Court Opinion

ID: 8656540
Source: CourtListenerOpinion
Date Created: 2022-11-24 21:16:31.720492+00
Date Added: 2024-06-11T16:56:44.855057
License: Public Domain

On Petition for Eehearing.
McCARTY, J.
Appellant has presented a petition for a rehearing. His counsel, in a brief filed in support of the petition, complains with much feeling and considerable earnestness that the principal ground upon which appellant relied for a reversal of the judgment is not discussed or referred to' in the foregoing opinion. Counsel seems to contend, if we correctly understand his position, that the execution of the note for $3,500 by Mason, in lieu of the other notes mentioned in the opinion, theretofore executed by him to the plaintiff, extinguished— paid — the indebtedness represented by the old notes, and that a new contractual relation was thereby created between Mason and the plaintiff, and that the note in question “was released from all lien,” and that plaintiff is not “the real party in interest.”
*549The principles of law applicable to the undisputed facts relating to this point are so well established and universally recognized and adhered to by the courts we deemed it unnecessary to discuss the question. Since counsel vigorously insist that this defense is not without merit and is deserving of careful attention by this court, we shall briefly consider it.
"We again invite attention to the note executed by Mason to plaintiff, to secure the payment of which he pledged to and deposited with plaintiff, as collateral, the note in question. The Mason note contains a provision which, so far as material here, is as follows:
“There is hereby and herewith pledged and deposited by and for the undersigned, as collateral security for the payment of this note, and also all other present or future demands of any nature or hind of the holder hereof against the undersigned now owing or ¿which may hereafter he owing, and whether now or hereafter contracted, the following property, viz.: Note J. A. Headlund of $1,000.00 with stock attached. ’'
It will be noticed that the part of the written pledge which we have italicized expressly-provides that the note in question is given as collateral security for the payment of all other “present or future demands,” etc., and, as stated 3 in the foregoing opinion, it was transferred and pledged by Mason to plaintiff before maturity. Plaintiff was therefore, as stated, ‘ ‘ a holder in due course. ” It is a well-established, and we might add elementary, rule of law that—
"The renewal of a negotiable bill or note representing the principal indebtedness, for the payment of which collateral securities have been deposited does not affect the right of the creditor to retain or enforce the collaterals. He is equally entitled to the benefit of the collateral securities as a means of obtaining payment of the note or bill given in renewal as in the case of the original evidence of indebtedness.” Colebrooke on Collateral Securities (2d Ed.) Section 14.
Many eases, both state and federal, supporting this rule' are cited in a note to the foregoing text.
In Jones on Collateral Securities (3d Ed.) section 541, the author says:
" A renewal of a note secured by a pledge merely extending the time of payment does not extinguish the debt, and is not a payment of it *550which will discharge the creditor’s claim upon the collateral securities” (citing many cases)'.
Nor does the giving of a new note in renewal of another note extinguish the debt for which the original note was given unless it clearly appears that it was the intention of- the parties that the execution of the new note and the cancellation of the old note should extinguish the debt represented by the old note 4
In 7 Cyc. 877, the rule is stated as follows:
“Renewal Does Not Extinguish or Change Debt. — Where a note is given merely in renewal of another note, and not in payment, the renewal does not extinguish the original debt, or in any way change the debt, except by postponing the time of payment, and as a general rule, therefore, the holder of a renewal note is entitled to the same remedies as if he were proceeding upon the original note. But if a new note is taken in payment, the original debt is extinguished and a new debt created. Whether a note is paid by the taking of a new note or merely renewed depends upon the intention.”
In 8 C. J. section 793, it is said:
"In so far as the taking of a renewal or new bill or note for an existing bill or note is concerned, it is generally held that the new bill or note is not a payment of the original instrument, in the absence of an understanding or agreement to that effect.”
The Supreme Court of California has repeatedly held that the execution of a note for a debt does not discharge the debt unless the parties expressly agree that the giving of the note shall be deemed payment. Comptoir de Paris v. Dresbach et al., 78 Cal. 15, 20 Pac. 28; Dellapiazza v. Foley, 112 Cal. 380, 44 Pac. 727; Grangers Bank of Cal. et al. v. Shuey et al., 55 Pac. 682; Bridge v. Connecticut Mut. Life Ins. Co., 167 Cal. 774, 141 Pac. 375; Welch v. Aldington, 23 Cal. 322.
In the case last cited the court says:
‘ ‘ The law will not presume such an agreement and it must be proved by the party relying upon it.”
In the case of Fidelity State Bank v. Miller, 29 Idaho, 777, 162 Pac. 244, cited and relied on by appellant in support of his contention on this point, it was expressly agreed that the new note should be an absolute payment of the indebtedness *551represented by the old note. In the course of the opinion it is said:
"The evidence shows that the plaintiff’s officers refused to accept any renewal notes, and that old notes were marked paid, canceled, and returned to the defendant; that the officers of said bank, under instructions of the bank examiner, stated to the defendant that they must have a new loan to be secured as an original transaction, and that the' bank would not make any extension of old notes. * * * The defendant was told at the time of making the new note that it was understood that it was a new loan and that he could have money to pay the old note. * * * The bank made no renewals whatever.”
Iii this case there was no express agreement that the execution of the note for $3,500 by Mason should be deemed payment of the indebtedness represented by the old notes, nor is there any evidence from which such intention can be inferred. The question, however, of whether the giving 5 of a new note in renewal of another note is payment of the debt represented by the old note is not of controlling importance in this case, as counsel for appellant seems to contend. The contract under which the note in question was held by plaintiff as collateral security provided that the note was “pledged and deposited * * * as collateral security for the payment of * * * all present and future demands * * * now or hereafter contracted,” etc. Counsel for appellant also cites Woodsum v. Cole, 69 Cal. 142, 10 Pac. 331; Chase v. Whitmore, 68 Cal. 545, 9 Pac. 942. In each of these cases the note was transferred after maturity and the rights of the transferees were acquired after maturity. Moreover, in the ease last referred to fraud of the rankest character was an important element in the case. In the case at bar appellant abandoned the defense based on fraud. His counsel in the brief filed in support of the petition claims that he is put in a false or untrue light because of the reference made in the foregoing opinion to that issue. Were it not that the element of fraud in Chase v. Whitmore is one of the features of that case that distinguishes it from the case at bar, we would be impelled to modify the opinion by eliminating therefrom the reference made to that issue, as appellant in his petition for a rehearing expressly abandons it. By elimi*552nating or abandoning the allegations of fraud in the answer, the defense on the merits, in the face of the undisputed facts, is frivolous and entirely without merit.
For the reasons stated, the petition for a rehearing is denied.
FRICK, C. J. and CORFMAN, THURMAN, and GIDEON, JJ., concur.