Iron v. Scioto Fire Brick Co..
| Decision Date | 30 September 1876 |
| Citation | 82 Ill. 548,1876 WL 10253,25 Am.Rep. 341 |
| Parties | JOLIET IRON AND STEEL COMPANYv.SCIOTO FIRE BRICK COMPANY. |
| Court | Illinois Supreme Court |
OPINION TEXT STARTS HERE
APPEAL from the Superior Court of Cook county; the Hon. JOSEPH E. GARY, Judge, presiding.
This was an action of assumpsit, upon a promissory note for $3953. The defendant set up, in its plea, that the plaintiff, after the commencement of the suit, had sold a number of railroad bonds belonging to the defendant, and by it placed in the hands of the plaintiff, as collateral security to secure the payment of the note sued on, which bonds were of great value, to-wit: of the value of all the damages sustained by the plaintiff by reason of the non-payment of the note sued on. To this plea the plaintiff replied that it had given public notice, by advertisement in a public newspaper, of the fact that it would sell the bonds referred to in the plea, at public auction; and that, in pursuance of such notice, it did sell said bonds at public auction to the highest bidder, and that the highest and best bid made for said bonds at such sale was $1800, and that the bonds were sold for that sum, which is the same sale in said plea mentioned, etc. To this replication defendant interposed a demurrer, which was overruled by the court and judgment rendered for the plaintiff, and the defendant appealed to this court.
Mr. FREDRICK ULMAN, for the appellant.
Messrs. SAWIN, JONES & HUNTING, for the appellee.
The pledge of commercial paper as collateral security for the payment of a debt does not, in the absence of a special power for that purpose, authorize the party to whom such paper is so pledged to sell the securities so pledged, upon default of payment, either at public or private sale. He is bound to hold and collect the same as it becomes due, and apply the net proceeds to the payment of the debt so secured. A person holding property or securities in pledge, occupies the relation of trustee for the owner, and as such, in the absence of special power to do otherwise, is bound to proceed as a prudent owner would with his own. From the very nature of the case, property can only be applied as security through the process of sale. Not so with bonds, mortgages or promissory notes. Wheeler v. Newbould, 16 N. Y. 392.
It is insisted, however, that the bonds mentioned in the plea are not shown to have been commercial paper. It is not perceived that this...
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