Fletcher v. Harmon

Haskell, J. Assumpsit on a promissory note, signed by the defendants, and payable to the plaintiff on demand. [469] The defendants plead in set-off that the plaintiff had sold certain notes, which they had pledged to him to secure- the payment of the note in suit, and had received the full face value thereof, exceeding the amount sued for. When securities pledged to secure the payment of a debt are legally sold by the pledgee, he sells for his own account so far as necessary to pay his debt, and the proceeds, when received, to that extent become his own, and operate as payment; but, the balance is money " had and received ” by him for the pledgor’s use, and may be recovered as such, by action, or by set-off in an action by the pledgee against the pledgor. Hancock v. Franklin Insurance Co. 114 Mass. 155; Potter v. Tyler, 2 Met. 58; Howard v. Ames, 3 Met. 308; R. S., c. 82, § 56. When such securities are illegally sold by the pledgee, and he has actually received money therefor, the pledgor may waive the tort, and require the money so received to be applied inpayment of the debt secured, and may recover any balance of the same by action for money had and received, or by set-off; but he can only avail himself of these remedies when money, or its equivalent, has been actually received from the tortious sale, and he must be content, with the money received, as his measure of damages. Androscoggin Water Power Co. v. Metcalf, 65 Maine, 40; Ware v. Percival, 61 Maine, 391. The evidence adduced does not tend to support the defendants plea, but rather shows that the plaintiff wrongfully, and without receiving any consideration therefor, surrendered the securities pledged, to a stranger, who claimed to own the same. In no way have the securities been applied to the payment of the debt. The parties have not agreed to so apply them, nor have they been so dealt with by the plaintiff, that the law so applies them. The statement of the case negatives the right of set-off, inasmuch as the securities have not been sold, or in any way applied to the-payment of the plaintiff’s debt, leaving a balance in the plaintiff’s, hands for the defendants’ use. Nor, can the defendants recoup the value of the securities, pledged to the extent of the amount due upon the note in suit. Recoupment would arise for some breach by the plaintiff of the. [470] contract sued, whereby the damages claimed by him are reduced, or extinguished. The contract in suit is a promissory note, containing no stipulations whatever for the plaintiff to perform. The reciprocal rights and liabilities of the parties touching the pledge, a collateral contract, as its name implies, depend upon the performance, or breach of the principal contract, and are incident to it, but not a part of it. Stipulations touching a loan and a pledge to secure it, may be inserted in one contract, if the parties desire, so that reciprocal duties and liabilities touching both loan and pledge would flow from it, and all controversies touching both.might be settled in the same suit, but that is not the case at bar. In a case in all essentials like the present, it was held that neither set-off, nor recoupment could be allowed. Stare decicis. Winthrop Bank v. Jackson, 67 Maine, 570. Exceptions overruled. Peters, C. J., Danforth, Virgin, Libbey and Foster, JJ., concurred.