ties of the parties would not be governed by the written agreement.

We do not think there is any error of law in this record that would justify the reversal of the judgment. As to the facts, the Appellate Court said in its opinion: "The evidence is, we think, sufficient to warrant and support the finding and judgment," and we could not disturb the judgment on the ground that it was contrary to the evidence, and it is therefore affirmed.

Judgment affirmed.

THE PEOPLE ex rel. Henry L. Arnold, County Collector, Appellee, vs. WILLIAM LEONARD et al. Appellants.

Opinion filed December 21, 1910.

This case is controlled by the decision in People v. Adair, (ante, p. 398.)

APPEAL from the County Court of LaSalle county; the Hon. JOSEPH DAVIS, Judge, presiding.

BUTTERS & ARMSTRONG for appellants.

B. F. LINCOLN, JOHN GARLAND, and D. L. Dunavan, for appellee.

Per CURIAM: This was an application by the county collector of LaSalle county for judgment and order of sale in the county court of the aforesaid county against the lands of the appellants to satisfy an additional assessment levied by the commissioners of Union District No. 1 of the towns of Freedom and Ophir, in LaSalle county. The record of the drainage district in this case is the same as the record of Drainage District No. 2 of the town of Ophir, considered by this court at this term in the case of People v. Adair, (ante, p. 398,) in so far as the drainage

record fails to show that the funds of the district have been exhausted and a necessity exists for the levy of an additional assessment in 'said drainage district.

The judgment of the county court will be reversed and the cause remanded. Reversed and remanded.

EMILIE WILHELMINE PEACOCK et al. vs. LILLIE M. PHILLIPS et al. (J. ARNOLD SCUDDER, Appellant, vs. EDWIN F. MASTERSON, Appellee.)

Opinion filed December 21, 1910.

I. BAILMENTS-one holding tangible personal property as pledge may sell the same. A creditor holding goods, chattels or other tangible personal property as a pledge to secure the indebtedness to him may sell the same and apply the proceeds to the payment of the debt, accounting to the debtor for any surplus, since from the nature of the property the only method of applying it to the payment of the debt is through a sale.

2. SAME pledgee of bonds, mortgages or notes cannot sell the same unless authorized by contract. A creditor, in the absence of a contract, cannot sell commercial paper or choses in action held by him as collateral security, but he may collect, the same and apply enough of the proceeds to pay his debt, returning any balance to the pledgor; and if there is a contract authorizing the pledgee to sell such collateral, the right to sell is conferred by the contract and not by the law, and must be exercised according to contract.

3. SAME-rule where securities of a third person are deposited as collateral. If the securities of a third person are deposited as collateral the creditor may collect the whole amount due from the maker and will hold any surplus above his own debt as trustee for his debtor, and in such case the maker of the securities is not concerned how the pledgor and pledgee may settle between themselves but is held for the full amount of his debt.

4. SAME-if collateral consists of a mortgage the holder has a right to foreclose. If the collateral security for a debt consists of a mortgage the pledgee has a right to foreclose, but he is not entitled to a decree for any more than is due him on the debt for which the mortgage is pledged, and he must account to the pledgor for any surplus.

5. SAME when pledgee of mortgage may either sell or foreclose. Where collateral security consists of a mortgage and the pledgee has a contract authorizing him to sell the mortgage, the pledgee may either foreclose or sell, in case of non-payment of the indebtedness to him.

6. SAME-effect of contract giving power to sell mortgage held as collateral. A contract giving a pledgee the right to sell a mortgage held as collateral does not enable the pledgee to confer upon a purchaser, who has full notice of all the facts and of the extent to which the pledgee may enforce the mortgage, any greater rights than the pledgee would have had if he foreclosed the mortgage.

7. MORTGAGES--purchaser of mortgage takes subject to mortgagor's equities and defenses. While the assignment of a note secured by mortgage carries with it the mortgage as an incident of the debt it does so only in equity, and when resort is had to equity to enforce the obligation any defense good against the mortgage in the hands of the mortgagee himself is available, except defenses based upon latent equities of third persons of whose rights the purchaser had no notice.

8. SAME mortgage gives notice, on its face, that mortgagor is the debtor. A mortgage gives notice, on its face, that the mortgagor is the debtor, and if a purchaser of the mortgage fails to obtain actual notice of any equities or defenses of such debtor it is due to his own neglect and he is chargeable with notice thereof; but the purchaser is not bound to inquire of third persons whether they have any equities, and is presumed to take without notice of such equities and free from them.

9. SAME-exception to rule that mortgage, in equity, is subject to defenses good against it in hands of mortgagee. The rule that one seeking to enforce a mortgage security in equity is subject to any defenses which would have been good against the mortgage in the hands of the mortgagee does not apply to corporate bonds which are issued for the purpose of raising funds for the corporation and are intended to be thrown on the market and to pass from hand to hand.

10. SAME when collateral is not mere accommodation paper. A note made by a person to his own order and endorsed in blank and delivered, together with a mortgage to secure its payment, as collateral security for another note of smaller amount, is not mere accommodation paper, which is made without legal consideration and which would fail of its only purpose if the assignee thereof could not recover on it discharged of all defenses which might have existed against the accommodated party.

II. SAME-when purchaser of mortgage is not entitled to foreclosure decree for full amount. Where a note, secured by mort

gage, made payable to the maker's order and endorsed in blank is delivered, with the mortgage, to a bank as collateral security for a note of the same maker for a smaller amount, and the bank is authorized, by contract, to sell the collateral on non-payment of the principal note, if a person having full knowledge of the facts purchases the collateral at the amount due on the principal note, which is then canceled by the bank and returned to the maker, he is not entitled, on foreclosure, to a decree for more than he paid to the bank, together with interest and solicitor's fees agreed upon.

APPEAL from the Branch Appellate Court for the First District;-heard in that court on appeal from the Circuit Court of Cook county; the Hon. GEORGE A. Carpenter, Judge, presiding.

MATZ, FISHER & BOYDEN, (LAIRD BELL, of counsel,) for appellant.

E. F. MASTERSON, and E. F. DUNNE, for appellee.

Mr. JUSTICE CARTWRIGHT delivered the opinion of the

court:

Emilie Wilhelmine Peacock, who was the owner of a promissory note for $15,000 secured by a trust deed on premises known as 151 Astor street, in Chicago, and the trustee in the said trust deed, filed their bill in the circuit court of Cook county to foreclose the same. The appellant, J. Arnold Scudder, filed his cross-bill in the case to foreclose a trust deed which was a second lien on the premises, and was made to secure the payment of a note for $4000 which he had purchased from the Chicago Savings Bank and Trust Company and which was held by the bank as collateral security for a note of $2500. The appellee, Edwin F. Masterson, had purchased the premises, and he and his wife by their answer disputed the right of the appellant to a foreclosure for the full amount of the trust deed, and insisted that it was a lien upon the premises only to the amount of the note for which it was collateral, which amount they were ready and willing to pay. The appellant

had paid for the note and trust deed on April 29, 1907, $2530.62, which was the amount due the bank, and appellee offered to pay that amount, with interest. The appellee paid the amount secured by the first trust deed and the original bill was dismissed without prejudice to the crossbill. He also paid to appellant the amount which appellant had paid for the note and trust deed, together with interest covering the amount for which it had been held as collateral, and $200 solicitor's fees agreed upon by the parties. Appellee also deposited with the clerk of the court $1800 to be held pending the result of the suit, and the lien of the trust deed was transferred, by order of the court, from the land to the fund deposited. The issues were referred to a master in chancery, who reported that appellant was entitled to the full amount of the $4000 note, with interest. The chancellor overruled exceptions to the report and entered a decree for $1618 and interest from March 3, 1908, and ordered the clerk to pay that sum to the appellant out of the funds in his hands. The Branch Appellate Court for the First District reversed the decree and remanded the cause, with directions to order the payment of the amount deposited to the appellee and to dismiss the cross-bill of the appellant. The court then granted a certificate of importance and an appeal to this court.

The question to be decided is whether the appellant, who purchased the note of $4000, and the trust deed securing the same, with notice that they had been deposited for the payment of a note for $2500, was entitled to a decree for the full amount of the note and trust deed purchased, or was only entitled to the amount due the bank and secured by the note and trust deed, which was paid to him, together with solicitor's fees.

The material facts were agreed upon before the master, as follows: Lillie M. Phillips, who was the owner of the mortgaged premises, made her promissory note on November 27, 1906, for $2500 to the Chicago Savings Bank and