1. Pledges — -Validity op Sale — Fraud and Collusion.

A pledgee of the bonds of a street-railroad company, securing notes given by the owners of the stock of the company amounting to something more than half the face value of such bonds, sold the same at public sale,' after due notice to all parties Interested; the makers of the notes and the company having become insolvent and made default in the payment of Interest. At the sale the bonds were purchased by a bank, which had acquired other claims against the company, for about S3,000 less than the amount due on the notes secured. This sum the bank also paid, taking an assignment of the notes. By a previous arrangement, the hank, which was of good financial standing, borrowed from tiie pledgee something over 90 per cent, of the amount it paid for the bonds, giving its own note therefor, secured by a pledge of the same bonds. The direct testimony of the parties showed without contradiction that the pledgee had no interest, direct or indirect, in the purchase of the bonds at the sale, and that its only purpose in assisting the purchaser by a loan was to obtain part payment of its debt, and the substitution of a solvent for an insolvent debtor for the remainder. Eeld that, in view of such evidence, the facts were not sufficient to impeach the good faith of the sale, and to warrant the court, in a suit to foreclose the mortgage securing the bonds, in disregarding it as fraudulent, and limiting the recovery to the amount of the original debt, to which such bonds were collateral.

2. Same — Conditions of Sale.

The delivery by a corporation of its bonds to a third person for the express purpose of enabling him to pledge the same as security for a loan to be obtained for the benefit of the corporation carries with it implied authority to make the hypothecation on the terms usual in such eases as to the manner of selling the bonds in case of .default in payment of the debt.

3. Same — Law Governing.

Where bonds are pledged in another state from that in which the debt- or resides to secure notes there payable, the law of such state governs as to the sale of the security.

4. Same — Mutual Mistake.

A mutual mistake by which bonds separately pledged to secure two different notes to the same creditor are applied in each case to the wrong note is immaterial, and does not affect the validity of the pledges, where, on a sale of the bonds, those constituting the separate pledges do not in either case realize enough to pay the smaller note.