Court Opinion

ID: 3513497
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:24:25.624243+00
Date Added: 2024-06-11T13:55:07.323440
License: Public Domain

SPECIALLY CONCURRING OPINION.
I do not disagree with the opinion in chief, nor with the conclusion therein reached, but I suggest that our judgment might well be rested on another ground. The appellant was not a party to the note executed by Hand to the Bank. What here occurred was that the appellant executed a note, payable to Hand, without consideration therefor. He delivered the note to Hand, not for the purpose of vesting title thereto in him, but merely for the purpose of enabling him to pledge it to the Bank as collateral to secure the payment of a note to be executed by Hand to the Bank, all of which was known to the Bank when it extended Hand's note without the appellant's consent. This being true, the appellant's liability to the Bank is not governed by the law of negotiable instruments, but by the law of pledges, 9 C.J.S., Banks and Banking, section 389, par. c, and is that of a surety for Hand. It is well settled that "a person pledging his property as security for the payment of the debt of another stands in the position of a surety of the debtor, and any change in the contract of the principal which would discharge the surety would operate to release and discharge the property so held as collateral." Jones on Collateral Securities (3 Ed.), Sec. 517(a); 49 C.J. 932; 1 Brandt Suretyship  Guaranty (3 Ed.), Sec. 42.
This rule applies to property of any kind, including promissory notes, which species of property is the kind usually pledged as collateral security. That a creditor who extends the payment of a debt without the consent of the surety therefor releases the surety from any further *Page 42 
obligation to pay the debt is too well settled to require the citation of authority therefor.