116 Cal. 116 | Cal. | 1897
On March 18, 1889, one Staples borrowed of one Montgomery a sum of money; to secure its repayment Staples and S. B. Steele executed their promissory note payable in ninety days to E. W. Steele who indorsed the same to Montgomery; as between Staples and the Steeles they were sureties for him in this transaction. As further security for the loan Staples and his wife executed to Montgomery a mortgage, in form a bargain and sale deed, of a tract of land which was subject to a prior mortgage in favor of John and Louisa Bauerle. Finding that he would be unable to pay said note when due Staples agreed with Montgomery for an extension of time of payment, and on May 27, 1889, pursuant to such agreement, he executed to Montgomery a new note for the same sum payable August 27th after date, which was indorsed by the Steeles; thereupon the first note was surrendered and canceled. Staples entered into no new express engagement relative to the mortgage, though the court found an “understanding” that it should secure the new note. February 16, 1892, John and Louisa Bauerle commenced an action for the foreclosure of their prior mortgage against said land making Montgomery a party defendant; he made default, and on October 31, 1892, the land was sold under judgment of foreclosure in that action to satisfy the debt due the Bauerles, and in due time a sheriff’s deed was issued to the purchaser. Subsequently to this judgment Montgomery assigned the said note of May 27, 1889, to the plaintiff here, Minnie A. Carver, who brought the present action to recover the amount thereof from E. W. and S. B. Steele as indorsers. The defense —sustained by the court below—is that Montgomery discharged Staples, the maker of the note, and consequently the indorsers, by failure to set up and foreclose his junior mortgage in the suit brought by the Bauerles to enforce their prior lien.
Conceding the point contended for by respondents, though without intimating any opinion on the subject, that the mortgage continued to be a security for the
Belcher, C., and Searls, C., concurred.
For the reasons given in the foregoing opinion the judgment and order appealed from are reversed.
Temple, J., McFarland, J., Henshaw, J.
Hearing in Bank denied.