In the absence of statutory restriction, no stockholder can have greater rights, or be subject to other liabilities, than the pledgee thus transferring his stock collaterals upon the books of the company issuing the same, and receiving new certificates.

A person may by his acts or conduct, in respect to the stock of a corporation, render himself liable to the responsibilities of a stockholder, and will be estopped to deny such liabilities as against third persons, creditors, and others who have been deceived thereby to their loss.

In the absence of restricted statutes, the pledgee of certificates of stock, endorsed and transferred on the books of the company, has a right to vote at its meetings. His name appearing as stockholder upon the records of the corporation, he becomes for all purposes a stockholder.

A pledgee holding certificates of stock as security, who, after transfer thereof and issue of new certificates, votes at meetings of the company is not liable to an action of trover for the conversion of such certificates.

The receipt of dividends on stock is sufficient to make a man a stockholder, as the responsibilities of the position go with the advantages.

Under general statutes giving authority to regulate the transfer of stock, it may be provided that no transfer shall be made upon the books of the company until after payment of all indebtedness to the company by the person who appears to be the owner, and in whose name the stock is credited on its books. Such lien extends to all the stock of the debtor, although it greatly exceeds the amount of the debt; nor will the lien be barred by the running of the statute limitations against the debt.

When a by-law required the special consent of the directors to a transfer of stock while the transferer was indebted to the company, a lien was given on the stock of one partner for a debt owing by the firm. The lien is not defeated by the taking of collateral security for the payment of any particular debt of the stockholder.

A pledge by a trustee of an estate of certificates of stock belonging thereto, the certificates showing a trust upon their face, or where the pledgee is, in any other way, informed or charged with notice that the stock is subject to a trust, as collateral security for money loaned for his individual use, is a breach of trust.

A pledge of stocks of the estate by a trustee is not within the ordinary course of business, as a trustee presumptively holds the prop

erty for administration; and although the consideration be a present loan, and the pledgee acts in good faith, he receives such certificates of stock as collateral security at his peril.

The pledgee holding certificates of stock indorsed with a power of attorney to transfer signed, as collateral security for a loan or discount of commercial paper, is entitled to sell such collaterals, at public sale, upon default of the pledgor, after due demand, and notice of the time and place. Having the legal title to the collateral securities, the pledgee is able to make them available, as the purchaser at such sale has a right to demand, as had the pledgee, transfer of the shares of stock to his own name on the books of the company, and to obtain new certificates.

Sub-pledgees of stock certificates, holding the same for value, are also entitled to sell such collateral securities, upon demand and notice. A private sale is not permitted to be made, even under contract, much below the current market quotation for the stock. Such a sale is open to inquiry and suspicion.

Bills of Lading as Collateral Security.

Bills of lading were among the earliest documents of title used in the commercial world for the purposes of collateral security. The discount by banks of bills of exchange, drawn upon consignees, for the purchase money of goods, the bill of lading being delivered as collateral security for its payment, or loans upon the deposit of bills of lading by the consignee, where they have been forwarded, in order to raise funds. to pay the bills of exchange drawn for the purchase price, are common forms of loaning money.

The transfer of a bill of lading as collateral security to a pledgee, who has advanced money, or discounted commercial paper, in good faith on the credit of the representations contained therein, without notice, vests in him the legal title to the property and the right of possession, and his title is good against all the world.

Warehouse Receipts as Collateral Security.

Except in the rare cases where statutory enactments have made warehouse receipts negotiable as bills of exchange or promissory notes, a warehouse receipt is not a negotiable instrument, and its indorsement and delivery, or delivery merely when payable to "holder," carries none of the effects as to cutting off the defenses of the warehouseman against the original holder, nor is there any certain time at which it

matures, nor is the title of the person loaning money upon it protected when lost or stolen, as in the case of commercial paper. Nor is the warehouseman a guarantor of the title of property held by him, and for which he has issued a receipt.

The transfer for value as collateral security of warehouse receipts, by indorsement and delivery, or by delivery only, when such receipts are made payable to "holder" or "only upon return of this receipt," vests the legal title and possession of the property in the pledgee, and is equivalent to an actual delivery of the property. The warehouseman at once, without notice, becomes the bailee of the lender of money upon the receipt he has issued.