78 S.E. 303 | N.C. | 1913
Action upon promissory notes. The evidence tended to show that plaintiffs, at the request of defendants, installed a heating plant in their residence for the price of $684. When the work was completed, 10 January, 1911, the defendant A. H. McCormick gave to plaintiffs his three promissory notes, each in the sum of $288, and due, respectively, thirty, sixty, and ninety days after their date. Plaintiffs indorsed the notes for value to the American National Bank of Asheville, N.C. the bank discounting the same 11 January, 1911, and afterwards the first note was paid and $50 paid on the other two notes in December, 1911. The defendants, A. H. McCormick and wife, having refused to pay the other two notes, plaintiffs were notified by the bank that they would be expected to take care of them, and thereupon plaintiffs gave to the bank their notes for the full amount of the balance due, and the two notes of defendants to the plaintiffs were deposited with the bank as collateral security. The evidence was conflicting as to when this was done, whether in 1911, before this action was commenced, or in February, 1912, after it was commenced, the summons having been issued and served on 10 January, 1912. There was much evidence (473) taken as to the quality of the heating plant, but, in the view we take of the case, it is not necessary that it should be stated here. The court, at the close of the evidence, having intimated that plaintiffs could not recover, they submitted to a nonsuit and appealed.
As the evidence was conflicting upon the question whether the two unpaid notes were taken up by *390
plaintiffs in 1911 or in February, 1912, after this suit was brought, we must assume, in favor of plaintiffs, that it was during the former year, as the evidence must be considered in the best light for them, drawing all reasonable inferences therefrom necessary to sustain their case, and rejecting the defendant's testimony, which is adverse to the plaintiffs.Brittain v. Westhall,
The question then is, and we presume this is the one the judge decided, Can the plaintiffs as pledgors of the notes to the bank, as collateral security, mantain [maintain] this action without the presence of the bank as a party? We must premise that it appears from the evidence (474) that the note of plaintiffs to the bank was paid and the collaterals taken up before the trial of this case, that is, in November, 1912, the trial having occurred at January Term, 1913. It was not denied that plaintiffs had paid the notes and were the legal and equitable owners thereof at the time of the trial, and one of defendant's witnesses testified that they were paid in November, 1912.
We need not consider the question as to the validity of the lien, as the plaintiffs were, at least, entitled to a judgment for the debt, if entitled to recover at all, and the nonsuit deprived them of this right. Two issues were submitted: one as to the debt, and the other as to the lien, and plaintiffs must have failed in their proof as to both before we can hold that the opinion of the judge was correct and the nonsuit proper.
The bald question, therefore, is, Can a pledgor, who has deposited notes with a bank as collateral, sue and recover upon the same, if he pays his debt, takes up the collateral notes and produces them at the *391 trial, so that they can be canceled for the protection of the debtor? We will answer this question in the affirmative, as we think it is in accordance with principle and authority.
First, let us consider the nature of a pledge. It has been well defined in the leading case of Doak v. Bank,
But it has been expressly held that the pledgor may sue for the property before paying the debt. The plaintiff and pledgor, in Wells v. Wells,
The writer of the article in the American Law Review, referred to in that case, states the law to be that the pledgor has an interest in the thing deposited in pledge, and is not restricted to the remedy of tender or repayment, and the pledgee will be protected in his rights by an order that he shall be first paid out of the fund derived from the sale of the property pledged or its collection, if a note. So it was held in Fisher v.Bradford,
What should have been done here for the protection of all parties was to require the notes in the hands of the plaintiff to be deposited with the clerk of the court for cancellation, as is generally done in other actions upon such securities. O'Kelly v. Ferguson, 49 La. Ann., 1230, gives us the rule of the civil law: "Until the debtor be divested from his property (if it is the case), he remains the proprietor of the pledge, which is in the hands of the creditor only as a deposit to secure his privilege on it," and thus applies it: "They (pledgors) maintain that having placed the notes in the hands of the plaintiff, they were themselves either powerless to take out remedial process against their lessees, or that it was not their duty to do so. The fact that the defendant transferred the notes to the plaintiff as collateral did not, in our opinion, withdraw from them the power of protecting (478) their interests by proceedings against the makers of the notes. Notwithstanding the pledge, they were still owners of the notes. . . . We see no obstacle in the way of the lessor's (pledgor's) having recourse directly to conservatory proceedings to protect his interests. He could legally make all the allegations necessary to that end and procure the necessary proof on the trial. It would not be essentially necessary for *394
the purpose that he should be in actual possession of the notes." We see that rule of the civil law, in regard to the nature of a pledge and the interests of the respective parties, corresponds with our law as stated in Doak v. Bank, supra. The same objection as we are now considering to plaintiff's right to sue and recover upon the pledged notes was raised upon similar facts in the recent case of Gilman v.Heitman,
If we consider the pledgee as the legal owner of the collateral, he holds it in trust, first, for himself, and then for the pledgor. If the debt for which the property is pledged be less than the value of the latter, the pledgor has not only a technical interest as a beneficiary, but a substantial one, and he is also a beneficiary in the sense that he will be entitled to the thing pledged upon payment of his debt. When he sues to preserve and protect his interest in the pledge, the court may so proceed or so mould its judgment or decree as to protect all parties concerned. Our present system of pleading and practice is elastic enough for this purpose. Its liberal procedure, it has been said, would in some respects shock a lawyer bred in the old school, but it is convenient, sensible, and in every way worthy of universal adoption. The common-law objection that its procedure and judgments are impossible *395
"is simply absurd; the thing is done, and is therefore possible". Pomeroy's Rem. and Remedial Rights (1876), p. 153, note 3, referring to the "divided" judgment in Gradwohl v. Harris,
The nonsuit taken in deference to an erroneous opinion as to the law of the case, is set aside.
New trial.
Cited: Hodges v. Wilson,