Brengle v. Bushey

Robinson, J., delivered the opinion of the Court. The bill in this case seeks to restrain the appellee from prosecuting to judgment, a suit upon a joint and several promissory note for the sum of one thousand dollars, ¹⁴⁷ executed by tlie appellant and Frederick Zumpstein, and payable sixty days after date to tlie appellee. The appellant as surety founds his claim to relief on the ground that subsequent to the maturity of the note, Zumpstein, the principal, mortgaged certain real estate to the appellee to secure the payment of nineteen hundred and ten dollars and fifty cents, which said sum included the amount due on the promissory note, with a covenant in the mortgage, on the part of Zumpstein, to pay the same on a day therein named. The amended bill alleges, that the appellee at the time of the execution of the mortgage, agreed to release the appellant as surety, and further agreed to extend the time of payment on the note until the expiration of the time prescribed for its payment in the mortgage.

The appellee in his answer, says the mortgage was voluntarily executed by Zumpstein and accepted by him, as additional or collateral security for Zumpstein’s entire indebtedness ; and denies any agreement, either to release the appellant as surety, or to extend the time of payment on the note. The case is submitted on bill, answer and proof. It is contended on the part of the appellant:— 1st. That the mortgage being a security of a higher nature, its acceptance by the appellee operated as an extinguishment or merger of the promissory note. 2ndly.

That the covenant in the mortgage to pay the amount due on the note, suspended tlie remedy on the latter until the expiration of the time prescribed therein for its payment. It is well settled, that the acceptance of a security of a higher nature in lieu of or in satisfaction of one of an inferior nature, operates as an extinguishment of the latter ; but where such security is accepted merely as additional or collateral security of a pre-existing debt, it is equally clear, that the doctrine of extinguishment or ¹⁴⁸ merger does not apply. Emes, et al. vs. Widdowson, 4 Carr. & P., 151; Twopenny & Boys vs. Young, 3 Barn. & Cress., 208; Bell vs. Banks, 3 Man. & Grang., 258; Holmes vs. Bell, 3 Man. & Grang., 213. The question then is, was the mortgage accepted by the appellee in satisfaction of the promissory note or merely as collateral security ?

In the first place, it was executed by but one of the parties to the note, and it is obvious from the face of the instrument, that its purpose was to secure the payment of the entire sum of nineteen hundred and ten dollars and fifty cents, of which the note in question formed only a part. Then again, there is no agreement on the part of the appellee to accept it in satisfaction, on the contrary, it refers to said indebtedness as being secured by the promissory notes of Zumpstein. Looking then to the face of the mortgage, we think it is clear upon the authorities, that it is to be regarded merely as additional or collateral security. In Emes vs. Widdowson, 4 Carr. & Payne, 151, suit was brought upon two bills of exchange by the drawer against the acceptor, and the defence set up, was an arrangement between the parties, by which the defendant assigned certain property as security for certain sums then due and to become due, the deed of assignment containing a power of sale to be executed upon six months’ notice.

Tindal, O. J., said, “I am of opinion that such an assignment can only be considered as a collateral security, and that the personal remedy is not suspended, as there is no clause to that effect in the deed.” So in Twopenny and Boys vs.