
    Keator v. Hunsicker, Appellant.
    
      Promissory notes — Affidavit of defense — Stock—Payment.
    In an action upon promissory notes the affidavit of defense set up that before the notes were given the plaintiff had in his hands a certificate for stock belonging to the defendant, and that when the notes were given defendant gave to plaintiff an option to buy certain of the shares represented by the certificate if the notes were not paid at maturity. The affidavit of defense further averred that no demand for the payment of the notes was made at their maturity, that the stock certificate was still in the possession of the plaintiff, and that the defendant believed and expected to be able to prove that the notes were paid by the exercise of the option to take shares of stock to the extent required for payment. Held, that the affidavit of defense was insufficient to prevent judgment.
    Argued March 28, 1911.
    Appeal, No. 5, Jan. T., 1911, by defendant, from order of C. P. No. 2, Phila. Co., Dec. T., 1908, No. 1,881, making absolute rule for judgment for want of a sufficient affidavit of defense in case of Anna W. S. Keator, Executrix of the Last Will and Testament of John F. Keator, deceased, v. Clayton M. Hunsieker.
    Before Fell, C. J., Mestrezat, Potter, Stewart and Moschzisker, JJ.
    Affirmed.
    Assumpsit on a promissory note.
    The facts are stated in the opinion of the Supreme Court.
    
      Error assigned was order making absolute rule for judgment for want of a sufficient affidavit of defense.
    
      J. S. Freeman, for appellant.
    
      John F. Powell and Lester B. Johnson, for appellee, were not heard.
    May 23, 1911:
   Opinion by

Mr. Chief Justice Fell,

This appeal is from an order making absolute a rule for judgment for want of a sufficient affidavit of defense in an action by the payee against the maker of two promissory notes given for money borrowed.

It is averred in the affidavit of defense that prior to giving of the notes, the plaintiff purchased of the defendant seventy-eight shares of the stock of a corporation named, and a certificate for 625 shares, with power to transfer, was placed in the custody of the plaintiff under an agreement, the terms of which are not set forth. That when the first note was given and as a part of the same transaction, the defendant gave to the plaintiff an option to buy additional shares of the stock, if the note was not paid at maturity, at $25.00 per share and authorized him ■to take the shares from the certificate for 625 which he held, and in which was included the seventy-eight shares before sold. A like agreement was made when the second note was given, except that no price at which the stock was to be taken in payment of the note was named. It is further averred that no demand for the payment of the notes was made at their maturity, that the stock certificate is still in the possession of the plaintiff, and that the defendant believes and expects to be able to prove that the notes were paid by the exercise of the option to take shares of stock to the extent required for payment.

The right to purchase the stock was to be exercised only in the event of the nonpayment of the notes and to the extent only that it might be necessary to pay them. The transaction was simply the borrowing of money, the giving of notes therefor and the pledging of stock as collateral security with power to convert the collateral in case of default in payment, There has been no actual conversion. The certificate is in the possession of the plaintiff in the form in which it was pledged. He has exercised no right in relation to it, except to retain it, nor has he done anything to give rise to the inference of an acceptance of the stock in payment. His holding of it is by virtue of a prior and independent agreement made before the money was borrowed. The averment with respect to the application of the stock to the payment of the note is not an averment of a fact but of a conclusion and is not only unsupported by any facts or circumstances justifying it, but is inconsistent with the facts alleged in the affidavit of defense.

The judgment is affirmed.  