112 N.W. 1062 | N.D. | 1907
This litigation arose in the district court of Ward county; the object of the action being to foreclose a chattel mortgage executed and delivered by the defendants Eliza, Jess and Daniel Show to the defendant Bradley, and by him sold and assigned, together with the notes secured thereby, to the First National Bank of Flaxton, said mortgage and notes having thereafter been sold and assigned to the plaintiff. At the time the defendant Bradley sold and assigned said mortgage and notes, he indorsed ■the notes upon the back as follows: “By agreement with recourse-after all security has been exhausted, waiving protest. E. R. Bradley.” The complaint prays a foreclosure of the mortgage and sale of the mortgage chattels, and for a deficiency judgment against the Shows and Bradley, should a deficiency exist after the application of the proceeds of the sale. The district court rendered judgment in plaintiff’s favor as prayed for; such judgment providing for a sale of the mortgaged chattels, and, in case of a deficiency after such sale, that plaintiff have execution against the Shows for the amount of such deficiency, and, further (and this-is the important provision so far as this appeal is concerned), that if the plaintiff is not able to collect the amount of such deficiency from the defendants the Shows, who, as above stated, are the mortgagors, then that plaintiff have execution against the property of the said Bradley therefor. Other provisions are contained in the judgment relative to the rights of Bradley to recover remuneration from the Shows for any sum collected from him under such judgment, but these provisions are not material to a decision of this appeal. The defendant Bradley is the sole appellant, and he asks for a trial de novo of the entire case under the provisions of section 7229, Rev. Codes 1905.
Authorities are numerous holding to the effect that no 'cause of action accrues against the guarantor of collection until after the creditor has exhausted his remedies against the principal debtor; hut we will content ourselves by a reference to only a few of them. In Borden v. Gilbert, 13 Wis. 670, Mr. Justice Cole, in speaking for the court, in an action similar to the case at bar, said: “The plain, obvious import of the guarantor’s contract is that he will pay the debt, provided, on due diligence, it cannot be collected out of the mortgagor, or made out of the security. It is not an absolute promise to pay in the first instance. The respondent should exhaust his remedy against.the mortgagor and the mortgaged property before he can call upon the guarantor to make good his contract. The former are the primary resources to which he must look for the payment of his debt. If they fail or prove inadequate then the guarantor becomes liable. It was therefore improper and erroneous to make the guarantor a party to this suit, and to take a personal judgment against him, under the allegations of the complaint.” In Dewey v. Clark, 50 N. W. 1032, 48 Minn. 130, 31 Am. St. Rep. 623, it was said: “But, without deciding what the rule is where the mortgage security was given by the debtor directly to the creditor and not furnished by the guarantor, we think that, upon both principle and authority, it must be held that where a party holding a note secured by mortgage sells the note, guaranteeing its collection, and at the same time, and as a part of the same transaction, assigns the mortgage, thereby furnishing the purchaser the means of obtaining payment, in whole or in part, the
It goes without saying that a person cannot be rightfully sued until a cause of action accrues against him, and, applying this elementary principle to the case at bar, it necessarily follows that the complaint fails to state a cause of action against appellant, because, at the time the action was commenced against him, no attempt had been made by plaintiff to exhaust the security covered by the mortgage. The argument of respondent’s counsel that appellant did not challenge the sufficiency of the complaint in the court below has no force, as it is well settled that this may be done in the Supreme Court for the first time. Nor is it any answer to appellant’s contention that the rights of appellant were safeguarded by the judgment. No cause of action existed against him at the time the action was brought, his liability being a mere contingent liability, and, such contingency not having arisen, no action could be commenced nor judgment recovered against him. As aptly stated by appellant’s counsel: “Reduced to its last analysis, the plaintiff’s case, as disclosed by the complaint and the judgment, is in this situation: At the commencement of this action the plaintiff held the appellant’s contract, by which the latter had assumed a liability contingent upon the happening of a certain event, to wit, the sale of the mortgaged property, and the insufficiency of the
It follows that the judgment appealed from, in so far as the appellant is concerned, must be reversed and the action dismissed; and it is so ordered, with costs to appellant.