McQueen's Appeal , 104 Pa. 595 ( 1883 )

Mr. Justice Trunkey

delivered the opinion of the court, January 7th 1884.

By the answer it is admitted that the appellant received from the plaintiff two notes signed by A. D. Dean and David Pentz, for the purpose of collection and application of the same as payment on a debt owed by the plaintiff to the appellant, and that the appellant in his own name obtained judgment on the notes against Pentz for $344.03; also, that the appellant caused an execution to be issued for collection of said judgment, and levied upon the real estate of Pentz, which was sold by the sheriff to Eliza M. McQueen for $51, and she has been in possession of the premises ever since. The Master finds that the sheriff’s sale took place on December 7th 1877, and that the plaintiff had neither notice nor knowledge of it; that the property was worth from eight hundred to one thousand dollars; that the appellant solicited his minor daughter to make the purchase, and that as between the plaintiff and appellant the sale was fraudulent and prejudicial to the rights of the plaintiff. He also finds that the judgment against Pentz was obtained on May 25th 1877, and that the case of McQueen v. Oakley et al. No. 483, October term 1877, was tried on the 9th and 10th of January 1879, and judgment recovered for $342.90.

Although the answer admits that the appellant took the notes as collateral security, it charges that the plaintiff in the said case of McQueen v. Oakley et al, being one of the defendants, swore to a different state of facts, and is therefore estopped from sotting up said matter in this action. What facts the plaintiff then testified, are not stated in the pleadings a material omission, but as the Master has reported them, the answer may be treated as amended. On the trial of that suit the issue was whether McQueen had taken the Pentz notes as payment of the debt sned on by him, or as collateral security for the same. The plaintiff here, a defendant then, testified that McQueen had taken them as absolute payment, and McQueen said he took them as collateral security. The verdict established that they were taken as collateral.

In this action the plaintiff again testified that he believed McQueen took the notes as payment and that ho told the truth when he testified before. The verdict is not evidence that he committed perjury; it evidences that McQueen lost nothing by reason of the alleged payment. McQueen was not precluded from recovery in that suit by reason of the allegation of payment ; had he been, the plaintiff would be estopped from now setting up that matter as a collateral. It is settled that. “ A man who obtains or defeats a judgment by pleading or representing an act in one aspect will be precluded from giving it a different and inconsistent character in a subsequent suit upon the same subject.” But the appellant adduces no authority for the position that a man who avers, yet fails' to establish, that a particular thing should apply as payment of a debt, shall lose the thing itself when the other party avers he received and used it as a collateral for that debt. When it is certain which of two conflicting witnesses the jury believed, it may be uncertain which told the truth. Mow, the question is not respecting the plaintiffs credibility, but whether he shall be heard to speak the truth as admitted by the defendant. The Master justly ruled against the alleged estoppel.

Where a debtor assigns a judgment as collateral security to his creditor, he parts with his authority over it, and the assignee has the light and power to let the lien die or to keep it alive, and must abide the consequences of his own will or negligence: Collingwood v. Irwin, 3 Watts 306. The debtor is entitled to a credit for a loss upon a judgment assigned as collateral to bis creditor, when the loss is occasioned by the supine negligence of the assignee: Beale v. the Bank, 5 Watts 529. A bond, or chose, which is transferred as collateral security is put under the dominion of the creditor to make his claim out of it. His duties in respect to it are active. He is to employ reasonable diligence in collecting the money on the security and applying it to the principal debt, and a conversion of it into a less security is such misuse as makes him accountable to the debtor: Muirhead v. Kirkpatrick, 21 Pa. St. 237. A creditor who holds a collateral security for his debt stands in a different relation to the assignor from that of a creditor to the surety for his debtor. By the contract the assignee is invested with the ownership of the collateral for all purposes of dominion over it. When the collateral is lost by the supine negligence of the assignee lie must account for the loss to his own debtor: Hanna v. Holton, 78 Pa. St. 334. The plaintiff parted with all right of control over the collaterals, and the appellant was bound to employ reasonable diligence in their collection.

From the facts found by the Master it follows that Eliza M. McQueen was an innocent purchaser and has a good title for the land. That her father omitted some things which he ought to have done,- and suffered the land to be sold for about one-twentieth of its value, was far from reasonable diligeuee, and was prejudicial to the plaintiff's right, but he may not be-guilty of actual fraud. The purchase by the daughter was the same in'effect as if it- had been by a stranger. Her relationship to the holder of the collateral must be considered in connection witli his omission to give the plaintiff notice of the sale, and the absence of effort on his part to effect a sale at a fair price. "We cannot adopt the inference that the appellant fraudulently procured the sale. lie had reason to believe that the property was worth nearly three times the amount of the judgment, and when informed that the sale was adjourned for want of bidders, it was not enough to get his infant daughter to buy it for a nominal sum, through the agency of his own attorney. He had absolute control of the writ and if he did not choose to stay it till a better time for selling, he ought, at least, to have notified the assignor before making a sacrifice of the property which left the judgment worthless. His conduct, if not fraudulent, was so culpably negligent that he must account for the loss to the plaintiff.

Under the facts, the measure of the plaintiff’s loss is the value of the property he transferred to the appellant. The subject of the assignment was the two notes. Neither the notes nor the subsequent judgment evidenced any title to other property. Had the land sold for all it was worth, after satisfaction of the execution, Pentz would have been entitled to the overplus. It sold for a pittance, and because the assignee omitted reasonable care in prosecuting the collection of the judgment, he is liable for the damages to the assignor. How can the damages exceed the amount of the judgment and costs ? Had the assignee released the lien, or receipted and satisfied the judgment, he would not be liable for more. He did not buy the land, and the inquiry does not arise, whether, if he had bought it, he would be answerable to the assignor for its value.

The appellant is not entitled to any compensation for his expenses and counsel fees in obtaining judgment against Pentz; for it is manifest that he made no effort to save the judgment, but was active in behalf of a favorite bidder whom he wished to serve. The amount of the judgment including interest, should be credited upon the debt and costs of the appellant’s judgment against the appellee at No. é83, October Term 1877. 'Upon the application of the collateral as a payment of the principal debt, it would seem that the collateral ought to become the absolute property of the creditor. Hence, the appellant is not bound to re-assign — the appellee obtains its application as if it had been collected.

Although the decree must be modified, the conclusion of the Master and court below is affirmed as to the appellant’s liability to account for the loss. "We are of opinion that the loss is measured by the amount of the collateral, not the value of the land sold at sheriff’s sale.

The facts impel the conclusion that the appellant should pay all costs in this action.

This cause having been heard,.upon consideration thereof, it is adjudged and decreed that the decree be affirmed, but modified so as to stand as follows:

1. That of the judgment of William McQueen v. D. Pentz, at No. 167, June Term 1877, the sum of $342.90, as of date January 10th 1879, be applied in payment and satisfaction of the debt of the judgment of said McQueen v. Henry O. and John Q. A. Oakley at No. 483, October Term 1877, and that the balance of said judgment v. Pentz, $34.67, be applied upon the costs in said judgment at No. 483, October Term 1877, and upon payment of the remaining costs in said judgment, said McQueen shall acknowledge satisfaction of the judgment upon the record. Said McQueen is enjoined from collecting the debt or any part of the costs in said judgment v. Oakley, except the costs remaining after deducting said $34.67.

2. That the appellant pay the costs, including the Master’s fee of $150, and the costs of this appeal.

3. That the record be remitted for enforcement of this decree.

Judgment v. Pentz.

Debt,.......$344.03

lnt. to Jan. 10, 1879, . . 33.54

377.57

Judgment v. Oakley, . . 843.90

Applied on costs, . . . $34.67