Androscoggin Railroad v. Auburn Bank

The opinion of the Court was drawn up by Davis, J. The plaintiffs hired money of the defendants, giving their promissory note therefor, and pledging, as collateral security, some of their bonds, with interest coupons attached. Their note was renewed from time to time, without payment of any part; and, some of the coupons upon the bonds becoming due in the mean time, the defendants presented them for payment, and received the amount due thereon. The plaintiffs claim that this was a conversion of the bonds; and they bring this action of trover for the value thereof. If the question were really before us, we probably should come to the conclusion that a pledgee of credits, to secure a debt due from the- pledgor to himself, might properly collect the accruing interest, even before his own demand is due, and hold the amount in pledge. Such an act has no analogy to the using of a chattel by the pledgee thereof. If one pledges as collateral, a demand on which interest is accruing at stated [343] periods, some of which occur before his debt, so secured, be-' comes due, such pledge necessarily implies an authority to the pledgee to collect and receive the interest as it becomes payable, and hold it on the same terms as the demand itself for the principal. Especially is this the case where the debtor pledges as collateral a bond, with interest coupons attached, which he might cut off before pledging the bond, but does not do it. But the case at bar involves no such question. The plaintiffs pledged as collateral, not the bonds of third persons, but their own bonds. On these bonds, they themselves, by their agents, paid the accruing interest coupons to the defendants. That such payment, voluntarily made by themselves, with the knowledge, or the means of knowledge, in regard to the whole matter, operated as a conversion of the bonds by the defendants, is a proposition that requires no consideration. Plaintiffs nonsuit. Tenney, O. J., Appleton, Gutting, May and Goodenow, JJ., concurred.