for them to the pledgor. He is to be reimbursed for any expenses necessarily incurred in caring for the article pledged. He must use ordinary care in keeping and preserving the property and is liable for ordinary negligence. This case lies midway in this respect between the bailment for the bailor's sole benefit and that for the bailee's sole benefit. He must redeliver the property when the pledge is redeemed by the pledgor.

After the debt is due and unpaid, the pledgee may sell the property to pay the debt, and must pay to the pledgor any surplus above the debt, interest, and expenses of sale. If there is no provision in the contract permitting a private sale, the sale must be at public auction after due notice to the pledgor; but it is often held that stocks and bonds may, after due notice, be sold on the floor of the stock exchange. The pledgee cannot purchase at his own sale. In the absence of an express provision in the contract prescribing the mode of sale, and especially where notice cannot be given to the pledgor, or where there are conflicting claims, it is safer for the pledgee to secure a judicial sale under a decree of a court of equity. In some states the statute provides for the manner of sale of pledged property.

4. Termination of pledge. A pledge is terminated when the property is redelivered to the pledgor, or when by tender or payment of the debt the pledgor is entitled to have it redelivered. A refusal to redeliver the property when the pledgor is entitled to it renders the pledgee liable in tort for conversion.

Examples: 1. A pledges a jewel to B as security for a loan. B leaves the jewel at night in a show case. Burglars enter and take it. B is liable to A for the loss if it is found that B did not use due or ordinary care for the safe keeping of the jewel. Due care might require B to put the jewel in a safe.

2. B wears the jewel and it is lost. B is liable to A, for he assumed the risk in wearing the jewel.

3. A pledged securities to a bank for the payment of a particular loan. A paid the loan and demanded the securities. The bank refused to deliver them and claimed to hold them for another unsecured loan. A brought an action against the bank for conversion of the securities and recovered. The bank could hold the securities for the particular loan but for no other.

4. The bank received dividends on the securities. These belong to A after he pays the loan, or they may be deducted from the loan and payment made of the balance.

5. A received dividends on the securities. He holds them in trust for the bank until the loan is paid.

6. A pledgee upon default sold the pledge under authority given by the pledgor, and purchased at his own sale. The sale may be avoided at the election of the pledgor.

Pawnbrokers. In New York pawnbrokers may take 3 per cent a month for the first six months and 2 per cent a month thereafter upon loans not exceeding $100, and 2 per cent a month for the first six months and I per cent a month thereafter upon loans exceeding $100. They cannot sell pawns until one year after possession thereof, and the sale must be at public auction and conducted by a licensed auctioneer. Notice of the sale must be published for at least six days in two daily newspapers. Any surplus on the sale shall be turned over to the pledgor. In Massachusetts the mayor and aldermen or other licensing board of a city may fix the rate of interest, and articles may be sold at public auction after four months.

66. Bailee hires an article of bailor. This is also a mutual benefit bailment, since both parties derive a benefit from it.

1. How created. This bailment arises only by contract. The bailor agrees to deliver to the bailee an article to be used by the latter, who, in turn, agrees to pay the bailor a compensation for such use. If the bailor refuses to deliver or the bailee to receive, there is a breach of contract for which damages may be recovered. When a delivery is actually made and accepted, the bailment begins.

2. Rights and liabilities of bailor. The bailor warrants his title and warrants that the bailee shall not be disturbed in his possession by one maintaining a superior title. He must warn the bailee of any defects, known to him and not observable by the bailee, which render the article dangerous for the purpose for which it is hired. So also the bailor must use due care to discover and remedy defects.

Example 1. B lets to C a horse and carriage and the carriage breaks down and injures C from a defect which by the use of due care B might have discovered. B is liable to C.

3. Rights and duties of bailee. The rights and duties of the bailee may be fixed in part by the contract. In the absence of contract provisions the following general rules would govern.

(a) The bailee must exercise ordinary care in the keeping and use of the article and is liable for ordinary negligence. Ordinary care is that which the average prudent man exercises under like circumstances in the conduct of his own affairs. The bailee is not liable for inevitable accident nor for any willful act of a third person. He is liable only for negligence, that is, the want of that ordinary care on his part which naturally and probably results in injuring the article.

(b) The bailee acquires the right to the exclusive use of the article during the time specified. He may maintain an action for any disturbance of his lawful possession and is said to have a special property in the goods. He must use the article with due care and only for the purpose or in the manner agreed upon. If he hires a horse to drive to A, he must not drive elsewhere or beyond A. An intentional material variation from the terms of the contract may amount to a conversion and render the bailee absolutely liable for the safe return of the chattel.

Examples: 2. A hires B's horse to drive to X. He does drive to X, but by a very circuitous and unusual route. This may be a technical conversion and render A liable for any injury to the horse while so converted. 3. A overdrives the horse and injures it. He is liable to B for want of care in using the horse.

(c) The bailee is liable to third persons for injuries resulting to them from his use of the article, in the same way as if it were his own. The bailor is not liable unless, perhaps, for some inherent vice in the article of which he did not warn the bailee. Third persons injuring the article are liable to either the bailor or the bailee as their damage may appear.

Examples: 4. A hires B's horse. A drives so negligently that he injures C. A is liable to C. B is not liable to C.

5. X drives into the horse and injures it. X is liable to A to the extent that the injury renders the horse less valuable to A, and to B for any permanent injury to the horse.

(d) The bailee is bound to compensate the bailor. If the price is not fixed by agreement, a reasonable price is understood. If the chattel is destroyed without fault of either party

before the term of the bailment is completed, the contract is discharged, but the bailor may recover the reasonable value of such use as the bailee has had up to that time.

(e) The bailee must redeliver the chattel at the termination of the bailment, and must pay any damages done to it by his negligence. If the bailee converts the chattel and the bailor recovers its full value, the absolute title vests in the bailee upon such payment to the bailor.

Example 6. A hires B's wagon for two days. At the end of two days B demands it and A refuses to return it. (a) B may replevin it, that is, get it by legal process. (b) B may sue in tort for conversion and get a judgment for the full value of the wagon. When A pays this judgment (not before) the title to the wagon vests in A.

67. Bailor engages bailee to keep, repair, or transport an article. In these bailments there is always a contract under which the bailee is to perform some services upon the chattel for a compensation.

1. Different bailments under this head. These bailments are of various kinds and for various purposes. There are three distinct types: (a) where the bailee for compensation is to take care of the goods for the bailor, as a warehouseman stores and cares for the goods of his customer or an innkeeper those of his guest; (b) where the bailee for compensation is to do some work upon the article, as a jeweler repairs a watch or a miller grinds grain; (c) where the bailee is to carry or transport goods for the bailor for a compensation, as railways carry freight or postal authorities carry letters.

The cases of innkeepers and common carriers present peculiar features and will be treated separately.

2. Liabilities of bailor. In addition to the liabilities of bailors in other relations, the bailor in this class is under a duty to compensate the bailee. That the bailee receives a compensation is the distinctive characteristic of these bailments. The compensation may be slight, but if there is any it serves to take the case out of the class of gratuitous bailments. Thus if B agrees to take and care for C's horse upon consideration that

he may use it, B is a bailee for hire and is not a mere depositary; he receives the use of the horse as compensation.

Usually the compensation is fixed by the contract or it is understood that it shall be the reasonable value of the bailee's services. When the bailee has fully performed he is entitled to his compensation, even though before the article is returned to the bailor it should be destroyed, provided the destruction is due to no fault of the bailee. If the article is destroyed without his fault after he has partly performed but before his contract is completed, he is entitled to compensation for labor or material furnished up to the time of the destruction of the article. If the bailee abandons the work without justification, many courts forbid him to recover any compensation, but some permit a recovery for the services less the damages to the bailor arising from the breach. So if the bailee does the work unskillfully, but it is of some value, he may recover its value less the damages to the bailor.

Examples: 1. B runs a store. He permits packages to be left there to be taken by a local expressman. A package for C is left there to be taken by the expressman, and when called for cannot be found. C sues B, who contends he was a gratuitous bailee and liable only for gross negligence. The judge tells the jury that B is not a bailee for hire unless he is to receive some certain benefit, — that an uncertain, contingent benefit in drawing custom to his store is not enough. On appeal the court held this was error. The nature and amount of compensation are immaterial. The law will not inquire whether it is adequate, nor in such a case whether it is certain. It is enough that B derives some compensation. (But note that in this case C is under no obligation to pay B anything.)

2. C agrees to work as bailee on B's chattel. After beginning the work, but before completing it, he stops and refuses to go on. Can he recover anything? Many courts say he cannot because he has committed a breach. Some allow him to recover the reasonable value of his services, less the damages to the bailor from delay in the completion of the work.

3. Rights and liabilities of bailee. These are often regulated, at least in part, by contract. Where the contract is silent the following rules apply.

(a) The bailee is bound to exercise ordinary care and diligence and is liable for ordinary negligence; but the standard