208 P. 887 | Mont. | 1922
delivered the opinion of 'the court.
By the note in suit, the defendant promised to pay at the office of the Northwestern Metals Company, in Philadelphia, Pa., to the order of himself the sum of $12,500. On the day of its execution—May 11, 1914—the maker indorsed and transferred it to the plaintiff, for value. As collateral security for its payment, and to meet any existing or future obligations between them, there was also delivered to plaintiff a note of the company named, in like amount, and 6,000 shares of its capital stock. The defendant on the back of the original note made a further written promise and agreement to this effect: Whenever the market value of the security thus pledged shall become insufficient to cover the entire obligations, “with twenty (20) per cent margin added thereto,” the maker “upon demand” shall deposit with the holder additional security sufficient to cover “the amount ’and margin.” In default of depositing the additional security, the principal note was to become due and payable; the right to liquidate the debt out of
The original complaint in the action was filed June 19, 1916. The amended complaint was filed March 2, 1917. A demurrer,filed July 10, 1917, attacked its sufficiency because it did not appear therefrom by whom, or to whom, the 6,000 shares of stock were delivered; whether they were delivered as collateral; to whom the interest on the note was paid; whether the stock at the maturity of the note was of any value at all; why the stock was not sold at maturity of the note to satisfy the debt; whether the company was or was not insolvent, or why it became so; upon the further ground that it alleges that the collateral note given by the corporation was allowed in the bankruptcy proceedings, but does not aver why the principal note would not be paid out of the proceeds of the bankrupt’s estate, nor why the lien cannot be foreclosed and the expense necessarily incurred therein will not amount to more than could beNealized on the note. The demurrer was overruled, and the defendant, in his answer filed August 10, 1917, admitted the making of the note with the indorsements thereon; its transfer to plaintiff; his ownership thereof; the pledging of the collateral note and of the stock as additional collateral security; its present worthlessness; the payment of the interest; and that the metals company had been adjudged a bankrupt. He denied that the metals company was insolvent prior to the giving of the collateral note; that its assets, at a fair valuation, were insufficient to meet the indebtedness, and that the security did not become valueless through any fault or negligence of the plaintiff; that its collateral note could not be sold or collected, except to the extent of the proceeds from the assets of the bankrupt, or that proceedings cannot be prosecuted to foreclose the lien on the collateral note; ana that the cost would exceed the amount that could be realized therefrom. As matters of affirmative defense, he alleges: That
On August 31, 1917, the plaintiff replied, denying all the affirmative matters alleged. On January 15, 1919, the plaintiff was allowed, without objection, to file a supplemental complaint, averring that $1,397.59 had been realized from a sale of all the property of the corporation, in bankruptcy proceedings, and applied upon the note in suit: This pleading, standing unanswered, removed all the issues of fact.
On September 9, 1919, the court set the cause for trial October 18. On October 15, by consent of the parties, the setting was vacated. On October 20, the plaintiff served upon defendant his notice of motion for judgment on the pleadings, stating that he tendered therewith “the worthless receipt for the worthless stock” described in the complaint, “the only evidence of said stock received by the plaintiff,” and that he “deposited in court for the use and benefit of the defendant and subject to his order-, the worthless note of the Northwestern Metals Company.” On October 21, plaintiff served his second notice of motion for judgment on the pleadings. On October 24, the
■ On cross-examination he testified that he prepared the amended answer on information obtained from defendant; that to the best of his recollection defendant had not been in Helena more than twice since his return to Helena in August, 1919; that before the witness left Helena, in January, 1918, to go into the army service, and after the copy of the summons and complaint in the action were handed to him by the defendant, he had not seen Hewitt more than once; that he did not remember whether he conferred with his client,by letter or how it came about; that he would not be sure whether he got any of the information by letter or how; that he would have to look through his letter files to determine that question. He further stated that he had no information relative to the facts set up in the proposed answer as a defense, until Hewitt came to Helena for the purpose of giving his deposition.
At the close of the evidence in support of the motion for leave to file the amended answer, the court ruled against the defendant, and ordered judgment upon the pleadings.
The defendant insists that in overruling the demurrer to the amended complaint, in denying leave to file the amended answer, in sustaining the motion for judgment on the pleadings, and in refusing to open the default, the court erred.
The appeal being from the judgment alone, our inquiry does not extend to matters occurring after its rendition, al
The assignments of error present but two questions: (1) Was the plaintiff derelict in failing to sell the collateral security at the maturity of the note? (2) Was the defendant excusably negligent in failing to inform his attorneys of the facts necessary to his defense?
1. If the plaintiff was remiss in not selling the collateral security and discharging the indebtedness- evidenced by the note, he must be held so because he failed to meet some requirement imposed upon him by the writing. According to its plain meaning, the collateral security was applicable to the payment of the note; and, upon default, the holder was authorized to sell it and to become the purchaser and the owner thereof. This was the limit of its effect. Upon the strength of the promises and the collateral security, the plaintiff was induced to hand over to the defendant $12,500. As a means of getting it back, it was his privilege—not his duty-—to sell the securities and apply the proceeds upon the original note. The collateral afforded him an" additional remedy, but it did not supersede his right to proceed against the pledgor personally, without a sale. (Granite Bank v. Richardson, 7 Met. (Mass.) 407.) The time and place at which the note was to be paid were fixed in the writing, and, in case of default, it pointed out to the plaintiff the way he might, if he chose, discharge the defendant’s obligation for him; but it did not oblige him to accept one or the other of the two alternatives. Its language is permissive merely in no sense obligatory. (Lake v. Little Rock Trust Co., 77 Ark. 53, 7 Ann. Cas. 394, 3 L. R. A. (n. s.) 1199, 90 S. W. 848; Robinson v. Hurley, 11 Iowa, 410, 79 Am. Dec. 497; Granite Bank v. Richardson, supra; Jones on Pledges, sec. 606; Culver v. Wilkinson, 145 U. S. 205, 36 L. Ed. 676, 12 Sup. Ct. Rep. 832 [see, also, Rose’s U. S. Notes].) “A postponement of the exercise of the right is a thing of which the debtor cannot complain; it only enlarges his opportunity to redeem and thereby prevent any
The complaint alleges the execution of the note, its delivery, default in its payment, the worthlessness of the note as well as the stock pledged, and the failure of the defendant to pay. The fact that the company was declared insolvent in the bankruptcy court, and that the amount indorsed upon the principal note was the sum of all its assets, is not controverted. Conceding that judgment cannot be rendered upon pleadings which raise a substantial issue of fact (Moore v. Murray, 30 Mont. 13, 75 Pac. 515; Reed v. Rogers, 19 N. M. 177, 141 Pac. 611), what material issue do the pleadings present? The charge in the answer and counterclaim is that had the plaintiff sold the securities pledged, the proceeds would have been sufficient to liquidate the note, and to have left a surplus, but that he wrongfully and negligently refused to sell them. It is true that it is essential that a counterclaim allege a cause of action in favor of defendant and against the plaintiff. The averment that the payee was “authorized” to sell the pledge, however, as we have seen, did not necessarily require him to do so, nor did anything contained in the writing. It is therefore very clear that the plaintiff is not liable for any depreciar tion in the value of the stock, if any there was. (Lake v. Little Rock Trust Co., supra.)
2. Upon the second point, Judge Galen’s evidence is that upon information obtained from the defendant he prepared the answer which was filed August 13, 1917. His testimony is as follows: “As to when he told me this note of the Northwestern Metals Company was given August 14, 1914, in payment of the other note, I know he told me so a week ago Saturday, when he was here for the purpose of giving his deposition. If I ever had been given the information before, I have no recollection of it now, and it would appear I did not have the information, otherwise it would have been embraced in the
The judgment appealed from is affirmed.
Affirmed.