The Supreme Court has enforced this rule with great strictness.

473] *No entry was made on the books of the Bank of this transaction with the Crédit Mobilier, except that the bills drawn on it were duly entered amongst bills payable; and the Crédit Mobilier was credited with the amount, which was put down amongst the liabilities of the bank, and so appeared in all the monthly statements, beginning with the first of August. The pledge of securities was not noticed. These all remained on the portfolio of bills discounted, as before, and their amount continued to be represented in the daily and monthly statements, without any note or memorandum to show that they had been pledged. So far as the public, and those with whom the bank dealt, could perceive, the bank continued to have possession and control of all the securities in its own right, and they all appeared to be equally liable with the other assets to the claims of all the creditors.

The Circuit Court rendered a decree dismissing the bill of complaint, and from that decree the receiver has appealed.

Messrs. J. D. Rouse and Charles Case, for appellant:

The prohibitory provisions of section 52, of the National Bank Act, are of the most sweeping and positive character, showing the intent of Congress to strike with nullity any and every device that would give one creditor any advantage over another.

Decisions upon the similar, but much less stringent provisions of the Bankrupt Acts of 1841 and 1867, show that all the strictness required by its language must be given to it.

Hutchins v. Taylor, 5 Law Rep., 289; Arnold v. Maynard, 2 Story, 349; Everett v. Stone, 3 Story, 453; Pulling v. Tucker, 4 B. & Ald., 382; 1 Bouv. Dic., verbo, Insolvency; Toof v. Martin, 13 Wall., 47, 20 L. ed., 482; Wager v. Hall, 16 Wall., 599, 21 L. ed., 505; Dutcher v. Wright (ante, 131); Peckham v. Burrows, 3 Story, 544; Everett v. Stone, 3 Story, 446; Morse v. Godfrey, 3 Story, 364; Arnold v. Maynard, 2 Story, 349; see, also, Sands v. Codwise, 4 Johns. 536; Wager v. Hall, 16 Wall., 600, 21 L. ed., 506; Forbes v. Howe, 102 Mass., 435; Wilson v. Bk., 17 Wall., 487, 21 L. ed., 728; Case v. Bk., 2 Wood, 23.

In Louisiana, the law of pledge is purely statutory. Until the Act of 1852, it was wholly contained in the Civil Code of 1825, title XX. Prior to the Act of 1852 (La. Act, 1852, p. 15), which was re-enacted in 1855 (La. Act. 1855, p. 348), promissory notes could be pledged only by written act passed before a notary public or registered in his office.

Sewall v. McNeill, 17 La., 189; Winchester v. Ory's Syndics, 17 La., 429; Fluker v. Bullard, 2 La. Ann. 338; Robinson v. Shelton, 2 Rob. La., 277.

It was also essential to the validity of a pledge under the Code of 1825, that it should be made by written act, either in public form, i. e.: entered into before a notary public in the presence of two witnesses; or, if under private signature, "registered in the office of a notary public at a time not suspicious."

Art. 3125; Cater v. Merrell, 14 La. Ann., 376. Granting, for the sake of argument, that, under the Act of 1866, with its repealing clause, the phrase "without further formalities,' dispensed with everything but delivery of the thing pledged: what is the effect of the legislation of 1870? The provisions of the Act of 1855 having been incorporated into articles 3158 (3125) and articles 3123, 3127 and 3128 of the Old Code having been re-enacted, they must now be construed together. In construing the Code, that interpretation must be adopted, which will make a particular article harmonize with its other provisions, if it can be done without violence to its terms.

Childers v. Johnson, 6 La. Ann., 638.

"When laws in pari materia are to be interpreted, that construction is to be preferred which will give effect to all their provisions."

Desban v. Pickett, 16 La. Ann., 350; Wood v. Stokes, 13 La. Ann., 143; Succession of Hebert, 5 La. Ann. 122; C. C., art. 17.

If possible, effect must be given to every ar ticle of the Code.

Gee v. Thompson, 11 La. Ann., 659.

When two articles of the Code cannot be reconciled, the last in order and the highest in number prevails over the other.

Barbet v. Roth, 14 La. Ann., 382.

With these rules for the construction of the Code, the application of its provisions to a pledge of negotiable promissory notes is not difficult. Both articles 3156 and 3161, of 1870, make indorsement by the pledger essential to the privilege. If there be any conflict between 3158 and 3161, the latter must prevail. But, fairly construed, there is no such conflict. The re-enactment of the Act of 1855 in the Code of 1870, must be considered as a legislative adoption of the construction by the Supreme Court in Cater v. Merrell, above cited, limiting the meaning of the phrase "without further for malities." Even the very article with which the Act of 1855 is incorporated, still requires by its first paragraph, that the act of pledge must be proved by act made in a public form or under private signature, in order to create a privilege against third persons.

Delivery to and retention by the pledgee is essential.

The requirements of the Code in this respect are plain and positive.

Geddes v. Bennett, 6 La. Ann., 516; Succession of D'Meza, 26 La. Ann., 35.

Mr. Thomas Allen Clarke, for defendants in error:

The pledge is valid. A pledge of negotiable paper requires no other formality than delivery. Acts of La., 1852, p. 15, sec. 1, re-enacted, 1855, p. 348; Rev. Civ. Code, 3158; Rev. Stat.,

sec. 2905.

The effect of revisory legislation, is stated with clearness in State v. Wiltz, 11 La. Ann., 439, cited with approbation in State v. Brewer, 22 La. Ann., 273; State v. McCort, 23 La. Ann., 326.

From these decisions it follows that the provisions of the Revised Statutes of 1870, a revision of the pre-existing statutes, retained in force the enactment, section 2905, in reference to the limitation of formalities in pledges of negotiable instruments, notwithstanding the Revised Code of same contained the provisions of the old Code alongside of the amendment of 1852. One article of the Code requires certain formalities, 3160. The other article, 3158, dispenses with formalities. The Revised Code contains the dispensing article.

So neither an act before a notary, nor an indorsement by pledger, is needful to constitute a valid pledge.

Informalities in a pledge cannot avail the pledger to impeach.

Partee v. Corning, 9 La. Ann., 539; Brother V. Saul, 11 La. Ann., 225.

Formalities required as against third persons are not required as against pledger.

Matthews v. Rutherford, 7 La. Ann., 225. The syndic, receiver or assignee, has no greater authority than the debtor they represent. If he cannot impeach, they cannot, except as the statute distinguishes. The restraints of the insolvent or bankrupt statute measure the difference between the rights of debtor's pledgers and their representatives under the said statute.

Partee v. Corning, 9 La. Ann., 539; Gibson v. Warden, 14 Wall., 250, 20 L. ed., 801; Cook v. Tullis, 18 Wall., 332, 21 L. ed., 933; Mitford v. Mitford, 9 Ves., 88.

The assignees under a commission are subject to all the same equities affecting the bank rupt's rights, which could have been enforced against the bankrupt himself.

Grant v. Mills, 2 Ves. & B., 308; Ex parte Hanson, 12 Ves., 349; Turner v. Harvey, Jac., 174; Campbell v. Slidell, 5 La. Ann., 274.

After a pledge has been made, it is lawful to constitute the pledger an agent to collect the negotiable instruments and to replace those collected by others, or to change the securities.

The case of Clarke v. Iselin, 21 Wall., 360, 22 L. ed., 568, exhausts the reasoning upon this point.

Embarrassed persons are not prohibited from transacting business.

Two things must concur to bring the transaction within the inhibitions of the law; the fraudulent design of the bankrupt, and the knowledge of it upon the part of the assignee.

Tiffany v. Lucas, 15 Wall., 422, 21 L. ed., 199; Wager v. Hall, 16 Wall., 595, 21 L. ed., 504; Wilson v. Bk., 17 Wall., 473, 21 L. ed., 723; Mays v. Fritton, 20 Wall., 414, 22 L. ed., 389; Tiffany v. Boatman's Inst., 18 Wall., 389, 21 L. ed., 871.

Mr. Justice Bradley stated the case and delivered the opinion of the court:

The substance of the agreement in this case, so far as necessary to be considered, was, that the Crédit Mobilier should accept the drafts of the banking association to the amount of a million of francs at ninety days, the bank agreeing to furnish funds to pay the drafts at maturity, with the privilege of a renewal; and it was stipulated that this obligation of the bank should be guaranteed by Cavaroc & Co., and by a deposit with them, for the use of the Crédit Mobilier, of first class securities, of which deposit the latter was to be advised.

This arrangement was immediately telegraphed to New Orleans, and the drafts were drawn on the 12th of July; but the weight of the evidence is, that none of the collateral securities were delivered until the 19th of August, -which might raise a question whether the accommodation acceptances of the Crédit Mobilier could be considered as a contemporary consideration therefor; or, if not, whether the bank was at that time, in the apprehension of Cav- [476 aroc (the common agent), in a condition of solv. ency and good credit,-as to which an affirmative answer could not well be given, since the proof is quite clear that the bank was then struggling with serious financial difficulties, from which it never recovered.

Waiving this question, however, for the present, we will proceed to examine whether, supposing, that no objection arises from the time when this transaction took place, it amounted to such a transfer or pledge of the securities in question as to entitle the Crédit Mobilier to a preference upon them over the other creditors of the bank at the time of its failure. Was of the collateral securities as to constitute a there such a delivery and retention of possession they were never out of the possession of the ofvalid pledge by the law of Louisiana? Clearly ficers of the bank, and were never out of the bank for a single moment, but were always subject to its disposal in any manner whatever, whether by collection, renewal, substitution, or exchange; and collections, when made, were made for the benefit of the bank and not that of the Crédit Mobilier.

The case has some features in common with, though differing in others from, that of Clarke

Section 52, of the Statutes of 1864, measures the power of setting aside transfers, etc., at the instance of a receiver.

This case has none of the elements prescribed. The interdiction of section 52 has the same purpose as that of the 35th section of the Bankrupt Act. It relates to sales, pledges or transfers for a fraudulent object, not those with an honest purpose.

this court held that collateral securities transferred by the borrower to the lender at the time of the loan were not devested out of the latter by the mere fact of his depositing them with the borrower for collection. The court say: "Obviously this deposit in no degree affected the title of the defendants to the notes. It merely facilitated collections." The court then cited White v. Platt, a New York case. in 5 Denio, 269, in which it was said: "Where

The case of Clarke v. Iselin, being a New York case, and governed by New York law, or the common law as understood in New York, the authority cited was necessarily of great 477] *weight, if not controlling. When, as in that case, the title has been transferred to the creditor, and the collections are made for his benefit, the pledger merely acting as his servant or agent in making them, the character of the security is not affected at the common law by the debtor having actual possession of the collaterals, there being no fraud in the transaction. In such case, they are held by the creditor by way of mortgage as well as pledge; and a mortgage is valid notwithstanding the mortgagor has the possession. The difference ordinarily recognized between a mortgage and a pledge is, that title is transferred by the former, and possession by the latter. Indeed, possession may be considered as of the very essence of a pledge (Pothier, Nantissement, 8); and if possession be once given up, the pledge, as such, is extinguished. The possession need not be actual, it may be constructive; as where the key of a warehouse containing the goods pledged is delivered, or a bill of lading is assigned. In such case, the act done will be considered as a token, standing for actual delivery of the goods. It puts the property under the power and control of the creditor. In some cases, such constructive delivery cannot be effected without doing what amounts to a transfer of the property also. The assignment of a bill of lading is of that kind. Such an assignment is necessary, where a pledge is proposed, in order to give the constructive possession required to constitute a pledge; and yet it formally transfers the title also. In such a case, there is a union of two distinct forms of security-that of mortgage and that of pledge; mortgage by virtue of the title, and pledge by virtue of the possession.

This advantage exists when notes and bills are transferred to a creditor by way of collateral security. His possession of them gives them the character of a pledge. Their indorsement if payable to order, or their delivery if payable to bearer, gives him the title also, which is something more than a pledge. This double title existed in White v. Platt and in Clarke v. Iselin. Hence the actual possession of the securities by the creditor was a matter of less importance in those cases.

Whether constructive possession in the creditor can be affirmed, where an article to which his only title is that of pledgee is actually rede 478] livered to the debtor with general *authority to dispose of it and substitute another article of equal value in its place, is the question which we have to meet in this case. Such a redelivery for a mere temporary purpose, as for shoeing a horse which has been pledged and is owned by the farrier, or for repairing a carriage which has been pledged and is owned by the carriage maker does not amount to an

In Hays v. Riddle, 1 Sandf., 248, the plaintiff delivered to the defendant, at his request, a convertible bond of the New York and Erie Railroad Company (which had been pledged by the latter to the former), in order to get it exchanged for stock of the same company, which stock was to be returned and substituted for the bond in pledge. The defendant never returned either the bond or the stock. The plaintiff brought an action of trover against him for the bond, and recovered its value, being less than the debt for which it was pledged. It being objected that by delivering back the bond to the pledger the plaintiff had lost his special property in it as pledgee, the court said: "At common law, as a general rule, the positive delivery back of the possession of the thing, with the consent of the pledgee, terminates his title. Homes v. Crane, 2 Pick., 607; Jarvis v. Rogers, 15 Mass., 389. If the thing, however, is delivered back to the owner for a temporary purpose only, and it is agreed to be redelivered by him, the pledgee may recover it against the owner, if he refuse to restore it to the pledgee, after the purpose is fulfilled. Skarratt v. Vaughan, 2 Taunt., 266; Story, Bailm.. sec. 299. So, if it be delivered back to the owner in a new character; as, for example, as *a [479 special bailee or agent. In such case, the pledgee will still be entitled to the pledge, not only as against the owner, but also as against third persons. 14 Pick., 497."

In Macomber v. Parker, 14 Pick. (Mass.), 497, referred to in the last case, the proprietors of a brickyard contracted it out on shares to a brick. maker, agreeing to advance the money requisite to carry on the manufacture of bricks and, after being repaid their advances, to divide the profits with the latter. It was agreed that the bricks, as fast as made, should be pledged to the owners of the yard as security for their advances; but the brickmaker was to keep them in his charge, and sell them at retail, and as often as he got the amount of a hundred dollars from the sales he was to deposit it in bank to the credit of the owners. The bricks were afterwards attached as to the share of the mak er for his debts. But the court held that the owners of the yard had not, by leaving the bricks in the hands of the maker, lost their lien as pledgees of the entire property. They remark: "To say that this limited authority to sell the bricks by retail, in small sums, on ac count of the plaintiffs, was a waiver of their possession of the residue that remained in the kilns in their yard. would be clearly against the intent and meaning of the parties, unreason

privilege only on the condition of being possessed of the thing. This condition was expressly imposed upon him by the 181st article of the Custom of Paris. This is reproduced by article 2102, No. 2, of the Code Civil, and we shall specially discuss it in the commentary on article 2076. Possession is indispensable to him. It withdraws the thing from the hands of the debtor and from the actions of creditors, and sets it aside in a privileged situation. 'Possidentis melior est conditio.' Possession is the most sure foundation, and the most striking index of his privilege. Without it, the creditor would have no ground for escaping the law of contribution. Casaregis says, 'Preference is accorded to a pledgee on the thing pledged, because he has it in his own hands."

This possession ought to be certain and not equivocal. If it is ambiguous, if the things pledged have been so placed as to deceive the other creditors, and to lead them to believe that the debtor always continued the possessor, the pledge would be endangered."

Troplong shows, however, that this possession may be a civil possession, as where the delivery is made by the transfer of a bill of lading of goods on board a ship, etc. Troplong, Nant., arts. 97, 99.

The same author, in commenting on article 2076, after treating of the absolute necessity of 483] possession by the pledgee, in order to constitute the relation of pledge, and after discussing the different forms of possession, actual and constructive, adapted to the nature and situation of the thing pledged, proceeds (Nantissement, No. 309) to treat of the manner in which it may be in the hands of the pledger without destroying the possession and right of the pledgee. He says: "Though the merchandise be deposited in the creditor's storehouse, it may still need the care of the debtor. Then it is not forbidden to stipulate that he shall continue to attend to it in the interest of the creditor. The important thing is, that this clause does not cover a fraud. Aside from this, the possession of the creditor is not incompatible with a certain co-operation of the debtor-being for the conservation of the thing he still being the owner. The creditor does not any the less continue exclusive possessor of the thing. The debtor is none the less dispossessed of it." He then gives some cases by way of illustration. For example:

In 1839, Morin & Co., of Beaune, pledged to Weiland & Co., of Baden, sixty thousand bottles of sparkling Burgundy, for a debt. The wine was delivered to an agent of Weiland & Co., and deposited in a vault hired by him for the purpose. It was agreed that Morin & Co. should give the wine all necessary care, in presence of the agent, who was to keep the keys of the vault. But, to facilitate matters, it sometimes happened that the agent gave the keys to Morin & Co.; and once, in 1840, the latter removed some of the bottles of wine to their own premises. Morin & Co. having failed, their assignees (syndics) insisted that the pledge was null and void, because the debtors were not dispossessed of the wine. But Weiland & Co. having renounced their privilege on the wines which had been removed, were sustained by the highest court in their claim to the remainder. It was held that the special character of the wine, and the difficulty of finding persons quali

fied to take proper care of it, were sufficient reasons for employing Morin & Co. to attend to it; and the agent's allowing them to take the keys occasionally for this purpose was a mere matter of convenience. to facilitate the operations of the workmen. Troplong, Nant., No. 311; Dalloz, Repertoire, vol. 32, p. 455, art. Nantissement. See, also, Duranton, vol. 18, Nos. 525, 528, 531.

*A different result was had in another [484 case, where certain Champagne wines were the object of the pledge, and the debtor had reserved the care of them; and, though the vaults in which they were stored were leased to the creditors, they communicated by open doors with the other vaults of the debtors, where their workmen were employed on the wines, and there was nothing to indicate which were pledged and which were not, and nothing to prevent a substitution thereof; so that the debtors appeared in possession, and kept up their credit thereby, which they could not otherwise have done. Troplong, No. 312; Ricou v. Syndics of Joly, etc., Dalloz, Repertoire, Nantissement, No. 93, n.

In another case, it was decided that the debtor might be permitted to make sales of the goods pledged, provided that they remained in the pledgee's possession, and could not be delivered to the purchaser without his consent. Dalloz, No. 129.

Troplong deduces, from these and other cases, the general conclusion that, whenever the assistance of the debtor is necessary to the better accomplishment of the object of the pledge, it ought to be permitted, provided always that it does not disturb the possession of the creditor in any respect. Nant., No. 313. Dalloz says: "It is evident that if the pledge of movables could, without a delivery, have effect in regard to third persons, it would be the source of great frauds and deceptions. When the debtor is obliged to surrender possession, he cannot deceive third parties dealing with him by keeping possession of the pledged articles as part of his estate, and getting credit thereby." He takes special notice of the decision that a pledge is not valid if the dispossession of the debtor is not sufficiently complete to prevent substitution; or if there is a mere contract for a pledge, and not an actual pledge. Dalloz, Rep. Nant., 119. And he lays down the principle that, though a contract for a pledge may be enforced against the pledger and his heirs, Nant., No. 121, yet that, by the very words of the Code, he cannot set up the privilege of the pledge, which alone constitutes his right as against third persons, without actual possession or its equivalent. Nant., 119, 209.

From these authorities, it seems to be evident that, in the French law at least, the text of which, in this regard, is the same as [485 that of Louisiana, a delivery by the owner of securities by way of pledge, followed by a return thereof to him, for the purpose of enabling him to collect them and apply the money to his own use, on substituting others in their stead, and with general liberty of substitution, and to appear as the owner and possessor thereof in his dealings with others (the title of the securities not being transferred to the creditor), is not such a delivery of possession as is necessary to establish the privilege due to a pledge as to third persons. It would be contrary to