Case Name: HANNA v. HOLTON
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1873-05-17
Citations: 1 Foster 335
Docket Number: 
Parties: HANNA v. HOLTON.
Judges: 
Reporter: Legal Chronicle reports of Cases decided in the Supreme Court of Pennsylvania (Foster)
Volume: 1
Pages: 335–336

Head Matter:
In the Supreme Court of Pennsylvania.
HANNA v. HOLTON.
A., owing to a judgment against a solvent defendant, marked it to tlie use of B. as collateral security, the latter neglected to collect it, and the defendant becoming insolvent, it was held that B. must account to A. for the loss of the judgment.
Collateral Security — Laches.

Opinion:
Opinion of the court, delivered May 17, 1873, by
Agnew, J.
The cases cited for the plaintiff in error, are chiefly those of sureties, where the indulgence of the creditor was purely permissive, and the surety was therefore held not to he discharged. A creditor who holds a collateral security for the protection of his debt, stands in a different relation to the assignor of the collateral, though the latter be his debtor. By the assignment, a privity in contract is established, which invests the assignee with the ownership of the collateral for all purposes of dominion over the debt assigned. He alone is empowered, to receive the money to be paid upon it, and to control it in order to protect his right under the assignment. This is the ground of the creditor's liability for the collateral, as stated by Tilghman, C. J., in Lyon v. Huntingdon Bank, 12 S. & R. 68; and also, by the court in Beale v. The Bank, 5 Watts, 530. It is therefore settled in this state, that-where the collateral is lost by the insolvency of the debtor in the collateral instrument through the supine negligence of the creditor, he must account for the loss to his own debtor, who invested him with its entire control. Miller v. Gettysburg Bank, 8 Watts, 192; Bank U. S. v. Peabody, 8 Harris, 454; Dyott's Estate, 2 W. & S. 490; Chambersburg Ins. Co. v. Smith, 1 Iowa, 120; Sellers et al. v. Jones, 10 Harris, 423; Lisky v. O'Brien, 4 Watts, 141; Morehead v. Kirpatrick, 9 Harris, 237; Ins. Co. v. Marr, 10 Wright, 507. We perceive no error, therefore, in the decision of the court below that William Hanna must account to Alexander Holton for the loss of judgment against Jackson Holton, by reason of his omitting to keep up its lien, and afterwards failing to proceed to collect it, until Jackson became insolvent.
This action is not founded on the loss of lien alone. This is but a circumstance, or one of the facts constituting negligence. Had the failure to revive the judgment been the only cause of the loss of the debt, as under some circumstances it might be, the six years having then elapsed, before suit, the statute of limitations would have been a bar. But the loss of the lien was not in this instance the sole cause of the loss of the •debt. Jackson Holton continued solvent, and the judgment remained collectable -until 1866, when Jackson sold his property and actually received a largetpart of the purchase money himself. Alexander Holton's .debt to Hanna was contracted in October, i860, and he then assigned to Hanna the judgment against Jackson Holton as collateral security. The lien of the judgment expired in September, 1863. Jackson sold his farm in July, 1866, and died insolvent in 1867 ; Hanna, in the meantime, taking; no steps to secure or to collect the judgment, which all this time stoodi marked to his use on the docket. It. is Very clear that the'real injury to Alexander Holton was not consumated until Jackson sold his farm and-put the proceeds in his pocket. The cause of action then arose,- and the-statute then began to run. At least, this was the earliest period it couldi arise, and this was only four years before the commencement of the action. The statute was no bar therefore, and the judgment is therefore-affirmed.