87 Tenn. 41 | Tenn. | 1888
This case involves the question as to whether the lien which exists in favor of the vendor of land, conveyed without reservation of an express lien, has been lost by the transfer of the obligation of the vendee as collateral security. Complainant BT. L. Cate being indebted to his co-complainant, B. E. Lillard, assigned to him, as collateral security, a note which had been executed by the defendant, M. E. Cate, as part consideration for
The doctrine is thus stated by Judge McKinney in the leading case of Green v. Demoss: “But this lien is a mere personal, equitable right in the vendor, and is not assignable. It looks only to the security of the vendor, and does not pass to the assignee of the vendee’s obligation for the consideration money, and consequently cannot be enforced in his favor. The assignment of the vendee’s notes as obligations for the purchase money is not, however, ipso facto an absolute discharge or extin-guishment of the lien; it is only so conditionally. The lien is to secure the payment of the purchase money to the vendor. If, upon a transfer by the vendor of the vendee’s note or obligation the former he discharged from all ultimate liability upon his endorsment; or if the assignment were without responsibility, on the part of the vendor, for the payment by the vendee, in either case this would amount to absolute payment, so far as the vendor is concerned, and the lien would be extinguished. But if the vendor is made liable upon his indorsement, or voluntarily takes back the note,
In Arkansas, where the lien is held to be nonassignable, the courts hold an assignment as collateral security not to defeat the lien. Blevins v. Royers, 32 Ark., 258; Carlton v. Buckner, 28 Ark., 66.
So in Mississippi, where the rule is as in this State, it has been held that where the assignor repossesses himself of the note the lien revives. Stratton v. Gold, 40 Miss., 778.
The note in the case now under consideration has never been assigned in the sense that the vendor has parted with his title. The debt due from him was not paid by the assignment; on the contrary, if the vendee fails to pay his note to Lil-lard the assignor will continue to remain liable for the whole of his debt to Lillard. The effect of the indorsement to Lillard and-of the receipt given by the latter is to l’ender the transaction nothing more or less than a simple deposit of the note by way of collateral security. Assenting, as we do, to the doctrine of the non-assignability of such a lien, and holding it to be a mere pei’sonal, equitable right of the vendor, yet the facts of this case take it out of the general rule. The vendor is still the legal and equitable owner of this debt, and entitled, therefore, to a decree enforcing his lien, the proceeds to be applied upon his debt due to Lil-lard accoiAing to the agreement between the parties.
It is easy to be seen that the case under consideration is to be distinguished from the one just referred to, and that it presents no real antagonism to the view herein expressed. The decree of the Chancellor will be affirmed in so far as to give to complainant, H. C. Cate, a decree for the debt and enforcing his lien, the net proceeds to be paid over on his debt to Lillard.
Appellant will pay costs of appeal.