Trafton v. Dore

Mellen C. J. delivered the opinion of the Court. On the third of April, 1826, William Bacon, Jr. and Henry Bacon gave five' promissory notes, for the sum of five hundred and seven dollars, payable to the plaintiff at different days; and also a mortgage of certain real estate as collateral security. On the 12th of January, 1827, the plaintiff gave his note to the defendant for the sum of four hundred and sixty dollars and interest, and assigned the said mortgage and notes to Dore as collateral security for the payment of his note. It appears, that the full amount’ due on Bacon’s notes was paid to Dore by Bacon, as early as Oct. 27, 1831, and the plaintiff in this action demands the difference between the amount due on the note he gave to Dore, apd' the amount due on the five notes given by Bacon to the plaintiff, and by him assigned to Dore. In deciding this cause, the mortgage and the assignment of it to Dore, may be laid out of the case : it cannot be the subject of claim or consideration in the present action. The above balance is demanded on the principle, that the five notes were assigned to Dore, merely as collateral security for the payment of the note for four hundred and sixty dollars, given by the plaintiff to the defendant, and that of course the balance belongs to him, as his note is overpaid. If such was the real character of the transaction, and such the agreement of the parties in relation to the assignment of Bacon’s notes, the claim of the plaintiff in an equitable point of yiew, at least, would be well founded. To ascertain its cha» [437] raeter and the plaintiff’s rights more fully, we must ¡look to the terms of the contract of January 12, 1827, under the hand and seal of the defendant, and which was introduced by the plaintiff to the action. By this contract, which is relied on by him, in support, and, of course, assented to by him, it is stated that the mortgage and the five Bacon notes were assigned to Dore as collateral security for the payment of the plaintiff’s note to him : and Dore promised and agreed that, if Trafton should pay, or cause to be paid, the said sum of four hundred and sixty dollars in one year from June then next following; that is, before the first of July, 1828, with interest, or if he should collect the same from Bacon’s notes by the time last mentioned, he would'reassigw the mortgage and the Bacon notes. If, upon the true construction of the agreement, the plaintiff is entitled to recover damages for any breach of it, the remedy must be sought in an action of covenant, and not assumpsit. But has the contract been violated as to the Bacon notes, (for we take no notice of the mortgage,) by the defendant’s omitting to reassign them to the plaintiff, after Bacon had paid them and they were thus Bacon’s property ? It seems to us not to have been. If by a fair construction, then, of the contract, it does not furnish a ground of claim against the defendant upon the contract itself, does it, or does it not, furnish a defence against the present action, brought to recover the balance above-mentioned, now remaining in his hands ? Though the Bacon notes were assigned as collateral security, yet by the terms of the contract, at least so far as respects the notes, the defendant was not bound to do anything, unless the $460 note was paid, or its amount realized out of the Bacon notes before the first of July, 1828; and neither of those events took place. Until that time, the notes were held by the defendant as collateral security : but after that time, by the terms of the contract, they immediately became the absolute property of the defendant; whereas by the assignment or mortgage of them, he acquired only a conditional property. Chancellor Kent, vol. 4, page 132, observes, “ The distinction between a pawn and a mortgage of “ chattels is equally well settled in the English and in the American law ; and a mortgage of goods differs from a pledge [438] “ or pawn in this, that the former is a conveyance of the title “ upon condition, and it becomes an absolute interest at law, if “ not redeemed by a given time.” See Brown v. Bennett, 8 Johns. R. 96. The Court in their opinion say, “ Here was a “ complete transfer of the title to the goods in question, with a “ condition of defeazance on the payment of $>*120,35 in four- “ teen days. This was a mortgage, not a technical pledge.” The money was not paid according to the condition, and the court decided that the title became absolute in the mortgagee. Homes & al. v. Crane, 2 Pick. 610. In Barrow v. Paxton, 5 Johns. 258, there was an assignment of certain household furniture as collateral security for the payment of rent, by certain specified days. The court say, “ the bill of sale stated in the record, was a mortgage of goods and not a technical pledge.” In the present case, it appears that the Bacon notes were assigned to the defendant, upon the conditions specified in the defendant’s agreement, and in case the condition had been complied with, he would have been bound to re-assign them. Exceptions overruled; nonsuit confirmed.— Judgment for defendant.