What is COLLATERAL SECURITY? Definition of COLLATERAL SECURITY in Black's Law Dictionary - Legal dictionary - Glossary of legal terms.
A security given in addition to the direct security, and subordinate to it, intended to guaranty its validity or convertibility or insure its performance; so that, if the direct security fails, the creditor may fall back upon the collateral security. Butler v. Rockwell, 23 P. 462, 14 Colo. 125; McCormick v. Bank, C.C.Ind., 57 F. 110; Perfection Tire & Rubber Co. v. KelloggMackay Equipment Co.,_194 Iowa 523, 187 N.W. 32, 33; Barbin v. Moore, 85 N.H. 362, 159 A. 409, 415, 83 A.L.R. 62.
Collateral security, in bank phraseology, means some security additional to the personal obligation of the borrower. Shoemaker v. Bank, 2 Abb., U.S., 423, Fed.Cas.No.12,801, or pledge of negotiable paper, shares of corporate stock, and the like. Turner v. Commercial Savings Bank, 17 Ga.App. 631, 87 S.E. 918; A. H. Averill Machinery Co. v. Bain, 50 Mont. 512,148 P. 334.
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