Sonoma County National Bank v. Skinner

WASTE, P. J.

Defendant appeals from a judgment in favor of plaintiff, upon a directed verdict, for money due on a promissory note.

On November 28, 1914, C. F. Fury, being at the time already indebted to plaintiff, borrowed from it the sum of

[203]

five hundred dollars. He executed and delivered to it his promissory note for that amount. As collateral security for the payment of this note, for what he already owed, and for future advances, he transferred to the bank a claim, for the sum of four hundred dollars, held by himself against the Helling estate, and transferred to it by indorsement the note in suit, executed to Fury by defendant. This note was dated November 27, 1914, and was payable May 27, 1915.

Some time thereafter the Helling estate paid to the banker the sum of four hundred dollars, the amount of Fury’s claim against it. This money the bank applied on the Fury note for five hundred dollars, leaving a balance of one hundred dollars due thereon, for which Fury, at the time, executed a new note. The bank then canceled the five hundred dollar note, and credited it on the books of the bank as paid. It marked as “paid” and delivered the canceled five hundred dollar note to Fury.

Subsequent to the transfer of the Skinner note by Fury to the bank a number of transactions were had between them, resulting in the giving by Fury of several promissory notes. According to the uncontradicted testimony of the plaintiff’s cashier, it was the custom of the parties that these notes “would run for a period of time, and were then afterward canceled and new notes taken.” It appears from the record to be equally well established that these dealings amounted to one continuous transaction, and that the collateral, pledged at the time Fury obtained the advance of five hundred dollars, was held by the bank as security for the repayment of the varying aggregate amounts of Fury’s indebtedness.

The present action was commenced on February 23, 1917, by plaintiff, to collect the sum of four hundred dollars, alleged to be due on the note, the purpose being to thus foreclose on the collateral to that extent, and apply the amount on the total sum claimed by the bank to be due from Fury, amounting at that time to approximately one thousand two hundred dollars, including the one hundred dollar note given on the surrender of the five hundred dollar obligation, as before stated.