228 N.W. 466 | S.D. | 1929
From a judgment and orders 'denying* a new trial in an action for foreclosure of a real estate mortgage, 'defendants -Smiley Gay Hardware Company and. .the Blackfords separately appeal. The appeals are submitted upon one brief: ; ■
The mortgage was given to Ed. Sundquist by Ammon ■M. Blackford and M'aud C. Blackford to secure the payment of three notes executed by the Blackfords to Sundquist on November x, 1919, each bearing interest at 6 per cent per annum from date as follows: Eixhibit'1 for $5,160.13, due July 15, 19.21; Exhibit 2 for $15,000, due July 15, 1920; and Exhibit 3 for $5,000, due July 15, 1921. On January 2, 1920, Sundquist transferred Exhibit 1 to Black Hills Trust & Savings Bank (hereafter referred to as the Deadwood bank). September 2, 1921, he transferred to said bank Exhibit 2, and on April 28, 1923, he transferred to said bank Exhibit 3, the transfer of the latter'note being as security only, for a general indebtedness owed by Sundquist to the bank. At the time of the transfer of Exhibit 3 it was pledged to' the Belle Fourche Savings Bank to secure the sum of $1,250, and the Deadwood bank paid that sum to the Belle Fourche Bank to procure' the release of the note and: its transfer to the Deadwood bank. The Black-fords, desiring to sell the mortgaged premises, found a prospective purchaser in one W'arren T. McCray. But as a condition of his making a deal he required that the time of payment of the two notes Exhibits 1 and 2 be extended to July 15; 1923, and an agreement for such extension was entered into by McCray and the Deadwood bank, by the terms of which McCray agreed to- pay these two notes (less all credits thereon), and $5,000 had been paid on the principal of the $15,000 note. McCray, as part of the same transaction, indorsed the $5,000 note, Exhibit 3, which was also extended to July 15, 1923. By the terms of the deed of the premises from the Blackfords to ¿McCray, the latter, as part of the consideration, assumed and agreed to pay the mortgage indebtedness. Ammon Blackford testified that at the time of the making of the agreement between McCray and the Deadwood bank'he understood that the Blackfords were to be released from liability on the notes, and that the bank was taking- McCray' in substitution for the Blackfords. There was other evidence to the effect that Blackford was insistent that he be released from liability on the notes when transferring the premises to McCray, but the cashier of the bank
Appellants argue that the notes in suit were paid by Ed. Sund-quist giving his note to- the bank for $13,000 with new security on April 28, 1923, and his son Oscar Sundquist giving to the bank on the same date his note with security for $12,500, and that the bank agreed to return to Sundquist the notes in suit as soon as four months had elapsed from the time of the new transaction; the bank desiring’ to hold the old paper for four months with the right to retain it should the new security be invalidated by the possible initiation of bankruptcy proceedings against Sundquist. But it is clear from the statement rendered by the bank to Sund-quist at the time of this new transaction that the indebtedness taken up by these two notes of $13,000 and $12,500 did not include any of the Blackford notes. That statement itemizes the several obligations that are taken up by these two notes, and none of the Blackford paper is included in the statement.
On September 7, 1923, the Deadwood bank commenced action against McCray on the guaranty contract, and attached certain live stock owned by McCray, and in December, 1923, on executions issued on a default judgment obtained in this action, the bank sold the attached property for the aggregate sum of $18,265.70, and satisfied its judgment against McCray. On October 6, 1923, a petition in involuntary bankruptcy was filed against McCray in the state of Indiana, and he was adjudged a bankrupt on said petition on May 9, 1924, and in an action in the United .States District Court in South Dakota by the trustee in bankruptcy against the plaintiff in the instant case, judgment was given in favor of the trustee for the recovery of the said sum of $18,265.70, less $6,-265.70 incurred for the care, preservation, and sale of the live
Appellants contend that the satisfaction by the Deadwood bank of-its judgment against McCray as guarantor of the notes, Exhibits 1 and 2, constituted the payment of those notes, and that such payment cannot be revoked or set aside because of the judgment and executions in that action having been vacated at the suit of the trustee in bankruptcy and the payment to the trustee pursuant to the federal court judgment of the net proceeds realized on the executions.
The satisfaction of a judgment 'has only the force of a receipt and like a receipt may be avoided as between the parties by showing that in fact no payment was received. Knaak v. Brown, 115 Neb. 260, 212 N. W. 431, 51 A. L. R. 237. When the attachment and sale of the McCray livestock was. set aside by the judgment of the Federal Court and the Deadwood bank required to account for the proceeds to the trustee in bankruptcy and such proceeds were paid over to the trustee in pursuance of the Federal Court judgment, there was no error by the trial court in the instant case in holding that the satisfaction of the judgment of the Deadwood bank against McCray was without consideration and that such satisfaction should be vacated.
'While the two Blackford notes, Exhibits 1 and 2, were owned and in the possession of the Deadwood bank and the note Exhibit 3 was in its possession as collateral security for the obligations of Sundquist, the mortgage securing these notes had not been formally assigned to the Deadwood bank. But the transfer of the notes carried with it, as an incident, the mortgage security. Rev. Code 1919, § 1551. Grether v. Smith, 17 S. D. 279, 96 N. W. 93. While tiie Deadwood bank was thus the holder of the Black-ford notes and mortgage given to secure the same, Sundquist, who appeared of record to be the mortgagee, commenced foreclosure of the mortgage by advertisement under a power of sale contained therein and bid in the mortgaged premises at the foreclosure sale. He afterwards assigned his certificate of sale to the Belle Fourche Bank as security for an indebtedness of $1,600 which he owed that bank. Smiley Gay Hardware Company, having a judgment against Sundquist for $1,775, issued execution thereon, and undertook to
But, while there is evidence to sustain the finding of the court that Ammon Blackford consented to the extension of time granted to McCray, there is no evidence that the defendant Maud C. Blackford gave any such consent, and, upon the-assumption of the mortgage debt. of the Blackfords by McCray he became the principal debtor and the Blackfords only sureties. 41 C. J. 737, § 789; Iowa L. & T. Co. v. Schnose, 19 S. D. 248, 103 N. W. 22, 9 Ann. Cas. 255; Hampe v. Manke, 28 S. D. 501, 134 N. W. 60; Mundt v. Publishing Co., 42 S. D. 608, 176 N. W. 740; John Deere Plow Co. v. Tuinstra, 47 S. D. 555, 200 N. W. 61; Leach v. Nelson,
“1. By payment in -due course by or on behalf of the principal debtor.
“2. By pajment in due course by the party accommodated, where the instrument is made or accepted f.or accommodation.
“3. By the intentional cancellation thereof by the holder.
“4. By any other act which will discharge a simple contract for the payment of money.
“5. When the principal debtor becomes the holder of the instrument at or after maturity in his own right.”
Some courts, the majority in number, hold that the modes of discharge of a person primarily liable, mentioned in this section, are exclusive. See Brannan’s N. I. L- (4th Ed.) 721. Maud Blackford is a person primarily liable on the notes in this case, and, if we should follow the majority rule, we would have to hold that the adoption of the Negotiable Instruments Law abrogated the rule in the Schnose case and other like cases decided by this court prior to the adoption. But in Brannan’s N. I. L. (4th Ed.) (by Chafee) 723, it is said that, so far as concerns the questions involved in sections 119, 120, “there is no longer any hope of uniformity.” The Uniform Negotiable Instruments Law, in so far as it relates to the discharge of the instrument or the discharge of persons liable on the instrument, having now lost all semblance of uniformity, we feel free to adopt that construction of the law which seems to us the more reasonable, and which enables us to give effect to other provisions of our Code. The rule that the. modes, of dis
“If the law of suretyship has not been repealed, and we hold that it has not, if the holder of the note should, without the knowledge or consent of the surety, extend the time of payment to. a time certain, so far as the surety is concerned., the contract and the instrument, being a simple one for the payment of money, is discharged.” •
'Under the provisions of our Rev. Code 1919, § 1491, “a guarantor is exonerated, except so far as he may be indemnified by the principal, if by any act of the creditor, without the consent of the guarantor, the original obligation of the principal is altered in any respect, or the remedies or rights of the creditor against the principal in respect thereto, in any way impaired or suspended.”
And a surety is exonerated in like manner with a guarantor. Rev. Code 1919, § 1504. • It is plain that under the provisions of section 1491 a surety is exonerated or discharged from liability by an extension of time granted by the creditor to the principal debtor without the consent of the surety. Niblack v. Champeny, 10 S. D. 165, 72 N. W. 402. In adopting the Revised Code of 1919 the Legislature adopted the provisions we have quoted
To the extent that a personal judgment is given against Maud C. Blackford, it is without support in the evidénce and the findings. The judgment appealed from is modified by striking ¿herefrom the allowance of $1,664 and interest to .Smiley Gay Hardware Company, and the personal judgment against 'Maud C. Blackford; and, as so modified, the judgment and the orders denying a new trial are affirmed.
Appellant Maud C. Blackford is entitled to her costs against respondent Smith. Respondent Smith is entitled to his costs of appeal as respondent against both the defendants Ammon M. Black-ford and Smiley Gay Hardware Company, and, in addition, the costs of his cross-appeal against Smiley Gay Hardware Company.