Court Opinion

ID: 8018053
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:07:09.224093+00
Date Added: 2024-06-11T16:36:29.044986
License: Public Domain

OPINION.
BOND, C.
I. • Appellant requests, in its brief,, that we shall reserve any rulings “on the effect and validity” of the rules of the Merchants’ Exchange or their application to this case until the appurtenant law can be submitted in future suits, when that ruling will be controlling, and that we shall consider in the present case solely the specific points argued and presented for a reversal. We will comply with this request. This necessarily excludes from review the amount of the judgment obtained, since that was based on a price fixed under the Exchange rules, and restricts our consideration to the question of the right of plaintiff to recover at all.
*46The first defense in the answer is that plaintiff is not “the real party in interest” to prosecute this action. Plaintiff’s right to sue is derived through a written transfer (coupled with notice to the defendant) of all the contractual obligations expressed in the several contracts made by defendant with plaintiff’s assignor. The fact that the contracts so assigned were át that time in defendant’s possession as security for overdue notes which it held against plaintiff’s assignor, in nowise prevented the covenantee in those contracts (plaintiff’s assignor) from assigning its general ownership therein, subject to any special interest or lien of the custodian (the maker of the contract). [Southworth Company v. Lamb, 82 Mo. l. c. 249; Richardson v. Ashby, 132 Mo. 245.] The deposit of these contracts as collateral security did not discharge their obligatory force nor affect the liability of the ■defendant as the. covenantor, nor deprive the cov•enantee of its cause of action for a breach of said ■agreements. The right and title to its cause of action for a breach of said contracts continued in the covenantee, and was validly transferred to plaintiff, who became as such assignee entitled to all redress which could have been had by the assignor. In such cases the assignee is the real party in interest and may sue in its own name. [R. S. 1909, sec. 1729; Young v. Hudson, 99 Mo. 102; Guerney v. Moore, 131 Mo. 669; Gay v. Orcutt, 169 Mo. 406; Dickey v. Porter, 203 Mo. l. c. 22; Conrad v. Fisher, 37 Mo. App. l. c. 403; Van Idour & Co. v. Nelson, 60 Mo. App. 523.] Hence this point is ruled against appellant.
II. Neither can we sustain the further contention that the fact of the physical possession of the written contracts by defendant disabled the assignee of the obligee in said- contracts to sue. These writings were only evidences of the contract or legal obligations expressed by their terms and which arose from the nature *47■of the engagements entered into by the parties. Until •these were discharged by payment or satisfaction, their •enforceability'continued as-it would have survived if the written evidences had been lost or destroyed. We .rule therefore, that the fact, that the contracts assigned to it were in the possession of defendant at the time -did -not deprive. plaintiff of the' right to enforce them .according to their terms and subject to the right of .the depositary to retain out of any sum for which he was liable as, the maker .of said contracts an amount •sufficient to discharge the notes for which they were-col•lateral security.
III. ' The next error assigned is, that it was plaintiff’s duty before or. when it filed this suit to pay or fender to defendant the amount of the notes due from plaintiff’s assignor to. secure which, its own contract •obligations had been deposited.- This position is -based on the assumption that plaintiff’s assignor and the defendant, .under-the facts in this record, stood-in-the technical relation of pledgor and'pledgee as"-to’thé grain contracts which had been deposited (pending the settlement of defendant’s liability on said contracts) to secure, a loan made to such assignor. - - ■
The. law on' the'siibject of pledges is plain and well •defined. The pledgee of tangible personal property; such as gold nuggets," lumber, cattle or physical things of intrinsic value, does not take the' legal title to the property put in his possession.' He may take the legal title to commercial paper held as collateral security- or to shares of corporate-stock when caused-'to be issued in-his name,'"hut these are-'exceptional instances; - He does not take the legal title iipon a deposit of'non'-negotiable páper or rights arising, under contract; -As to these ánd as to articles 'ordinarily pledged," the-pledgee acquires merely a possessory right to -retain the "property until’the payment-'of. the debt,"Or a-lien-upon-its proceeds'in case it.id sold... after default pf-the ffiedgdri *48The implied right of the pledgee to sell for non-payment of the secured debt at its maturity does not extend to commercial paper, or choses in action having no marketable value, for as to these he cannot sell without either the aid of the court or the authority of a contract with the pledgor. The general title of the pledgor of goods and chattels is vendible, or may be levied upon by execution or attachment subject to the pledgee’s lien. [Jones on Mortgages (2 Ed.), 651; Richardson v. Ashby, 132 Mo. l. c. 246; Trust Co. v. McMillan, 188 Mo. l. c. 569.] On the other hand, the pledgee upon default may pursue any of several remedies: ‘ ‘ 1st, He may bring an action upon the debt secured; 2d, He may make sale of certain things pledged as at common law without judicial proceedings; 3d, He may proceed under statutory provisions where these exist; 4th, He may make sale by decree of a court of chancery; 5th, He may sell under special power of sale executed by the pledgor. He may use any one of these remedies against the debtor or his property for the collection of the principal debt without destroying or impairing the security for the debt until it is actually paid.” [Jones on Mortgages (2 Ed.), secs. 589-590.]
If these rules should govern the case at bar (as claimed by defendant), then it is clear that thé defendant may avail itself of the remedy of an independent suit on the notes made to it by plaintiff’s assignor. And it is equally dear that defendant was not compelled to plead such notes as an offset in the present action. It had the full option to do so, for that right enured to it when it became possessed of the grain contracts as security for the notes given by plaintiff’s assignor. Whether it would do this, or whether it would enforce the indebtedness shown by the notes in a separate suit, was a matter resting in the choice of the defendant. With full knowledge of its rights as the custodian of these causes of action sued on, its answer in this case wholly fails to plead that the causes of action *49sued on are ‘subject to any lien or offset in its favor as pledgee. The answer simply denies that plaintiff is the real party in interest; denies Ms title to the causes of action; and avers that defendant “is the legal owner and bolder of each and all of the instruments of writing sued upon herein,” and avers that “plaintiff has no legal right or title thereto whatsoever.” None of these defenses, by any just legal intendment, conveys the idea that defendant relied upon its status as pledgee, or desired to enforce its right as such in the present action. The answer contains no affirmative defenses, but mere denials. An examination of the petition discloses that the nineteen causes of action contained therein are based only on the alleged infraction by defendant of its contracts to deliver certain grain, and that the recovery sought is for the damages caused by the alleged breach by defendant of its contracts mentioned in the petition. The petition contains no allegations referring to defendant as the pledgee or custodian of such contracts, or as possessed of any special interest or lien therein of any description. It merely alleges the .execution of the contracts, their assignment to plaintiff and the breach thereof by defendant. The defendant did not see proper to plead its status or right as the possessor of the grain contracts to this action, based on them. Neither plaintiff nor the court had any power to require defendant to set up his special defenses to this action, or to plead otherwise than as in its answer. The result of this suit has not precluded the defendant from instituting an action against the maker of-the notes held by it. The defendant is free to pursue its remedy in that respect. But defendant is not entitled to withhold its defense of an offset in the present action, thus retaining possession of the notes which it was privileged to use in that way, and thereafter complain of a recovery by plaintiff for the full amount of the liability of the defendant under the con*50tracts sued upon. Nor can defendant insist that its impleaded status and rights as to the contracts sued on could he taken cognizance of as a defense, pro tanto, to the present action. The rule is axiomatic that triable issues are formed by the pleadings and cannot be expanded either by-evidence or instructions. [Lynch v. Morrow’s. Adm’r, 28 Mo. 357; Currier v. Lowe, 32; Mo. 203; Greene v. Gallagher, 35 Mo. 226.] Whatever, rights defendant had by its custody of the causes of action were special. The assertion of -these' rights by defendant in' this action or in' a suit on its notes was optional. Defendant chose not to'assert them in this suit. Hence,, it cannot assign error for a recovery which ignored defenses which it did not assert. . ,
' . We have considered the contention of defendant, that plaintiff was precluded from bringing the present suit before paying Or tendering to pay the' notes' given defendant by plaintiff’s assignor,, and to secure which defendant’s grain contracts had been left with it, as if .the-transaction was strictly within the principles applicable to ordinary pledges of personal property. We have seen that defendant, under the pleadings and issues joined in this case, cannot .avail itself of the rule; preventing .a pledgor from recovering the" subject" of the pledge from the. pledgee, in invitwm, without paying or offering- to pay the debt secured. And while that is sufficient to dispose of the points under'review,' yet we do not wish to be understood as conceding that the transaction shown by this record partook of " the essential characteristics and attributes of a pledge .of goods and chattels, as that subject is defined by law."
■ In its essence, the present transaction was nothing more than an advance in the form of a loan byra debtor to his creditor, to be secured by leaving with the debtor the written evidences of its. own obligations to. the-creditor. - It was, inferably, a convenient business way cf possessing .a creditor with some, part of what was; due him, pending a dispute as to the fpll.amount;:..;
*51We do not hold that the legal effect of this action -of the two parties made it the duty of the creditor to repay the loan before calling on the debtor to pay what was dne from it. It was at most a transaction result-: ing in the creation of reciprocal indebtedness, and one wherein the contractee (as may be assumed from the verdict in this case) was entitled to a much larger sum than was loaned him by the contractor. ’
IV. It is finally suggested for defendant, that the judgment herein deprives it of a property right or impairs the contract under which it held the grain contracts as collateral. We cannot assent to that view: Defendant declined to plead or set up its rights to the collateral when sued upon the obligations expressed in them. When the interest of defendant later appeared from the evidence, defendant also declined (though plaintiff consented this might be done) “either by pleading or instruction” to ask a reduction of any recovery by plaintiff to the amount of the notes and interest given by its assignor. Defendant lost no constitutional protection by any ruling adverse to its special interest. For no issue presenting it was before the court, and defendant refused to assert it under the offer made by the plaintiff on the trial. Necessarily -therefore the court did not rule against such interests
V. Circuity of action may be avoided by a disposition of this case whereby complete justice may be done to the parties without further litigation or delay. Interest reipubKcae ut sit finis litium. — Broom’s Legal Maxims. This court is invested with statutory power, after an examination of the record, to ‘ ‘ give such judg-' ment as [the trial]; court ought to have given, as to them shall seem agreeable to law.” [R. S. 1909, sec. 2083.] The defendant has in its possession two notes-representing loans made by it to plaintiff’s assignor, aggregating about $6000 and interest. Counsel for-*52plaintiff, in their brief and oral argument in this court, have requested, if the judgment in its favor should be affirmed, that this court enter a decree adjudging that such judgment shall be reduced by the amount of said notes and interest, provided defendant will deliver* them up for cancellation.
We, therefore, order that the judgment heretofore recovered by plaintiff be affirmed for the amount thereof less the principal and interest thereon of the two-notes in the possession of the defendant executed by plaintiff’s assignor, provided defendant shall within ten days deliver up said notes duly cancelled. Cost of this appeal to be taxed against defendant. Otherwise the judgment recovered herein by plaintiff is affirmed.
Brown, G., concurs.
PER CURIAM.
The foregoing opinion of Bond C., is adopted as the opinion of the Court in Banc on rehearing.
All the judges concur, except Woodson, J who dissents in opinion filed.