Hanesley v. National Park Bank

Evans, P. J. (After stating the foregoing facts.) The plaintiff seeks to enjoin the New York bank from instituting, in the [99] city court of Americus, a suit on a note given by him to the Americus bank and hypothecated by that bank, on the grounds: (1) that the indorsement of his note by the Americus bank to the New York bank was done with a rubber stamp, which is not an indorsement in writing within the purview of the doctrine that the holder of a note payable to order, as collateral, is not such a bona fide holder for value as to be protected against equities and against set-off by the maker, unless the note is indorsed in writing by the payee, and that he is entitled to set off against the note his counterclaim against the Americus bank; (2) that his note was transferred by the Americus bank to the New York bank to secure an existing indebtedness, in contemplation .of insolvency, and is void as a preference, and that he is entitled to set off, against his note in the hands of the New York bank, an indebtedness due him by the insolvent Americus bank; and (3) that under the facts alleged he is equitably entitled to have the New York bank marshal its securities, so that it can receive full payment of its notes against the Americus bank and at the same time give him the right of set-off against his note for the amount the Americus bank is due him. 1. With respect to the first and second grounds for injunction, the plaintiff clearly fails to show a right to injunctive relief. The law is settled in this State that while a city court has no jurisdiction to grant affirmative equitable relief, it may entertain jurisdiction of an equitable plea purely defensive in its nature. House v. Oliver, 123 Ga. 784 (51 S. E. 722). The plaintiff can litigate in the city court with the New York bank, testing the validity of the transfer of his note, as entitling him to plead his set-off against the Americus bank in partial or total discharge of liability on his note. 2. The plaintiff insists that the New York bank holds other notes hypothecated by the Americus bank as security for the indebtedness- of the Americus bank to it; and that, having the right to set off his obligations with the Americus bank against that bank, equity will compel the New York bank to marshal its securities, so that it can receive full settlement of the obligations of the Americus bank to it, and give the plaintiff the right of set-off for the debt which he claims against the Americus bank. The general rule of compulsory election is thus stated in the Civil Code (1910), § 3220: “As among themselves, creditors must so prosecute their own rights as not unnecessarily to jeopard the rights of others; [100] hence a creditor having a lien on two funds of the debtor, equally accessible to him, will be compelled to pursue the one on which other creditors have no lien.” This doctrine is inapplicable to the facts of this case. The New York bank is not claiming a lien or any other right to the deposit which the plaintiff had in the Americus bank. The doctrine of two funds applies only to cases where contending creditors have a common debtor. Carter v. Neal, 24 Ga. 346 (5), 353 (71 Am. D. 136). A holder of a note as collateral security for a debt -stands upon the same footing as a purchaser. Civil Code (1910), § 4289. If the collateral note be given to secure a pre-existing indebtedness, the holder is entitled to the same protection as a bona fide purchaser. Harrell v. National Bank of Commerce, 128 Ga. 504 (57 S. E. 869). The New York bank holds all the notes as collateral to the notes of its principal debtor, the Americus bank. A creditor may lawfully take and hold several securities for the same debt, and can not be compelled to yield up either until the debt is paid. Union Bank v. Laird, 2 Wheat. 390 (4 L. ed. 269). The collateral notes are not in the hands of the Americus bank or its receiver as assets of the Americus bank; and the plaintiff is asking a court of equity to compel an election by the New York bank to satisfy its own debt out of its own property, based on the predicate that he was a creditor of the Americus bank to the extent of his deposit. Equity will not delay or inconvenience a creditor in the collection of his debt secured by collateral notes, by confining him to one of his col-laterals, at the instance of one whose note is included among the collaterals, and who claims an equitable set-off against the payee of his note. See 6 Pom. Eq. Jur. § 866; Green v. Ingram, 16 Ga. 164. Judgment affirmed. All the Justices concur.