
    Jane Barber, Respondent, v. Azariah J. Hathaway, Appellant.
    
      Bond and mortgage assigned to secure a debt — liability of the assignee who transfers ■ them, absolutely — presumption as to their mlue.
    
    The fact that an assignment of a bond and mortgage is absolute in form does not prevent the assignor from treating it as a pledge given to secure a loan.
    Where the pledgee executes an absolute transfer of the bond and mortgage without giving the pledgor notice or demanding repayment of the loan, and the mortgage is subsequently foreclosed and the property sold, the pledgor is entitled, without tendering to the pledgee the amount of the debt, to maintain an action against-the latter to recover the difference, if any, between the face value of the bond and mortgage and the amount of the debt for which they were pledged.
    In the absence of proof that the obligor in the bond is insolvent, the amount unpaid thereon is pi'ima facie the value of the security, although the mortgaged premises are not of that value.
    Appeal by the defendant, Azariah J. Hathaway, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Otsego on the 26th-day of July, 1899, upon the verdict of a jury, with notice of an intention to bring up for review upon such appeal an order entered in said clerk’s office on the 5th day of May, 1899, denying the defendant’s motion for a new trial made upon the minutes.
    
      Gibbs & Wilbur, for the appellant.
    
      Edson A. Hayward, for the respondent.
   Merwin, J.:

On April 2, 1883, A. Palmer Barber duly executed and delivered to David Beekman a bond conditioned for the payment of the sum of $1,800 in six equal annual payments, with interest annually. As security for such payment, A. Palmer Barber and Jane, his wife, at same date, duly executed and delivered to Beekman a mortgage on certain real estate in the town and village of Morris. The bond and- mortgage were assigned by Beekman' to Jane Barber, the plaintiff, by assignment dated January 2, 1892, but not delivered until March. 18, 1891. The full amount of the principal was then unpaid, besides some of the interest, and upon the transfer to plaintiff the bond and mortgage were in her hands a valid security for the full amount of the" unpaid principal and interest. Afterwards, by assignment bearing date March 17,1894, Jane Barber transferred the bond and mortgage to the defendant. This assignment is in the usual form, and is on its face absolute, and recites as the consideration of the transfer the sum of $1,800. The defendant, by assignment dated March 7, 1895, transferred the bond and mortgage to J. E. Hathaway, and covenanted that there was then due théreon the sum of $1,800 and interest from April 7, 1889. On the.24th of March, 1896, J. E. Hathaway, the assignee, commenced a foreclosure of the mortgage by advertisement, and this resulted in a sale on the 20th of June, 1896, the property being then struck off to Asel Emerson, the highest bidder, at the sum of $2,400. Emerson transferred his bid to the defendant and he transferred it to J. "E. Hathaway, stating in the transfer that he authorized the deed to be made to him, said J. E. Hathaway. A. Palmer Barber died October 14, 1894.

This action was commenced on September 3, 1896. In the complaint it is, among other things, alleged that the transfer from plaintiff to defendant on March 17, 1894, was by way of pledge to the defendant to secure the payment to him of the sum of $1,100 then loaned by him to the plaintiff, the defendant agreeing to keep the same until redeemed'by plaintiff and then to redeliver and reassign to plaintiff; that tile' transfer by defendant to J. E.. Hathaway was at private sale and without demanding of plaintiff the payment of the loan, and without any notice of the time of place of such sale, and without the knowledge or consent of the plaintiff, and without " giving her any opportunity .to redeem; that since that time the defendant has claimed that the transfer to him wras absolute, and has refused to permit the plaintiff to redeem, and has refused to Redeliver or reassign; that the bond" and mortgage were of the value of $2,554. There was also an allegation that on or about the 4th day of March, 1896, or prior thereto, the defendant wrongfully and unlawfully converted and disposed of the bond and mortgage to his own use to the damage of the plaintiff in the sum of $2,554.

The defendant in his answer admitted that since the 4th day of March, 1896, he had claimed that the transfer to him was absolute, ¿nd he alleged the fact so to be.

Hpon the trial the main issue upon the facts was whether the transfer to defendant was absolute or as security for a loan of .$1,100. The plaintiff proved that the defendant at the time of the transfer executed and delivered to her a paper, of which the following is a copy :

». This is to certify that I have this day took an assignment of a mortgage 'for $1,800 from Jane Barber and paid thereon $1,100. With the agreement that when said $1,100 and interest is paid in full I am to reassign said mortgage with the bond to the said Jane Barber.
" Moiíeis, March 17, 1894. A. J. HATHAWAY.”

The defendant denied the execution of this paper, but upon the evidence that clearly was a question .for the jury, and. their verdict in effect that he did execute it should not be disturbed. The plaintiff testified that the defendant never gave her notice of any kind that he was going to dispose of the bond and mortgage and never made a demand upon her for the $1,100.

The court-, in the submission of the case to the jury, charged them that the question for them to determine was whether the transfer of the bond and mortgage was absolute, or as security or pledge for the' repayment of the $1,100 ; that if they concluded that the transfer was absolute the plaintiff could not recover ; that if they concluded the transfer was as security for the loan and to be reassigned upon its payment, then the plaintiff could recover the face value of the bond and mortgage, being the sum of $1,800, with interest from April 7, 1889, less the sum of $1,100, with interest from March 17, 1894. There was no request to submit any other question to the jury or any exception to the charge except as to the measure of damages. The defendant requested the court to charge that, if the jury should find that the plaintiff was entitled to recover, “ all she would be entitled to recover would bé the difference between $1,100 .and the proof' of the value of the property, $1,500.” This the court properly declined to charge. There was no proof that the •obligor Barber was insolvent, and, therefore, the amount unpaid was prima faoie the value of the security. (Griggs v. Day, 136 N. Y. 152.) Besides the court could hot assume that the value of the. property was $1,500, as testified to by a witness for defendant, in the face of the fact that at public sale it brought $2,400.

The defendant at the conclusion of the -charge asked leave to introduce evidence as to the insolvency of the obligor Barber. This, request the court denied. The jury found a verdict for the plaintiff for $1,400.37. The defendant afterward, upon affidavits showing that the obligor was insolvent in 1894 and that the counsel, for-, defendant by reason of misapprehension or inadvertence failed to-» show'the fact, moved for a new trial, which the court granted, unless the plaintiff would reduce the verdict to $630 and interest from; March 3* 189.8, which the plaintiff accordingly did. Ho fault seems-to be found by defendant with the result of this motion, so far as the amount of the verdict is concerned, and no good reason is apparent for disturbing the conclusion of the jury that the transfer to-■defendant was as a pledge or security for the loan.

The appellant claims' that the court erred in denying the motion of defendant fora nonsuit. We think.not. The ground of the-motion was that the plaintiff had failed .to prove facts sufficient to-constitute a cause óf action. There was proof tending to show that the defendant, having received the transfer of the bond and mortgage-as pledge or security for the loan, thereafter, without notice to-the plaintiff, disposed of the same absolutely* to the injury of the plaintiff. It is not necessary here to characterize the action. Ho. question was made as to the pleadings on the motion for nonsuit.

. The fact that the transfer was in form absolute does, not prevent, the plaintiff from treating it as a pledge. (Wilson v. Little, 2 N. Y. 443, 447; O’Dougherty v. Remington Paper Co., 81 id. 496, 498.) In Kashins v. Kelly (1 Robt. 160, 172) it is said that the transfer of choses in action as mere security for a debt is always a pledge.

If the defendant held the bond and mortgage as a pledge, he liad ho.right to sell it without notice to the plaintiff. (Wheeler v. Newbould, 16 N. Y. 392; 18 Am. & Eng. Ency. of Law, 668.) In Griggs v: Day (supra) it was held that a wrongful sale by a creditor . of collateral security placed in his hands by the debtor is a conversion thereof, and discharges the debt to an amount equal to the actual, not the face value of such security. I see' no good reason why this rule is not applicable here. The assignment by defendant followed by the foreclosure operated to deprive her of her security. She was not obliged to tender to defendant the amount of her debt as the value of the security was greater than the debt, and by the defendant’s act she was injured to the extent of the balance of the value over arid above the debt.

No reversible error is apparent in any of the rulings to which our attention is called.

The defendant has not, I think, any good ground for complaining of the judgment as finally adjusted, and it should be afiirmed.

All concurred.

Judgment and order affirmed, with costs.  