157 P. 103 | Okla. | 1916
The parties will be designated as in the court below, plaintiff in error as defendant bank, and defendant in error as plaintiff.
The facts in this case can best be understood from an inspection of the written agreed statement of facts, which is as follows:
"WHITE DU BOIS, "Attorneys for Plaintiff.
"T.T. VARNER, "Attorney for Defendant."
The trial court in effect held that the failure on the part of the defendant bank, as creditor, to institute proceedings against the First State Bank of Le Flore at the request of the plaintiff, at a time when the lien of the first mortgage held by said defendant bank as collateral *308 security for the payment of the note upon which the plaintiff was liable as a surety was valid and subsisting, operated as a discharge of the plaintiff as surety on said note, and that thereafter the failure on the part of the defendant bank, as creditor, to renew the filing of the chattel mortgage in question, executed and delivered to it by the principal debtor on the note, so as to keep said lien alive and subsisting for the protection of the plaintiff as surety on said note, operated as a release or discharge of the plaintiff as surety thereon. If under either of these holdings the plaintiff has been legally discharged as surety on the note, then the court below was not in error in rendering judgment, under the law and upon the agreed statement of facts herein set forth, against the defendant bank and in favor of the plaintiff.
Section 1058, Rev. Laws 1910, reads as follows:
"A surety may require his creditor to proceed against the principal, or to pursue any other remedy in his power which the surety cannot himself pursue, and which would lighten his burden; and if in such case the creditor neglects to do so, the surety is exonerated to the extent to which he is thereby prejudiced."
This section is not in conflict with the provisions of chapter 49, Negotiable Instruments Law, Rev. Laws 1910, pp. 1059 to 1092, but is an enlargement of the grounds for discharge enumerated under sections 4169 and 4170 of said chapter.
Section 4694, Rev. Laws of Oklahoma 1910, reads as follows:
"Persons severally liable upon the same obligation or instrument, including the parties to bills of exchange and promissory notes, and indorsers and guarantors, may all *309 or any of them be included in the same action, at the option of the plaintiff."
Under this section of our Code it is optional with the plaintiff as to which one of the parties to a promissory note he will sue, and the order in which, if more than one of said parties are to be sued, he will proceed against such parties, and no party to such note, whether principal or surety, can, by oral demand or request, force the plaintiff or principal debtor to his choice. Palmer v. Noe,
In the instant case plaintiff applied to the defendant bank, after the maturity of the note and while the lien of the chattel mortgage held by said defendant bank as collateral security for said note Was valid, binding, and subsisting, demanding that said defendant bank proceed at once against the First State Bank of Le Flore to recover the value of the two horses taken by said bank and sold under a second mortgage, the said horses being a part of the chattel securities included in the first mortgage of the defendant bank, said horses being of a value in excess of *310 the balance due said defendant bank on the note in question, and said plaintiff notifying said defendant bank at the time that upon its failure to so comply with his demands he would hold himself as released from any further obligation on the note. Had the matter ended here and the defendant bank by its neglect or indifference failed to proceed against the First State Bank of Le Flore as requested by plaintiff, and afterwards, through its carelessness or neglect, lost its lien under its first mortgage by not renewing the filing of same in compliance with the law, then it would seem to be clear that the plaintiff would be entitled to recover against the defendant bank upon his cause of action herein sued upon under section 1058, supra. But at the very time that the plaintiff made his demand upon the defendant bank, said bank, through its cashier, W.A. Campbell, then and there refused to take any proceedings against the Bank of Le Flore, and advised the plaintiff, M.C. Lowrey, that if he, or Lowrey Bros., would pay the balance due on the note, the bank would deliver the mortgage to him for the purpose of allowing him to take any proceedings he might desire against the said First State Bank of Le Flore, and the plaintiff, M.C. Lowrey, or Lowrey Bros., refused to pay the balance and to have the mortgage delivered to them. Thus it is plain that the defendant bank, the creditor of the plaintiff surety on the note, placed it within the power of the surety, so that he, himself, could pursue his remedy against the principal and against the First State Bank of Le Flore, and by so doing lighten his own burden. If under section 1058, supra, it was in the power of the surety on the note to pursue his remedy against the principal, then, and in that case, the failure or neglect of the creditor to do so will not exonerate the surety. *311
"There is no sound reason for permitting a surety to discharge himself, by requesting the creditor to proceed against the principal. The undertaking of a surety is absolute in its terms, and not conditional, as is the engagement of an indorser. He is directly, and not contingently liable to the creditor. The latter has a direct remedy against both principal and surety. If the obligation is joint and several, he has an undoubted right to proceed against the surety alone. It is no part of his contract that he will take active measures to collect the debt. The duty to act rests with the debtors. All that the surety has the right to require of the creditor is, that no affirmative act shall be done that will operate to his prejudice; such as an extension of the time of payment by a binding arrangement with the principal, or the giving up of other securities for the payment of the same debt. The law affords the surety a sufficient protection. He can pay the debt the moment it falls due, which is doing no more than he agreed to do, and immediately resort to the principal for reimbursement. Upon payment of the debt, he may, in equity, be subrogated to all the rights of the creditor. He may also, in the first instance, go into equity to compel the specific performance of the contract by the principal. On this subject, it is said, in Story's Equity Jurisprudence, in section 639: 'If the debt is due, and the creditor does not choose to call upon the debtor for payment, the surety may come into equity by a bill against the creditor and the debtor, and compel the latter to make payment of the debt, so as to exonerate the surety from his responsibility. In cases of this sort, there is not, however, any duty of active diligence incumbent on the creditor. It is for the surety to move in the matter.' " (Taylor v. Samuel Beck,
"By the exercise of diligence, the promisor can have full protection by paying the debt himself at maturity, and bringing his own action against the debtor, or by bringing a proceeding in equity against the principal to compel him to pay the creditor, and he should not be permitted *312
by a mere 'request' to shift upon the creditor the burden of a greater degree of diligence than he himself is willing to exercise in his own behalf. Such is the holding of the great preponderance of authority in this country." Stearns on the Law of Suretyship, page 174; Moore v. Topliff,
"As between creditor and surety, it is the surety's business to see that the principal pays. The creditor's chief purpose in requiring a surety is to avoid the necessity of resorting to legal remedies against the principal — to escape the vexation and expense of litigation, and cast that burden upon another. The surety's contract is that he will himself pay the note when it falls due, and not that he will pay it in case the payee or holder cannot by due diligence enforce payment by the principal. If he performs his contract, the creditor has neither cause nor opportunity to institute legal proceedings." (Morrison v. Citizens' Nat. Bank,
"Mere omission to sue the principal, however long continued and however prejudicial to a surety, does not release him from his obligation of suretyship. Brandt on Suretyship and Guaranty, sec. 296; Ray v. Brenner,
In Gray v. Farmers' National Bank,
"Stating the proof in its strongest aspect against the bank, its action amounted to no more than inaction or passive delay; and, when that is the case, there is no impairment of the creditor's right to resort to the surety. * * * If the surety desires to expedite payment, he may pay the debt, and by that means put himself in the place of the creditor, or he may call on the creditor, by the aid of a court of equity, to proceed against the debtor, upon giving the proper indemnity against costs and delay."
In Myers v. Farmers' State Bank,
"Where the maker of a note secures its payment by a chattel mortgage, and the payee of the note indorses and delivers it to a third party, his failure to seize the mortgaged property for the purpose of satisfying the note, even though requested so to do by the sureties of the maker, will not discharge them."
In Bank of Montreal v. Davy, 21 U. C. C. P. 179, it was held that the creditor was not required, on the demand of the surety, to sell a vessel mortgaged as collateral security, under the power of sale in the mortgage.
In the case of Bailey Loan Co. v. Seward et al.,
We are therefore of the opinion that the holdings of the trial court were erroneous, and that for the reasons *315 stated the judgment of the county court of Le Flore county must be reversed, and the cause remanded, with instructions to said court to set aside said judgment and to render judgment against the plaintiff, M.C. Lowrey, and in favor of the defendant National Bank of Poteau, Oklahoma, with costs.
By the Court: It is so ordered.