100 Tenn. 245 | Tenn. | 1898
This cause is before us on application to rehear by both plaintiff and defendant. The suit, was brought before a Justice of the Peace on a note for $200. On appeal to the Circuit Court, it was heard before the trial Judge without a jury, and judgment was rendered for the note and interest. Defendant appealed to this, Court. At a former day of the term the judgment of the Court below was modified, and now, on the application of both parties, is reheard. It appears that on February 7, 1895, Brown executed his note for $200, payable to Pearson at ninety days, in order that Pearson might negotiate it and get the proceeds for Brown’s benefit. Pearson, instead of negotiating it for Brown’s benefit, borrowed from Dudley $55 for his own use, giving his note therefor, and pledging the $200 (Brown) note as collateral. Pearson then sold the $200 note to Dr. H. T. Campbell, upon the terms that Campbell would pay off the $55 note to Dudley, and would transfer to him a phaeton valued at $125, all of which was done. Campbell being now the owner of the $200 note, notified Brown that he held it, and would expect payment. Brown informed him that the note had been fraudulently obtained from him, and transferred fraudulently by Pearson, and that he (Campbell) must look to Pearson for its payment. Campbell, being fearful that litigation would arise, bought back from Pearson the phaeton, and gave him for it $60 in money and a buggy valued at $40. When Campbell sold the phaeton to
In other words, the fraudulent note is negotiated
But we are of opinion that Dr. Campbell, when he was informed of the fraud practiced upon Brown', the maker of the note, was obligated to hold the title to the phaeton to indemnify Brown against loss, or, at least, he could not surrender the title to Brown’s prejudice, nor could he allow the phaeton to be sold, or buy it himself, • except on condition that he apply the value of the phaeton pro tanto to satisfy the note. Having retaken and repurchased the phaeton, and thus given up the security which, under the facts, he was obligated to, hold for Brown’s benefit, he must be held liable for its value as a credit upon the $200 note, so that he is entitled to recover only the amount paid Dudley, $55, with interest, and for this amount, and all costs, judgment will be entered. The judgment of the Court below will be modified accordingly.