Slack v. Elkins

Russell, J. 1. Under the facts stated in the defendant’s motion, it was error to refuse, at the trial term, to allow the default to be opened. The defendant had paid the costs, the showing under oath set up a meritorious defense, and the movant offered to plead instanter, and announced ready to proceed with the trial. 2. Generally the holder of a promissory note, pledged to him as collateral, may enforce it for the entire amount against the maker as obligor; holding, as trustee for the pledgor, any surplus after the payment of his debt; but if the maker has a valid defense against the original payee, the holder can not recover more than' the amount of the debt due him by the payee as his pledgor. If the maker of a promissory note which has been pledged to a third person as collateral security proves a defense not available as a bar to recovery by the pledgee, but 'good as against the pledgor, the pledgee will be allowed to j'ecover only to the amount of the debt for which he holds the collateral security. 3. In a ease in which A. gives his promissory note to B., and deposits with B. a promissory note of C. to himself as collateral security; and B. sues C. upon the collateral note, and A. thereafter, before the trial tei-m,-pays in part his original obligation to B., and C. on his part has paid to A. either the whole or a part of the amount of the note held by B. as collateral, B. is not entitled to recover, in his action against C., a sum larger than the amount of the unpaid balance due him by A. at the date of the judgment. 4. Where the contract for attorney’s fees contemplates that it shall be fixed upon a percentage basis, the amount due as attoimey’s fees is detex-mined with refei-ence to the amount actually due upon the obligation at the time of the trial, and not by the amount alleged to be due when the suit was filed. Judgment reversed. Pottle, J., not presiding.