Case Name: Pendexter & Alden vs. Vernon
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1848-09
Citations: 9 Hum. 84
Docket Number: 
Parties: Pendexter & Alden vs. Vernon.
Judges: 
Reporter: Tennessee Reports
Volume: 28
Pages: 84–91

Head Matter:
Pendexter & Alden vs. Vernon.
1. An attorney at law has no authority by virtue of his general retainer to bind his principal by the stipulations of a deed of trust taken to secure the debt of the principal, nor to make any agreement for the suspension of the proceedings on a judgment.
2. Where judgment was recovered against a debtor and the plaintiff then took a ■ deed of trust on real estate, which stipulated that if the defendant should not pay such judgment within twelve months after the execution of it, the trustee should sell the estate for the satisfaction of the debt; it is held that the deed of trust contained no obligatory stipulation for delay.
3. The taking of collateral security from the principal debtor without a valid agreement for delay does not discharge the guarantor.
Pendexter & Alden brought an action of assumpsit in the Circuit Court of Rhea county, against T. M. Vernon, The declaration averred the execution of a note by Wilton to Pendexter & Alden, on the back of 'which was written the following, to wit: “In consideration that Pendexter & Alden would sell to James Wilton the goods for which the note is given, I agree and hereby promise to see the within note paid. J. M. Vernon.” Vernon pleaded, 1st, non-assumpsit, on which there was issue; 2nd, that he was discharged by an agreement made by Pendexter & Alden with Wilton, by which they agreed to give Wilton twelve months time for the payment of the debt in consideration of the execution of a deed of trust on real estate for the security of the debt. To which there was a replication and issue; 3rd, payment and issue.
The case come on for trial at the November term of the Circuit Court of Rhea county, in 1846, and was submitted to a jury by the presiding Judge, G. W. Rowles.
It appeared that Pendexter & Alden transmitted the note of Wilton to John 0. Cannon, for collection. Cannon sued Wilton and recovered a judgment on the note. After this judgment was recovered he took a deed of trust from Wilton on real estate to secure this debt and another. This deed of trust recited the existence of a judgment in favor of Pendexter & Alden against Wilton, for six hundred dollars and stipulated that if said debt and another should not be paid in twelve months from the date thereof, said Cannon, as trustee, should sell the estate for the satisfaction of the debts therein specified, after notice, &c. Cannon stated that there was no agreement for delay made and none intended by the deed of trust; that it was intended merely as collateral security. Cannon ordered the issuance of an execution against Wilton, which was done, and it was returned “nothing found.”
This suit was thereupon commenced.
The court charged the jury as follows: ‘The deed of trust taken in connexion with all and each of its stipulations and the matters recited in it amounts, in legal construction among other things, to a -covenant on the part of the plaintiffs wilh Wilton, that for the space of twelve months they will delay to enforce their demand against him. If the deed of trust warrants this construction, of which opinion the court is, and defendant Vernon did not assent to it, then the law, viewing Wilton as the principal debtor, and Vernon in the nature of security, and the plaintiffs in consequence of the deed of trust as framed having in law estopped themselves from enforcing the collection of the debt as against Wilton, the principal debtor, for twelve months, Vernon, the guarantor in law, would be discharged from all liability on his guarantee.”
The jury returned a verdict for the defendant. The plaintiff made a motion for a new trial. This motion was overruled and judgment rendered for the defendant on the verdict. The plaintiff appealed.
Trewhitt, for the plaintiff.
1. The guarantee was an absolute undertaking to see the money paid.
The holder taking collateral security the indorser is not thereby discharged, unless the right of action be suspended. Chitty on Bills, 272; 7 Wendell’s Reports, 117.
Indulgence from the maker does not discharge the endorser when there is no valid agreement for giving time. . 17 Wendell, 501; Chitty on Bills, 273.
Scantland vs. Settle, and others: Meigs’ Reports, 169. If a creditor take a deed of trust on his principal’s property, not stipulating to grant the debtor any delay, the taking of such additional security docs not discharge the security. See, also, 6 Vesey, 734; 3 Hump. 412; 10 Yerger, ill.
W. F. Keith, for the defendant.
The Counsel for defendant contends, first, that the execution of the deed of trust discharged the guarantor, because — 1st, It amounts to an agreement to suspend the collection of the judgment. 2nd, It is a higher, better and new security.
1. It appears from the deed itself that it was founded upon a valuable consideration, and that the parties were bound by its stipulations. What, then, is its true construction? Does it amount simply to a covenant that the lands therein conveyed shall not be sold to satisfy the judgment for the space of twelve months? Or, does it amount to an agreement to renounce all legal proceedings on said judgment for that space of time? The latter is most clearly the proper construction, and if so, the defendant is discharged from his guaranty according to the principles settled in the cases of the Bank of the United States vs. Match. Peters’ Rep. 250; and McLemore vs. Powell; 21 Whea-ton, 554,
But, should the former be considered the true construction, yet the defendant, is equally discharged, because, bad lie, after tbe execution of the deed of trust and before the expiration of the year, applied to the plaintiffs, and paid off the note, he had a claim to be subrogated to their rights, which Were to proceed with the collection of the judgment by execution, but the plaintiffs had so tied up their hands that no execution could have issued from the judgment Within the year, or placing the case in its most favorable aspect, none of the lands conveyed in trust could have been sold within the year to satisfy the judgment and the plaintiffs had thus suspended and impaired their remedy so as to prejudice the rights of the guarantor and he must be discharged.
2. When a payee in a note takes a higher, better and new security for its payment, the guarantor becomes ipso facto discharged from his liability. 1 Mason’s Rep., 191? 4 Peters’ Con. Rep., 458. The law places a guarantor on higher grounds and construes his liabilities more strictly than a mere security or endorser. Cromer vs. Higginson et ais. 1 Mason’s Rep. 323; 1 Bibb's Rep. 236; 3 Con. R. 396.
The guarantor was discharged by the negligence of plaintiffs in not collécting the judgment against Wilton. The plaintiff must pursue with legal diligence all his means and remedies, direct, immediate and collateral to recover the amount of his debt from the maker of the note, and he must have taken every compulsory process of law against the maker until his insolvency was established, or the suit and all its incidental remedies were found -insufficient to cause payment, before he' can look to the guarantor. Bank of U. S. vs. Weiseigef. 2 Peters’ Rep., 347. -In this case there has been not only a lack of legal diligence, but a most culpable delay and negligence. Wilton was in embarrassed circumstances, but. had property enough to pay the judgment at the time it was rendered. No ji. fa. ever issued. Several months after the judgment was rendered, a deed of trust was taken, giving twelve months delay, and was left in the possession of Wilton until the property thereby conveyed was sold to an innocent purchaser. A delay of fourteen months is per se negligence, no matter what other steps may have been taken. 1 Bibb’s Rep., 289: 'King vs. Baldwin. 2 John’s Ch. Rep., 554.
The cases decided in 3 Hump., 412, and 10 Yerger 111, relied on by the counsel for plaintiff, do not at all apply to the present, case. Those decisions are based on the act of 1809, which authorizes a security at any time after judgment has been rendered against him to have judgment over against his principal on motion. Nic. & Car. 653.
When a creditor takes a collateral security, and by any act of his own puts it out of his power to make an assignment of such security, to the surety who may have paid the debt, such security would be discharged. Meigs’ Rep. 169 — citing 1 Story’s Eq. 502. This principle applies to the present case considering the defendant as a mere surety.
Plaintiff by his own act disabled himself from assigning the callateral security to the defendant. He took no steps to have the deed of trust registered, but left it in the possession of the judgment debtor until the land was sold to an innocent purchaser.

Opinion:
MoK ín.ney, J.
delivered the opinion of the court.
This'is an action against the defendant as guarantor of a promissory note, made to the plaintiff by James Wilton, for $534 52, bearing date, Baltimore, 3rd April, 1841, and due at six months. The guaranty was written upon the back of the note, at the time of its execution, and is as follows, viz: 'In consideration that Pendexter & Alden would sell to James Milton the goods for which the within note is given, I agreed, and hereby promise to see the within note paid. Jambs M. Verson," The name of the maker was signed by the defendant, who executed the note for him, and in his absence. Prior to the institution of this suit, the plaintiff had sued and recovered judgment upon said note against the maker. And as collateral' security for the amount of the judgment, and also for another debt due from Milton to M. E. George & Son, the plaintiff's attorney, without the knowledge of the plaintiff, as is to be inferred from the record, took a .deed of trust from Milton, conveying certain property to the attorney, as trustee, for the security of said debts. It is stipulated in said deed of trust, that on failure of Milton to pay, in twelve months from its date, said two debts, the trustee should proceed to make sale of the property, and apply the proceeds pro rata towards their satisfaction. The deed contains no agreement or stipulation, for the suspension of execution, or for delay in enforcing satisfaction of said judgment. And the attorney, whose deposition was taken as evidence in the cause, proves, that the deed was intended merely as collateral security, and was not intended to delay the collection of the judgment, and that he was at liberty to make the money, at any time, out of any other property of Milton..
The defendant, on the trial of the case, introduced and relied upon the deed of trust as evidence of an agreement to delay the collection of the money, for twelve months, and insisted that its effect was, to discharge his liability. And the Circuit Judge charged the jury, in substance that by the proper legal construction of the deed, it amounted to a covenant on the part of the plaintiff with Milton, that they would delay to enforce the judgment against him; and would estop them from collecting the money before the expiration of that period; and that if the defendant did not assent to this agreement, his liability as guarantor would be discharged. The jury found a verdict for the defendant, and a new trial being refused, the plaintiff appealed in error to this court.
We think this charge of the court is manifestly erroneous.
1. Had the stipulations of the deed of trust constituted an agreement for delay, as assumed in the charge, the plaintiff would not have been bound thereby. There is nothing-in the record to show that they had any knowledge of, or ever assented to its execution; and their attorney, in virtue of his general retainer, had no authority to take a deed of trust, or to bind his client by any such agreement.
2. But, the court erred in the construction of the deed. Its terms import no agreement to suspend or delay the enforcement of the judgment, and in judgment of law could have had no such effect; and from the proof it seems that in point of fact, it was not intended so to operate.
3. While it is admitted, that the guarantor will be discharged by the holder giving time to the maker, and thereby impairing the right, or increasing the risk of the guarantor, it is well settled, that taking a collateral security from the maker, without an agreement to give time to him will not discharge the guarantor. Story on Promissory Notes, sec. 485.
The obligation of a guarantor is very different from that of an endorser, and the law is much less strict in respect to the liability of the former than of the latter. Mr. Story lays it down, in sec. 460, that the omission to make presentment at the maturity of the note, and to give due notice of the dishonor, will not necessarily in the case of a guarantor, as in that of an endorser, amount to a discharge of bis liability. It will depend upon the fact whether or not he has sustained any loss or injury thereby. If he has, then he is exonerated pro tanto; if he has not sustained any loss or injury then he is liable for the whole note. And we apprehend the same principle would be applicable to the taking of a deed of trust, or other act of the holder.
The judgment will be reversed, and the cause remanded íbr a new trial.