Jenckes v. Rice , 119 Iowa 451 ( 1903 )

Sherwin, J.

Removal of promise to pay: suspension of statute of limitation. The defendant Jphn E. Rice was a resident of the state of Washington when he executed the instrument in suit, and has ever since resided there, while the plaintiff was then and still is a resident of Indiana. We need not determine, however, whether the action was barred by the Washington statute pleaded and proven, because we find that such bar, if it ever existed, was removed by the defendant’s new promise in writing to pay in his letter to Spencer M. Rice under date of February 24, 1893, in which he said, “I cannot tell where I can get money enough to pay the note, but, as true as God, I will send it as soon as I can get it.” The contention that this language may have referred to the individual note which Spencer had given the bank is not sustained by the record. The letter refers to the instrument in suit directly and explicitly in other parts thereof, and its entire tenor shows conclusively what he meant in the sentence quoted, for no other note is mentioned in the entire letter.

2 promissory of conaftíonai payment. We cannot agree with the contention of the appellant that the instrument before us is a promissory note. A -promissory note is an‘ unconditional written promise to pay absolutely and at all events a sum certain in money, and this the instrument clearly does n0^ ¿0i contains an express condition that it is “void and nonpayable” upon the happening of a certain event, and, in addition thereto, it states that it was given to indemnify S. M. Rice against a loss on his investment in the stock in question. It is true that the clause containing this statement speaks of the instrument as a note, and, if the condition and statement of the purpose for which it was executed were not present, it would in fact be a note; but the entire instrument must be construed together, and, when so construed, we think it clearly shows that it was intended and understood as a contract of indemnity only. Certain it is, however,- that, if not so construed, it cannot be held to be a promissory note, and, being ambiguous, its character would then be determined in the light of the surrounding circumstances, and, considering these, no doubt is left as to the intent and meaning of the parties. Rush v. Carpenter, 54 Iowa, 132.

Furthermore, the instrument in all essential particulars is like that under consideration in Ellett v. Eberts, 74 Iowa, 597, which was held not to be a promissory note, and in which Green v. Austin, 7 Iowa, 521, and Rush v. Carpenter, supra, were distinguished. It being a contract of indemnity only, it was necessary for the plaintiff to allege and prove that actual damage had been sustained.

3 sai.e of iiideSnityf by pledgee, Moreover, we are of the opinion that the sale of the collateral security by the bank did not vest the absolute title therein in the plaintiff. It is undoubtedly the rule that ^ie pledgee of personal property in the shape of goods and merchandise or tangible (jhaftelg of any kind may sell the same, after default, upon proper notice to the pledgor; but this rule has been quite generally held not to apply to choses in action or commercial paper, other than stocks and bonds, unless the contract so provides; and the reason for this exception is that such securities, not being usually marketable at their fair value, would generally be sold at a sacrifice, and an injustice would thus be done the debtor, and it cannot be presumed that it was the intention of the parties thus to deal with the securities. 22 Am. & Eng. Enc. Law (2d Ed.) 884; Wheeler v. Newbould, 16 N. Y. 392; Fletcher v. Dickinson, 7 Allen, 23; Banking Co. v. Lewis, 12 N. J. Eq. 323; Joliet Iron & Steel Co. v. Scioto Fire Brick Co., 82 Ill. 548 (25 Am. Rep. 341); Manufacturing Co. v. Gray, 19 Colo. 149 (34 Fac. Rep. 1000); Stevens v. Wiley, 165 Mass. 402 (43. N. E. Rep. 177), and see note in 43 L. R. A. 737; Cleghorn v. Trust Co., 57 Minn. 341 (59 N. W. Rep. 320, 47 Am. St. Rep. 615); Whitteker v. Gas Co., 16 W. Va. 717; Jones, Pleading, 661. The justness of this rule cannot fail to be recognized in this case, where collateral security now worth its face value was sold for $30. In Robinson v. Hurley, 11 Iowa, 410, the contract provided for a sale of the collateral, and the question we are now considering was not involved; hence the language therein to the effect that the pledgee may sell upon notice must be held dictum, and not binding upon us. The bank had no interest in the collateral except as a pledgee, and it could not, therefore, sell or assign a greater interest than it had, which was the security of the S. M. Rice note. It might lawfully sell and transfer its debt against Rice, and transfer with it the collateral held to secure its payment, but nothing more; and, when the note so secured is paid, the plaintiff has no further interest in or right to the collateral. The judgment against John E. Rice was, therefore, too large in any view of the case, for he could be held for no greater sum than the amount due on the S. M. Rice note, and the court properly held that the latter should be subrogated to the rights of the plaintiff upon payment of the judgment against him on his personal note. It being admitted that such judgment has been paid, it is not necessary to determine whether a personal judgment should have been rendered against S. M. Rice herein.

The judgment is aeeirmed 'on the plaintiff’s appeal, and on the defendants’ it is reversed.

Bishop, J., took no part.