Court Opinion

ID: 5436991
Source: CourtListenerOpinion
Date Created: 2022-01-08 17:55:50.661248+00
Date Added: 2024-06-11T08:31:52.573373
License: Public Domain

Rhodes, J., dissenting:
I am of the opinion that the plaintiffs were entitled, upon the pleadings, to a judgment for the amount due upon the promissory note of the defendant. I do not concur with Hr. Justice Crockett in the views that the plaintiffs, upon the facts appearing in the complaint, are entitled to a judgment directing the sale of the note of Ferguson. When a prom*355issory note is assigned as collateral security for a debt, and no special contract is made, the contract, rights, duties and liabilities of the parties are the same as in the case of the assignment of a note for value, except in one respect, which is that the assignee undertakes to pay to the assignor the overplus that he may receive on the collateral, after the satisfaction of the principal debt. The law governing such contracts is derived from the custom of merchants, or rather such custom is the law. The parties usually, as in this case, execute no contract in writing, but the holder of the note merely endorses it, and the law declares the nature and effect of the contract, and fixes the rights and liabilities of the respective parties. A case might, perhaps, be stated that would authorize the holder of the collateral note to have a decree of sale, but no facts are stated in the complaint which take this case out of the ordinary course of procedure, except that the note was assigned by way of mortgage, and that the plaintiffs were authorized to sell it in due form of law, etc.; but there is no evidence to that point except that it was endorsed in blank by the defendant as collateral security. It was proven that payment of the note was demanded of Ferguson, and that the note was returned to the plaintiffs protested for non-payment, but these facts do not appear in the complaint, nor is it therein alleged that the note remains unpaid.
If this is held to be a mortgage as the plaintiffs contend (though I am inclined to the opinion that it is a pledge), the words of the Practice Act, read literally, are broad enough to include it, and authorize a judicial sale of the note. The 246th Section provides “that there shall be but one action for the recovery of any debt or the enforcement of any right secured by mortgage upon real estate or personal property, which action shall be in accordance with the provisions of this chapter.” Since the adoption of that provision in 1860, actions, almost without number, have been brought for the recovery of the principal debt, and I have never heard it objected that the plaintiff should have proceeded by foreclosure and sale of the note assigned as collateral security for the debt. That is not the practical construction which *356that clause has received at the hands of the profession, nor do I think it has been so understood by business men. There is no good reason why the Legislature should interfere to give a different effect to a contract of that kind and a new remedy to the assignee; but every reason and consideration is against it (see Wheeler v. Newbould, 5 Duer, 29, and 16 N. T. 392; Atlantic Ins. Co. v. Boies, 6 Duer, 583), and, in my judgment, such was not the intention of the Legislature.