Hanna v. Holton

1. The assignment of a security to a creditor to hold as collateral security of his debt, establishes a privity of contract, which invests him with the ownership of the collateral for all purposes of dominion of the debt assigned. 2. When the collateral is lost by the insolvency of the debtor in it, through the supine negligence of the creditor, he must account for the loss to his own debtor. 3. Plaintiff assigned to defendant a judgment against Jackson, the lien of which expired September 1863, as collateral for money lent to plaintiff; defendant neglected to revive the lien; Jackson sold his land July 1866 and the judgment against him was lost. Held that defendant was liable to plaintiff on the ground of negligence. 4. Jackson, at the sale of his land, was solvent, and the judgment was collectible. He afterwards died insolvent. Held that the Statute of Limitations began to run from the time of the sale, not from the time when the lien expired.

Error to the Court of Common of Pleas Chester county: Of January Term 1872, No. 250. This was an action on the case, brought October 6th 1870, by Alexander Holton against William Hanna, to recover damages for negligence, in not reviving and continuing the lien of a judgment against Jackson A. Holton, in favor of the plaintiff, which had been assigned to the defendant as collateral security for money borrowed by the plaintiff from him. The defendant pleaded “ Not Guilty” and the Statute of Limitations. On the 19th of March 1858, Jackson A. Holton executed to the plaintiff a bond with warrant of attorney to confess judgment for $1000, payable in five years with interest; judgment on this bond was entered by virtue of the warrant of attorney on the 27th of September 1858 ; it was the first lien, and well secured on a farm belonging to Jackson A. Holton. On the 22d of October 1860, the plaintiff borrowed from the defendant $550, for which he gave his bond payable on the 25th day of the next March, and assigned as collateral security, the bond and judgment above mentioned against Jackson A. Holton, the judgment being marked on the record for the use of the defendant as collateral security for the debt of plaintiff to defendant. On the 27th of September 1863, the lien of the plaintiff’s judgment against Jackson A. Holton expired, and was not afterwards revived. On the 14th of July 1866, Jackson A. Holton sold his farm, which was all the real estate that he owned; he received all the purchase-money, and the bond to the plaintiff remained unpaid. Jackson A. Holton died insolvent on the 8th of January 1867, and the bond of the plaintiff against him was entirely lost. These facts appeared on the trial November 14th 1871, before Butler, P. J. The defendant’s points were :— 1. The Statute of Limitations bars the plaintiff’s recovery. 2. It was not the duty of the defendant to pursue Jackson A. Holton for the collection of the bond assigned as collateral security, or of the judgment entered upon it. 3. It was not the duty of the defendant to cause the lien of the judgment, marked to his use as collateral security, to be revived. 4. The plaintiff having obligated himself to pay the defendant the $550 bond, nearly two years before the $1000 bond assigned as collateral security was payable or could be collected, and two years and a half before the lien of the judgment entered upon it had expired, and having neglected to pay the $550 bond, he was in default to the defendant, and there was no further duty on the defendant to the plaintiff with reference to said assigned bond or to said judgment. The court answered the points as follows:— “We cannot charge the jury as requested by the first point— that ‘the Statute of Limitations bars the plaintiff’s recovery.’ “We think it does not. We do not regard the neglect to revive the lien at the expiration of the first five years as the cause of action, hut the continued neglect of the judgment thereafter, which resulted in its loss. “ The negligence commenced at the period indicated, and continued up to the time the land was sold, at least. “ The redress sought is not for the loss of the lien, in 1863, but for the loss of the value of the judgment. This latter loss was not sustained when the lien first expired ; nor until the land was parted with and the debtor had become insolvent, years after. If the judgment had been re-assigned upon the expiration of the lien, and the plaintiff, lying still until the sale of the land and insolvency of the debtor, had brought suit in 1866, for the loss of his property, basing his claim upon the original neglect to revive, he certainly would have been answered that the loss did not result from this, but from subsequent negligence of his own; and it would have been conclusive. If an action had been brought upon the expiration of the lien, the complaint could not have been what it now is —negligence—whereby the value of the judgment was lost. It must have been negligence by which one of its incidents merely (the lien) was lost; and as this could then have been readily restored, and the plaintiff placed where he was before, the damages, if any, must have been virtually nominal. “ The question raised by the point is, however, a very interesting one, and we regret that the time afforded us will allow of no more than this very brief indication of the ground on which we dispose of it. “ The remaining points are also disaffirmed. We will not say that it was the duty of the defendant, under the circumstances shown here, to issue execution for the collection of the judgment, so long as its lien continued on the land; but we think it was his duty to take care that the lien continued; that the hold upon the land was preserved; and that the judgment did not, while in his hands, become. less secure, or less valuable, by reason of any omission of his.”