106 Misc. 147 | N.Y. App. Term. | 1919
The action is on a note, against the indorser, who was the payee. The plaintiff’s prima facie case is admitted, but the defendant pleads the following facts, which are conceded, as a defense and counterclaim. When the maker made the note to the
It is said in Corpus Juris (vol. 8, p. 620) that: “ The surrender or release by the holder of a bill or a note of any security which he has received from the acceptor or maker, for the payment of the instrument, operates as a discharge of the indorsers to the amount of the security so surrendered. * * * Indorsers are released if the security is impaired by the act or negligence of the holder to the injury of the surety or indorser. * * * So it has been held that an indorser or surety on a note may be discharged by the holder’s failure to record a mortgage given to secure the note, whereby the benefit of the mortgage security is lost. ”
In Atlanta National Bank v. Douglass, 51 Ga. 205, the precise situation we are here dealing with arose, and it was held that the indorser was relieved because of his indorsee’s failure to record a mortgage executed by the maker as collateral security, the failure so to record causing the loss of the lien; and the holding there was approved by our Court of Appeals in Shutts v. Fingar, 100 N. Y. 539, 544, where Ruger, Ch. J., quoted (at 546) from Reese v. Barrington, 2 Lead. Cas. in Eq. pt. 2, p. 373, as follows: “ The creditor * * * is not entitled to relinquish any hold "which he has actually acquired on the property or estate of
In Spring v. George, 50 Hun, 227, the doctrine of the Shutts case was relied upon to the extent of holding that where, after the note was dishonored, the indorsee attached property of the maker sufficient to pay the note, and later released the levy, and the maker became insolvent, the indorser was released.
Judgment reversed, with thirty dollars costs, and judgment directed for the defendant, with appropriate costs in the court below.
Guy and Bijur, JJ., concur.
Judgment reversed, with thirty dollars costs.