Hennessey v. Stempel ( 1902 )

The opinion of the court was delivered by

Breaux, J.

Tbis is an action iof the pledgor against the pledgee to compel the latter to account for the .amount at which he sold the note pledged to him as security for a loan.

' It is well settled that the pledgee is bound to account to the pledgor for all amounts collected on the claims against third persons left with him as collateral security, and when called upon for an accounting, it is for him to show what has become of tbe pledged security.

In this instance, tbe defendant who inherited tbe right and obligation of tbe pledgee refused to account, averring that tbe note was discounted and that it was tbe property of those from whom she bolds; that it was not transferred in pledge and that in consequence she owes no account.

Tbe testimony as to whether the note was discounted and became tbe property of tbe McCans, under whom defendant bolds, or was transferred to them in pledge, is conflicting. Tbe weight of tbe testimony and tbe circumstances show that it (tbe note) was deposited as a collateral security. One of tbe entries in tbe books of tbe late firm sets out that this note was to be held as security for all indebtedness to the firm.

Witnesses have, by their testimony, identified this note as one pledged more particularly to secure one of tbe loans wbicb was for fifteen hundred dollars ($1500.00) and we infer that in addition it was to be held as security for any other amount wbicb might become due by tbe borrowers to tbe firm in question.

We have examined tbe books of McCan and Son, introduced in evidence. They bad been called for by plaintiff by whose counsel they have been examined. They were offered in evidence by defendant and admitted by tbe court. Having been called for and examined by plaintiff, they were admissible in evidence. 45 Fed. Rep. 59; 4 Cranch; C. C. 532; Fed. Cases 29, p. 94. Defendant’s objection is that although admitted in evidence, they were not considered by the lower court. In view of this complaint, we have brought to bear ¡our most careful .attention in examining them.

Our attention was, in the first place, arrested by the following entry in the stub of the check book showing that on Aug. 14th, 1884, John Hennessey & Bro., in liquidation, received check 1272 from D. O. McCan & Son on the note of A. Sorrell (the note which defendant claims was discounted), quoting from the entry: “Balance of note to be retained for bal. if any notes due us by Hennessey & Bro.”— $1,500.00 is the amount for which the check was issued. The amount of the A. Sorrell note was $5,535.00. This has not the appearance cf a discount and acquisition of the last mentioned note by McCan & .Son as it expressly mentioned that the balance was to be retained as security for other notes due by plaintiff.

The entries as relates to the amount collected on this note, deposited .as collateral security afterward were all made in the name of McCan & Son and not as if retained as security for other notes. The bookkeeper, Levy, ¡of this firm, testified that he then kept note of these items of collection.

We excerpt the following from his testimony: “After the death of Charles P. McCan (of the firm), as I was not aware of the accounts, be having kept the cash account, I placed them to the account of D. C. McCan pending any settlement of the account.”

If, as we infer, the note was to be held as collateral security, as before mentioned, there was no good reason to carry the sums collected .as was "done. They should have been carried to the credit of plaintiff’s account.

The principle is clearly laid down that it is the duty of the pawnee to render account of all collections derived by him from the pledge. iStory on Bailment, p. 809. We understand that no account was rendered as required, and that it .does not appear with any degree of certainty that plaintiff was indebted to the firm in question after they bad collected sufficiently to cover the loan in question.

We excerpt the following from the testimony ¡of the witness, 'McMurdo:

“Q. — What was the result -then of your investigations of these hooks ?

“A. — I found, as I "stated just now, that a good many notes discounted by D. O. McCan & Son and charged in toto to John Hennessey & Bro. had never been placed to their credit wih:en paid.”

We have not found that proper credit was given at any time, although as per entry before referred to the note was deposited to secure Hennessey’s indebtedness. The original agreement was in 1884. In 1885 the following is the entry in the books: “Jno. Hennessey & Bro. credited by discts. A. Sorrell’s note $5535. Jno. Hennessey & Bro. charged to discts. A. Sorrell’s note paid $5535”; although there is no evidence that this note was ever paid.

Sometime afterward it was sold for $2500 for account of the first ¡holders, the McOans. No part of this amount is shown to have gone to the credit of plaintiff on indebtedness for which it had been given as collateral. An amount sufficient in addition was collected on this note to pay the $1500 borrowed by Hennessey & Bro. at the time the note in question was deposited as security to pay it as well as other indebtednesses.

This court has already substantially determined that the note was held as a deposit, and that balance due thereon was not prescribed.

By reason of the law and the evidence being in favor of plaintiffs,, the judgment is affirmed.