Court Opinion

ID: 8002938
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:50:49.691053+00
Date Added: 2024-06-11T16:35:46.709292
License: Public Domain

CuRRiER, Judge,
delivered the opinion of the court.
The plaintiff held three notes against a third party, maturing at successive- periods, which were secured by a deed of-truSt upon real-estate. - -After -the notes had all matured, a sale was had under the deed, and the entire net proceeds of the property sold were applied upon the notes last- maturing, nothing being applied upon the-first. -The defendant was surety upon ■ the last mentioned note, and this suit is brought to recover from him the sum due upon it.
The defendant’s answer alleges, in -substance, that the note sued on has been satisfied and paid from the proceeds of the déed of trust salo. The ground-assumed is that the law will apply the proceeds realized from a mortgage or deed of trust to the extin-*303guishment of the note or debt secured thereby Avhich first matures, and in the order of their maturity. Mitchell v. Ladew, 36 Mo. 526, and the case following that decision-, are cited and relied upon as establishing the doctrine contended for. The authorities cited do not necessarily determine the question presented for decision in the case at bar. Mitchell v. Ladew was a suit between contending creditors or parties holding different notes secured by the same deed of trust — not between the original creditor on the one hand and the debtors on the other. It ivas there held that, as between the creditors or holders of the different notes, the proceeds of the deed of trust should be applied to the payment of the notes in the order of their maturity. -But that is not this case. The substantial question here is : shall the original creditor, who holds all the notes, have the full benefit of all the securities Avhich he took for his own protection ? He Avas not satisfied with the security of the deed of trust, and therefore required an additional name upon one of the notes. He testified, and without objection, that he intended the additional name as a security additional to that of the deed of trust, and the transaction upon its face suggests as much. In the meantime he has surrendered no security, and done nothing to prejudice the right of the surety upon the note. A-nd since his debt is not paid, he noAV calls upon the surety to make good the unpaid balance to the extent of the sum called for upon the face of the note sued on. The principle declared in Mitchell v. Ladew we do not consider as in the way of a recovery.
It is urged, hoAvever, that if the defendant had paid the surety note prior to the deed of trust sale, he Avould have had the right to be subrogated, and to have his money reimbursed to him first out of the mortgaged property. The idea seems to be that, in the condition of things supposed, the defendant Avould have occupied the position of an independent holder of the note first maturing. The doctrine of subrogation or substitution has no application to the case. The creditor has not been paid, and, until he is either paid or secured, the surety has no fight to be substituted in his place. The right of substitution is founded upon considerations of an equitable character, and does not of *304necessity rest upon the relations or privities of tie contracting parties. (Kyner v. Kyner, 6 Watts, 221; Union Bank v. Edwards, Grill & Johns., Md., 346; and see Crump v. McMurtry, 8 Mo. 408.)
On the trial of the case in the Circuit Court, the law was declared to be that the plaintiff could recover nothing upon'the note in suit, if it appeared .from the evidence that the plaintiff had received from the net proceeds of the deed of. trust a sum sufficient to pay it, principal and interest. We do not regard that as a correct statement of the law of the case. It was clearly the right of the plaintiff to have sued upon the note at once upon its maturity, and to have collected the.whole of it from the defendant. Had he done so the defendant would have had no legal grounds of complaint. It would have been the mere assertion of the plaintiff’s legal rights. He has forfeited no rights, legal or equitable, by pursuing a course more forbearing and indulgent.
The judgment will be reversed and the cause remanded.
The other judges concur.