(dissenting):
By the agreement between the Lee Arms Company and E. Remington & Sons the one dollar and fifty-five cents royalty to be paid by the latter to the former was only to be. paid for each and every gun manufactured and sold, the same to be paid tri-monthly, and at the end of each and every three months from the date of the contract. The actual sale of each gun by E.Remington & Sons was a necessary condition precedent to entitle the Lee Arms Company to be paid said royalty.
Among the arms not sold, as claimed by the Lee Arms Company at the time the receivers were appointed, were the following, which E. Remington & Sons had pledged to the several persons named, and to the number mentioned, as collateral security for the payment of -certain debts owing by them ;
R. J. Dean & Co., 1,600 rifles; Tradesman’s Bank, 2,000 rifles ; Hartley & Graham, 500 rifles; Thomas Richardson, 220 rifles; National Mohawk Yalley Bank, 1,000 rifles; Oanajoharie National Bank, 10 rifles.
Were these arms so pledged by E. Remington & Sons as security for the payment of the several obligations, the pledges, respectively, held against said firm, and which had not been sold or disposed of by them at the time the receivers were appointed, sold by E. Remington & Sons, within the intent and meaning of the contract for royalty between it and the Lee Arms Company ?
We think the disposition of the'guns by E. Remington & Sons in the manner stated did not amount to a sale, and that the title to each remained in them and passed to the receivers at the time of their appointment, subject only to the pledge.
This transfer of the guns was not in effect a mortgage. The cor*292rect definition of a chattel mortgage is, that it is an instrument of sale, conveying the title of the property mortgaged to the mortgagee, with terms of defeasance, and if the terms of redemption are-not complied with, then, at law, the title becomes absolute in the-mortgagee. To make it a mortgage, the effect of the agreement must be such that, by the mere non-performance of the conditions by the mortgagor, the title will be transferred to the mortgagee, by force of the agreement. (Story on Bailment, §§ 287, 288 2 Kent’s Com., 582 ; Brownell v. Hawkins, 4 Barb., 491; Langdon v. Buel, 9 Wend., 83 ; Brown v. Bement, 9 Johns., 96; Garlick v. James, 12 id., 146 ; Stearns v. Marsh, 4 Denio, 227; Cortelyou v. Lansing, 2 Caine’s Cas., 200.)
On the other hand, a pledge consists of a delivery of goods by a debtor to his creditor, to be held until the debtor’s obligation is, discharged and then to be delivered to the pledgor, the title not being changed during the continuance of the pledge. (Story on Bailment, § 286.)
In case of a pledge, as security for the payment of a debt, the only way the pledgee can avail himself of the pledge, is to demand payment after default, and if refused, to sell the property, after notice to the pledgor, at public sale, and apply the proceeds to discharge the obligation or to foreclose the lien in equity. Until this is done the title remains in the pledgor. The 500 guns held by Hartley & Graham and the ten by the Canajoharie National Bank were subsequently returned by the respective pledgees to the-receivers without anything being paid to either of them, the debts for which they were pledged having been paid out of the proceeds of other securities held by the creditors. These guns were subsequently sold by the receivers, and the proceeds formed a part of the assets in their hands. These 510 rifles, separated from the remainder of those pledged, were not, therefore, sold by E. Remington & Sons before the appointment of the receivers, and as to them no royalty had become due or owing to the Lee Arms Company at the time of their said appointment. We are, therefore, of the opinion that as to these the receivers contracted the debt for the royalties after their appointment, and that the same should be paid in full, provided the condition of the estate will permit the same to-be made out of the assets remaining in their hands.
*293"We are also of the opinion that the remaining arms which had been pledged, as aforesaid, by E. Remington & Sons, as collateral security for the payment of debts owing by them, and which had not been actually sold by the pledgees, cannot be regarded as having been sold by E. Remington & Sons, within the meaning of the contract, at the time the receivers were appointed; and said guns having either been returned by the pledgees to the receivers, or subsequently sold by the pledgees, and the proceeds applied to discharge the debts, the receivers became liable to pay the royalties, •and that such royalties upon these other guns was an obligation contracted by the receivers after their appointment, and for the benefit of the estate, and that the same should be paid in full upon -the condition and in the manner provided for the payment of the royalties upon the 510 rifies mentioned.
If correct in the conclusions reached, it follows that the order made at Special Term should be so modified as to direct the receivers, out of any property or assets in their hands, to pay the Lee Arms Company the royalty of one dollar and fifty-five cents upon the whole 8,410 rifles pledged by E. Remington & Sons to their creditors for the payment of debts owing by said firm and remaining in the possession •of the pledgees undisposed of at the time the receivers of E. Remington & Sons were appointed, in full if the assets remaining in their hands are sirfficient for that purpose, with ten dollars costs and disbursements, to the Lee Arms Company.
Order modified by directing the receivers to pay the Lee Arms Company $199.25 royalties on 135 arms, and that upon the remainder they pay it a dividend as directed in the order of the Special Term, .and as modified, order affirmed, with ten dollars costs and disbursements to Lee Arms Company, to be paid out of fund in the receivers’ hands. .