Court Opinion

ID: 3905730
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:35:05.426226+00
Date Added: 2024-06-11T14:15:54.157155
License: Public Domain

Error is predicated upon the court's conclusion of law in the third paragraph to the effect that the appellee was entitled to have a foreclosure of the vendor's lien and to have sale made of the 20 1/2 acres of land to pay off and satisfy the full amount due and owing him on the notes executed by Lee Denmark, "including the amount of the barred note." The point made is that appellee, as a pledgee, has not the legal right to have the proceeds *Page 972 
of the sale of the collateral applied to the satisfaction of "the amount of the barred note" of the original debt; that he can recover upon the collateral only such sum as is legally allowable to be recovered against his original debtor, Lee Denmark. The appellee, it appears, held the collateral security before the statutory bar of four years against the first note of the original debt of Lee Denmark was perfected, and, as appears, the collateral itself was not barred. In these facts the appellee would have the legal right to have the proceeds of his collateral applied to the satisfaction in full of the original debt of Lee Denmark, although the original debt, in whole or in part, be barred. Hudson v. Wilkinson,61 Tex. 606; Goldfrank v. Young, 64 Tex. 432; Fievel v. Zuber, 67 Tex. 275,3 S.W. 273; Tombler v. Palestine Ice Co., 17 Tex. Civ. App. 596,43 S.W. 896; 21 R.C.L. p. 659; Jones on Pledges and Collateral Securities (2d Ed.) p. 621. The reason of the rule is, quoting from Hudson v. Wilkinson, supra:
"In case of a pledge, the fact that the debt which it was made to secure is barred by the statute of limitation would constitute no defense to an action by the pledgee. * * * for the reason that a pledgee has a special property in the pledge and entitled to its possession until the debt is paid. It is said that `the statute simply bars the remedy — it does not extinguish the debt; consequently, where a lien is given upon the property for the payment of a claim, whether by contract or by the custom or usage of trade, the lien may be enforced, although the remedy upon the debt itself is barred.'"
Therefore, if the pledgee, as here, held the collateral security before the statutory bar against the original debt was complete, he may continue to hold it afterwards, unless the collateral itself is barred. It would be inequitable to assist the pledgor in recovering the possession of the collateral which he has placed in the possession of the pledgee as security for his obligation, without paying in full his obligation. The obligation of the pledgor is not satisfied by mere lapse of time. The appellant J. J. Mead, as a purchaser from the pledgor with notice of the pledgee's rights, took the property subject thereto. And the appellant John Wesley Royal has no ground of complaint as to the amount and extent of recovery, because the pledgee's recovery was only to the extent of the debt for which he held the collateral as security, and the pledgee was not awarded a recovery against John Wesley Royal upon the collateral notes, or in any personal judgment.
The further point is made that there could be no foreclosure of the vendor's lien on the whole 20 1/2 acres until and unless a personal judgment was rendered against John Wesley Royal upon his four notes. The appellee had the right, in the facts of this case, to foreclose the lien on the land. A pledgee can sue to foreclose the pledge lien, or on the collateral itself, in the same action on the original debt of the pledgor. The appellee here did sue on the collateral itself, and not merely upon a pledgee's lien on the collateral. In such case the appellee's remedy did not only consist of having a personal judgment on the notes, but he had the right to foreclose the lien on the land represented by the notes, and the judgment is not void for following either remedy. And none of the parties are in a position to complain of the judgment in that respect. The appellant Royal had reconveyed the land to Denmark in cancellation of the notes. The appellant Denmark had conveyed his interest in the land to Mead. The appellant Mead purchased the land with notice and subject to appellee's right to have a foreclosure, and in consequence his only interest is in the surplus arising from the sale after appellee's debt against Lee Denmark is fully paid. In this respect Mead's rights are protected by the terms of the judgment in the marshaling of the securities.
The appellant Denmark insists that the personal judgment against him includes the amount evidenced by the first note found by the court to be barred and should therefore be reformed to the correct amount for which he is legally liable. Appellee confesses the error. It is evident that the amount of the judgment, as stated, is not by knowledge or intention on the part of the court, and is a mere mistake. The judgment should have been entered for $305 instead of $484; the $100 barred note, interest, and attorney's fees to date of judgment being $178.75.
The judgment is reformed so as to allow a personal recovery against Lee Denmark for $305 instead of $484, and as reformed will be in all things affirmed. The cost of appeal will be taxed against the appellee, L. H. Avinger.