95 Wash. 546 | Wash. | 1917
This is an action to recover damages for the conversion of two first mortgage bonds. The facts necessary to an understanding of this opinion are these: On June 15, 1911, the plaintiff, Fred R. Thompson, was the owner of three first mortgage bonds of the defendant corporation, by the terms of which it promised to pay to the holder of such the sum of $1,000, with interest. On that date, plaintiff pledged the bonds to defendant as collateral security for the payment of a note of the American Mortgage & Building Company, in the sum of $2,404.17. This indebtedness was subsequently reduced to $1,304.17, at which time the defendant surrendered one of the bonds. Thereafter the mortgage company became indebted to defendant in the sum of $580.30 for rent, but this was separate and distinct from the note for the payment of which plaintiff’s bonds were pledged. On January 31, 1914, the mortgage company, being indebted in a large amount, made a common law assignment to P. B. Truax for the benefit of its creditors. About one year later, it was mutually agreed between the creditors, including defendant and the assignee, that it would be advisable to hold the property until business conditions should improve. To carry this policy into effect, it was agreed that bonds of the mortgage company should be issued payable on or before ten years from date of issuance, to be secured by mortgage upon all of the company’s real estate equities and by assignment of all its interest in outstanding contracts, and these bonds were to be accepted by the creditors in settlement of their several claims against the company. Pursuant to this agreement, Truax in due time closed his trust as assignee and released the property to the mortgage company, which in turn executed to Truax, as trustee for the bondholders, an assignment and deed of trust con
“Metropolitan Building Company, Seattle, Washington.
“Gentlemen: In accordance with your agreement to accept bonds of American Mortgage & Building Company for your claims against the company, you will find herewith enclosed bonds Nos. . . . aggregating $2,057.05. This aggregate amount is arrived at as follows: [itemized statement including both the indebtedness upon the nóte and for the rent.] Will you kindly sign and mail to me the receipt which is herewith enclosed?”
On April 2, 1915, defendant wrote Truax as follows:
“Enclosed please find receipt for bonds of the American Mortgage & Building Company as listed thereon.”
The receipt referred to in this letter follows:
“Seattle, Wn., March 24, 1915.
“Received of American Mortgage & Building Company its bonds Nos. [being the same as set forth in the letter of Truax], aggregating $2,057.05.
“Metropolitan Building Company,
“Per E. H. Sennott, Asst. Treasurer.
“The Metropolitan Building Company also holds, as security a/c claim for rent due this company from American Mortgage & Building Company, two (2) Metropolitan Building Co. bonds, property of Fred R. Thompson.”
By letter of date April 3, 1915, Truax called the defendant’s attention to the fact that the note of the mortgage company had not been inclosed in its letter of April 2. On April 6 defendant inclosed the note to Truax, explaining that it had neglected to send it when the receipt for the bonds was mailed. On the back of the note appeared the following:
“Paid April 2nd, 1915.
“Metropolitan Building Company,
“By N. E. Fell, Cashier.”
The lower court found that the defendant accepted the ten-year mortgage bonds in payment and satisfaction of the balance due on the note of the mortgage company, and that its refusal thereafter to surrender the bonds upon demand amounted to conversion. We are not disposed to disturb
It is urged that plaintiff knew of the composition agreement and the acceptance by defendant of the mortgage company bonds and did not obj ect thereto; but it is well settled that mere silence on the part of a surety, when he is informed of a modification of the contract between his principal and the creditor or that a new obligation has been substituted in lieu of the original one, does not imply assent on his part. In order to bind him to the new undertaking, it is not sufficient that he passively acquiesce; he must actively consent to be bound by the terms of the new agreement. American Iron & Steel Mfg. Co. v. Beall, 101 Md. 423, 61 Atl. 629; Edwards v. Coleman, 6 T. B. Monroe (Ky.) 567; Brandt, Suretyship & Guaranty (3d ed.), § 379; 32 Cyc. 161.
Plaintiff did not pledge his bonds as security for the payment of the ten-year bonds of the mortgage company. Plis property was deposited as collateral to secure the payment of the mortgage company’s demand note which defendant surrendered when it took the bonds, and there is no evidence in the record that plaintiff agreed that his bonds might be
This conclusion renders it unnecessary to discuss the question whether the assertion of the right to hold the bonds as security for the payment of the claim for rent was likewise an act of conversion. Defendant urges that the composition agreement was not carried out by the trustee according to its terms and provisions but that preferences were given to certain creditors, and therefore the agreement was void and the acceptance of the bonds did not release plaintiff’s property. This contention is without merit, (1) because there was no substantial departure from the agreement; and (2)^ because defendant continued to hold the bonds and made no effort to rescind the agreement.
Consequently, whether the acceptance of the bonds was intended to be in satisfaction and discharge of the original indebtedness or is to be treated as the taking of a new and different obligation without the consent and agreement, of plaintiff, the collateral bonds were released from the lien of the pledge and plaintiff was entitled to their immediate return.
We conclude that the judgment should be affirmed on the original, and modified on the cross-appeal, with direction to enter judgment in favor of plaintiff for the sum of $2,000, with interest from March 24, 1915.
Ellis, C. J., Chadwick, and Main, JJ., concur.