Citizens' National Bank v. Bank of Commerce

The opinion of the court was delivered by Graves, J.:

The plaintiff in error insists that the transaction in which the certificates were deposited with Minturn, in trust for the secürity of the inter-pleading bank, amounted to a pledge of the certificates, and gave a right to them superior to any which could thereafter be acquired by an attachment issued in a .suit.against the pledgor.

The . Bank of Commerce claims that whatever right the Citizens’ bank may have acquired to the certificates, its right to the tangible property represented thereby was inferior to the lien acquired thereon by an actual seizure thereof by a writ of attachment in favor of one who had no knowledge or notice of the pledge.

We understand that when- personal property is pledged the pledgee acquires a right thereto which is superior to any right that can thereafter be given by the pledgor or be acquired by a subsequent attachment issued in an action against him. (22 A. & E. Encycl. of L. 867, 868, and notes; Bank v. Harkness, 42 W. Va. 156 .) The assignment and delivery of the certificate constitutes a delivery of the property represented thereby. (22 A. & E. Encycl. of L. 856.) In the second edition of Jones on Pledges and Collateral Security, section 37, it is said:

“A delivery of a document of title, which serves to put the pledgee in possession of the goods, is equivalent to an actual delivery of them.”

This question was discussed and authorities were collected in the case of Bank v. Harkness, 42 W. Va. 156 . (See, also, Continental Nat. Bank v. Eliot Nat. Bank, 7 Fed. 369 .) The great weight of authority *208 seems to be that this kind of delivery is sufficient to constitute a pledge. A completed pledge has the effect of depriving the pledgor of all control over the property, as far as the interest of the pledgee is concerned. He can neither sell nor encumber it so as to dispose of or impair the rights of the pledgee therein. It seems clear that what he can not do personally can not be done by a writ of attachment. Generally, the rule has been that an attachment takes only the interest which the owner has when the writ is levied. In our view, the interplea states substantially that the plaintiff’s attachment was levied upon personal property of the defendant Erwin which was pledged to E. W. Minturn, and was then in-the latter’s possession and being held in trust as collateral security for the payment of a debt due from Erwin to the interpleader. These facts, if true, would be sufficient to give the interpleader a- right superior to that of the attachment. The fact that the attachment creditor acted in good faith and without notice of the pledge is not important, as there is no law requiring pledges to be recorded. We conclude that the demurrer should have been overruled.

The judgment of the district court is reversed, with direction to overrule the demurrer to the interplea and proceed in accordance with the views herein expressed.