203 N.W. 220 | Minn. | 1925
"Indebtedness" means a state of being indebted or a sum owed. The language indicates a debt to the bank. A "debt" is that which is due from one person to another — that which one person is bound to pay to another. It is a liability of one to another.
Was the $13,000 note of the father, which was held by the bank as collateral to the Hunt indebtedness to the bank, a debt of the father to the bank within the meaning of the word "indebtedness" as used? The bank held this note as a pledgee. This note was a debt from the father to Hunt. It was delivered to the bank to secure the performance of the Hunt obligation and upon the performance of that obligation the collateral was to be returned to Hunt. It is an additional security to the personal obligation of the borrower, Hunt. When it was hypothecated with the bank, the bank acquired certain rights therein. The term necessarily implies the transfer to the creditor of an interest in the property so hypothecated. It is a cumulative means for securing payment of the original debt. The holder acquires the legal title, and he may institute legal proceedings thereon to collect the same. The pledgee takes it as a trustee for the pledgor. The pledgee's actual interest is purely contingent in this, that it depends for effect on something that may or may not occur. The term "indebtedness" as used must be and is construed as meaning direct and not contingent indebtedness. The result is that plaintiff's collateral did not become collateral to Hunt's collateral, but to the $680 note only. Under the circumstances the indebtedness of the father evidenced by the $13,000 note and mortgage was an indebtedness to Hunt and not to the bank. First Nat. Bank v. Southworth,
Our conclusion is reached without consideration of the supporting rule of construction that so far as possible a construction is to be avoided that will lead to absurd or unjust results. In this case plaintiff's collateral matured in 5 years. His father's collateral matured in 10 years. Upon defendant's theory of construction it could collect plaintiff's collateral upon maturity, and then, not being *458 able under the law to apply it upon the $13,000 note and mortgage before its maturity, it could hold plaintiff's $10,000 and interest for 5 years awaiting the maturity of the other obligation. We cannot conclude that any of the parties ever so intended. The evidence sustains the findings of the trial court.
Affirmed.