39 S.W.2d 704 | Ark. | 1931
Own November 17, 1930, the American Exchange Trust Company, being insolvent, closed its doors. *934 At that time, and for a considerable period previous thereto, it held a note for $10,000 executed in its favor by J. E. Shroll and Ben C. McFerrin, evidencing a loan of $10,000 in money, which had been made to Shroll to aid in the construction of bridges in Newton County, Arkansas, in road improvement No. 6. This improvement was begun prior to the passage of the Harrelson Road Law, act No. 5 of the acts of the General Assembly of 1923. In aid of the construction, Newton County undertook to pay for the construction of certain bridges, the builder of which was J. E. Shroll, and issued its warrants in the sum of $25,545.55, delivering the same to the said Shroll on completion of the bridges. These warrants, at the time of the execution of the note, were delivered to the American Exchange Trust Company as collateral security for the payment of the note afore said, and before November 17, 1930. Under authority of the Harrels on Road Law, the State Highway Commission took over and undertook to complete improvement No. 6, incorporating the same in its highway No. ___, and said improvement No. 6 delivered to the commission the cash on hand, amounting to the sum of $38,600, which was paid into the State Treasury to the credit of the said commission.
It was claimed that, under the terms of act No. 153 of the Acts of 1929, as construed in the case of Grabiel v. Blackwood,
These are the facts out of which this lawsuit arose, and the question presented for our determination is whether or not the State has a right to offset the demand of the American Exchange Trust Company out of its deposits in said bank. Counsel for the American Exchange Trust Company argue that there was no valid claim against the State until the highway commission ascertained whether the claim was valid, and the amount thereof, and, as the commission did not do so until February 18, 1931, after the Exchange Trust Company became insolvent, such claim could not be used as an offset under the rule announced in Sloss v. Taylor,
The effect of our decisions is that the holder of the pledge has a special ownership therein to the extent of the debt secured thereby and may proceed to enforce it if it be a chose in action, a negotiable instrument, or any of a like nature. Turner v. Stroud,
It follows that the judgment of the trial court will be reversed, and the cause remanded with directions to allow the offset as pleaded by the State.