Court Opinion

ID: 7988068
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:27:51.044304+00
Date Added: 2024-06-11T16:35:15.703920
License: Public Domain

Terral, J.,
delivered the opinion of the court.
The right of property in the thing pledged does not pass to' the pledgee, but remains with the pledgor, subject to the lien of the pledgee. 2 Kent, 581. The pledgee’s character is that, of a- trustee for the pledgor — first, to pay the debt, and, second, to pay over the surplus to the pledgor — and he cannot deal with the property so as to destroy, or even impair, its value. The pledgee cannot sell the subject of the pledge unless he is specially authorized so to do. His authority to deal with the pledge is determined by the law. In the case of promissory notes, and other negotiable instruments, he is prima facie bound to collect the full face value of them, with interest, unless under special circumstances of excuse, to be shown by him. He should use reasonable and ordinary diligence for their collection, and, when collected, he should reimburse himself to the extent of his lien upon them, and pay over the surplus to the pledgor. If the pledged notes be assigned by the pledgee to some third person, with notice of the pledge, such person can take no greater right in the pledge than his assignor had,, and, upon the collection of the notes, must pay to the pledgor the surplus after satisfying the debt for which they were originally pledged. Neither the pledgee or his assignee can impose a greater burden on them than the satisfaction of the principal debt for which they were originally pledged, except by the consent of the pledgor. Wheeler v. Newbould, 16 N. Y., 392; Fletcher v. Dickinson, 7 Allen (S. C.), 23; Nelson v. Wellington, 5 Bosworth (N. Y.), 178; Lamberton v. Windom, 12 Minn., 232, 242.
It seems to us that the subject-matter of litigation is of equity cognizance. Kelly & Mills had no authority to discount the notes of Mrs. Roby. By so doing they committed a breach of trust and confidence, and Boswell, to whom the notes were sold at a sacrifice, participated in such wrong, and by so purchasing at a discount, he became a trustee in invitum. 2 Pom. Eq., sec. 1044. Mr. Story, in his Equity Jurisprudence,. *318sec. 1032, says that the assignment of the pledge gives the chancery court jurisdiction, and 3 Pom., sec. 1231, .announces the same rule, and it applies with greater force, we think, where the assignment is effected by a wrongful sale of the pledge. It is unnecessary to consider ‘the statute of limitations, as the suit cannot be barred, even under the three years’ limitation. The defendant bought the notes and collected the money November 20, 1893, against the protest of Mrs. Roby, who, to protest, must have been in being, and we know by law that the November term, 1896, of the chancery court of Leake county, at which plaintiff’s letters were granted, began on the ninth and ended on the fourteenth day of November, so that three years has not elapsed since the death of Mrs. Roby, and an administrator has one year after the grant of letters to bring suit. Nor do we think there is any uncertainty in the bill of complaint. It is not usual, nor is it necessary in suits by administrators, to state when the intestate died, and we see no reason for so doing. The bill, we think, calls for an answer; and when she died, and whether testate or intestate, if necessary to protect the defendant, can be raised by plea or answer. We find no question to be discussed upon the other grounds of the demurrer.

The action of the chancellor is affirmed, at the costs of the appellant.