PLEDGE, or Pawn, in law, is “a bailment of personal property as a security for some debt on engagement” (Story on Bailments, § 286). The term is also used to denote the property which constitutes the security. Pledge is the pignus of Roman law, from which most of the modern law on the subject is derived. It differs from hypothec and from the more usual kind of mortgage in that the pledge is in the possession of the pledgee; it also differs from mortgage in being confined to personal property. A mortgage of personal property in most cases takes the name and form of a bill of sale (see Bill, the giving of bills of sale being now regulated by the Bills of Sale Acts, 1878 and 1882). The chief difference between Roman and English law is that certain things, e.g., wearing apparel, furniture, and instruments of tillage, could not be pledged in Roman law, while there is no such restriction in English law. In the case of a pledge, a special property passes to the pledgee, sufficient to enable him to maintain an action against a wrongdoer, but the general property, that is the property subject to the pledge, remains in the pledgor. As the pledge is for the benefit of both parties, the pledgee is bound to exercise only ordinary care over the pledge. The pledgee has the right of selling the pledge if the pledgor make default in payment at the stipulated time. No right is acquired by the wrongful sale of a pledge except in the case of property passing by delivery, such as money or negotiable securities. In the case of a wrongful sale by a pledgee, the pledgor cannot recover the value of the pledge without a tender of the amount due. For pledges by factors see Factor. A pledge by a banker, merchant, broker, attorney, or other agent, in violation of good faith, and contrary to ...the purpose for which the property pledged was intrusted to him, or a pledge of property with which he was intrusted for safe custody, renders the offender guilty of a misdemeanor, punishable with a maximum term of seven years’ penal servitude, 24 & 25 Vict. c. 96, §§ 75, 76. Pledges with pawnbrokers are regulated by the Pawnbrokers’ Act, 1872, 35 & 36 Vict. c. 93 (which applies to Great Britain). By the provisions of the Act (which does not affect loans above <£10), a pledge is redeemable within one year and seven days of grace added to the year. Pledges pawned for 10s. or under not redeemed in time become the property of the pawnbroker, pledges above 10s. are redeemable until sale. The sale must be by public auction. The pawnbroker is entitled to charge as interest one halfpenny per month on every two shillings lent where the loan is under 40s., on every two shillings and sixpence where the loan is above 40s. Special contracts may be made where the loan is above 40s. Unlawful pawning of goods not the property of the pawner, and taking in pawn any article from a person apparently under the age of sixteen or intoxicated, or any linen or apparel or unfinished goods or materials intrusted to wash, make up, &c., are (inter alia) made offences punishable by summary conviction. An annual licence, costing £7, 10s., must be taken out for every pawnbroker’s shop.
The law of Scotland as to pledge generally agrees with that of England, as does also that of the United States. The main difference is that in Scotland and Louisiana a pledge cannot be sold unless with judicial authority. In some of the States the common law as it existed apart from the Factors’ Acts is still followed; in others the factor has more or less restricted power to give a title by pledge. In some States pawnbroking is regulated by the local authorities, and not, as in most, by the general law of the State.
[659 words — estimated reading time: 4 minutes]
