Stevens v. Wiley , 165 Mass. 402 ( 1896 )

Allen, J.

1. A conveyance, absolute in terms, of real or personal property, may be shown in equity by paroi evidence to have been taken as collateral security. Campbell v. Dearborn, 109 Mass. 130. Reeve v. Dennett, 137 Mass. 315. Minchin v. Minchin, 157 Mass. 265. But in the present case the defendants gave a receipt specifying the terms on which they received the conveyance of the yacht, viz.: “We are to credit Stevens five hundred dollars on our account against Stevens and Old-ham.” This was an agreement by the defendants to take the yacht in satisfaction of their account to the amount of five hundred dollars, and it was not open to the defendants to show by paroi evidence that the agreement was something else. Langdon v. Langdon, 4 Gray, 186. Squires v. Amherst, 145 Mass. 192, and cases cited.

2. The other question is whether the defendants are bound to account to the plaintiffs for the full amount of the Bohndell note. The master found that it was not to be credited by the defendants as cash, at its face value, but that it was taken as security, and to be charged back if not paid. In other words, it was received in pledge, or as collateral security. The authority of the defendants in respect to it was quite limited. No special authority was shown, and therefore their authority depends on general rules of law. The pledgee of a note has only a special property in it, the general property remaining in the pledgor. He is to collect it if he can, but is not at liberty to sell or dispose of it, or compromise it. Merchants’ National Bank v. Thompson, 133 Mass. 482, 485. Story, Bailm. § 321. In the present case the defendants in the first place took from Bohndell two notes, payable to their own order, in renewal of the original note, which they surrendered to him. These renewal notes would be subject to any defences or equities which Bohndell might have against the defendants. They afterwards renewed these two notes from time to time, receiving small payments, and finally the amount due on one of these notes so taken in renewal was combined with the amount of another claim held by them against Bohndell, and a new note on three months was taken from him for the amount of both claims. In this Commonwealth there is a prima facie presumption that a note taken in renewal of or for an antecedent debt is received in payment. Ely v. James, 123 Mass. 36. Green v. Russell, 132 Mass. 536. O’Conner v. Hurley, 147 Mass. 145. This presumption is confirmed by the facts that the defendants took the new notes payable to their own order, and delivered up the original note to the maker. It is not stated in express terms that any of the renewal notes except the last was on time, but from the frequency of the renewals the inference seems fair that time was agreed to be given by the defendants to Bohndell. Taking all the facts together, the acts of the defendants amounted to a conversion of the note, which they held as collateral, and rendered them liable to account to the plaintiffs for the full amount of it. Dewey v. Bell, 5 Allen, 165. Depuy v. Clark, 12 Ind. 427. Freeman v. Benedict, 37 Conn. 559. Garlick v. James, 12 Johns. 146. Gage v. Punchard, 6 Daly, 229. Nexsen v. Lyell, 5 Hill, (N. Y.) 466. Southwick v. Sax, 9 Wend. 122. The plaintiffs were not bound to accept the new notes payable to the order of the defendants, and subject to possible defences or equities, in place of their own note.

In other States there are some decisions which tend somewhat to support the other view; but so far as they have come to our notice, the cases may he distinguished in their facts from the present case. Hunter v. Moul, 98 Penn. St. 13. Exeter Bank v. Gordon, 8 N. H. 66. Randolph v. Merchants’ National Bank, 9 Lea, (Tenn.) 63. Decree affirmed.