
    Mansur-Tebbetts Implement Co. vs Carey & Moore.
    Opinion delivered April 2, 1898.
    
      i.Pledge of Promissory note as Collateral — Duty of Pledgee to us Diligence in Collecting.
    
    When a debtor pledged notes of solvent persons as collateral si curity to an indebtedness due-bis creditor and which at thi time could have been collected at their maturity by reaso able diligence on the part of the pledgee, but which b came uncollectible while in the hands of the pledgee by reaso: of the insolvency of the maker, the pledgor can recover fro: the pledgee the amount of the uncollected collateral in th absence of any showing of diligence in the collection of sam on the part of the pledgee.
    
      2.Pledge of Promissory Note — Pledgee Held Liable to Account for same
    
    In an action on anote the holder is required to'produce and ac count for collateral, pledged as security and if he fails to do sc he will be chargeable with the face value of the collateral.
    
      3.Collateral — Right of Pledgee to Charge Expense of Collection.
    
    In the absence of a contract a pledgee can not charge fees c commissions for his personal services in the collection of co lateral and he can not charge attorneys fees and expense unless he actually incurs such attorneys fees and expenses.
    
      Appeal from the United States Court for the Southern Jistrict.
    C. B. Kilgore, Judge.
    Suit by Mansur-Tebbetts Implement Co. against larey & Moore. Judgment for defendants. Plaintiffs ap-)eals.
    Affirmed.
    This is an action for the recovery of six certain >romissory notes, the principal of which aggregates $3,781.-2, all past due. The answer admits the execution of the otes sued on, but alleges — First, that the defendants are ntitled to credit in the sum of $143.85, for hauling certain reight for the use of plaintiff; and, second, that at the time f the execution of the notes sued on, and as a part of the ame transaction, and as collateral to secure the payment of fie same, the defendants indorsed to plaintiff various other Íromissory notes, executed to them by their customers, ggregating the sum of $4,832; that a great majority of lese collateral notes were secured by chattel mortgages up-n sufficient property to secure their payment; and that rose which were not so secured were all executed by perms who were then solvent and possessed of sufficient pro-erty out of which the notes could be collected; that the laintiff agreed with the defendants to use reasonable dilig-nce in collecting the said notes, and also agreed that the efendants should have the right to assist in their collection; íat plaintiff has denied them that right; that all of said col-■teral notes are long since past due, and, by the exercise of jasonable diligence on the part of plaintiff, could and ould have been collected; that defendants have no knowl-ige as to how much has been collected, but' charge that ■laintiff has collected the whole amount, and appropriated it ■> their own use, whereby plaintiff has become liable to defendants for the full value of the said collateral notes, t< wit, $4,832, which sum defendants plead over against plain tiff’s claim, and pray judgment for the difference. Toth answer a replication was filed, denying the the charge fo: freight. Plaintiff admitted that, at the time the suit was in stituted* it held certain notes of customers of defendant as collateral security for the notes sued on, but denied tha said notes were against solvent parties, or that the; amounted to the sum claimed by defendants’ answer, or tha they could, by the exercise of reasonable diligence, have been collected. Plaintiff denied that most of said collatera notes were secured by mortgages, but admitted that the; were all past due, but averred that the most of said note were not secured at all, and many of them were agains £ ‘insolvent, reckless persons, who have left the Indian Ter ritory. ” Plaintiff averred that since the institution of thi suit, at great cost and expense to itself, it has collected o the said collateral notes, and has given credit on the not' sued on, the sum of $2,945.14. Upon the issues thus pr sented, the case was tried, resulting in a verdict for the d> fendants for the sum of $600, and judgment was by the coui accordingly rendered. Motion for new trial was filed an overruled. No exceptions were saved to the charge of th court.
    
      G. L. Herbert, Yancy Leivis. and Jesse Hill for appellam
    
      Johnson, Gruce & Oruce, for appellees.
   Clayton, J.

(after stating the facts). There wei eight errors assigned. The first to the fourth, inclusivi all go to the sufficiency of the evidence to support the ve] diet and the judgment of the court. The fifth and sevent were waived by the plaintiff. The sixth is as follows: ‘ ‘Th court erred in refusing to permit the plaintiff to prove b be testimony of the defendant J. EL Carey and the testi-nony of J. C. Thompson, A. C. Cruce, and W. I. Cruce, at-orneys of the Ardmore bar, that ten per centum of the mount of the collateral notes collected by the plaintiff was , reasonable compensation for collecting the same.” The ighth assignment is "that the court erred in overruling the laintiff’s motion for a new trial, in that all the errors bo’tf'e mentioned were embraced in said motion, and called o the attention of the trial court.” From an inspection of hese assignments, it will be seen that only two questions rc presented to the court for its consideration, to wit: (I) 7as the evidence sufficient to support the verdict and judg-íent? (2) Did the court err in refusing to admit the evience set out in the sixth assignment?

As to the sufficiency of the evidence: The face value f the notes in the suit is $3,781.62. The face value of the ollateral notes is $4,832, the difference being $1,050.38. All f the notes draw the same rate of interest from maturity, ad were due about the same time. The law charges the ffendants with interest on the principal note, and charges íe plaintiff with all the interest collected by it on the col-,teral notes, together with that which, but for the neglience of the plaintiff, could have been collected on the un-fflected collateral notes. On the trial, the plaintiff pro-iiced in court uncollected collateral notes of the face value, ithout interest, of $1, 219.18, leaving abalance of $3,612.82. ,s to this last amount, there is no proof but that it was all )llected by the plaintiff, with whatever interest there may we been due upon it, and none of the notes covering this nount were produced at the trial, nor any explanation ven for their nonproduction. Under these circumstances, .e law requires that this amount shall be credited to the Biyment of the principal note. Goleb. Collat. Sec. § § 106, B-2. And inasmuch as these notes were drawing interest at fte same rate, and were due at the same time as the principal notes, this credit would satisfy that note, with interest to that extent. Crediting the principal note, to wit, $3,781. 62, with the above amount, $3,612.82, and we have a balanc due plaintiff of $168.80. The proof establishes, and it seem to be conceded by plaintiff’s counsel, that the freight charge set up in the answer, of $143.85, should be allowed defenc ants. Deducting this from the above leaves the sum of $24 95 due plaintiff. But the pleadings of the defendants alleg ‘ ‘that all of the said collateral notes, by the use of prope diligence on the part of plaintiff, could have been collectei that the great majority of them were secured by chattej mortgages upon sufficient property to secure their paymen and that those which were not so secured were each owin by parties who were solvent, and were possessed of sufficie: property, subject to execution, to enforce the payment of t same; that, by reason of plaintiff’s negligenc-carelessness; and mismanagement in collecting and handlin said notes, they became worthless, and plaintiff becau liable to them in the full amount. ” The replication denic these allegations, but admits that plaintiff forbade the di fendants having anything to do with their collection. A the trial, the plaintiff introduced in evidence the princip; notes, and rested its case. The defendants, properly takin the burden of proof, introduced testimony tending strong] to show that, with the exception of about $175, all of tl collateral notes, when turned over to plaintiff, were c solvent parties, or sufficiently secured by mortgage, am with proper diligence on the part of the plaintiff, could ha been collected at their maturity, and that for a long ti: thereafter the makers of said notes were solvent; that of t notes produced by plaintiff at the trial, with the exception perhaps about $400, all were worthless, the makers there-having, since the maturity of the notes, become insolvenl The plaintiff offered no rebutting proof as to its diligence 3 their collection. Under these circumstances, with the excel on of the notes covering the $175 and the $400, above set it, the plaintiff clearly became liable for the balance of the icollected collaterals. Coleb. Collat. Sec. § (§ 105 — 142. aking these amounts, to wit: Due plaintiff on principal >te, $24.95; notes not good at time of delivery, $179; notes >od, produced by plaintiff at trial, $400, — $603.95,—from e face vaiue of the collaterals produced by plaintiff, to wit, ,219.18, and there would be a balance due to defendants of 15.23. The verdict of the jury was $600. In the ove calculation, interest on the collateral notes produced the trial, and which could have been collected by plaintiff ■ proper diligence, is not included.

Pledgee oí Collateral must use diligence in collecting.

The evidence, we think, was amply sufficient to sup-rt the verdict and judgment, unless the court erred in ex-idiugthe testimony set out in the sixth assignment of ¡or. The plaintiff undertook to get a credit on ac-mt of expenses and services in collecting the collater-notes. We think that it was clearly entitled to credit 1 any and all necessary expenses incurred in making ¡se collections, including attorneys’ fees, if attorneys re necessarily employed. To establish this claim, the .intiff offered to prove by a number of attorneys of the 6more bar “that a reasonable compensation for the coition of the collateral notes turned over by the defendants the plaintiff would be 10 per centum of the amount col-bed on such collateral. ” To the introduction of this evi-Lce, defendants objected. Objection sustained, and ex-ition saved. There was some proof that a few of these es were put into the hands of a lawyer by the name of ley' (who seems to have left the country without having omplished a great deal in the way of collecting them). w much he actually collected, if any, or that he was at expense in the matter, is not shown. With this ex-bion, there is no evidence of any cost incurred by plaintiff in connection with these collateral notes, or that thi service of any lawyer was had. The law does not permit a pledgee to charge attorney’s fees or commissions for his personal service in the collection of collaterals, unless tha1 was the contract between the parties. No such contract is here shown. As above stated, without a special contract he can only be allowed his actual expenses for the collec tion; and, as"none were proved, we think the court did no err in excluding the evidence of the attorneys, to the effec that a reasonable compensation for the collection of thes notes was 10 per cent. Finding no error in the proceeding of the court below, the judgment is affirmed.

Right of Pledgee to expenses for collecting collateral.

Springer, C. J., and Thomas and Townsend, JJ concur.  