President of the Franklin Bank v. Harris

Briscoe, J., delivered the opinion of the Court. These are cross-appeals. The action was one of trover, brought by the assignees of Thomas J. Wilson against the President and Directors of the Franklin Bank of Baltimore, to recover the value of certain securities deposited by him as collateral with the defendant corporation. There was no dispute about the facts, and they are as follows: On May 14th, 1890, Thomas J. Wilson borrowed of the hank two thousand dollars for which he executed and delivered to it a demand note, depositing at the same time, as collateral security for its payment eighty shares of Bellaire and Zanesville and Cincinnati Railroad Company preferred stock, and two thousand dollars of Oskaloosa Water Bonds.

The note contained this provision: “It is also agreed that if I shall come under any other liability, or enter into any other engagement, with said hank, while it is the holder of this obligation, that the net proceeds of sale of the above securities may be applied either on this note, or any other of my liabilities or engagements held by said hank, as its president or cashier may elect.” Wilson afterwards became insolvent, and made an assignment to the plaintiffs for the benefit of his creditors, who qualified as trustees. These trustees tendered the amount of the note, with interest to date of tender, and demanded the note, and ⁴²⁷ the securities which had. heen deposited as collateral. The Bank, however refused to make a surrender of the securities, claiming to hold them as collateral for a note of one Charles D. Gaither, dated December 30, 1889, for §1451, which was endorsed by their assignor, Thomas J. Wilson. The judgment of the Court below being in favor of the plaintiffs for the sum of $259.55 less than the plaintiffs claimed, both parties have appealed.

The first question, then, that presents itself for our consideration, is a construction of the provisions of the collateral note, which was raised by the plaintiffs’ first and the defendant’s second prayer. It was earnestly contended on the part of the Bank that the effect of the contract of the 14th of May, 1890, was retroactive, that it not only covered future, but past liabilities. The Court below granted the plaintiffs’ first prayer, which