Court Opinion

ID: 6602671
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:09:09.015154+00
Date Added: 2024-06-11T15:58:04.354433
License: Public Domain

EyaN, O. J.
A rehearing of this appeal was granted on the question of the amount which the respondent was entitled to recover.
The learned counsel of the appellants took the position that, because the respondent held the note in suit as collateral security for a note of the payee of much less amount, and because the record disclosed defenses to the note as against the payee, the respondent’s recovery should be limited to the amount for which the note of the appellants was collateral.
The general rule is, that a plaintiff recovering- on an instrument held as collateral is entitled to recover the entire amount. Hilton v. Waring, 7 Wis., 492; Plant’s M. Co. v. Falvey, 20 id., 200; N. W. M. L. Ins. Co. v. G. F. Ins. Co., 40 id., 446. It is true that Dixon, C. J., throws some doubt on the rule in Kinney v. Kruse, 28 Wis., 183; and there are cases elsewhere in conflict with it. But the rule has been established in this *379court for twenty years, and still appears to be tbe proper one. If tbe bolder of tbe collateral recover more than bis principal debt, be recovers it for tbe use of bis principal debtor. Plant’s M. Co. v. Falvey, supra. But there are exceptions to tbe rule. As between tbe pledgor and pledgee, when tbe securities pledged are the obligations of the pledgor, tbe pledgee can only recover his principal debt. Jesup v. Bank, 14 Wis., 331. Eor it would be worse than idle that a plaintiff should recover an amount which be would be obliged instantly to restore to tbe defendant. So where tbe collateral is in the bands of a bona ficle bolder, without notice of a good defense against bis assignor, tbe general and better rule appears to be, that tbe pledgee can recover tbe amount of bis principal debt only. Bank v. Chapin, 8 Met., 40; Stoddard v. Kimball, 6 Cush., 469; Bond v. Fitzpatrick, 4 Gray, 89; Fisher v. Fisher, 98 Mass., 303; Williams v. Smith, 2 Hill, 301; Duncan v. Gilbert, 5 Dutcher, 521; Valette v. Mason, 1 Carter, 288. There are other cases to tbe same effect, but it is sufficient to give these from tbe brief of the learned counsel for tbe appellant. And this court bolds this to be a proper exception to the general rule. For it would be manifestly unjust to allow a plaintiff to recover for tbe use of bis assignor, what tbe assignor could not recover for himself.
The question here is, therefore, whether the evidence in this case discloses a defense against the payee of tbe note.
Tbe defenses here set up are, that tbe note was altered by tbe agent of tbe payee, and- that it was originally made by a partner of the appellants, now deceased, to pay bis individual debt. Tbe learned judge of tbe court below found that the alteration was made without tbe knowledge, consent or permission of tbe payee; and that tbe note was given for the price of chattels appertaining to tbe business of tbe partnership, purchased by tbe partner giving it ostensibly for the use of tbe partnership.
All the evidence bearing on these questions has been considered; and tbe preponderance of evidence appears to be in favor of tbe findings; certainly not against them. This court *380cannot, therefore, assume to disturb tbe findings. Ely v. Daily, 40 Wis., 52.
The note in question was counted on as payable to RTcDon--ald or bearer. And on the argument of the first hearing, the alteration was discussed by counsel on both sides as one changing the note from order to bearer. The former opinion so treats it. This appears to have been inaccurate in terms, though possibly the alteration had the effect of making the note payable to bearer. On that no opinion is now expressed; but it is deemed proper to note the inaccuracy.
By the Gowrt. —The judgment of the court below is affirmed.