¹ On the situation in the United States of America see: Gilmore, G., Security Interests in Personal Property (Boston, 1965) vol. 1, p. 462Google Scholaret seq.

² Joseph, D. (1965–1966) 44 Divrei HaKnesset 34.Google Scholar In the Pledges Law, 1967, the term “pledge” is used to denote all types of security interests, and not only those created by transfer of possession in the collateral.

³ For the full text of the Pledges Law, 1967, see (1969) 4 Is. L.R. 443 ((1967) 21 L.S.I. 44). For a general review of the Law see Weisman, J., “Principles of the Pledges Law, 1967” (1969) 4 Is. L. R. 417.Google Scholar Note that registration as well as deposit are actually not creating the security but rather perfecting it. Weisman, id. at 423 et seq.

⁴ Land Transfer Ordinance, 1920, Drayton, , The Laws of Palestine II p. 881Google Scholar; Shipping (Vessels) Law (1960) 14 L.S.I. 60.

⁵ Regarding motor vehicles, until the Pledges Law, 1967, the law did not utilize the existing registration system to enable registration of a security interest over a motor vehicle. However, although not provided by law, a usage developed among creditors to enter a notation in the car registry whenever a security interest was created. In view of the absence of any legal sanction to such registration it would seem that such registration could only come in addition to and not in substitute for the fulfilment of the requisites provided by the law for the creation of a security interest. Such a notation could, perhaps, be of value for the purposes of the Movable Property Law, 1971, sec. 12 (24 Sefer HaHukim no. 636, p. 184) or sec. 34 of the Sale Law (1968) 22 L.S.I. 107, in preventing the possibility that a pledged car would reach the hands of a bona fide purchaser. A purchaser would not be able to claim that he was unaware of the existence of the security interest if such a notation was entered in the car registry. The question whether the general registration system under the Pledges Law would not have the same effect as the notations in the car registry will be discussed below.

⁶ Companies Ordinance 1929, Drayton, , The Laws of Palestine I, p. 169Google Scholar. Cooperative Ordinance, 1933, Drayton, , The Laws of Palestine I, p. 360.Google Scholar

⁷ Compare: Uniform Commercial Code, 1972 Official Text, The American Law Institute sec. 9–302.

⁸ It is limited to “movable property and securities”. See secs. 4 (2) and 24, of the Pledges Law, 1967.

⁹ Joseph, D., (1965–1966) 44 Divrei HaKnesset 33, 34.Google Scholar

¹⁰ Who are included in the category of “third parties”? Sec. 4 of the Pledges Law, 1967, speaks only of “other creditors of the debtor”, an expression which was defined in sec. 24 to include trustees in bankruptcy of the debtor, or his liquidator. Other classes of third parties who are not mentioned in sec. 4, e.g. purchasers of the collateral, are presumably bound by the security interest although not registered. See sec. 3(a). For further discussion of this aspect see: Weisman supra n. 3 at p. 432, 433.

¹¹ At least in cases where the other creditor was aware of the security prior to binding himself towards the debtor.

¹² Sec. 4.

¹³ Sec. 4 (2).

¹⁴ In certain cases transfer of possession could also function indirectly as a notification of the security interest. This is so, e.g., when ownership of the debtor over the collateral was already known to some third parties. In such cases the lack of possession is expected to alert these third parties, who, through questioning, might find out about the existence of the security interest.

¹⁵ When the debtor's ownership over the collateral was known to his creditors, then those who became creditors after the creation of the unperfected security interest, can claim to have been misled by the fact that the security was not perfected. But is not the position of those who became creditors before the creation of the unperfected security interest different? Could subsequent registration or deposit, be of any use to creditors, who were already bound to the debtor? If indeed registration or deposit cannot affect the situation of earlier creditors, why should the validity of a security against such creditors be dependant upon registration or deposit? A possible answer to that is that transfer of possession, or registration, could operate as a warning to the creditors that the debtor's economic condition must be carefully watched. Creditors might then be on guard that the date of maturity of their debts does not elapse without payment. In suitable cases registration or transfer of possession could be considered as acts of bankruptcy by the debtor, and declared void. Thus, registration or deposit could be useful even for such early creditors, and that is why they should be insisted upon (Bankruptcy Ordinance, 1936, sec. 3, 43 (published in (1936) P.G. supp. no. 4, at p. 21): Hane'emanim Lenichsey Rafiah v. State of Israel (1968) (1) 22 P.D. 124; Karst v. Gane 136 N.Y. 316, 32 N.E. 1074 (1893). The weight of this answer depends upon the accuracy of the assumption involved that normally unsecured creditors keep a watchful eye on the Registry of security interests, and that they keep track of changes in the possession of their debtors assets. This assumption when applied to people who accepted the risk that is involved in unsecured debts seems to be questionable. See: Gilmore, supra n. 1, at p. 463.

¹⁶ That was the situation with regard to land registration prior to the Land Law, 1969, according to the Land Transfer Ordinance, 1920, secs. 4, 11. This approach was also applied to registration of charges by Companies (Companies Ordinance, 1929, sec. 127, Drayton, , The Laws of Palestine I, p. 169Google Scholar; In re Monolitic Building Co. [1915] 1 Ch. 643) and to registration of charges over patents (see sec. 90 of the Patents Law (1967) 21 L.S.I. 149 at p. 164).

¹⁷ This is presently the situation regarding land registration. Land Law, 1969, secs. 7 (b), 9; Weisman, J., “The Land Law 1969; A Critical Analysis” (1970) 5 Is.L.R. 379, 452.CrossRefGoogle Scholar

¹⁸ Secs. 3 (a), 4. And see Weisman, supra n. 3 at p. 432.

¹⁹ Admittedly such creditors would not be a common occurrence. Under sec. 5 of the Gift Law, (1968) 22 L.S.I. 113, a promise to give a gift can create a binding obligation. The beneficiary under such an obligation would presumably qualify as belonging to the “other creditors of the debtor”, dealt with by sec. 4 of the Pledges Law. “Creditor” is not defined in the Pledges Law. It would appear that any person having a right in personam against the debtor is included in the phrase “other creditors of the debtor”.

²⁰ Land Law, 1969, secs. 7, 9.

²¹ Land Law. 1969, secs. 125, 10. For the meaning of the term “settled land” see Weisman, supra n. 17 at p. 408.

²² Shipping (Vessels) Law (1960) 14 L.S.I. 60. The effect of sec. 80 is very close to a Deed Registration system. See also the title of the chapter under which sec. 80 appears: “Validity of Title Registration”.

²³ Land Law, 1969, sec. 125(b). For the meaning of the term “unsettled land” see Weisman op. cit. at p. 408.

²⁴ (1967) K.T. no. 2105, p. 3245. Hereinafter referred to as Pledge Regulations.

²⁵ R. 3(b) of the Pledge Regulations, 1967, requires that the pledgor submit together with the Pledging Notice an affidavit to the effect that he has a right to pledge the property specified in the Pledging Notice. However, no registration system can guarantee the validity of a pledge only on the force of an affidavit submitted by the pledgor. A person who is ready to take the risk involved in defrauding his creditor by pledging to him property which he does not own, might not be deterred from doing so by a requirement to declare in an affidavit that he owns the property.

²⁶ Sec. 4 in its original version in Hebrew is clearer on this point than the English translation would indicate.

²⁷ Pledges Law, 1967, sec. 3(a).

²⁸ According to the Pledge Regulations, 1967, (Forms 7 and 8 in the First Schedule) the signature of the creditor is required when applying for cancellation of registration. What can a debtor do when his creditor refuses to cooperate and sign the necessary form? With regard to mortgage of land, or ships, special provisions were made for such an eventuality to enable striking out the entry (Land Regulations (Administration and Registration) 1969, rr. 62, 63, (1969) K.T. no. 2498, p. 657; Shipping (Vessels) Law 1960, sec. 68). No such provision is to be found in the Pledge Regulations. Presumably the debtor would have to apply for a declaratory judgment to the effect that the pledge was terminated.

²⁹ Pledge Regulations, 1967, r. 3(b), Form No. 1 in the First Schedule.

³⁰ Pledges Law, 1967, sec. 4(3).

³¹ See supra n. 10.

³² See, Sale Law, 1968, sec. 34. Presumably Registration does not preclude the possibility that a purchaser would be considered as being bona fide. See further on this aspect in Weisman, supra n. 3 at p. 434.

³³ See, Sale (Amendment) Law (1971) 23 Sefer HaHukim no. 636, p. 186.

³⁴ Ibid.

³⁵ Brown, R. A., The Law of Personal Property (2nd ed., Chicago) 233.Google ScholarMann, F. A., The Legal Aspect of Money (Oxford, 3rd ed., 1971) 10.Google Scholar Although it is difficult to conceive that this rule does not apply to Israel law, it is not easy to point out the exact source on which one could rely for this purpose.

³⁶ Pledge Regulations, 1967, r. 12, and Form No. 7 in the First Schedule.

³⁷ Pledge Regulations, 1967, r. 3(b) and Form No. 1 in the First Schedule.

³⁸ Cf. Uniform Commercial Code, secs. 9–208. Gilmore supra n. 1, at pp. 472–74.

³⁹ Transfer of Obligations Law, 1969, sec. 5 (1969) 23 L.S.I. 277.

⁴⁰ Guarantee Law, 1967, sec. 12 (1967) 21 L.S.I. 41.

⁴¹ Cf. Uniform Commercial Code secs. 9–302(2), where it is provided that new filing is not necessary in case of transfer of the security, vis-à-vis the creditors or assignees of the debtor.

⁴² See Pledge Regulations, 1967, r. 9, and the fourth form in the First Schedule of these Regulations. See also sec. 1 of the Succession Law (1965) 19 L.S.I. 58.

⁴³ Pledge Regulations, 1967 rr. 1, 3, 6.

⁴⁴ Pledge Regulations, 1967, r. 4(a). The question of the efficiency of this method, and what is done with debtors who have no Identifiation Card is considered below.

⁴⁵ While such a general provision is missing special kinds of debtors might be subject to a duty to use only a certain registered name, by virtue of provisions in specific laws, e.g. Partnership Ordinance, 1930, secs. 6, 8, 10, Drayton, , The Louis of Palestine II, pp. 1041Google Scholar; Registration of Business Names Ordinance, 1935 (published in (1935) P.G. supp. no. 1 at p. 119) etc.

⁴⁶ This information was given to the writer by the Pledges Registrar in Jerusalem.

⁴⁷ Shipping Regulations (Construction and Mortgages) 1961, rr. 49, 50 (1961) K.T. no. 1103, p. 974.

⁴⁸ Land Regulations (Administration and Registration), 1969, rr. 17, 21.

⁴⁹ According to the information given to the writer by the Department of Population Registration, in the Ministry of Interior, no note of a change of name is entered in a new Identification Card which replaces a lost one, if seven years have elapsed since the change of the name.

⁵⁰ The Names Law (1956) 10 L.S.I. 95, provides that changing a name must be published in an official publication. Pledges Registrars would do well if they followed these official publications. This could help to reduce the possibility of fraud perpetrated by debtors who officially change their names. Pledges Registrars could, perhaps, be assisted by having the competent authority under the Names Law notify them of every change of name that has been filed. A similar duty, to report changes in names, was laid down in sec. 15 of the Population Registration Law (1965) 19 L.S.I. 288 at 291, whereby it is provided that changes in names should be reported to the Registrar of Population. Formally changing the name would not, however, be often in use for purposes of committing frauds upon the registry since the Names Law restricts the possibility of changing a name to once every seven years.

⁵¹ It seems that no change in the Pledges Registry is required in order that such transfer of ownership shall be valid. Succession Law (1965) 19 L.S.I. 58, secs. 1,101, and Ch. 6, art. F of this Law. Pledge Regulations, 1967, r. 9 and Form no. 4 in the First Schedule clearly indicate that ownership passes even before any alteration in the registration is made. As to the power of the debtor to transfer ownership over collateral see Yadin, U., “Some Further Remarks on the Pledges Law, 1967” (1970) 5 Is. L.R. 116, 118.CrossRefGoogle Scholar

⁵² Pledge Regulations, 1967, r. 1.

⁵³ Pledge Regulations, 1967, r. 4(a).

⁵⁴ See supra p. 404.

⁵⁵ Pledge Regulations, 1967, r. 4(b).

⁵⁶ This practice was officially disclosed to the writer in a letter of the Department of Population Registration, dated October 30, 1972.

⁵⁷ Pledge Regulations, 1967, r. 4(c).

⁵⁸ The wording of r. 4(b) when compared to 4(c) indicates that r. 4(b) does not apply to a body corporate which is not included in 4 (c). (See the text of these regs. below). However, it would seem that the intention of r. 4(b) was to provide the office in Jerusalem as a place for registration in all cases where another solution is not provided for. Following is the translation of r. 4:

(a) The address of the debtor is the place registered in his Identification Card as his address.

(b) A debtor who is not an Israeli resident and who does not have an Identification Card, or any other debtor not included in subsection (a), will be considered as if Jerusalem was his address.

(c) The address of a partnership and corporate bodies who are subject to the Pledges Law, 1967, is their registered place of business, and when unregistered their principal place of business.