72 Md. 441 | Md. | 1890
delivered the opinion of the Court.
The record now before us brings this case up for the second time. The first appeal is reported in 70 Md., 343.
I. Parker Veazey, by his letter of December 9th, 1881, addressed to the cashier of the National Bank of Baltimore, arranged with the appellee for a loan of twelve thousand dollars to himself, with the note of the appellant for the same amount, payable to his order, as collateral, and with the further security of Gaddess Brothers, either as accommodation drawers or endorsers of his paper. On December 12th, 1881, the bank discounted for Veazey a note of Gaddess Brothers for twelve thousand dollars endorsed by Veazey, and payable in four months, and took as collateral security the note of the appellant, dated December 13th, 1881, for twelve thousand dollars payable to Veazey in four months, and endorsed by him. This note of the appellant is the one
The appellant rests her defence to the action on two grounds: First, it is insisted that the transaction of December 16th, 1885, or some of the preceding renewals of the note of December 12th, 1884, amounted in law to
On the former appeal this Court said, that the question then involved was “whether the note sued on is to be considered and treated as collateral security only for the payment of the first note of Gaddess Brothers, endorsed by Yeazey, or as collateral security for. all the notes given in the subsequent transactions between Veazey and the Bank. This was a question of fact to be determined by the jury from the proof in the cause. It has been decided in a number of cases that it depends on the intention of the parties whether the giving of a new note extinguishes the existing debt and creates another obligation, or is to be considered as a mere renewal of thq, eld note for which it is substituted. If the old debt is extinguished, the collateral security ceases to operate. If the old debt continues to exist there is no extinguishment of the collateral security.”
The proposition announced by the eighth prayer is this: If the note sued on was delivered to the bank by
Wherever collateral security is given for the payment of a debt, the collateral will continue as a security until the debt is satisfied, unless both the parties to the original contract agree to its surrender or the pledgee in some other way discharges or releases it. If the debt be evidenced by a promissory note and upon the maturity of that note the parties intend by a renewal merely to extend the time for payment and nothing more, then a simple renewal so made will not extinguish the original debt. Flanagin vs. Hambleton, 54 Md., 222. The same debt will still remain. Consequently, the collateral pledged for it in the first instance will not be released where the renewal transaction is, and Avas meant by both parties to be, a mere extension of the time for payment. 3 Rand. Com. Pa., sec. 1571. It equally folIoAvs that the ex parte unexpressed intention of the pledgor that the collateral shall not apply to and secure a reneAval which is, in fact, a mere extension of the time for payment, and not an extinguishment of the original debt, cannot defeat the fight acquired by the pledgee under the contract made by both of them when the debt Avas created. The right so acquired is the right-of a bona fide holder for value. 1 Danl. Neg. Inst., sec. 824. And it
The eleventh prayer, after reciting the original transaction and the several renewals, and leaving to the jury to find that the note sued on was intended by both Yeazey and the bank to remain as collateral for the note of December 16th, 1885, restricted the bank, in the event of the verdict being for it, to a recovery of only the amount “the Court may, upon the evidence, find to have been due and owing by the defendant to said Yeazey at the time of said discount in December, 1885.”- In other words, though the bank took the Williams note in good faith as collateral, and therefore for value, and hy the agreement of hotli Yeazey and itself continued to hold it for all the subsequent renewals of the same debt, yet, if, in fact, Mrs. Williams owed Yeazey nothing on her note when the transaction of December 16th, 1885, took place, the bank could recover nothing from her. Such is not the law. Had Mrs. Williams paid Yeazey the entire amount of the note, after its pledge to the bank, without the assent of the bank, or had she really owed him nothing on it in the first instance, the right of the bank to recover from Mrs. AYilliams the balance due to it by Yeazey cannot be questioned. After a note is once pledged payment to the pledgor will not discharge or satisfy it, and will not constitute a defence on the maker's part against the pledgee. Griswold vs. Davis, 31 Vermont, 390.
The twelfth prayer sought an instruction to the effect that if the note sued on was left as collateral security for the Gaddess-Yeazey note of December 12th, 1884, and for all renewals thereof, and for no other purposes, and that in December, 1885, Yeazey had his own note for
The fourteenth prayer asked an instruction to the effect that if, upon the maturity of the note of Gaddess Brothers endorsed by Yeazey, and dated- August 17th, 1885, a note of I. Parker Yeazey for twelve thousand dollars, dated December 16th, 1885, was discounted by the bank for Yeazey ; and if his account was then credited with the net proceeds of that discount, and if Yeazey drew his check, payable to the bank, on those proceeds for the amount realized by the discount of his note, and added sufficient cash to make-up the amount due on the note of August 17th, and if the check was carried to the debit of Yeazey, and the Gaddess Brothers’ note of August 17th was delivered to Yeazey — “then the said
Finding no errors in the rulings excepted to, the judgment of the Superior Court must be affirmed.
Judgment affirmed.