Montgomery & Co. v. Martin

Lumpkin, Justice. The motion for a new trial contains several grounds,, which, together with the facts necessary to an understanding of the questions involved in this case, are set forth by the reporter. The head-notes really cover the-whole case upon its substantial merits, as disclosed by the record. 1. It appears that Montgomery & Company did, in fact, take from Bailey a mortgage in accordance with their agreement to do so; but as against the rights of Martin, the surety, they wrongfully applied a portion of the mortgaged property, or its proceeds, to another debt they held against Bailey. To this extent the surety was-injured, and therefore is entitled to credit, as to his liability on the note, to the extent of the value of the property thus misappropi’iated. 2. It does not appear that Montgomery & Company made any agreement with Martin not to credit Bailey beyond the amount covered by the mortgage, as an inducement to sign the note. If, after the execution and delivery of the note, Montgomery & Company, without-any valuable consideration moving to them, made any such agreement, it would not affect the contract of suretyship entered into by Martin, because such agreement on the part of Montgomery & Company would be a mere nudum pactum; but neither the absence of such, an agreement nor its invalidity would authorize the appropriation of the mortgaged property to the additional debt of Bailey not covered by the mortgage, even if the 224 rsurety expressly assented to the giving of the additional credit to Bailey, unless that assent, fairly interpreted under all the circumstances, clearly implied a consent •on the part of the surety to such application. As the • case is to be tried again, we trust that the facts, which, with the record now before us, appear to be somewhat • confused, will be fully cleared up, and that, in the light of the rules we have attempted to outline, a right and just result may be reached. Judgment reversed.