President of the Franklin Bank v. Harris

Briscoe, J., delivered the opinion of the Court. These are cross-appeals. The action was one of trover, brought by the assignees of Thomas J. Wilson against the President and Directors of the Franklin Bank of Baltimore, to recover the value of certain securities deposited by him as collateral with the defendant corporation. There was no dispute about the facts, and they are as follows: On May 14th, 1890, Thomas J. Wilson borrowed of the hank two thousand dollars for which he executed and delivered to it a demand note, depositing at the same time, as collateral security for its payment eighty shares of Bellaire and Zanesville and Cincinnati Railroad Company preferred stock, and two thousand dollars of Oskaloosa Water Bonds. The note contained this provision: “It is also agreed that if I shall come under any other liability, or enter into any other engagement, with said hank, while it is the holder of this obligation, that the net proceeds of sale of the above securities may be applied either on this note, or any other of my liabilities or engagements held by said hank, as its president or cashier may elect.” Wilson afterwards became insolvent, and made an assignment to the plaintiffs for the benefit of his creditors, who qualified as trustees. These trustees tendered the amount of the note, with interest to date of tender, and demanded the note, and [427] the securities which had. heen deposited as collateral. The Bank, however refused to make a surrender of the securities, claiming to hold them as collateral for a note of one Charles D. Gaither, dated December 30, 1889, for §1451, which was endorsed by their assignor, Thomas J. Wilson. The judgment of the Court below being in favor of the plaintiffs for the sum of $259.55 less than the plaintiffs claimed, both parties have appealed. The first question, then, that presents itself for our consideration, is a construction of the provisions of the collateral note, which was raised by the plaintiffs’ first and the defendant’s second prayer. It was earnestly contended on the part of the Bank that the effect of the contract of the 14th of May, 1890, was retroactive, that it not only covered future, but past liabilities. The Court below granted the plaintiffs’ first prayer, which instructed the jury that by the true construction of the contract, the defendant was not entitled to retain possession of the securities pledged, after a tender of the amount of the debt therein mentioned, with legal interest. In other words, that the defendant was not entitled to retain the securities mentioned in the declaration as a security for the note of Charles D. Gaither, dated December 30, 1889, and endorsed by Thomas J. Wilson. And in the granting of this prayer and the rejection of the defendant’s second prayer, which was the converse of the plaintiffs’ first prayer, we think there was no error. The plain and obvious meaning of the contract, and that which was contemplated by the parties at the time of its execution, was to cover future liabilities made after the execution of the note, and those entered into at the time of its delivery. Any other liability he should come under or enter into, or any other engagement that he should make, is the language of the contract. A [428] responsibility assumed by him nearly five months before the making of this note, and not mentioned at the time it was given, nor embraced in its provisions, cannot be considered as coming under other liabilities or engagements which should thereafter be entered into. Besides this, there were power and authority given the Bank to sell these securities upon a default, but it was distinctly provided that this should not be done except on the nonperformance of promises contained in the note itself. The Gaither note was payable on demand, dated December 30, 1889, and was due at the time of the execution of the collateral note. The remaining question is upon the correctness of the Court’s rulings as to the measure of damages, and arises upon the plaintiffs’ appeal. The Court rejected the plaintiffs’ fourth and fifth prayers, and gave the following instruction of its own: That the measure of damages is the value of the property mentioned in the declaration on November 18th, 1890, less the amount tendered on that date, as shown by the evidence, with interest on the sum so ascertained, in their discretion. And in the correctness of this ruling we entirely concur. (Decided 21st April, 1893.) It follows, therefore, that the judgment must be affirmed. Judgment affirmed.