Case ID: walker_4/html/0430-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Per Curiam.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

PETERSON vs. GUARANTEE TRUST AND SAFE DEPOSIT COMPANY.
    The holder of a note secured by collateral .is entitled to interest until paid, if realized out of the collateral, even though the debtor died insolvent before the note was paid.
    The holder of a collateral note is not bound to sell the collateral, unless peremptorily notified to do so.
    Error to. Common Pleas No. 4, of Philadelphia County. No. 136, July Term, 1884.
    This was an action brought by Richard Peterson, executor of P. S. Peterson, deceased, against the Guarantee Trust and Safe Deposit Company. The jury found the following special verdict:
    We find that P. S. Peterson, as P. S. Peterson & Co., borrowed from the said defendants the followings sums:
    On November io, 1875...........$9,000 00
    On January 2, 1877 ............. 8,500 00
    On January, 4, 1877............... 8,000 00
    That he gave to the defendants a promissory note of the date ■of each loan for the amount of said loan, proui notes. And at the time of each loan transferred to the defendants the shares of stock and bonds mentioned in the note given for such loan, as collateral security therefor; and in each of said notes authorized and empowered the holder thereof, provided the same was not paid at maturity, to sell and transfer, at public ©r private sale without further reference to the maker ■of said note, said securities so transferred, and apply the proceeds in payment of said note, together with interest and charges incurred thereon.
    That the said P. S. Peterson died insolvent on the seventh day of January A.D., 1877, and letters testamentary were duly granted to the said plaintiff.
    That the said executor on the twenty,-third day of February A. D. 1877, wrote and sent letters to the defendants as follows :
    Philadelphia, Feby. 23rd, 1877. Guarantee Trust And Safe Deposit Co.
    Gent. : — Your favor from J. C. Price, duly received. The only letter I received from you was one sent.to my house, and which I did not receive for two weeks afterwards, as letters there are often mislaid where I never see them. I did not answer the same, as I thought it was too long after to do so. I now say to you, as the estate cannot pay the loans of the late P. S. Peterson, deceased, you will have to dispose of the col-laterals left in your hands. Try and work them off to the very best advantage, and oblige, sending me copy of sales.
    Yours respectfully,
    RICHARD PETERSON, Executor.
    
    
      That the defendants sold and received the proceeds of said securities transferred to them, as collateral security for said notes as above found, as follows:
    1877, January 23...............$ 2,150 00
    “ February 28 ............ 7,812 00
    “ March 2................ 1,317 5°
    “ July 12................. 922 25
    “ July 13................. 5,335 88
    1878, December 19 ............. 6,551 00
    1880, December 4............... 1,018 22
    “ September 20 ............. 670 00
    In all $25,777 35
    That the defendants received from said collaterals before the sale thereof, dividends and interest as follows:
    1877, July 6......................$237 50
    1878, January 10.................. 105 00
    “ November 2................ 35 00
    1879, May 6..................... 35 00
    “ May, 14.................... 45 00
    1879, October 2.................... 10 00
    “ October 11................... 15 00
    1880, January 9.................. 35 00
    “ January 29 ................. 10 00
    “ April 29................... 10 00
    In all........................$537 50
    That the proceeds of the sale of said securities are insufficient to pay in full to the defendants the amount of said loans, with interest to date of sale of securities.
    That being ignorant in point of law as to the right of the said defendant to have from the proceeds of said securities, interest on said loans after the death of the said Peterson, or, not having such right, whether the defendant has the right to apply the dividends and interest received on said collaterals to the payment of such interests, to the extent of such receipts; if the Court be of opinion that the defendant is entitled to have from and out of the proceeds of sale of said collateral securities, payment in full of said loans, and interest thereon,, down to the time of such sale, we find for the defendant.
    If, in the opinion of the Court, the defendant is not entitled to have out of the proceeds of said sale any interest on said loans after the death of the said Peterson, January 7, 1877,/ we find for the plaintiff, and assess the damages at $953.34,: and if, in the opinion of the Court the defendant is entitled to-have such interest to the extent of the dividends and interest-received on said securities by them from the date of said death to the time of the sale of said securities, we find for the plaintiffs, and assess the damages 'at $303.87.
    On March 17, 1884, the Court entered judgment for defendant on the special verdict.
    Peterson then took a writ of error, complaining of the entry of judgment in favor of the defendants upon the special verdict.
    
      F. F. Brightly, Esq., for plaintiff in error,
    argued that as. the estate was insolvent, interest ceased at the death of decedent; Burnell’s Estate, 9 W. N. C., 334; Weightman’s Appeal, 10 W. N. C., 155; Wainright’s Estate, 13 Phila., 336. The status of the claim is fixed at the death of decedent; Scott vs. Ramsey, 1 Binney, 221; Deichman’s Appeal, 2 Wh., 395; Bosler vs. Bank, 4 Pa., 32; Myers vs. Scully, 85 Pa., 360. The company should have sold upon receipt of notice; O’Neill vs. Whigham, 87 Pa., 394.
    
      C. S. Pancoast, Esq., contra.,
    
    argued that where the creditor holds collateral securities for his debt, he is entitled to be paid principal and interest, if the same can be realized out of the securities, even though the estate is insolvent; Miller vs. Bank, 5 Wh., 505; Sims vs. Willing, 8 S. & R., 103; Port Royal vs. Graham, 84 Pa., 426; Schultz’s Appeal, 11 S. & R., 182; Bank of Penna., 60 Pa., 471; Brownsville Bank’s Appeal, 96 Pa., 347; Brough’s Estate, 71 Pa., 461; Miller’s Estate, 82-Pa., 113.
   The Supreme Court affirmed the judgment of the Common Pleas on April 13th, 1885, in the following opinion:

Per Curiam.

The collaterals were transferred to secure the payment of the note together with interest and charges incurred thereon. The notice to the company to “try and work them off to the best advantage” is not equivalent to an express and peremptory order to sell immediately. The language fairly imports that it should exercise judgment and discretion as to the time and manner of making sale. The company acted in entire good faith in the exercise of that power. There is no error in the judgment entered on the special verdict.

' Judgment affirmed.