204 Ky. 275 | Ky. Ct. App. | 1924
Opinion op the Court by
Affirming.
Appellee; Reed sold to J. R. Dean a tract of land in Mercer county, the consideration being paid one-third cash, and the balance represented by two lien notes of date March 21, 1919, each for $3,820.00, the first one due April 1, 1920, and the second one due and payable April 1,1921, with interest at sis per cent. (6%) from date until paid. Each note was secured by a lien on the tract of land in Mercer county, containing 191 acres, more or less, which Reed sold to J. R. Dean and for which the notes were given. Before the notes bcame due Reed assigned them to appellant Smiley Dean and Smiley Dean thus became a holder in due course. When the first became due in 1920 appellant Smiley Dean neglected and failed to present same for payment at the Cornishville bank at which it was negotiable and payable according to its terms, and by reason of his neglect appellee Reed
When the case was submitted the court adjudged appellant Smiley Dean entitled to recover of J. R. Dean
“If the plaintiff elects to enforce the collection of said note from said Reed, it is the judgment of the court that when said Reed pays off said note, he shall be held and treated as the owner and holder thereof and by paying the same to the plaintiff he shall thereby become invested with the lien to secure the payment of said note above adjudged to the plaintiff, and entitled to joint control of the judgment enforcing the lien. In the event that the said note is paid by the defendant (Reed) to the plaintiff (appellant) then the proceeds of the sale of said land shall be applied first to the payment of the costs of these cases, except the cost incident to the contest between plaintiff Reed, and in the second case, which Reed is to pay; and second, the balance of the proceeds of sale shall be paid to Smiley Dean and ¥m. Reed in proportion as the amounts of the two debts bear to each other. In the event that Reed’ is not required to pay off the note on which he is adjudged liable, the proceeds arising from the sale of said land shall be applied first, to the payment of costs, as above set out; and second, the balance to be applied as a credit on the debt adjudged plaintiff against J. R. Dean alone and on the debt adjudged J. R. Dean and ¥m. Reed in proportion as the amounts bear to each other. Whatever balance there remains due to the plaintiff (appellant) on the debt adjudged against J. R. Dean and Wm. Reed, execution will issue for against them jointly.”
This appeal is prosecuted to reverse that part of the judgment which subrogates the appellee Reed to the rights of appellant as a lienholder on the land described in the judgment in the event Reed is required to pay the-second note to appellant. Appellees insisted in the lower
Appellant, Smiley Dean, owned both' notes. They were endorsed and transferred to him for value before due by appellee Reed, thus appellant Smiley Dean became a holder in due course. Failing to present the first note for payment at the time at which it was payable, on its due date, appellant lost his right to charge Reed as an endorser upon that note, but by prompt action he saved his rights with respect to the second note, and it is not contended that Reed is not liable as an endorser upon that note. Reed does not claim to own either of the notes, nor does he claim any right of subrogation with respect to the first note. Reed was certainly liable to appellant for the full amount of the second note because he was bound as an endorser thereon. Callahan, etc., v. Bank of Kentucky 82 Ky. 231. When appellee pays that note to appellant, Smiley Dean, Reed will become the owner thereof and entitled to be subrogated to the rights of Smiley Dean as between him and Smiley Dean.
It appears to us that the lower court correctly ruled that when Reed pays off the second note, the one on which he is liable as endorser, he becomes. the owner thereof and entitled to participate in the proceeds of the sale of land which was in lien for the security of both notes, the two being of equal dignity.
Judgment affirmed.