178 P. 23 | Nev. | 1919
By the Court,
This is an action on a" promissory note.
The plaintiff, a domestic' banking corporation, alleges in its complaint that the Interstate Life Insurance Company executed and delivered to the plaintiff its promissory note for $1,000, and “delivered and left with the plaintiff, as collateral security” for its payment, that certain promissory note of the defendant in words and figures as follows, to wit:
“$800.00. Winnemucca, Nevada, Nov. 5th, 1915.
“Twelve months after date, without grace, I promise to pay to the order of Interstate Life Ins. Co. at Winne-mucca, Nevada, Eight hundred Dollars, in Gold Coin of*381 the United States of America, of the present standard value, with interest thereon, in like Gold Coin, at the rate of 6 per cent per annum from date until paid for value received. Interest to be paid semiannually and if' not so paid, when whole sum of both Principal and Interest to become immediately due and collectible, at the option of the holder of this note. And in case suit or action is instituted to collect this note, or any portion thereof I promise and agree to pay, in addition to the costs and disbursements provided by statute, such additional sum, in like Gold Coin, as the Court may adjudge reasonable, for Attorney’s fees to be allowed in said suit or action.
“Interest payable from issuance of license to write policies.
“Due Nov. 5th, 1916.
“Witness: H. Howard Dunbar. J. D. Corbeil.”
That the said promissory note bears on the back thereof 20 cents in canceled United States revenue stamps, and is indorsed on the back thereof as follows: “Interstate Life Insurance Co. A. W. Stowe, Secy. A. G. Crane, President.”
It is further alleged that said note was “so indorsed and delivered” as security for the payment of the covenants of the said Interstate Life Insurance Company, and to further secure the repayment of the sum evidenced by its promissory note; that both notes are due and unpaid, and that the plaintiff is the legal owner of the defendant’s said note, as well as the holder thereof; and demanded judgment against the defendant for the amount of the note so pledged.
The district court sustained a general demurrer to the complaint, and ordered the action dismissed, and rendered judgment in favor of the defendant and against the plaintiff for costs. The plaintiff appeals.
Section 44 of our practice act (Rev. Laws, 4986) provides that “every action shall be prosecuted in the name of the real party in interest, except as otherwise provided in this act.”
It is the contention of the respondent that the complaint shows the legal title to the note in question to be in the payee, and it is the real party in interest, and the only party entitled to prosecute the action.
Doubtless the object of section 44 of the practice act, says the Supreme Court of the United States, in construing a similar provision in the New York practice act, was to change the common-law rule that an action must be brought in the name of the party who has the legal right, and to substitute for it the rule in equity, but with considerable enlargement. Chew v. Brumagen, 13 Wall. 497, 20 L. Ed. 663.
The transaction stated in the complaint is conceded to be in the nature of a pledge, and the rights and liabilities of the parties are to be determined by the law applicable to the pledgee of property of this character.
The purpose of the pledge in this case was that the pledgee might reimburse himself for his debt when it becomes due and remains unpaid. This can only be done by converting the pledge into money. This, then, he has a right to do in a bona-fide manner, and the contract assigns him such a property in the pledge as will enable him to do it. Whether it is a note or goods and chattels makes no difference — the property passes. White v. Phelps, supra.
Applying these principles to the cause of action stated in the complaint, it is not easy to see why, if the plaintiff is not the real party in interest, it was not at least a trustee of an express trust. The indorsement and delivery of the note, though expressly stated to be for a collateral security, gave plaintiff the entire legal interest in the note. The indorsement and delivery of the note enabled the plaintiff to employ the entire note for the payment of its debt. The rights of the insurance company are not concurrent with those of the plaintiff. They are subordinate. The insurance company has nothing to get from the note until the plaintiff’s claim be entirely satisfied. By its indorsement and delivery of the note it substituted the plaintiff in its place to demand and receive payment of the note. Surely it had no right to demand anything from the plaintiff. How, then, had it any real interest in the note at the commencement of the action? It is true it had an interest in what the plaintiff might collect, but that is a different thing from an interest in the note itself.
The right of the plaintiff to maintain this action arises
Entertaining these views, we are clearly of the opinion that, whether the note declared on be negotiable or nonnegotiable, the complaint states a cause of action. The judgment, therefore, must be reversed, and the cause remanded for further proceedings.