PLEDGES - APPLICATION OF COLLATERAL TO OTHER DEBTS

Authors

Michigan Law Review, University of Michigan Law School

Abstract

Plaintiff's testator, in 1922, before delivery indorsed a demand note of the corporation of which he was president, waiving presentment for payment, demand, protest, and notice of protest. In 1925, when he was no longer president, he similarly indorsed another note of the corporation. Defendant was payee on both of these notes, which were given for obligations of the corporation. In 1929, the testator executed to defendant a personal note for his own use, to secure which he pledged stock pursuant to a pledge agreement "for the payment of this and of any other liabilities of the undersigned to said payee or assigns, due or to become due, or that may hereafter be contracted." Defendant was given the power to sell the collateral on the maturity of the note. At the testator's death in 1932, defendant sold the collateral and applied the proceeds to the payment of the personal note, and the residue to the corporate notes. An action was brought for the wrongful conversion of the stock. Held, defendant was liable on the ground that the words "any other liabilities" could be construed to comprehend only the pledgor's individual liability on his personal notes. Perron v. First National Bank, 289 Mich. 629,286 N. W. 859 (1939).

Recommended Citation

Michigan Law Review, PLEDGES - APPLICATION OF COLLATERAL TO OTHER DEBTS, 38 Mich. L. Rev. 921 (1940).
Available at: https://repository.law.umich.edu/mlr/vol38/iss6/22