Court Opinion

ID: 3271387
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:39:51.679855+00
Date Added: 2024-06-11T14:00:12.291348
License: Public Domain

This is (an appeal from a judgment dismissing appellant's complaint against appellee upon a failure to amend same, after a demurrer had been sustained thereto upon the ground that it did not state a cause of action. The complaint, omitting caption, is as follows:
"Comes the plaintiff, Andrew Briscol, and states that M. C. Pappas departed this life on the _____ day of _______, 1922, intestate, and that he was appointed administrator of the estate of the said M. C. Pappas on the 7th day of June, 1922, by the probate court of Pulaski County, Arkansas, and duly qualified as such administrator; that at the time the Bank of Commerce  Trust Company was a corporation organized under the laws of the State of Arkansas, and doing a general banking business; that, subsequent to said time, the American Southern Trust Company has become the owner and successor of the American Bank of Commerce  Trust Company, and is and has been, since its succession to the ownership of said American Bank of Commerce 
Trust Company, engaged in the banking business in the city of Little Rock, Arkansas. Plaintiff states that, at the time of the death of said M. C. Pappas, the said American Bank of Commerce  Trust Company held a promissory note of said Pappas for the sum of $700, and to secure said note he, the said Pappas, had placed as collateral a certificate of deposit, executed by the Banque Nationale de Greece, which certificate of deposit cost the said M. C. Pappas the sum of $5,000 of American money, and was of that value; said certificate maturing *Page 416 
about April, 1924. Plaintiff states that, after the death of the said M. C. Pappas, he, together with the said H. C. Pappas, a brother of deceased, put their indorsement upon said note past due, and also executed a new note individually to cover said loan and to serve as a renewal or continuance of said original note. Plaintiff states that the said American Bank of Commerce 
Trust Company failed and refused to present its debt for allowance by the administrator and to have same probated as the law directs, and that said claim of $700 has never been probated against said estate. Plaintiff states that, some time about the first day of April, 1923, the defendant, or the American Bank of Commerce 
Trust Company, of which the defendant is successor, accepted payment of its note from H. C. Pappas, the brother of the deceased and wrongfully delivered at the time to H. C. Pappas the said security held by it, which was of the value of $5,000, against his directions and over his protest, and refused to deliver same to this plaintiff, upon proper demand made therefor, thus converting said securities unlawfully to its own use. Plaintiff states that there is a large amount of indebtedness against said estate, and that the other property belonging to same is wholly insufficient to pay same indebtedness, and that the said American Bank of Commerce 
Trust Company is indebted to him, as administrator, in the sum of $5,000, the value of the said security held and wrongfully converted by the defendant, for his cost, and all proper and general relief."
Appellant contends for a reversal of the judgment upon the ground that, after maturity of the note and the death of the maker, it ceased to be negotiable, and that the delivery thereof, with collateral attached, to an indorser who paid the note, amounted to a conversion of the collateral, and that appellee is responsible for the value thereof, less the amount of the note and interest.
The death of the maker and maturity of the note did not render it non-negotiable. The death of a maker *Page 417 
does not affect the negotiability of paper, so far as transferring it is concerned, the only effect being that the assignee takes it after maturity subject to all defects and defenses the maker or prior holders might have. The indorsement of the note by appellant and H. C. Pappas and the execution of a new note by them for the purpose of renewing or continuing the original loan note with collateral attached had no other effect than obtaining an extension of the original note by giving additional security. The complaint does not allege that the new note was given in settlement of the old and that the collateral was released, but, on the contrary, alleges that it was given in continuation or renewal of the old note. The payment of the note by one of the indorsers, and the delivery of the old note with collateral attached, amounted to a transfer of negotiable paper which carried the collateral as an incident, and did not amount to a conversion of the collateral by appellee. The administrator still had and has the right to follow the collateral in the hands of H. C. Pappas, and recover any equity there might be after paying the note. The rule announced is sustained by the following cases: Bank of Forsyth v. Davis, 113 Ga. 341, 38 S.E. 836, 84 Am. St. Rep. 248; Goss v. Emmerson, 23 N.H. 38; Waddle v. Owen, 43 Neb. 489, 61 N.W. 731.
The case of Union  Mercantile Trust Co. v. Harnwell,158 Ark. 295, 250 S.W. 321, cited by appellant in support of his contention, is not in point. In that case the collateral was sold contrary to the pledged agreement, and the court ruled that it was an unlawful conversion of the collateral, while in the instant case there was no sale of the collateral at all. The note was assigned to H. C. Pappas by the bank when he paid the debt, and the collateral attached to the note passed to H. C. Pappas as an incident.
Mr. Justice KIRBY not participating. *Page 418