The opinion of the court was delivered by
Mr. Justice McIver.On December 31st, 1875, the Green-ville and Columbia Railroad Company borrowed from the South Carolina Railroad Company eighty of its second mortgage bonds of the face value of $40,000, and to secure the return of this loan the Greenville and Columbia Railroad Company transferred to the South Carolina Railroad Company $80,000, face value, of its second mortgage bonds. This transaction was not evidenced by any formal written agreement, bond or other obligation; and its terms are only to be found in two letters — one of W. J. Magrath, who was at the time president of both companies, dated December 31st, 1875, addressed to J. H. Wilson, treasurer of the South Carolina Railroad Company, and the other, of C. H. Manson, acting treasurer of the Greenville and Columbia Railroad Company, dated January 1st, 1876, likewise addressed to said Wilson.
In the letter of Magrath, he says: “ In consideration of the loan this day made by the South Carolina Railroad Company of forty thousand dollars of the second mortgage bonds of said company, I hereby authorize you to set aside and transfer to the sole control of the said South Carolina Railroad Company second mortgage bonds of the Greenville and Columbia Railroad Company to the amount of eighty thousand dollars out of the securities of the Greenville and Columbia Railroad now in your possession. The same to be held by you until the second mort*185gage bonds of the South Carolina Eailroad are returned to the company.” In the letter of Manson, he says : “ I have yours epclosing. copy of note of Greenville and Columbia Eailroad Company, $20,000, at thirty days from 31st ult., given to bank of Charleston, N. B. A. for loan, net proceeds, $19,725. For security for the collateral on the above — say $40,000 South Carolina Eailroad second mortgage bonds, I observe, by authority of the president, you have laid aside $80,000 of our second mortgage bonds.”
The testimony leaves no doubt on our minds that the object of this transaction was to enable the Greenville and Columbia Eailroad Company to use the $40,000 of the second mortgage bonds of the South Carolina Eailroad Company as collateral security for a note of the Greenville and Columbia Eailroad Company to the bank of Charleston for the sum of $20,000. Accordingly, they were so used'; and the note of the bank having been reduced by successive payments and renewals to the sum of $10,000, and being past due and unpaid for some months, the bank, in December, 1878, sold seventy of the bonds held as collateral security for an amount which overpaid said notes by the sum of $174.32. This left in the hands of the bank, to the credit of the Greenville and Columbia Eailroad Company, ten of said bonds of the face value of $5,000, detached coupons to the amount of $8,175, and the small surplus of cash above mentioned.-
After James Conner became receiver of the Greenville and Columbia Eailroad Company, he received from the bank these remaining bonds, coupons and cásh; and being in doubt whether the same passed to the purchasers at the sale of the Greenville and Columbia Eailroad, which had been previously made, or whether they belonged to the lien creditors of said company, reported all the facts to the court, when an order was passed directing them to be placed in the hands of the master, to be held by him subject to the further order of the court. Soon after, to wit, on January 14th, 1881, this petition was filed, in which Fisher, as receiver of the South Carolina Eailroad Company, claimed the said bonds, coupons and cash as .the property of said South Carolina Eailroad Company.
*186In the meantime, however, a controversy had arisen between Fishery as receiver, and the purchasers of the Greenville and Columbia Railroad as to the true amount of the bid of said purchasers, and while the same was pending in the Supreme Court of this State, to wit, on February 26th, 1881, an agreement was entered into whereby said controversy was settled, one of the terms of which settlement was that Fisher sold to the purchasers of' said road, the said $80,000, of second mortgage bonds of the Greenville and Columbia Railroad Company, together with a large amount of other bonds of said company, of the same class, at a very full and fair price. In this agreement a stipulation was inserted that the present controversy, as to the ownership of the second mortgage bonds of the South Carolina Railroad Company, “ is to be decided by the proceeding already instituted for that purpose,” meaning the petition which is now under consideration.
It will be observed that- the claim of the petitioner is not for a general accounting between these two corporations, but it is a claim for the specific bonds, coupons and cash which remained after the sale by the bank and the payment of the aforesaid note to the bank, as the property of the corporation of which he had been appointed receiver, which he, therefore, demands shall be delivered to him in specie. He is not suing for a debt, or for the value of property converted, but he is claiming the possession of certain specific property, of which he claims to be the rightful owner. The question, therefore, is as to the ownership of this particular property, consisting of bonds, coupons and cash, which, however, we will, for the sake of convenience, hereafter designate simply as bonds. We agree, therefore, with the Circuit judge that the various other transactions between these two companies have nothing whatever to do with the issue which we are now called upon to determine, but we cannot agree with him in the conclusion which he has reached as to the right of the petitioner to the possession of these bonds.
There can be no doubt that at one time the South Carolina Railroad Company was the owner of these bonds, and it is incumbent upon the respondents to show when and how this admitted title passed out of said company. It certainly did not *187pass when the bonds were first delivered to the Greenville and Columbia Railroad Company, for, by the express terms of the arrangement, they then passed as a loan, to be returned, and not by way of gift or sale. It is true that the purpose of the loan was to enable the borrower to use them in such a way as might necessitate the passing of the title out of the lender. But until they were so used, and the necessity for passing the title arose, the title remained in the lender. The mere fact of pledging the bonds to the bank could not pass the title out of the lender, for if the debt to the bank had been paid otherwise than by a sale of the bonds in question, unquestionably the bank would have been bound to return the bonds to the Greenville and Columbia Railroad Company, and that company would have been equally bound to return them to the South Carolina Railroad Company. That would not only be the legal effect, but it is manifestly what was intended by the parties, for it was understood by both parties at the time the bonds were borrowed, that they were borrowed for the express purpose of ■ being pledged to the bank, and they were immediately so pledged.
Now if the effect of so pledging them was to be, or was intended to be, a transfer of the title, where would have been the necessity or propriety of the stipulation for their return? As we have said, there was a contingency upon which the title would pass, and that was when the necessity for it arose. But until th^at contingency did arise, the title never was intended to pass, and did not pass out of the lender. The South Carolina Railroad Company, knowing that the bonds were borrowed for the purpose of being pledged as collateral security for ,a debt of the Greenville and Columbia Railroad Company to the bank, must be regarded as consenting that they should be so used; and further as authorizing the bank to take any steps that might become necessary to make the security available, by making an absolute sale of them, in part or in whole, whenever it became necessary so to do in order to effect the object for which they were loaned. The lender would, therefore, be estopped from disputing the title of the purchaser at such sale, made by its own authority, but where would be the ground upon which it could be said that the lender was estopped from claiming those of the *188bonds which were not sold? The title to those which it was not necessary to sell to effect the purpose for which the loan was made, remained in the original owner, for, as we have seen, the mere fact of pledging the bonds to the bank did not affect the title.
It is said, however, that the petitioner is estopped from setting up a claim to the bonds in controversy by reason of the fact that he exercised the right of ownership over the $80,000 of bonds of the Greenville and Columbia Railroad Company deposited with his company as security for the return of the $40,000 of bonds loaned to the Greenville and Columbia Railroad Company, thus putting it beyond his power to return the $80,000 of bonds, which he is bound to • do before he can claim the $40,000 of bonds or any part thereof; and this seems to be the ground upon which the Circuit judge rests his decree. According to our view of the matter the two companies stood towards each other in the relation of pledgeor and pledgee — the Greenville and Columbia Railroad Company being the pledgeor and the South Carolina Railroad Company being the pledgee. The former, desiring to borrow the $40,000 of bonds, pledged to the latter $80,000 of second mortgage bonds to secure the return of the loan. Now what would be the rights and duties of the parties growing out of this relation ? Suppose the loan had been of money instead of bonds, certainly the pledgee would have had the right, upon the non-payment of the money borrowed to have sold the things pledged, upon proper notice, and apply the proceeds to the payment of the debt, and if such proceeds should have proved insufficient for the purpose he would have had a right of action for the balance left unpaid. It certainly could not be said that, by selling the things pledged he had forfeited his right to recover the unpaid balance. We do not see why the same principle should not apply to a pledge given to secure the return of borrowed bonds, as would apply to a pledge given to secure the return of borrowed money.
When, therefore, the Greenville and Columbia Railroad Company failed to return the borrowed bonds within a reasonable time — no specific time being fixed by the contract — and certainly when it had become unable to do so, it was clearly the right of *189the South Carolina Railroad Company, represented by the receiver, to sell the $80,000 of bonds pledged to it, and if the proceeds of such sale proved insufficient to re-imburse it for the value of so many of the borrowed bonds, the return of which, by the sale by the bank, had been rendered impossible, then it would have the same right to recover the remaining bonds, as it would have had to recover the balance of the money loaned, if the loan had been of money instead of bonds. The title to such remaining bonds never passed out of the South Carolina Railroad Company, and we are unable to see any reason why selling the thing pledged should operate as a forfeiture of such title, for, by selling, the pledgee did no more than it had a perfect right to do, so soon as the pledgeor had failed to return the thing borrowed within the time limited for that purpose, and, certainly, so soon as the pledgeor had put it beyond its power to return much the larger portion of the bonds which it had borrowed.
The testimony fully shows that the proceeds of the sale óf the $80,000 of bonds was not sufficient to pay the value of that portion of the borrowed bonds which the borrower had put it beyond its power to return, and, therefore, the pledgee has, in our judgment, a perfect right to have the proceeds of the sale of the $80,000 of bonds applied,to the payment of the value of that portion of the borrowed bonds which were sold by the bank, and such proceeds not being sufficient to pay the value of said bonds at the time of the sale of the $80,000 of bonds, it has a clear right to recover the possession of the bonds in controversy. '
It is true that, properly, the sale of a pledge should be made at public auction, and after full notice, whereas the sale in this case was a private one; but the testimony leaves not a shadow of doubt that the sale was a most advantageous one, and that the bonds brought a much larger price than they would have done except for the peculiar circumstances under which they were sold, and while there was, perhaps, no formal notice to the pledgeor of the time and place of the sale, it is quite manifest that all parties really interested not only knew, and approved of the sale, but actually participated in it, either in person or by *190attorney. Under these circumstances it would be idle to expect that any court would treat the sale as invalid, simply because certain formalities were not complied with, which, if they had been complied with, would, by the delays incident thereto, most likely have defeated the opportunity for making a most advantageous sale,
We are unable to see how the circumstance that the South Carolina Railroad Company was very largely interested in the stock of the Greenville and Columbia Railroad Company, much relied upon in the argument for the respondents, can affect the question. That circumstance may have had, and doubtless did have very great influence in inducing the South Carolina Railroad Company to loan its bonds to the Greenville and Columbia Railroad Company, but it cannot affect the legal relations between the two companies, growing out of this transaction. Though their interests were largely the same, yet they were not identical. They were, in law, two distinct persons, capable of contracting with each other just like any other two persons, and when they did so contract, their contract must be construed by the same legal principles which would govern in tjve construction of a contract between any two other persons.
The judgment of this court is that the judgment of the Circuit Court be reversed, and that the case be remanded to that court for such further proceedings as may be necessary to carry into effect the views herein announced.