Court Opinion

ID: 6236017
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:32:41.985123+00
Date Added: 2024-06-11T08:57:59.802035
License: Public Domain

Mr. Justice Paxson
delivered the opinion of the court, March 3d 1879.
Whether a person holding personal property in pledge for money loaned can retain such property as security for advances subsequently made, must depend upon the understanding and agreement of the parties at the time such subsequent advances are made. It is said in Story on Bailments, sec. 304: “ The mere existence of a former debt due to the pledgee does not authorize him to detain the pledge for that debt, when it has been put into his hands for another debt or contract, unless there is some just presumption that such was the intention of the parties. The like rule applies to a subsequent debt or loan contracted by the pledger; for in such a case the new debt or loan will not be deemed attached to the pledge, so that the pledgee may retain the same therefor, unless from all the circumstances there is just ground of presumption that the new debt or loan was made upon the credit of the pledge, and was so understood by the parties. The rule in all these cases strictly applies, that the particular contract is to govern the rights of the parties. Modus et eonventio vincunt legem.” The learned author cites numerous authorities in support of his text. In Buckley v. Garrett, 10 P. F. Smith 333, it was held that if a debtor at or immediately after the execution of a mortgage on his property to a creditor, transfers to him a policy of insurance against fire on the mortgaged premises, though nothing be expressed at the time, or it be transferred as collateral security generally, it is a conclusion of law from the very nature of the transaction, that the policy is to be held by the creditor as a collateral security for the mortgage. Says Sharswood, J.: “ It would require evidence of an express agreement or understanding to authorize the assignee to apply the amount *57of the insurance received, in the event of a loss, to any other debt or liability.” The appellant, while conceding that the rule at law is as above stated, contends that in equity it is not so in the case of a pledge of chattels, and that in such case, without any distinct proof of a contract for that purpose, the pledge may be held until the subsequent debt or advance is paid, as well as the original debt. Such a rule is undoubtedly recognised in Story on Equity, at sec. 1034. The ground of the distinction is that he who seeks equity must do equity, and the plaintiff seeking the assistance of the court, ought to pay all the moneys due to the creditor to entitle him to equitable relief. Conceding all that can be claimed for this principle, it does not apply to this case. The money for which the whiskey was pledged was borrowed by Bankson from Charles W. Poultney. The latter held the notes, together with the transfer of the whiskey, and power to sell the same upon the non-payment of said notes. The appellant was a mere broker, and negotiated the transaction. That Poultney permitted him to retain the papers and control the whiskey, can make no difference. The right of possession and the legal title were in Poultney. Had Bankson paid the notes, he could have been compelled to return the whiskey under the express terms of the bill of sale. Had Poultney made further advances, and this bill had been filed against him, the equitable rule referred to might possibly have been enforced. It has no application to the appellant, as the whiskey was pledged to other parties for money loaned by them at the time he made the advances to Bankson of the respective sums of $1200 and $600.
The master finds as a fact that there was no agreement between the appellant and the administrator of Bankson that the former should sell the whiskey on general account; but that, on the contrary, the administrator was willing that the collaterals should be sold, and the proceeds applied to the payment of the notes for which they were specifically held.
We do not think this is important, as it is clear the administrator of an insolvent estate cannot, by his mere agreement, bind the estate in such manner as to take the assets out of the course of distribution provided by law.
We need not discuss the questions of brokerage and commissions. While no opinion was filed by the court below, the learned master has given sufficient reasons to justify his conclusions upon these points.
The decree is affirmed and the appeal dismissed, at the costs of the appellant.
Justices Mercur and Gordon dissented.