Williams v. Hahn

Harrison, J. The defendant executed his promissory note to W. B. Bourn, November 8, 1890, for the sum of two thousand dollars, payable six months after date, and, at the same time, delivered to him twenty-seven thousand gallons of wine as collateral security for its payment, with authority to the payee, or his assigns, in case of default in the payment of the note, to sell the same and apply the proceeds upon the note. This authority is in the following terms:

“Should the note or any part thereof, or the interest accruing thereon, remain due and unpaid after the same should have been paid according to the tenor of said note, I hereby waive demand of payment of said note, and irrevocably authorize and empower said W. B. Bourn, or his assigns, to sell and dispose of the above-described property, or any part thereof, at public or private sale, with or without notice to me of any such sale, and out of the proceeds of such sale to pay the costs and charges for the storage and care of said property, the charges and costs of such sale, and the principal and interest due upon said note, and to pay over the balance, if any, to me or my representative, upon demand.”

The defendant did not pay the note at its maturity, and thereafter the plaintiff, to whom the note had been assigned, sold the wine, and applied the proceeds of said sale, after deducting certain charges and expenses, as a payment upon the note. The present action was brought to recover the amount remaining due on the note, and, at the commencement of the action, a writ of attachment was issued at the instance of the plaintiff. The defendant moved to dissolve the attachment, upon the ground that the note was originally secured by a pledge of personal property, and that the same had not [477]become valueless. It was shown to the court that the wine was sold by the plaintiff for more than its market value at the time of the sale, but it did not appear that the plaintiff gave any notice of the sale. The court denied the motion, and the present appeal is from that order.

By the provisions of section 537 of the Code of Civil Procedure, the plaintiff is not entitled to a writ of attachment if the debt sued for is secured by a pledge of personal property, or, if originally so secured, such security has, without any act of the plaintiff or the person to whom the security was given, become valueless. It is contended by the appellant that the latter of these conditions existed in the present case—that the security, that is, the wine which was pledged, has not become valueless, and that, if the sale of the wine has rendered the security valueless, this was by the direct act of the plaintiff.