Opinion
(September Term, 1894.)
Contract — Note — Pledge of Collaterals — Rights of Payee of Note.
For "money borrowed" J. gave his note to H. and pledged certain shares of stock as collateral security. A contemporaneous agreement between them provided that all assessments upon the stock should be paid equally by them and the stock should be sold to pay the note; any surplus up to a certain amount to go to J. and all beyond that amount to H. The stock became worthless and unsalable: Held, that the transaction was merely a loan of money secured by collaterals, and, the security having become worthless, H. is entitled to enforce the secondary liability of the maker of the note.
ACTION, tried before Hoke, J., and a jury, at April Term, 1894, of WAKE. Plaintiff declared on a note for $790, bearing date 12 November, 1890, as follows:
$790. RALEIGH, N.C. 12 November, 1890.
One day after date, for value received in borrowed money, I promise to pay John W. Hinsdale, or order, the sum of $790, with interest at 8 per cent from date.
This note is secured by the pledge of ten shares of Rockbridge stock, Certificate No. 192. B. S. JERMAN.
Defendant admitted execution of note, as presented, but denied his liability on same because, by the terms of the entire transaction, of which the note was a part, the plaintiff and defendant became and were partners in the matter, and offered in evidence an agreement, entered into by plaintiff and defendant at the time the note was signed, and (153) which was a part of the entire transaction, with the note, as follows:
RALEIGH, N.C. 12 November, 1890.
In consideration of the sum of one dollar, paid by John W. Hinsdale to B. S. Jerman, it is agreed between them that the ten shares of stock of the Rockbridge Company, Certificate No. 192, which is pledged to John W. Hinsdale to secure the payment of note of B. S. Jerman for $790, shall be sold first to pay the said note, and that all between that sum and interest thereon that the said stock shall (154) sell for up to $900 shall be paid to B. S. Jerman, and that all over the sum of $900 that the said stock shall bring shall be divided equally between the said Jerman and Hinsdale.
It is further agreed that all future assessments upon the said stock shall be paid by the said Jerman and Hinsdale equally, each paying one-half the same, to be refunded to each of them out of the proceeds of the sale of the said stock next after the payment of the said note to the said Hinsdale, and before the payment of any amount to the said Jerman.
Witness our hands and seals the day and year first above written.
J. W. HINSDALE. [SEAL.] B. S. JERMAN. [SEAL.]
Judgment on verdict for plaintiff, and defendant appealed. (157)
R. O. Burton and Armistead Jones for plaintiff.
Haywood Haywood and Thomas M. Argo for defendant.
MACRAE, J., did not sit on the hearing of this case.
The note set out in the complaint, with the contemporaneous agreement between the plaintiff and defendant, which the latter put in evidence, constituted the contract between the (158) parties to this action. We think the construction put by his Honor on this written contract was correct, and that the transaction was merely a loan of money, secured by collaterals which have become worthless, thus leaving no course open to the plaintiff to recover the money he loaned to defendant except to enforce the secondary liability of the maker of the note. It seems to us very evident that he has the right so to do.
Affirmed.
Cited: Sykes v. Everett, 167 N.C. 609.