Court Opinion

ID: 4011739
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:15:24.281168+00
Date Added: 2024-06-11T13:58:02.792795
License: Public Domain

The following opinion was filed May 4, 1944:
Plaintiff claims that the determination results in great injustice to her.  We have carefully re-examined the issues as they were presented to this court, and we see no basis for modifying our determination.
The administratrix's deceased husband, Charles Linker, sued as pledgor for the conversion of collateral deposited by him.  Both in the lower court and in this court it was found *Page 472a 
that there had been such conversion.  In this court it was found upon evidence that we still regard as incontestable that the value of the stock converted was nominal.  Had the action been in replevin, the return of the stock in specie might have been enforced; but, having elected to put the title to the stock in the bank by suing in conversion, plaintiff foreclosed that solution.  Therefore, so far as the stock is concerned, we see no way in which plaintiff can have anything but a nominal setoff. It is stated in the opinion that the foregoing disposes of all the issues in the case and an examination of the pleadings confirms this conclusion.
It is suggested by plaintiff in her motion for rehearing that the court incorrectly assumed that the $19,500 Linker Realty Company note of April 6, 1936, payable to Charles Linker, and debentures were not within the issues.  The complaint makes no mention of the Linker Realty Company note, but it is claimed that this matter was litigated below, and that at the time of the sale of the collateral the note was sold and Linker credited with $1,950 upon this note, which, with others against the Linker Realty Company, were later traded in upon the reorganization of the Linker Realty Company for debentures still held by the bank.  Upon this we make the following comment to clarify the situation and indicate the limits of our determination here.  From all the facts it is obvious that the loan for which Linker signed his note was actually to the Linker Realty Company.  The company was the principal debtor and its note for $19,500 (regardless of the fact that it was in terms payable to Charles Linker and by him turned over to the bank, and regardless of the fact that it was designated as collateral) was nothing more nor less than an integration of the principal indebtedness.  As the transaction stood, Charles Linker was the guarantor or accommodation maker.  Linker Realty Company was the principal debtor and the bank was the creditor.  Being the principal indebtedness, the only thing that could be done with it was to pay it or default in payment.  There being a default, the bank had a right *Page 472b 
to sell the Linker Realty Company stock, which was in its hands as collateral, and apply the proceeds on the Linker Realty Company note and on the accommodation note of Charles Linker.  It could, and did, sue and reduce to judgment its claim against Charles Linker as surety or guarantor.  In the process of protecting itself the bank wrongfully converted the stock.  This matter was fully litigated in these proceedings. Not only is it not alleged by plaintiff that the bank converted the Linker Realty Company note, but also this allegation could not very well be made because that was the principal indebtedness.  When, and if, the indebtedness of Linker is paid to the bank, the question as to.  Linker's rights, (1) to cancellation of the Linker note for which he was surety, or (2) to subrogation to the bank's rights to the Linker note or that which was taken in return for it, can properly be determined.  This matter is not within the issues of this case and presents possibilities that we do not intend to explore in this memorandum.  These possibilities have to do with the rights under varying circumstances of a guarantor with relation to the principal debt of his principal which he has paid.
It is suggested that there is an ambiguity in the opinion as to whether the debt of Linker to the bank is wiped out by the original mandate.  It is, of course, perfectly clear that it is not.  The only process by which it could be wiped out would be a finding of a setoff equal to or greater than the debt itself. There was no successful attack upon the liability of Linker upon his note.  The only defense was one which operated by subtraction, and since this court held that there was no value to the stock converted, the only subtraction would be the nominal amount found by the court.  It follows that the liability of Linker upon the note is not affected by our determination; nor is Linker foreclosed, upon paying the judgment rendered against him in favor of the bank, from having determined and established whatever rights he may have to indemnity or subrogation.
By the Court. — Motion denied. *Page 473