Court Opinion

ID: 5438202
Source: CourtListenerOpinion
Date Created: 2022-01-08 17:57:38.334269+00
Date Added: 2024-06-11T08:31:55.069109
License: Public Domain

By the Court, Wallace, C. J.:
The note and mortgage made to Ponce by Le Coat was received by the defendant Powell merely as collateral to secure 'the payment of the note of Ponce, as given by the latter to George. It was, as between these parties, a pledge. The assignment which Ponce made was not intended to transfer the title any further than to enable the assignee to obtain satisfaction of the debt from Le Coat. To give it any effect other than this would be to do violence to the obvious intention of the parties, which was to create a security for the protection of the note to George—nothing more. When, therefore, the defendant Powell, in virtue of the assignment running to him, obtained in his own name from the defendant McElvy, administrator of the estate of Le Coat, a recognition of the validity of the claim, and so constituted it an acknowledged debt of the estate, its character as being a mere security between the parties remained unchanged. When at a later period the defendant Powell, in his character as the accredited holder of the claim, bid in the mortgaged premises at the administrator’s sale, and appropriated the entire claim in part payment of the purchase money, he obtained, as against Ponce, no better or higher right to the land than he had theretofore held to the note and mortgage themselves—the land was thenceforth the security, representing in that respect the note and mortgage which it had supplanted.
But at this point of the transaction the relations of the parties changed in the important respect that a trust arose for the first time in favor of Ponce. The George not'e had been extinguished, and the relation of debtor and creditor based upon that note had ceased. The pledgee, the defendant Powell, had realized by the purchase the whole value of the pledge, which being in excess of the debt due to him, *160that excess he held as trustee for Ponce. Had this been effected by means of a full payment in money made by the administrator to Powell, the amount of the trust fund in the hands of the latter would have been readily ascertainable by subtracting the amount of the George note and interest from the amount received upon the Le Coat note—the balance remaining would have constituted the subject of the trust. The purchase of the land, effected by Powell for a larger sum than the amount of the latter note and interest, while it necessitates the proceedings upon the part of Ponce, to follow the trust interest in the land itself, does not alter in substance the principle upon which it is to be done, for the whole of Le Coat debt was absorbed in the purchase. Upon this view we have already virtually disposed of the defense of the Statute of Limitations set up by Powell. The purchase was made by him in 1870, and the trust with which he is charged in this suit arose at that time, and not before then. His refusal, made in 1865, to turn over to Ponce the note and mortgage of Le Coat, upon the tender of the supposed amount of the George note by Ponce could not operate to set the statute in motion against the trust, which, as we have seen, first arose some five years afterward by his realization of the overplus of the Le Coat note and the simultaneous satisfaction of his own debt, as represented by the George note.
The effect of that refusal, upon whatever ground it may have proceeded, did not operate to change the nature of the right by which he held the possession of the Le Coat note from that of a mere security to one of absolute ownership, nor did the lapse of the intervening period of time constitute a bar to his obligation, subsequently arising, to account for the balance remaining in his hands after his own claim had been satisfied.
Judgment reversed, and cause remanded, with directions to overrule the demurrer to the complaint.
Mr. Justice Rhodes did not express an opinion.
Mr. Justice Hides, having been of counsel in matters pertaining to the case, did not participate in the decision.