nizes the doctrine of the text but holds that the sale by the pledgee of a promissory note which was the subject of the pledge was valid, because authorized by a special power. § 2665. Interpretation of Express Powers of Sale.-Where an express power of sale is given in the contract of pledge, it will, unless it is otherwise specified, be interpreted as giving the power to sell only upon a reasonable notice to the pledgor to redeem, and also upon a reasonable notice of the time and place of sale.1 Nor does the superaddition of a power to sell, which, without an express agreement, would not exist, take away by implication the power which ordinarily exists on the part of the pledgee, of proceeding by any other mode,- of enforcing the collection of the debt by any remedy which the law gives him.2 A power to sell the pledge is a power coupled with an interest, and passes to the legal representatives of the pledgee,3 to his assignees, or to his executor or administrator. § 2666. Express Authority as to Sale Excludes Implied Authority. Express authority in a contract of pledge to sell the pledge for non-payment of the debt at maturity, excludes any implied authority to sell before maturity.1 § 2667. Effect of Authority to Sell at Board of Brokers.— Express authority to sell the shares pledged at the board of brokers, in case of forfeiture, does not authorize a sale made otherwise than openly at the board after stating the facts.5 § 2668. Notice and Mode of Sale.-As shown in a preceding section, in the absence of a special agreement to the contrary, the sale cannot take place without notice to the pledgor to redeem, and without notice to him of the time and place of sale (unless he knows it already); and unless otherwise agreed, the sale must be at public auction. In an ordinary case of pledge, the 3 pledgee has no right to sell without notice to the pledgor,1 unless such notice is waived. Where the pledge is for an indefinite period of time, he must first give reasonable notice to the pledgor to redeem,2 and if the pledge is not redeemed and he proposes to sell it, he must sell it at public sale, but only after notice to the pledgor of the time and place of sale. If this be not done, the pledgor's rights are unaffected by the sale. Some of the decisions state the doctrine of the text in a different form, by saying that the pledgee can not dispose of the securities until payment of the debt has been demanded and refused." The pledgor may, of course, waive notice of sale, and thereby estop himself from complaining that the pledge has been sold without notice. But, although the right to notice of the time and place of sale is expressly waived in the contract of pledge, this, it has been held, does not amount to a waiver of demand of payment.7 § 2669. Doctrine that where the Pledgee Purchases the Pledge at his Own Sale, there can be no Conversion. — A (N. Y.) 360; s. c. 45 Barb. (N. Y.) 2 Alexandria &c. R. Co. v. Burke, 22 Gratt. (Va.) 254, 263; Stearns v. Marsh, 4 Denio (N. Y.), 227; s. c. 47 Am. Dec. 248; Garlick v. James, 12 Johns. (N. Y.) 146; s. c. 7 Am. Dec. 294; Wilson v. Little, 2 N. Y. 443; s. c. 51 Am. Dec. 307. 3 Stearns. Marsh, 4 Denio (N. Y.), 227; s. c. 47 Am. Dec. 248; Bryan v. Baldwin, 52 N. Y. 232; Ogden v. Lathrop, 65 N. Y. 158, 162; Lewis v. Graham, 4 Abb. Pr. (N. Y.) 106, 110; Wilson v. Little, 2 N. Y. 443, 448; 8. c. 51 Am. Dec. 307; Wheeler v. Newbould, 16 N. Y. 392, 400; Strong v. National Mechanics Banking Assn., 45 N. Y. 718; Porter v. Parks, 49 N. Y. 564, 569. Morgan v. Dod, 3 Colo. 551; Ogden v. Lathrop, 65 N. Y. 158; Rosenweig v. Fraser, 82 Ind. 842. 5 Wilson v. Little, 2 N. Y. 443; Lewis v. Varnum, 12 Abb. Pr. 308. 6 Fitzgerald v. Blocher, 32 Ark. 742; 8. c. 29 Am. Rep. 3. 7 Wilson v. Little, 2 N. Y. 443; s. c. 51 Am. Dec. 307. decision of the Court of Appeals of New York seems to involve the aberration of holding that if the pledgee exposes the pledge to sale, though without giving to the pledgor the notice which the pledgor is entitled to receive, and the pledgee bids in the pledge at his own sale, this does not entitle the pledgor to maintain an action against him for the converson of the pledge. The court reason that the only thing effected by such a sale is a purchase which the pledgor can ratify and thus make valid, or disaffirm and thus make it a nullity. If he ratifies it, it will have the effect of making it lawful in all respects as though the notice had been received by him. If he disaffirms it, it becomes a nullity and therefore no conversion.1 This seems to overlook the elementary principle that any exercise of dominion over the property of another to the exclusion of his legal rights, whatever form it takes, is a conversion.2 § 2670. Power to Sell without Notice not a Power to Sell without Demand. Although the contract of pledge may confer upon the pledgee the power to sell the pledge without notice to the pledgor, yet this does not necessarily carry with it the power to sell it without demanding payment of the pledgor. It is said to be well settled that where no time is expressly fixed by contract between the parties for the payment of a debt secured by a pledge, the pledgee can not sell the pledge without a previous demand of payment, although the debt is technically due immediately. 3 § 2671. Custom of Selling at Private Sale without Notice Void. — A custom of brokers to sell stocks and bonds pledged as securities for a loan, at private sale, without notice to redeem and without notice of the time and place of the intended sale, is illegal and void. 1 Bryan v. Baldwin, 52 N. Y. 232. 2 Cooley Torts, 448; Webber v. Davis, 44 Me. 147, 152; s. c. 69 Am. Dec. 87; McPheeters v. Page, 83 Me. 234; s. c. 23 Am. St. Rep. 772; Reid v. Colcock, 1 Nott. & McCord (S. C.), 592; s. c. 9 Am. Dec. 729; Allen v. Crary, 10 Wend. (N. Y.) 319; s. c. 25 Am. Dec. 566; Hale v. Aines, 2 T. B. Mon. (Ky.) 143; s. c. 15 Am. Dec. 150; note, 15 Am. Dec. 151. 3 Wilson v. Little, 2 N. Y. 443, 448; s. c. 51 Am. Dec. 307. See also McNeil v. Tenth Nat. Bank, 55 Barb. (N. Y.) 59. 4 Wheeler v. Newbould, 16 N. Y. 392; Case where the notice was held suffi. cient although it did not specify the place of sale: Worthington v. Tormey, 34 Md. 182. § 2672. This Right to Notice may be Waived by Contract. It is of course competent for the parties to the contract of pledge to regulate therein the remedy to which the pledgee must resort in case of default in payment of the debt,1 provided the agreement be not in contravention of the statute law, against public policy, or fraudulent. But the authorities seem to be unanimous that this right to notice may be waived by the pledgor, by a stipulation to that effect in the contract of pledge. Thus, it is said by a recent writer of authority: "A waiver of the requirement of notice of the pledgee's intention to sell, and of the time and place of sale, may be made by agreement of parties. A waiver of the common law rule of notice is generally made when the parties agree upon a special power of sale; for under such a power, it is usual either to waive notice of sale altogether, or else to provide for a special notice. Such notice is waived by giving the pledgee the option to sell at private sale. Under authority given a pledgee to sell at public or private sale at his option, he may sell without notice, in the usual manner of selling such property in the market." If the pledgor asserts the existence of an agreement providing for a special remedy to be pursued by him, it is of course incumbent upon him to show it." § 2673. Notice to Redeem not Necessary where Time of Payment Fixed. Moreover, it has been ruled that where the parties by contract expressly fix the time for the payment of the debt secured by the pledge, no prior demand upon the pledgor is necessary, which is equivalent to saying that no prior notice to him to redeem is necessary.5 § 2674. Circumstances Dispensing with Special Notice. It is obvious that special notice to the pledgor of the time and place of sale will not be necessary, if he actually knows when it is to take place. So, a sale without special notice may be ratified by the pledgor by participating in it. So, where the giving of notice has been rendered impossible by the action of the pledgor himself, the power may be executed without notice.3 This is a rule common to all obligations, that they be taken to be accomplished when the obligor has brought about such a condition as prevented the accomplishment of them.4 § 2675. Pledgor cannot Require Sale to Take Place at any Particular Time. "The pledgee has jus in re aliena, a special right in the pledgor's property for the purpose of compelling the pledgor to pay the debt. The pledgor retains a double interest in his having his debt paid, and in a possible surplus. But, as the pledgee has taken possession, the pledgor can make a sale only through the pledgee. But if the pledgee has a right to make his claim out of the property, and it has been put into his hands for this purpose, how can it be said there is a right in the pledgor to require a sale at a given time? This virtually asserts in him a right he has surrendered with the pledge. To say that the debtor has an absolute right to require a sale at a given time, is to say that the creditor is not to exercise his judgment and skill in the management of his own special property. On the other hand, so far as the pledgor's interest is involved, the pledgee ought only to be responsible for negligence, not for a failure which may be consistent with diligence and even indicate vigilance and skill in calculating the chances of the market. The refusal to sell upon request of the debtor may, on the other hand, tend to show negligence or want of reasonable care, it being merely a fact to be considered with other facts." 5 1 Alexandria &c. R. Co. v. Burke, 22 Gratt. (Va.) 254. Compare Earle v. Grant, 14 R. I. 228; Child v. Hugg, 41 Cal. 519; Ex parte Fisher, 20 S. C. 179. 2 Ex parte Fisher, supra; Earle v. Grant, supra; Child v. Hugg, supra. See also as to a ratification by the pledgee of a voidable sale, Hill v. Finigan, 62 Cal. 426. 3 City Bank v. Babcock, 1 Holmes (U. S.), 180. So held where the pledgor was a bank which afterwards failed, closed its place of business, and thereafter transacted no business, and had no office nor acting officers. Ibid. 4 Hotham v. East India Co., 1 T. R. 638; Williams v. Bank of United States, 2 Pet. (U. S.) 102. 5 Franklin Savings Inst. v. Preetorius, 6 Mo. App. 470 and 472, opinion by Hayden, J. See also Richardson v. Insurance Co., 27 Gratt. (Va.) 749; Goodall v. Richardson, 14 N. H. 572. |