^** The official translation, taken from (1966–67) 21 L.S.I. 44, is appended to this Note.

¹ See National Insurance Institute v.l Revitski, (1965) (III) 20 P.D. 29; and Weisman, J., “The Charge on Company Assets” (1965/1966) 22 HaPraklit 420, 426.Google Scholar

² Trustee of the Estate of M. Lichstein, deceased v. Shekem Ltd. (1959) 46 P.E. 12, 14; Cohen v. Reinhold (1947) 4 HaMishpat 41.

³ With regard to land, see Hevra Le Nehasim Ubinyan Ltd. v. Assessing Officer for Major Enterprises (1967) (II) 21 P.D. 229.

⁴ Quite common forms of security in our day. See Uniform Commercial Code, sees. 1–201 (37), 9–102 and the notes thereon in Uniform Commercial Code, The American Law Institute, 1962, Official Text with Comments (hereafter referred to as U.C.C.).

⁵ Under the Ottoman Law for the Mortgage of Immovable Property, 1913.

⁶ Sec. 10 of the Land Transfer Ordinance, 1920; see too the Mortgage Law (Amendment) Ordinance, 1920, sec. 5.

⁷ Goadby, F. M. and Doukhan, M. J., The Land Law of Palestine (Tel-Aviv, 1935) 168.Google Scholar

⁸ See, for example, Custodian of Absentee Property v. Ovid (1962) 16 P.D. 2649, and the cases cited therein.

^8a The term “collateral” is used throughout this article to denote the property subject to a pledge.

⁹ Mejelle, Articles 701, 706, 729. This requirement does not apply to the mortgage of a ship under the Shipping (Vessels) Law, 1960.

¹⁰ Hevrat Semper Ltd. v. Hart's Successors (1961) 16 P.D. 498.

¹¹ Cohen v. Reinhold (n. 2 supra).

¹² See Prof.Daykan, P., “Lacunae in the Law and Private Trusts” (1947) 4 HaPrahlit 7Google Scholar and Hevrat Semper Ltd. v. Hart's Successors (n. 10 supra).

¹³ Mejelle, Article 749.

¹⁴ Gutsman v. Alaska (1945) 2 HaMishpat 16: and compare Mercantile Bank of India v. Central Bank of India Ltd. [1938] 1 All E.R. 52.

¹⁵ (1965/66) 44 Divrei HaKnesset 37.

¹⁶ Contrast the speech of Gideon Hausner, M.K., in the Knesset debate on the first reading of the Pledges Bill. In his opinion, there was no danger to the creditor in this said practice: (1965/66) 44 Divrei HaKnesset 37. In one field, company law, the Supreme Court has dispensed with the transfer requirement, by a bold interpretation of the Companies Ordinance: in National Insurance Institute v. Revitski (n. 1 supra) the Court held that a limited company could charge its movable property as security for its debentures without transferring the possession of that property.

¹⁷ Mejelle, Articles 743, 744. These provisions did not apply to the mortgage of a ship under the Shipping (Vessels) Law, 1960.

¹⁸ Hevrat Semper Ltd. v. Hart's Successors (n. 10 supra).

¹⁹ National Insurance Institute v. Revitski (n. 1 supra); and see n. 9 supra with regard to ships.

²⁰ Feldman v. Discount Bank (1957) 12 P.D. 1402; Trustee of the Estate of M. Lichtstein, deceased v. Shekem Ltd. (n. 2 supra).

²¹ I am indebted to Prof. A. V. Levontin for drawing my attention to this distinction.

²² See n. 12 supra.

²³ Trustee of the Estate of M. Lichtstein, deceased v. Shekem Ltd. (n. 2 supra).

²⁴ Ibid. See too Rabinowitz v. Matalon (1959) 20 P.M. 365.

²⁵ Ahiezer, Dan, “The Deposit of Registered Share Certificates as Security for a Loan” (1966/1967) 23 HaPraklit 65.Google Scholar

²⁶ Apart from charges which have to be registered under the Companies Ordinance or the Co-operative Societies Ordinance.

²⁷ Trustees of the Property of Abraham Rafiah v. State of Israel (1967) (I) 20 P.D. 124.

²⁸ Sec. 18.

²⁹ Sec. 14.

³⁰ so Sec. 4(b).

³¹ Mazeaud, , Leçons de droit civil (2nd. ed., Paris, 1963), Vol. 3, p. 8.Google Scholar

³² Planiol, M. et Ripert, G., Traité pratique de droit civil français (2nd. ed., Paris, 1953), Vol. 12, pp. 89, 90.Google Scholar

³³ U.C.C., sec. 9–102, p. 604 et seq.

³⁴ The law prescribes tests for determining the intention of the parties: U.C.C. sec. 1–201 (37).

³⁵ Planiol et Ripert, op. cit., 136–137.

³⁶ Sec 4. This provision deals only with other creditors of the debtor and not with third parties in general (which would include purchasers); and there is no express provision in the Law on the right to inspect the registers of pledges. These points are discussed below.

³⁷ Sec. 13(a) of the Law; and see sec. 13(c).

³⁸ The equity of redemption ceases to exist on realization of the pledge. But is the debtor still entitled to redeem the pledge after steps to realize it have been initiated, but have not yet been completed: for example after the signing of a contract for the sale of the collateral, but before the property in it has passed to the purchaser?

Compare U.C.C., sec. 9–506.

The Pledges Law speaks of redemption of the pledge “by fulfilling the obligation”. On the subject of termination of the pledge, in sec. 15 one also finds that the pledge terminates “when the obligation ceases”. It seems that in both of these cases it should be added that a tender of the debt, even if not accepted by the creditor, brings the pledge to an end. See U.C.C., ibid.; Osborne, G. E., Handbook on the Law of Mortgages (Minn., 1951) 838et seq.Google Scholar; Restatement of the Law of Security (American Law Institute, 1941) 151.

³⁹ On the validity of an agreement contracted after the pledge agreement, and denying the right to redeem the pledge, see sec. 13(a); and compare sec. 16(b). Under sec. 2851 of the Ethiopian Civil Code of 1960, such an agreement is only valid if made after the date fixed for fulfilment of the obligation secured. Sec. 1239 of the Greek Civil Code of 1940 adopts a similar solution. French law, in contrast, regards this kind of agreement as valid if contracted after the pledge agreement: Mazeaud, op. cit., Vol. 3 pp. 74–5.

⁴⁰ Sec. 16(b).

⁴¹ In contrast to one given to a banking institution: see sees. 17(3) and 19. One disadvantage of realization of the pledge by the creditor himself is that the purchaser does not enjoy the same protection that he would in regular execution proceedings: see sees. 29 and 40 of the Execution Law, 1967.

⁴² Mejelle, Article 760.

⁴³ Sec. 6.

⁴⁴ Sec. 10.

⁴⁵ Ibid.

⁴⁶ Sec. 13(b). Further optional provisions are to be found in the following sections: 7—the pledge as security for interest, expenses and damages payable by the debtor in respect of the obligation and for expenses due for the safekeeping and realization of the pledge; 8—the application of the pledge to the income of the pledged property too; 20—the right of the creditor to realize his debtor's right against a third person, where this has been pledged to him; 22—the crediting, to the account of the obligation secured, of sums of money received by the creditor before the time fixed for fulfilment of the obligation.

⁴⁷ See the text to nn. 28 to 30 above.

⁴⁸ Sec. 2(a) of the Pledges Law, 1967.

⁴⁹ See the text to nn. 5 to 8 above.

⁵⁰ Sec. 55. In view of the wording of that section, the position is not completely clear.

⁵¹ In so far as charges on patents are concerned, sec. 89 of the Patents Law, 1967, follows the same approach as the Pledges Law.

⁵² Sec. 3(a).

⁵³ In view of the growing number of liens established of late by the legislator, the possibility of enacting a general body of regulations, embracing the points common to the various kinds of lien, should be examined. In the last few years alone statutory liens have been created in favour of: shipbuilders—sec. 54 of the Shipping (Vessels) Law, 1960; advocates—sec. 88 of the Chamber of Advocates Law, 1961; agents—sec. 12 of the Agency Law, 1965; bailees and innkeepers—sees. 9 and 12(e) of the Bailees Law, 1967; vendors and purchasers—sec. 31 of the Sales Law, 1968.

⁵⁴ This classification is not inconsistent with what has been said under the heading “Security Devices Recognized by the Pledges Law”. The first category comprises all the forms of pledge by agreement; the second and third classify the imperative provisions of the Law, discussed under the aforementioned heading.

⁵⁵ Sec. 4 of the Ottoman Law for the Mortgage of Immovable Property, 1913; Sec. 55 of the Shipping (Vessels) Law, 1960; Sec. 89 of the Patents Law, 1967.

⁵⁶ In French law it is accepted that, in principle, the agreement must be in writing; but there are a number of important exceptions, of which the commercial pledge is the most important: Mazeaud, op. cit., 67. In the United States according to the U.C.C, the agreement must be in writing if the collateral is not in the possession of the creditor; U.C.C., sec. 9–203.

⁵⁷ Sec. 2 of the Debt (Assignment) Ordinance, 1928. The basic question, whether, in view of the provisions of the Pledges Law, a debt can be pledged, is discussed below.

⁵⁸ Compare Lesar, H. H., Landlord and Tenant (Boston, 1957) 302–3.Google Scholar

⁵⁹ For example: an executor, under sees. 89–90 of the Succession Law, 1965; a receiver, under sees. 53(b) and 58 of the Execution Law, 1967.

⁶⁰ Sec. 12 of the Pledges Law, 1967.

⁶¹ Sec. 24.

⁶² Sec. 4(2).

⁶³ Ibid.

⁶⁴ Under sec. 9–305 of the U.C.C., the secured party is deemed to have possession from the time the bailee receives notification of the secured party's interest. In French law, the agreement whereby the creditor ceases to be a mere bailee and becomes pledgee is a substitute for the act of deposit. Where the property pledged is in the hands of a third party, that party has to give notice that his possession is as bailee on behalf of the pledgee; see Planiol et Ripert, op. cit., Vol. 12, pp. 96–7, 120.

⁶⁵ Where, for instance, the same collateral has been charged to two creditors, to one by deposit and to the other by registration. (The question of registration is considered below.)

⁶⁶ Sec. 4(2).

⁶⁷ Ibid. The pledge does not, in that event, terminate completely: it still has the qualities of a “pledge by mere agreement”.

⁶⁸ Sec. 9–305 of the U.C.C., approaches the matter in the same way. Under certain systems, the return of the pledged property to the debtor does not necessarily terminate the pledge. A distinction is drawn between cases in which the creditor has given up possession of his own accord and other cases: only in the former cases does the pledge terminate. See Mazeaud, op. cit., 80; Ethiopian Civil Code, 1960, sec. 2852 (2); Greek Civil Code, 1940, sec. 1243.

⁶⁹ Sec. 4(3).

⁷⁰ Pledges (Registration and Inspection Procedures) Regulations, 1967, regs. 1, 3(a), 4(a), (b). In the case of a partnership, the registered place of business determines where the pledge will be registered; if there is no registered place of business, then the main place of business. Ibid., reg. 4(c).

⁷¹ Pledges (Registration and Inspection Procedures) (Amendment) Regulations, 1968, reg. 1.

⁷³ Reg. 6(a) of the Pledges (Registration and Inspection Procedures) Regulations, 1967.

⁷³ Ibid., reg. 15. Sec. 25(2) of the Pledges Law gives the Minister of Justice power to make regulations as to the procedure for the inspection of registrations; but there is nothing in the Law as to the actual right of the public to inspect them.

⁷⁴ Sec. 125(3) of the Companies Ordinance.

⁷⁵ Sec. 109 of the Shipping (Vessels) Law, 1960.

⁷⁶ Sec. 168 of the Patents Law, 1967.

⁷⁷ Sec. 1(a).

⁷⁸ But not liens created by law; for this type of security is outside the scope of the Pledges Law, which, as we have seen, confines itself to security interests created by agreement.

⁷⁹ Sec. 1(a).

⁸⁰ See, for example, Osborne, op. cit., 246 et seq.; Restatement of the Law of Security, pp. 8–9; Casner, A. J. and Leach, W. B., Cases and Text on Property (Boston, 1951) 185Google Scholar; Planiol et Ripert, op. cit., Vol. 12, p. 81; Mazeaud, op. cit. Vol. 3, p. 62.

⁸¹ See Markovitz v. Ben-Sinor (1946) 2 P.D. 216, 221.

⁸² Sec. 1(b).

⁸³ When the debt is both future and conditional. In the United States the position is clear: under sec. 9–204(5) of the U.C.C, obligations covered by a security agreement may include future advances whether or not the advances are given pursuant to a commitment.

⁸⁴ Sees. 3(a), 4, 6.

⁸⁵ In the United States for example: see U.C.C., sec. 9–404.

⁸⁶ Sec. 15.

⁸⁷ Sec. 13(b).

⁸⁸ Ibid.

⁸⁹ See. 21 (a).

⁹⁰ Sec. 1 (b).

⁹¹ Sec. 1(b).

⁹¹ Cf., with regard to land, sec. 9 of the Mortgage Law (Amendment) Ordinance, 1920.

⁹² Sec. 1; see, too, sec. 1 of the Guarantees Law, 1967, and compare the definition of “secured creditor” in sec. 2 of the Bankruptcy Ordinance, 1936. See Planiol et Ripert, op. cit., Vol. 12, p. 81.

⁹³ On the problems likely to arise if the pledge secures an unliquidated liability, see Levontin, A. V., “Debt and Contract” (1960) 1 Is.L.R. 60, 97, note 185Google Scholar. Prof. Levontin considers that, since an unliquidated liability is not tenderable, it is not suitable for securing by a pledge. The danger is that the secured creditor may delay his claim and, in consequence, the realization of the security; in this way he will bring about a clogging of the property—a kind of mortmain. The fact that there are several legal systems which expressly require the maximum sum secured by the pledge to be stipulated offers some support for Prof. Levontin's view. See, for example, sec. 2828(1) of the Ethiopian Civil Code, 1960; Osborne, op. cit. 255, n. 48; and contrast the Restatement of the Law of Security, p. 5; Osborne, op. cit. 255–6; sec. 1–201(37) of the U.C.C. The following points can be made in favour of the contention that a pledge securing an unliquidated liability is possible. First, it will quite often be reasonable to read into a pledge agreement securing such a liability an implied undertaking on the part of the creditor to sue on the liability without delay. In appropriate cases, this would eliminate the danger of the pledge being clogged in the creditor's hands. Another possibility open to the debtor who seeks to release the pledge is to ask for a declaratory judgment fixing the amount of his liability, so that he can make a tender. In cases where this measure is likely to prejudice the secured creditor—for example, where he has not yet had sufficient opportunity to organize his claim—the court would, it may be assumed, dismiss the debtor's request; but, if the court finds that the creditor is delaying his suit against the debtor without reasonable cause, it would seem that the interest of the debtor (and of the public) in releasing property clogged in the hands of the creditor will override that of the creditor to sue whenever he sees fit. For a contrary opinion see Levontin, supra, 91–2, note 148, where he cites In re Clay [1919] Ch. 66. But in that case the creditor was unable to state the amount due to him at the time the request for the declaratory judgment was made (ibid. 75). The special facts of the Clay case, which, it seems, do not justify a general conclusion being drawn against the possibility of a declaratory judgment in the circumstances we are considering, are discussed in Zamir, I., The Declaratory Judgment (London, 1962) 213–4Google Scholar. Yet another means of avoiding some of the difficult consequences of the mortmain is now provided by sec. 21 of the Pledges Law, which empowers the court to issue such directions as it thinks fit, if satisfied that the rights of the parties may be prejudiced. By virtue of this provision, it will now be possible, for example, to realize a pledge which is clogged in the hands of the creditor without producing any yield, and to replace it by an income-bearing investment.

⁹⁴ End of sec. 1; sees. 18, 19.

⁹⁵ Sec. 16(a); and compare sec. 20.

⁹⁸ Sec. 7.

⁹⁷ Ibid.

⁹⁸ Secs. 8, 9.

⁹⁹ See sec. 15 of the Pledges Law, 1967. The opposite, of course, does not hold: the lien does not have all of the characteristics of the pledge. The main difference between the two lies in the right to realize.

¹⁰⁰ In the first place, this is the logical conclusion to draw. If the lien is identical with the pledge, or narrower than it, then it serves no purpose at all. If the lien has any purpose of its own, we must assume that it embraces certain spheres to which the pledge does not apply. From a comparison of the two laws, it emerges that the lien applies to expenses incurred “as a result of the bailment”, whereas the Pledges Law refers to the “expenses of the safekeeping of the pledged property”. It may be that, in this respect, the lien is broader than the pledge. But, on the other hand, while the expenses in the case of the lien have to be “reasonable”, they are not thus expressly limited in the case of the pledge.

¹⁰¹ Similarly, what effect does the granting of rights (such as a lease) in the collateral have on the charge?

¹⁰² Contrast sec. 9–311 of the U.C.C.

¹⁰³ Contrast sec. 9–306(2) of the U.C.C.

¹⁰⁴ 44 Divrei HaKnesset 85.

¹⁰⁵ Sec. 1.

¹⁰⁶ For, of course, if we hold that the validity of the pledge, as against the successors of the pledgor, depends on the words “a charge on property” in the definition of pledge, then this result will be the same whatever the category of pledge. See sees. 1, 3(a).

¹⁰⁷ See the text to nn. 62 and 69 above.

¹⁰⁸ Apart from a purchaser in circumstances in which the market overt rules apply: sec. 34 of the Sales Law, 1968.

¹⁰⁹ Sec. 4(3). Thus, it is only against other creditors of the debtor that the pledge by agreement operates as a kind of equitable pledge. The Law does not stipulate when the knowledge must exist in order to influence the effect of the pledge. It would seem that the relevant moment is when the agreement giving rise to the debtor-creditor relationship is contracted. Accordingly, in the case of an agreement whereby the creditor undertakes to make a loan to the debtor in the future, if at the time of the agreement the creditor does not know of the existence of the pledge, then, even if he subsequently learns of it before actually making the loan, he is nonetheless considered a bona fide creditor.

¹¹⁰ The opposite view prevails in the United States: that is to say, a bona fide purchaser enjoys a wider protection than a bona fide creditor. See sees. 9–301, 9–302(1) (d), 9–307(2) and 9–312 of the U.C.C.

¹¹¹ Sec. 9–301 (3) of the U.C.C.

¹¹² Sec. 24 refers to the trustee in bankruptcy and the liquidator; but, in doing so, it does not answer the questions raised here. It seems that the doctrine of “reputed ownership” expressed in sec. 37 of the Bankruptcy Ordinance, 1936, is more consistent with the assumption that the trustee need not draw any distinction between the various creditors and that the pledge should be considered invalid.

¹¹³ Sec. 4 of the Law.

¹¹⁴ For the view that, at least in so far as a security in consumer goods is concerned, it is quite unrealistic to expect the creditor to do so; see Blunn, C., Snead, H., Speidel, R., An Introduction to the Uniform Commercial Code (1964) 367–8.Google Scholar In the United States a purchase money security interest in consumer goods is perfected even if it is not registered: see U.C.C., sees. 9–302 (1) (d), 9–307(2).

¹¹⁵ Sec. 4(2) and (3) of the Pledges Law.

¹¹⁶ A deposited pledge is effective against other creditors upon deposit; a registered pledge upon registration. When does the pledge take effect against other creditors in a case where it is first registered, then deposited? The obvious answer would appear to be on completion of the earlier of these two acts; that is to say, upon registration. But as a result of incautious drafting, the answer emerging from a strict interpretation of sec. 4(3) of the Law is: on completion of the later act, i.e. upon deposit.

¹¹⁷ Sec. 6. Under sec. 4(2), the priority of a deposited pledge is determined according to when it was deposited; that of a registered pledge is determined according to the time of registration, as specified in reg. 5 of the Pledges (Registration and Inspection Procedures) Regulations, 1967. For the registration of a pledge by a company or co-operative society, see reg. 1 of the Pledges (Registration and Inspection Procedures) (Amendment) Regulations, 1968. The priority of a pledge by agreement is determined according to the time of the agreement: sec. 3(a); but here, of course, this factor will only be of importance as against creditors who know or should know of the pledge: sec. (4)(3). In other words, in so far as a pledge by agreement is concerned, sec. 6, which deals with the question of priorities as between secured creditors, must be read subject to sec. 4, which deals with the effect of that category of pledge against other creditors of the debtor.

¹¹⁸ A more extreme position is taken in the United States on this point. Under sec. 9–304(1) of the U.C.C, a security interest in negotiable instruments can only be perfected by transfer of possession. It is submitted that the solution adopted in the Pledges Law, whereby the choice is left to the parties themselves, is preferable.

¹¹⁹ Sec. 13(b). Where property is pledged without the knowledge of the owner thereof (this possibility will be considered below) the owner has the right to redeem the property before the time for payment, despite any agreement to the contrary in the pledge agreement: sec. 5, 13(c). Where redemption before the agreed time is possible and the obligation is an interest-bearing monetary obligation, the person redeeming is required to pay the creditor interest for a certain period in compensation: sec. 13 (b).

¹²⁰ Sec. 6. In the case of early payment under this heading, no provision is made as to compensation of the creditor by payment of interest. There does not appear to be any justification for treating this case differently from that referred to in the previous note.

¹²¹ Sees. 29(a), 40(a), 76(c) of the Execution Law, 1967. Here, too, there is no provision as to compensation of the creditor by payment of interest for a certain period: see the two preceding notes.

¹²² Sec. 56 of the Bankruptcy Ordinance, 1936; see, too, the Second Schedule to that Ordinance, sees. 12, 17, 21.

¹²³ Sec. 21.

¹²⁴ Sec. 22.

¹²⁵ Sec. 1.

¹²⁶ Nor is there a definition of the term “property” in the Interpretation Ordinance.

¹²⁷ Sees. 4, 5. In the English translation of the Law, the term “movable property” is used here; but it would seem that the translator has ignored the accepted distinction drawn in Hebrew by the legislator between “movable property” (Metaltelin) and “chattels” (Nehasim Nadim): see n. 131 below.

¹²⁸ Sees. 4, 24.

¹²⁹ Sees. 9(b), 17(4), 20.

¹³⁰ Examples of “securities” are promissory notes, bills of lading and warehouse receipts. When the instrument is “to order” it will have to be endorsed before it becomes a “security” within the terms of the definition, because of the requirement that the holder be vested with the right represented by the document. Where indorsement does not have this effect, as in the case of registered share certificates, the instrument is not a “security” (and consequently cannot be pledged by deposit).

¹³¹ Sec.24. While the term “movable property” is defined in the Interpretation Ordinance, it is apparently wrong to assume that the legislator identifies “chattels” with “movable property”. Sees. 4(a) and 34 of the Sales Law, 1968, provide examples of the separate usage of these two terms. The distinction between them may be that “chattels” refers solely to tangible things; the context in which this term has been used in recent enactments supports this view. At all events, in the Pledges Law “chattels” does not include “securities”, which are mentioned as a separate category: see, for example, sec. 4(2) and (3).

¹³² See sees. 1 and 4 of the Sales Law, 1968, and Sec. 1 of the Gifts Law, 1968.

¹³³ One example of something which cannot be pledged is the right to inherit the estate of someone who is still alive: Succession Law, 1965, sec.8(a).

¹³⁴ Sec. 2(a) of the Pledges Law.

¹³⁵ This is largely due to the impossibility of registering the land in the land registry, owing to non-parcellation.

¹³⁶ See sees. 1 and 4 of the Ottoman Law for the Mortgage of Immovable Property, 1913; sec. 9 of the Land Law (Amendment) Ordinance, 1933; sees. 2, 4, 7 and 10 of the Land Transfer Ordinance, 1920.

¹³⁷ Sec. 4 of the Ottoman Law for the Mortgage of Immovable Property, 1913; sec. 10 of the Land Transfer Ordinance, 1920.

¹³⁸ Sec. 1.

¹³⁹ Na'offlan v. Mayor of Tel Aviv (1954) 10 P.D. 1943; see too Doman v. Administrator General (1963) 17 P.D. 2202.

¹⁴⁰ See sec. 9(a) of the Interpretation Ordinance (New version).

¹⁴¹ Minister of Justice, Joseph, D., 44 Divrei HaKnesset 34.Google Scholar

¹⁴² Sec. 3(b) of the Law. The “restriction or condition applying to the transfer of ownership”, dealt with in this provision, refers, it is assumed, to the transfer of ownership by agreement. Thus, for example, the fact that the law forbids the sale of certain categories of property in execution proceedings does not also mean that the same property cannot be pledged. Accordingly, while machines (up to a certain value) which are necessary for the carrying on of the debtor's trade cannot be sold in execution, they can be pledged, because their voluntary sale by the debtor is permissible; sec.22(a) (4) of the Execution Law, 1967; and compare sees. 38(c), 39 (b). When it was sought to impose restrictions on the pledging of the debtor's property, express provisions were made to this effect in the Execution Law, ibid.

¹⁴³ Difficulties arise in the case of the placing of a charge on a debt. Sec. 2(1) of the Debt (Assignment) Ordinance, 1928, provides: “…Any absolute assignment by writing under the hand of the assignor, not purporting to be by way of charge only, of any debt…shall be valid…” (our italics). Here we have a restriction on the transfer of ownership of property (namely, a debt), which according to the provisions of sec. 3(b) of the Pledges Law applies also to the pledging of that property. Thus, in so far as the pledge of a debt is concerned, we must read the above provision of the Debt (Assignment) Ordinance as if it said: “The pledge of a debt by writing under the hand of the debtor, not purporting to be by way of charge only, shall be valid”. Since every pledge is, by its very nature, “purporting to be by way of charge”, it would appear to follow that the pledge of a debt is invalid. But this was certainly not what the legislator intended; one of the main innovations of the Pledges Law was the possibility to pledge rights (see Dov Joseph (then) Minister of Justice, 44 Divrei HaKnesset 34). The problem is evidently the result of inadvertence as to the provisions of the Debt (Assignment) Ordinance, or a consequence of the assumption that the words “restriction…to the transfer of the ownership of any property”, in sec. 3(b) of the Pledges Law, do not apply to the assignment of a debt.

If the Assignment of Debts Bill, 1965 (Hatza'ot Hok 5725, p. 246) is enacted, the difficulty will disappear, for sec. 1 (c) of the Bill expressly provides for the charging of a debt. Until then, one possible solution is to adopt the very narrow interpretation given to the words “by way of charge” in the Debt (Assignment) Ordinance. According to this interpretation, the above restriction does not apply if the debt is transferred, even if the purpose of the transfer is to provide a security. This approach was followed by the English courts in the case of the mortgage of a debt (see Chitty on Contracts (23rd. ed., 1968) Vol. 1, 472–3). If the restriction “by way of charge” as interpreted in the cases, does not apply to the transfer of the ownership of a debt, then clearly sec. 3(b) creates no difficulty here.

¹⁴⁴ Civil Wrongs Ordinance (New Version), sec. 22; and see n. 142 above.

¹⁴⁵ Sec. 8 of the Wage Protection Law, 1958, expressly forbids the transfer or the charging of a certain portion of a person's wage (subject to an exception in the case of maintenance, under sec. 8(b)).

¹⁴⁶ Sec. 14 of the Family Law Amendment (Maintenance) Law, 1959; and see the exception there with regard to a person who has provided necessaries. This Law too expressly invalidates both transfer and charge.

¹⁴⁷ Sees. 38–39 of the Execution Law, 1967; Sec. 30 of the Tenants Protection Law, 1955.

¹⁴⁸ See Succession Law, 1967, sec. 7, which deals with the power of an heir to pledge his part of the estate before the estate has been divided up.

¹⁴⁹ Mejelle, Articles 1072, 1131.

¹⁵⁰ Sec. 11 of the Pledges Law.

¹⁵¹ See 49 Divrei HaKnesset 2150.

¹⁵² See n. 131 above.

¹⁵³ Sec. 5. This provision constitutes an exception to one of the provisions considered above, whereby a legal restriction on the transfer of the ownership of any property shall also apply to the pledge of that property (sec. 3(b)). Sec. 5 accepts the possibility of a pledge being made where transfer of ownership is impossible.

¹⁵⁴ Mejelle, Article 728.

¹⁵⁵ See Mejelle, Article 1659, and Mercantile Bank of India Ltd. v. Central Bank of India Ltd. [1938] 1 All E.R. 52; Central Newbury Car Auction Ltd. v. Unity Finance Ltd. [1956] 3 All E.R. 905.

¹⁵⁶ Arminjon, P., Nolde, B. B., Wolff, M., Traité de droit comparé (Paris), Tome 1, pp. 400Google Scholaret seq; Murray, D. E., “Sale in Market Overt” (1960) 9 I.G.L.Q. 24Google Scholar. In the United States, too, there has been of late a trend in the direction of the continental approach: see sec. 2–403(2) of the U.C.C. This trend is criticized in Duesenberg, R. W., King, L. P., Sales and Bulk Transfers under the Uniform Commercial Code (New York, 1968) 10–51, 10–52Google Scholar, note 20.

¹⁵⁷ See the cases mentioned in n. 155 above and Vaines, J. C., Personal Property (4th ed.London, 1967) 153et seq.Google Scholar

¹⁵⁸ This question has been examined recently in England. See Law Reform Committee, Twelfth Report, 1966, Cmnd. 2958. On the point we are considering the Committee recommended that no change be made in the existing English approach: ibid. 12–13, 16. See also Aronovsky, M., “Comments on the New Law of Sales” (1969) 4 Is. L.R. 141, 149.Google Scholar

¹⁵⁹ Sec. 34 of the Sales Law.

¹⁶⁰ Planiol et Ripert, op. cit., Vol. 12, pp. 86–7. Mazeaud, op. cit. 62.

¹⁶¹ See the text to n. 58 above.

¹⁶² It is not possible to equate the market overt rules in the case of pledge with those in sale by application of the provisions of the Sales Law to the pledge. The Sales Law speaks of “a person who deals with the sale of property of the same kind as the thing sold”; this condition cannot be applied to a borrower who pledges his property. There is no “market” for borrowers (in contrast to lenders). But this does not explain the content of the market overt rules in the Pledges Law. If there is no market for borrowers, then it is possible either to do without such rules in this field of the law (as in England), or to take a quite different approach and to protect all bona fide pledgees, whether the property comes into the hands of the pledgor with the sanction of the owner or not. This is the position in Italian Law: see Italian Civil Code, 1942, sec. 1153(3), and Messineo, F., Manuale de Diritto Civile e Commerciale (Settima Edizione) Vol. 2, p. 282.Google Scholar The Pledges Law has chosen a third way: recognition of the special responsibility of the owner in cases where he has voluntarily transferred possession of the property to the pledgor. But this gives rise to the difficulty we have already dwelt on: why should this responsibility be limited to the case of pledge? For a contrary point of view, see Aronovsky, cit. 149–150.

¹⁶³ Compare the definition of “property” in the Execution Law, 1967.

¹⁶⁴ On the possibility of charging future property and the priority given to secured creditors who have financed the purchase of that property, see the American Law on the subject: U.C.C., sec. 9–204(3), p. 645, note 5; sec. 9–312 (3), (4).

¹⁶⁵ Trustee of the Estate of M. Lichstein, deceased v. Shekem Ltd. (n. 2 supra).

¹⁶⁶ Sec. 8.

¹⁶⁷ Sec. 9.

¹⁶⁸ On this point see, for example, the provisions as to proceeds in sec. 9–306 of the U.C.C. It is possible that in Israel the legislator refrained from tackling the question because it constitutes a general problem of the law of property (that of “tracing”) and, as such, not one that can be satisfactorily dealt within the framework of the law on pledges.

¹⁶⁹ Sec. 9.

¹⁷⁰ See, for example, the provisions of the U.C.C., sec. 9–306(3) and Coogan, Hogan, Vagts, op. cit., Vol. 2, pp. 1600–1601.