172 Ga. 731 | Ga. | 1931
J. F. Hattaway brought suit against First National Bank of Blakely, alleging in substance as follows: Defendant has damaged petitioner in the sum of $10,000, by reason of the following facts: In the fall of 1920 petitioner delivered to defendant fifty bales of cotton to secure certain indebtedness due by the plaintiff to defendant. The indebtedness was renewed from time to time, and is now represented by two promissory notes, both dated April 3, 1922, and due September 28, 1922, for the principal sum of $4,046.21 and $1,788.81, or a total of $5,835.02, with interest thereon at the rate of 8 per cent, per annum from maturity. By amendment, in response to special demurrer, copies of the notes were attached to the petition. In each one of the notes the cotton is described as being located in a certain' warehouse. Each of the notes has the following stipulation: “I represent that I am sole and lawful owner, and have full power and authority to pledge such collateral, and I hereby constitute the president, vice-president, and cashier of said corporation, jointly and severally, my attorney or attorneys to collect, sell, or otherwise dispose of the whole or any portion of said collateral, either at public or private sale, and without notice [to] me of an intention to sell, in case of the nonperformance of this contract,, applying the proceeds to the payment of this note, including interest, and accounting to me for the surplus, if any; and at any such sales or sale the said corporation or any officer or agent thereof may be the purchaser in whole or in part. In case qf deficiency, I hereby promise to pay said bank the
After maturity of the notes, defendant was by plaintiff instructed to sell the cotton pledged whenever the price thereof would pay the notes in question, but this it failed to do; and thereafter, on or about November 15, 1923, petitioner again instructed and demanded defendant to sell said cotton and discharge the notes. It is averred that the cotton was, on the date of the demand, of the market value ‘of 33 cents per pound; also that on the date of the maturity of the notes or shortly thereafter and subsequently to petitioner’s instruction to sell the same, the cotton was of the market value of 37 cents per pound where located, from which price it steadily declined for a period of a year or more, and until the same was sold by the defendant. Notwithstanding the plaintiff’s several demands and the decline in price, defendant failed and refused to sell the cotton for a period of two years and six months after the maturity of the notes, but did, on March 3, 1925, sell the same for 24-15/16 cents per pound, a total received therefor of $5,892.84. Petitioner alleges that the cotton, on or about October 1, 1923, and after the date of the first demand to sell, was of the market value of 37 cents per pound, or a total of $8,920.33; that the difference between this amount and the amount due on the notes was $2,618.55, which the plaintiff alleges he is entitled to recover. On or about November 15, 1923, the date of the second demand, the cotton was worth 33 cents per pound, and the difference between its value at that time and the amount due on the notes was $1,595.80. It .is alleged that the defendant’s failure, refusal, and omission to sell the cotton under the conditions stated was wrongful, negligent, and injurious to petitioner, whereby he sustained loss in the sum aforesaid; that defendant did not exercise ordinary diligence in making a sale of said cotton when authorized, and was grossly negligent in omitting to sell the cotton for a period of at least a ¡year and a half, after the request to do so and while
To this petition the defendant filed both a general demurrer and special demurrers. After amendment of the petition to meet one ground of the special demurrer, the judge overruled all the demurrers, and the defendant excepted.
The petition shows on its face that the proceeds of the cotton at the time it was sold on March 3, 1925,. were not sufficient to pay the principal and interest due on the notes held by the bank. It is alleged that about October 1, 1923, and again on November 15, 1923, the plaintiff demanded that the bank sell the cotton which had been pledged, -and that if either of these demands had been complied with the proceeds at the then market value would have been more than sufficient to pay the notes in full. And among other questions raised by the general demurrer is, is the bank liable in damages for failure to exercise ordinary care in dealing with the collateral because it failed to sell the cotton at the time the plaintiff made the demand that it be sold?
Neither at common law nor under the statutes of this State, in the absence of contract, is the holder of collateral bound to sell it, though he may have the right to sell it, under certain conditions, by giving notice as required by the statute. As a matter of law, a pledge of chattels is a mere security for the obligation that the pledgor would pay the debt. The pledgee may sell the collateral in order to protect himself, if he deems it wise to do so, after compliance with the statute as to notice, etc., or in the exercise of special contractual power. But he is not obliged to sell the collateral to satisfy the debt in whole or in part, even upon the demand of the pledgor. The pledgee may look solely to the promisor, and may proceed against him on his promise, without exhausting the collateral. The creditor may sue on the note and obtain an ordinary common-law judgment, without exhausting the security/ The
In view of these authorities, we are of, the opinion that the general demurrer should have been sustained, and the court erred in overruling it.
Judgment reversed.