Bank of Picher v. Harris

Opinion by STEPHENSON, O. Tbe defendant executed and delivered bis promissory note to tbe plaintiff in tbe principal sum of $750, with interest at tbe rate of 10 per cent, per annum, and gave bis mortgage on certain real estate improvements to secure tbe payment. As a part of tbe original transaction, tbe defendant caused an insurance policy to be issued on the improvements, with a loss payable clause in favor of tbe plaintiff, and pledged tbe policy with tbe plaintiff as additional security. Tbe defendant made default in payment of tbe note and mortgage. Later the improvements were destroyed by fire and tbe defendant made sworn proof of loss and delivered same to the company. Tbe insurance company refused to pay tbe loss according to tbe terms of tbe policy. Tbe defendant refused to take any action for tbe collection of tbe policy for the plaintiff. Tbe plaintiff commenced its action against tbe insurance company on tbe policy and joined tbe defendant. Tbe defendant by his answer in tbe cause disclaimed any interest in tbe policy, and further set forth that, if tbe proof of loss purported to be sworn to by him, it was without bis authority or direction. Among the several grounds upon which tbe company denied liability, was tbe further claim of tbe failure of tbe insured to make and furnish sworn proof of loss as required by tbe terms of tbe policy. Tbe action of the defendant put in jeopardy tbe plaintiff’s right to recover on tbe policy, and made recovery uncertain. Tbe plaintiff settled and compromised tbe suit later for $600 by reason of the conduct of tbe defendant. The plaintiff incurred a necessary expense of $35 in tbe action on tbe policy. Tbe plaintiff deducted tbe expenses and a charge of $150 as attorney’s fees from tbe agreed judgment, ■ and credited tbe balance of $415 on tbe note and interest, and commenced its action against tbe defendant for the balance due on the note. Tbe defendant alleged that after tbe loss be assigned the insurance policy to tbe plaintiff in full settlement of tbe indebtedness. Tbe defendant further alleged that if the assignment was insufficient, that tbe plaintiff was unauthorized to compromise and settle tbe suit for less than $750, and that he was entitled to a set-off for this sum against tbe amount sought to be recovered on tbe note. As a further counterclaim, tbe defendant pleaded usury in tbe loan. In tbe trial of tbe cause the jury found that tbe defendant made an assignment of tbe policy to tbe plaintiff in settlement of tbe indebtedness, and returned a verdict in favor of tbe defendant on tbe issue of usury and for attorneys’ fees. Tbe court approved tbe verdict on usury for $20 and for $25 as attorneys’ fee. Among tbe several errors assigned by tbe paintiff for reversal are: (1) That a certain part of tbe- sum charged tbe defendant for tbe loan was for incidental expenses in tbe transaction; and (2) That tbe alleged assignment peaded by the defendant was without consideration and not binding on tbe plaintiff. Tbe lender in making a loan may charge a reasonable sum for tbe preparation of necessary papers and for inspection of collateral by agreement with tbe debtor. If these charges are made by agreement, such items will not be considered in determining whether tbe lender has charged a usurious rate of interest. First Nat. Bank of Ada v. Phares, 70 Okla. 255, 174 Pac. 519. But the defendant disputed tbe plaintiff’s claim that a portion of tbe sum charged was for expenses incidental to tbe loan. This made a question of fact to' go to tbe jury, and there is ample testimony to support tbe verdict of tbe jury in this respect. The insurance policy was pledged to tbe plaintiff as a part of tbe original consideration for tbe loan, and so continued as a pledge until tbe loss ■of tbe property. As the defendant refused to collect the policy after tbe loss, tbe plaintiff was authorized' to proceed with tbe collection of tbe claim and charge tbe debtor with tbe necessary and reasonable expenses, including an attorney’s fee. Gregory v. Pike, 67 Fed. 837, 15 C. C. A. 33; Furness v. Union Nat. Bank, 147 Ill. 570, 35 N. E. 624; Hanover Nat. Bank v. Brown (Tenn.) 53 S W. 206; Ruberg v. Brown, 71 S. C. 287, 51 S. E. 96. By the alleged assignment on the part of tbe defendant, tbe plaintiff did not acquire any right in addition to those created by the pledge of tbe property. Tbe plaintiff did not receive any considertion for incurring the burden of collecting tbe pledge at bis cost and expense. Tbe original consideration for tbe pledge will not support tbe assignment. There must be some new or additional consideration to support tbe alleged assignment of tbe pledged property in full settlement of tbe debt. State v. Sapulpa, 58 Okla. 550, 160 Pac. 489; Wright v. Tacoma, 87 Wash. 334, 151 Pac. 837; Jobes v. Wilson (Mo.) 124 *258 S. W. 548; McDevitt v. Stokes, 174 Ky. 515, 192 S. W. 681, L. R. A. 1917-D, 1100; Abbott v. Doane, 163 Mass. 433, 34 L. R. A. 33. Tbe plaintiff was entitled to an instructed verdict on tbe question of tbe assignment of the policy in satisfaction or tbe indebtedness. Ordinarily tbe creditor is not authorized to settle or compromise claims in connection with pledged collateral for less than its face value, and if be makes settlement for less than face value, be will be liable to tbe pledgor for tbe difference. Griggs v. Day (N. Y.) 18 L. R. A. 120; Moses v. Grainger, 106 Tenn 7, 53 L. R. A. 857; Mansur-Tebbetts Imp. Co. v. Carey, 1 Ind. Ter. 572, 45 S. W. 120. But if the sum which ought to be paid on the pledged collateral becomes disputed or denied, and tbe debtor fails and refuses to take steps for its collection, if it be bis duty to do so, or to commence an action for recovery, tbe pledgee is authorized to take such steps for tbe protection of bis rights. If tbe conduct of tbe debtor prior to and during tbe suit for recovery by tbe creditor has been such as to threaten plaintiff’s right of recovery, and to make recovery uncertain, the pledgee may settle and compromise tbe litigation for less than tbe face value of tbe claim. Under such circumstances, tbe pledgee will not be liable to tbe debtor for tbe difference between tbe amount settled for and tbe face value of tbe claim. In order for tbe debtor ■to bold tbe creditor for tbe difference, be must be free from wrong in tbe discharge of such duties as rested upon him in aiding tbe creditor to collect the pledge, if it was his duty to do so. Exeter Bank v. Gordon, 8 N. H. 66; Nelson v. First Nat. Bank, 69 Fed. 798; Griggs v. Day (N. Y.) 32 N. E. 612; Hartford Fire Ins. Co. v. King (Tex.) 73 S. W. 71. Tbe defendant fails upon a further and additional ground. He was a party defendant in tbe case against tbe insurance company, and bad entered bis appearance by answer. Tbe court bad jurisdiction of the defendant and tbe subject-matter, which gave, the court jurisdiction to make final disposition of all questions. Tbe court bad jurisdiction to enter an agreed judgment in the cause between tbe plaintiff and tbe insurance company. Tbe defendant was bound to take notice of tbe agreed judgment entered in tbe case, and unappeal-ed from, is binding on tbe pledgor. Tbe defendant cannot collaterally attack or question the agreed judgment as entered in this ease. Hartford Fire Ins. Co. v. King, supra. This record does not entitle tbe defendant to a recovery for tbe difference between tbe amount for which tbe nolicv compromised and the face value thereof. Tbe plaintiff incurred a necessary expense of $35 in the collection of the policy. Tbe facts in regard to the expense and litigation in connection with tbe policy are not disputed. The matter of allowing tbe expenses and determining tbe allowance for attorney’s fee are questions for the court. We think on tbe record as disclosed, a charge of $100 ag attorney’s fee in the action on tbe policy would be reasonable. Tbe plaintiff is entitled to an allowance of tbe necessary expense incurred in tbe sum of $35, with tbe sum of $100 as attorneys’ fee.' It is recommended that tbe judgment for usury and attorney's fee in tbe total of $45 in favor of the defendant be affirmed, with six per cent, interest from tbe date of its rendition. In all other respects it is recommended that tbe judgment be reversed and remanded, with directions for tbe court to allow tbe plaintiff tbe expense of $135 in tbe recovery on the policy. Tbe balance of tbe judgment should be credited on tbe note. Tbe plaintiff should be allowed interest at ten per cent, on tbe $750 from December 27, 1919, to the date of tbe payment of tbe judgment on tbe policy. Tbe plaintiff should then be allowed interest at tbe rate of ten per cent, per annum on the balance of tbe principal of tbe note after tbe remainder of tbe insurance judgment is credited thereon, until tbe rendition of the judgment. Tbe court should render judgment in favor of tbe plaintiff and against tbe defendant for tbe two items of interest so calculated, and tbe remainder of tbe principal of tbe note after receiving tbe credit from the insurance company judgment; less tbe $45 with interest at the- rate of six.per cent, per annum from tbe date of its rendition. By tbe Court: It is so ordered.