Peterson v. Rochelle

LEVY, J. (after stating the facts as above). In the light of the evidence the error of the court was to the extent only of directing a verdict in favor of the plaintiff against the maker of the collateral note for the full amount of such note with interest thereon. Although the $1,250 note was a negotiable paper, yet the evidence established without dispute that the transfer of the sanfe from Leonard H. Weldon to the Miller County Bank & Trust Company was.intended simply as collateral security for the payment of the $51 note, which was a personal obligation of the said Weldon, and not for the purpose of transferring the property in the instrument. The Miller County Bank & Trust Cbmpany held it in its possession as security only, and transferred it, with the $51 note, to A. Rose as security only. Neither the Miller County Bank & Trust Company nor A. Rose ever proceeded “to sell the note at public or private sale, with or without notice,” in the case of nonpayment of the $51 note at the maturity thereof, as was provided in the contract indorsing the collateral note to the Miller County Bank & Trust Company. Neither is there any pretense in the evidence tha't they were “purchasers” of the collateral note as distinctive special property. The plaintiff, J. F. Rochelle, it appears, acquired only the rights of the Bank & Trust Company and A. Rose, and no more, For he acquired, as held by the trial court, and properly so, no rights under the justice court judgment and constable sale, same being absolutely void. And A. Rose disclaimed, as against the claim of the plaintiff, only “all right, title and interest he then held and owned in said notes.” The plaintiff relied upon the disclaimer as an admission of his interest and right in the’ notes, and offered no other evidence in support of it. The plaintiff’s rights, then, were shown to be such as of one taking negotiable paper before maturity as collateral security. He was not a purchaser of the collateral note as distinctive personal property. As such conditional holder or pledgee of the collateral note he was, for all practicable purposes, the owner of it and a bona fide holder for value, and may sue on it and collect it without regard to the equities or dealings between the original parties, A. L.‘ Peterson and Leonard H. Weldon. Article 5935, §§ 51, 52, Rev. Stat.; Liddell w Crain, 53 Tex. 549; Texas Banking & Ins. Co. v. Turnley, 61 Tex. 365; Hardie v. Wright, 83 Tex. 345, 18 S. W. 615. For the agreed power to sell the collateral note at public or private sale was not exclusive, and did not limit the pledgee to that remedy, but he may enforce the security in the usual manner by suit. Jones on Pledges and Collateral Securities (2d. Ed.) § 658, p. 708. But the plaintiff, as the bolder or pled-gee of the collateral note, and seeing to enforce it by suit thereon, was not authorized in this case, in view of the particular 'facts and pleadings, to have judgment enforcing the collateral beyond the actual original indebtedness called for in the $51 note, principal and interest. Weldon, the original payee of the collateral note, and entitled to the surplus above the original debt, expressly admitted that the maker, A. L. Peterson, had fully satisfied him, and that such maker was entitled to be credited on the note with all money above the amount of the $51 note. Such admission of feet and pleading rendered unnecessary the enforcement by the holder or pledgee of the collateral note or the payment to its full amount for the' benefit of both himself and the pledgor, Weldon. The plaintiff, as the holder of the collateral note, was relieved thereby of an accounting for the excess of money above the actual indebtedness, and his security could not extend beyond the actual indebtedness evidenced by the $51 ‘ note. And under such proof and pleading A. L. Peterson, as maker of the collateral note, was entitled to be protected to the extent of his payments above fhe $51 note. The collateral note was not barred by limitation, and it is immaterial that the $51 note was barred, as it was not being sued on. The judgment is modified so as to allow a recovery on the collateral note in favor of the plaintiff against appellant, A. L. Peterson, for the amount of the indebtedness of Leonard H. Weldon, evidenced by his $51 note, with interest thereon at 10 per cent, from March 2, 1918, to April 19, 1924; otherwise the judgment is in all respects affirmed. •The costs of appeal' will be taxed against ap-pellee. Modified and affirmed.