Gowen v. Wentworth

The opinion of the Court was by Weston C. J. The note in question, having been negotiated to the plaintiff, bona fide, before its maturity, as collateral security, he was the holder for value, and as such entitled to be protected from any defence, which might have been available against the indorser, the original payee. Smith v. Hiscock, 14 Maine R. 449. It was not necessary that the defendant, the maker, should have had notice of the transfer. He knew that the note might be negotiated, and he should have taken care to pay only to the holder. There is proof however in the case, tending to show, that the de [69] fendant liad notice of the fact, that the plaintiff bad the note, prior to the date of the receipt, upon which he relics. Having reference only to the liability, as collateral security for which the note was originally negotiated to the plaintiff, so long as that continued, neither the payee nor the maker had a right to do any thing to impair the value of the pledge. The payee was not entitled to receive any payments, until he reclaimed the note. And the maker was not justified in making payment to him. Notwithstanding the note, pledged as collateral security, was of greater value than the amount of the liability first assumed, the plaintiff has a right to recover and receive in his own name the amount of the note. Story on Bailments, <§> 321. And ho is not limited to the sum, for which it was pledged. Pomeroy v. Smith, 17 Pick. 86. The payment, real or pretended, by the maker to the payee, was in contravention of the rights of the plaintiff, and cannot therefore be received in defence, the amount paid by the plaintiff upon his original liability, not having yet been refunded to him. Until that is done, he has a right to hold the pledge unimpaired. And this sufficiently sustains the ruling of the presiding Judge. It is unnecessary therefore to decide, whether the plaintiff is not entitled to hold the pledge also, on account of further liabilities assumed. Story says, <§> 304, of the work before cited, other debts may bo attached to the pledge, if it has been so agreed, expressly or tacitly. He adds, that the mere existence of prior debts, will not justify such a presumption. If the pledge when made, did not embrace such prior debts, it may well be presumed, that they were intended to he excluded. But subsequent debts or liabilities stand upon a different principle. The credit given or liability assumed, may well be understood to have been based upon the security of the pledge. If the plaintiff would not assume the first liability, without security, it is fair to presume, that in such as he subsequently look upon himself, he depended on the same security, still remaining in his hands. Judgment for plaintiff.