution. (2 Rev. Stat. 367 § 20; Revisers notes part 3d,Chap. 6, title 5, § 17. 24.) The provision is as follows: — "When goods or chattels shall be pledged for the payment of money, or the performance of any contract or agreement, *Page 40 
the right and interest in such goods, of the person making such pledge, may be sold on execution against him, and the purchaser shall acquire all the right and interest of the defendant, andshall be entitled to the possession of such goods and chattelson complying with the terms and conditions of the pledge." The intent of the provision is two-fold: 1st, To empower the officer to sell that which it was before conceded he had no authority for selling: 2d, To vest in the purchaser the precise interest of the pledgor. The officer is to do what the pledgor himself might have done and nothing more, to vest in the purchaser his right. The sole aim of the statute is to remedy an existing and admitted evil, viz: the injury to creditors arising from an inability to reach by the process of the law the residuary interest of a pledgor or assignor. I cannot think that it contemplates, in any way, even a temporary disturbance of the pledgee's rights. The power is given to the officer to sell, not the goods and chattels themselves, but the pledgor's "right and interest" therein. He is to sell something in itself incapable of manual seizure.
The question presented in this case is, whether a Sheriff under the section of the statute above cited aided by the provisions of the 23d section following, is authorized to take corporal possession of the pledged property, and remove it from the hands and custody of the pledgee. In other words, whether the statute in securing a benefit to the creditor of the pledgor, contemplated the infringement and disturbance of the rights of the pledgee. For it is idle to assume that no injury can arise to the pledgee by compelling him, before an extinguishment of his title by the payment of his debt or otherwise, to yield up even to an officer of the law the actual possession of his pledge. The undoubted effect, in many cases, would be to jeopard or impair his security.
It is insisted, that as the 20th section authorizes the officer to sell, and the 23d section provides that "no personal property shall be exposed for sale unless the same be present and within the view of those attending such sale;" that the power to take actual possession, and remove the property from *Page 41 
the custody of the pledgee is necessarily implied — that the law having charged the officer with a performance of a duty, he is clothed by implication, with all the power necessary to its full discharge. In the abstract, the principle may be correct, whilst the species of power contended for, in this case, may not follow from it as a consequence. That it does not, it may be urged, 1st, That the power contended for is in derogation of a common law right, and should not be presumed; 2nd, That effect may be given to the statute, and its object fully attained, without destroying the possession of the pledgee; 3d, That the statute does not contemplate a change of the pessession of the pledge until after its redemption by the purchaser. The officer is to sell, and the purchaser to acquire all the "right and interest" of the pledgor. The pledgor's interest is transferred by the act of the officer, and the operation of the statute, to the purchaser, placing the latter in the precise relation of the pledgor to the pledgee. But as a bona fide pledgee would be entitled to the possession of the pledge against the pledgor and all others, until the bailment was terminated by payment, or his title extinguished in some other way, it is provided that after the sale and legal transfer of the interest of the pledgor to the purchaser, the latter shall have possession "on complying with the terms and conditions of the pledge." The obvious meaning of the section is, that the officer may sell and the purchaser acquire the "interest" of the pledgor, but that the pledgee shall only be divested of his possession of the pledged property after a redemption by the purchaser; 4th, That it is extremely doubtful whether the provisions of the 23d section apply to the sale contemplated by the 20th section, and indeed, if the whole section be read together, it is clear that they do not. In addition to having the property present and within the view of those attending the sale, the section provides that such property "shall be offered for sale in such lots and parcels as shall be calculated to bring the highest price." The residuary interest in goods and chattels cannot be sold in "lots and parcels." But if the Sheriff must necessarily have the pledge in view when offered *Page 42 
for sale, he may comply with the statutory direction without removing the property from the possession of the pledgee. If he can enter upon the pledgee's premises to seize and remove the goods, he can also enter to sell, and may sell without removal, thus leaving the right of the pledgee undisturbed. It is true, that by leaving the property in the possession of the pledgee, the officer would encounter the risk of having it forthcoming at the sale, but if he has no power to remove he would not be responsible, should he fail, by the act of the pledgee, to effect a sale. On the other hand, should he divest the pledgee of his possession, the effect might be to impair, if not wholly destroy, the security of the latter.
I cannot bring my mind to the conclusion that the legislature in giving to the officer the power of disposing of the pledgor's interest for the benefit of his creditors intended, in any respect, to interfere with the common law right of the pledgee to exclusively hold the possession of the property until the bailment was terminated, by a compliance with its terms and conditions. Consequently I am of the opinion that the Circuit Judge erred in charging the jury, in this case, "that where property is pledged for debt and in the possession of the pledgee, a Sheriff having an execution against the pledgor, may by virtue thereof, take the said property out of the hands of the pledgee into his own possession, and remove it, and sell the right and interest of the pledgor therein." I cannot resist the conviction, that, in this State, where vast amounts of property are held in pledge for advances made thereon, the adoption of the principle that a sheriff or constable, having an execution against the pledgor, may arbitrarily divest the pledgee of his possession, would be fraught with the most injurious consequences to the interests of commerce: and I am unwilling, without the clearest expression of legislative intention, to lend my aid to its adoption.
The judgment of the Supreme Court should be reversed, and avenire de novo awarded.
BRONSON and JONES, JS., were in favor of affirming the judgment.
JOHNSON, J., was for reversal.           Judgment affirmed. *Page 43