Case Name: Bryden, Respondent, vs. Cairncross and another, Appellants
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1911-03-14
Citations: 145 Wis. 478
Docket Number: 
Parties: Bryden, Respondent, vs. Cairncross and another, Appellants.
Judges: 
Reporter: Wisconsin Reports
Volume: 145
Pages: 478–483

Head Matter:
Bryden, Respondent, vs. Cairncross and another, Appellants.
February 21
March 14, 1911.
Bills and notes: Collateral security: Indorsement: Waiver of demand, etc.: Mortgages: Foreclosure: Homestead: Exhausting remedy on collateral.
1. The indorsement and delivery of a note, by tbe payee to a third person, before maturity, as collateral security, with waiver of demand and notice of nonpayment, amounts to an absolute agreement on bis part to pay tbe note at maturity if tbe maker fails to do so.
2. Where a note is so indorsed and delivered as collateral security to a debt of the indorser, it is no defense to an action upon the principal debt that the plaintiff failed to enforce collection of such collateral note, since defendant was under contract to pay it and might then enforce it himself.
3. Where a debt of $2,000 was secured by mortgage of real estate ■ worth $11,500, including a homestead worth $9,000, and also by a note for $500 subsequently given as collateral, on which the mortgagor was liable as indorser, — the mortgaged land being thus ample to pay the judgment on foreclosure and still leave the $5,000 homestead exemption intact, — there .was no reason why the mortgagee, seeking to foreclose, should be compelled to exhaust first his remedy against the maker of the collateral note, either to exonerate the realty as a whole or to save the homestead.
4. The fact that the homestead had been conveyed by the mortgagor to his wife subsequent to the mortgage furnished no reason for compelling the mortgagee to exhaust his remedy on the collateral note in order to preserve her rights, especially where she not only signed the mortgage, but afterwards, when plaintiff purchased it, signed a declaration stating the amount due thereon and that it was a valid lien on the property, and in her answer alleged that said collateral note was her separate property.
5. If the maker of the collateral note had a defense thereto which was not available against the indorsee as a tona fide holder, that would furnish an additional reason why the latter should not and perhaps could not be compelled to enforce collection of it until the remedy on the mortgage was exhausted.
Appeal from a judgment of tbe circuit court for Wauke-sha county: MabtiN L. Lueoic, Circuit Judge.
Affirmed.
. On August 2, 1892, the defendant Qeorge A. Cairncross executed and delivered his promissory note to Samuel E. Dale, whereby he agreed to pay said Dale $2,500 with interest at six per cent, three years after date. To secure the payment of this note said Ceorge A. Cairncross and Jean B. Cairncross, his wife, executed a mortgage on certain real estate, part of which constituted the homestead of said defendants. Thereafter Dale duly assigned the note and mortgage to one Minnie L. Davis, who in turn assigned the same on October 14, 1908, to the plaintiff, James Bryden. In the meantime $500 bad been, paid on tbe principal. Tbe defendant George A. Cairncross induced said Bryden to purchase said note and mortgage, and as part of tbe transaction and as additional security indorsed and transferred to said Bryden a note for $500 executed by one A. D. Agnew to said George A. Cairncross. On tbe transfer of sucb note and mortgage tbe plaintiff loaned to said Cairncross tbe sum of $100 in addition to tbe amount due on tbe note and mortgage assigned to bim. Tbe Agnew note bas not been paid, although interest thereon bas been regularly paid by tbe maker, and tbe court found that be was as solvent when tbe suit was brought as be was at tbe time tbe note became due, and that defendants sustained no loss or damage by reason of tbe failure of tbe plaintiff to collect tbe note. Sucb note bas been long past due. Prior to tbe commencement of tbe action tbe defendant Jean B. Cairncross made a tender of tbe amount due on tbe note and mortgage, except tbe sum of $400.
This action is brought by tbe plaintiff to foreclose bis mortgage. Tbe defendants answered separately. Each of tbe defendants avers by way of answer that tbe plaintiff in reality purchased tbe Agnew note and that tbe amount thereof, less tbe sum of $100 advanced at tbe time the transaction took place, should be credited on the note. Tbe defendant Jean B. Cairncross further answered that sucb note was her separate and individual property at tbe time it was assigned to tbe plaintiff by her husband; that plaintiff bad extended tbe time of payment of tbe same from time to time without her consent, and that subsequent to tbe assignment of tbe note and mortgage to tbe plaintiff she became tbe owner of a portion of tbe mortgaged premises; that a portion of said premises was occupied by her as a homestead, and that tbe plaintiff should be compelled to credit tbe sum of $400 on account of tbe Agnew note as a payment on tbe note sued upon. Tbe trial court in substance found that tbe Agnew note was taken by tbe plaintiff as collateral security and that there was no agreement on the part of the plaintiff to accept the same as part payment on the indebtedness secured by the mortgage and no agreement whereby the plaintiff bound himself to exhaust his remedies against Agnew upon the note before the foreclosure of his mortgage. On practically all of the disputed issues in the ease the court made findings favorable to the plaintiff, and ordered judgment of foreclosure and sale for the full amount claimed to be due upon the note and mortgage of the defendants. Erom such judgment the defendants appeal.
Eor the appellants there was a brief by M. H. Brand> attorney, and Brnst Merton, of counsel, and oral argument by Mr. Merton.
For the respondent there was a brief by G. H. Winkenr iverder and Ghas. T. Hiclcox, of counsel, and oral argument by Mr. Hiclcox.

Opinion:
BahNes, J.
The appellants insist that the court erred (1) in not compelling the plaintiff to exhaust his remedy against Agnew on the note, and thereby save the appellants from paying more than $1,600 and interest on the mortgage debt; (2) in not compelling the plaintiff to exhaust such remedy to save the homestead of the appellants; and (3) in not compelling the plaintiff to exhaust such remedy to save the property of Jean B. Cairncross and not compel her to pay her husband's debts.
1. Cairncross indorsed the Agnew note and waived demand and notice of nonpayment thereof and then delivered it to the plaintiff, and the court found that such note was delivered to secure a new loan of $100 and as collateral security for the payment of the note secured by the real-estate mortgage. This transaction amounted to an absolute agreement on the part of the indorser to pay the note at maturity if the maker did not do so. Hoover v. McCormick, 84 Wis. 215, 217, 54 N. W. 505; Mallory v. Lyman, 3 Pin. 443. It is apparent, therefore, if the finding of the conrt is correct, that Cairncross violated bis plain contract duty, and be is not in a position to claim with very good grace that the plaintiff should have enforced collection of the note when he himself-was under contract to pay the amount of it to the plaintiff and might then enforce collection of it.. Winkler v. Magdeburg, 100 Wis. 421, 16 N. W. 332; Fanning v. Murphy, 126 Wis. 538, 105 N. W. 1056. Delay or passivity on the part of the creditor did not discharge the indorser or relieve him from his contract obligation. Day v. Elmore, 4 Wis. 190; 2 Daniel, Neg. Inst. (5th ed.) § 1311, 1326, 1328; Hoover v. McCormick, supra; Loverin & B. Co. v. Travis, 135 Wis. 322, 115 N. W. 829. The evidence is ample to sustain the finding of the conrt that the plaintiff accepted the note as collateral security in the first instance, and not as a payment on the note secured by the real-estate mortgage. Likewise, the evidence is abundant to support the conclusion of the court that the plaintiff did not make the note his own by his subsequent conduct.
2. The .mortgage covered property occupied as the homestead of the defendants and worth $9,000 and other property worth $2,500, leaving security over and above the amount of the homestead exemption to the amount of $6,500. The foreclosure judgment amounts to $2,413.77. It is very evident, therefore, that the mortgaged property is ample to pay the mortgage debt and still leave the $5,000 homestead exemption intact. But if this were not so, we -perceive no reason in this case why those who claim to be endeavoring to protect their homestead should not pay the plaintiff the amount due on the Agnew note and proceed to collect it themselves. On May 24, 1910, about a month before this action was begun, the defendants tendered to the plaintiff $1,755 in full payment of the mortgage debt, and thereafter deposited the amount of such tender in court. So it is quite apparent that they were not debarred from taking up the Agnew note because of inability to do so.
3. On February 26, 1910, tbe defendant George A. Gaimr cross deeded tbe homestead to bis wife, and it is contended by tbe appellants that under tbe decisions in C. Gotzian & Co. v. Shakman, 89 Wis. 52, 61 N. W. 304, and Dahlman v. Greenwood, 99 Wis. 163, 170, 74 N. W. 215, tbe plaintiff should be compelled to exhaust bis remedies against Agnew in order to preserve tbe rights of tbe purchaser of tbe equity of redemption. Tbe cases cited have no application' to tbe situation before us. Tbe wife, if she purchased anything, purchased an equity of redemption. • As such purchaser she stands in tbe same position as tbe principal debtor. She bought subject to tbe mortgage. Tbe property was subject to all outstanding liens to tbe same extent that it was before. Larson v. Oisefos, 118 Wis. 368, 373, 95 N. W. 399. There are additional reasons in this case for saying that tbe wife cannot compel tbe plaintiff to engage in a lawsuit with Agnew. She not only signed tbe original mortgage, but at tbe time tbe plaintiff purchased it, and as a condition of bis doing so, she signed a declaration reciting that there was $2,000 and interest from August 2, 1903, at six per cent, due on tbe note in suit, and that such indebtedness was a valid lien on tbe property involved, and in her verified answer she alleged that she, and not her husband, was tbe owner of tbe Agnew note.
There is a suggestion made in tbe brief of tbe appellants to tbe effect that Agnew may have some defense to tbe payment of bis note in a suit brought by tbe payee named therein which would not be available against tbe plaintiff, who became a bona fide bolder of it for value before maturity. If this be true, it furnishes a reason why tbe plaintiff should not and perhaps could not be compelled to enforce collection of it.until tbe mortgage security was exhausted. Union Nat. Bank v. Roberts, 45 Wis. 373, 379.
By the Court. — Judgment affirmed.