French & Co. v. Haltenhoff

Mr. Justice Eakin delivered the opinion of the court. 1, 2. Defendants urge that the plaintiff having alleged that it is the owner of the note, and the proof showing that it acquired it as collateral security, there is a variance from the pleading; that, the investment company having no title to the note and mortgage, it could not maintain this suit. A pledge of commercial paper duly indorsed to the plaintiff transfers to it the legal title thereto, and the title to the note carries with it the title to the mortgage. This has been recognized as the law in Oregon in Gregoire v. Rourke, 28 Or. 275 (42 Pac. 996); Dawson v. Pogue & Nickell, 18 Or. 94 (22 Pac. 637, 6 L. R. A. 176); First Nat. Bank v. Miller, 48 Or. 587 (87 Pac. 892); 22 Am. & Eng. Ency. Law, [247] p. 894; 31 Cyc. 885 (E). The assignee of a chose in action may sue thereon in his own name, and a consideration for the assignment need not be proved. 3. The second contention is that the plaintiff is not an innocent holder of the note and mortgage; that the investment company is not a bona fide corporation, but merely a paper corporation used by plaintiff to promote a scheme to put the land owned in the name of the corporation on the market. But we do not find such fact from the record. There is no such issue tendered by the answer, nor does the proof establish it. The proof shows that plaintiff furnished $11,500 to the investment company, which was paid upon the purchase price of the land, and took the note and mortgage mentioned in this case as collateral security for the repayment thereof. If defendants desired to hold the plaintiff liable for his damages on the original contract by which it purchased tracts 9 and 10, issues of that character should have been tendered. Such a contention is first made in defendants ’ brief, but is not sustained by the record. 4. Defendants further allege that whatever interest the plaintiff has in and to said note and mortgage was taken by the plaintiff with full knowledge of the covenants in said deed and with full knowledge that the same had not been performed; that the plaintiff is not the owner and holder thereof, hut is in possession of the same as a trustee for the investment company, and along with the said note and mortgage is in possession of divers other and different securities and property belonging to the investment company and is holding them as such trustee; that the said note and mortgage are subject to defendants’ judgment; and that plaintiff as such trustee has been fully authorized by the invest [248] ment company to credit the defendants with the amount of said judgment on said note and mortgage. But there is no suggestion in defendants’ answer that the investment company is incorporated for the benefit of the plaintiff, that its property is held by it for plaintiff, or that the plaintiff is liable for its debts. The judgment was obtained on the 23d day of October, 1913, and the note and mortgage were transferred to plaintiff on December 23, 1910, as collateral security for a loan to the investment company of $11,500 made on that date. When so transferred to plaintiff, it had no notice of any defense thereto or of said judgment, and, unless plaintiff was shown to be the real party in interest in the said deed made by the said investment company to the defendant, the judgment cannot be offset against plaintiff in this suit, and any proof offered in relation thereto is incompetent. The third point raised by defendants is that the plaintiff should not be permitted to sue on the mortgage in question without crediting thereon the amount of said judgment, namely, $2,365; but, as already suggested, the defendants have not pleaded ‘or proved such a state of facts as will entitle them to such a credit. 5. At the argument the defendant Haltenhoff made the contention that he was in a position to ask for the marshaling of the securities held by plaintiff; but no case is made in the answer or proof calling for such relief. The party asking for such relief can have it enforced only when the paramount lienor is fully protected, and that can usually be accomplished only when his claim is matured, at which time the securities can be enforced and his claim first satisfied. There is nothing shown in regard to these matters, and they cannot be considered. In any event, the junior lien [249] creditor can be protected by subrogation, and in some cases that may be tbe only remedy: See 26 Cyc. 938. There being no error disclosed in tbe record, tbe decree is affirmed. Affirmed.