Court Opinion

ID: 4893267
Source: CourtListenerOpinion
Date Created: 2021-09-02 23:53:21.327133+00
Date Added: 2024-06-11T08:09:49.015750
License: Public Domain

Gould, Associate Justice.
One of the propositions of plaintiff in error is thus stated: “ Where a creditor has personal security, and, in addition, has a mortgage or other collateral security for the same debt, the surety, upon discharging the debt, is entitled to have the collateral security assigned to him; and if the creditor loses it, by negligence or by design, so that the surety cannot be subrogated to it upon his discharging the principal debt, the surety is discharged to the extent of the collateral security so lost.” This proposition is supported by the authorities cited by counsel, and is regarded as established law.
Where the mortgaged property or other collateral security is intrusted directly to the creditor, he becomes a bailee, and is liable for injuries to the trust fund growing out of his negligence or misfeasance as such bailee. (2 Am. Lead. Cas., 5th ed., p. 401; 3 Lead. Cas. in Eq., p. 554; Brandt on Suretyship, sec. 384.)
Where, however, the property is placed, not in the hands of the creditor, but in the hands of a trustee, the common agent of the owner and the creditor, the creditor is not a bailee, and is not chargeable as such. In accepting the deed of trust, he doubtless assumes some new obligations; but so long as he discharges those obligations, he is not responsible *527for the negligence or mismanagement of the trustee. If he procures or connives at such negligence and mismanagement, they may well be imputed to him as his own. But the proposition that the trustee is the agent of the creditor in such a way as to make the creditor responsible for the trustee’s want of diligence, is one to which we do not assent; nor are we prepared to affirm as law that a subsequent ratification or assent by the creditor to what the trustee had already done or neglected to do, will relate back and make him responsible for a loss to the trust fund already incurred.
It follows from these views that the court did not err in refusing the instructions asked.
In regard to the charge as given, it is not, perhaps, a full presentation of the law of the case, but it is not believed that the parts complained of embody such error as operated to the material injury of the plaintiff in error. The postponement of the sale and the appointment of an incompetent agent to take charge of the stock, seem to be the main grounds of complaint against the trustee. In regard to the postponement, the evidence is that it was the act of the trustee at the request of the principal debtor, the owner of the trust property; and if, under the circumstances, it was wrongful, it was not, so far as the evidence shows, procured by the creditor Scott or assented to by him in advance. But, aside from this, it is not perceived that the charge, in so far as it may bear on this point, is subject to any further objection than that it is not sufficiently full and explicit. In so far as the charge bears on the liability of Scott for the neglect or mismanagement of the trust property by the trustee, it is believed to be substantially correct.
We see no reason to believe that the jury were misled by anything in the charge to the prejudice of the plaintiff in error. The judgment is affirmed.
Affirmed.
*528On Motion for Rehearing.