National Bank v. Baker

Citations

• 128 Ill. 533
• 4 L.R.A. 586

Syllabus

<p>1. Pledge—sale of thepledge—before and after maturity—demand of payment—notice to redeem. Ordinarily, when a pledge of property is made to secure the payment of indebtedness, the pledge can not be sold until after the debt is due and demand is made to redeem, and notice is given of the. intention to sell.</p> <p>2. Parties may, however, by contract, agree that in certain contingencies the pledge may be sold before the debt is due, or that it may be sold without previous notice, etc. But in such case, what is the contract must be determined from the language used, and not from a consideration of what would best subserve the interests of the creditor, for the law has no greater regard for his interest than it has for that of the debtor.</p> <p>3. The rule at common law was, that the pledgee must give notice to the pledgor to redeem, before he could sell. The purpose of this notice was to terminate the indulgence and require the pledgor to protect his property, while notice of the sale is to invite competition and secure the best price attainable by a sale.</p> <p>4. Where the sale is only to be made in the event of failure to make payment at the maturity of the debt, it may'be that the pledgor is not entitled to a demand of payment. But when the pledgee elects to sell the pledge before the debt is due, because of the happening of a contingency provided for by agreement, the pledgor is entitled to notice to redeem, and that the pledgee will not wait till the maturity of the debt. A sale without notice, in such case, will not pass the pledgor’s right of redemption.</p> <p>5. Same—sale before maturity—in case of depreciation of pledge “in market value”—worthless stocks. The makers of a promissory note deposited in pledge with the payee certain certificates of shares in a corporation, and also a life policy of insm-ance of one of the makers of the note, calling for $5000. The certificates of stock proved to be counterfeits, and worthless. The contract of the parties pr