Plunkett v. State National Bank

McCulloch, C. J. The plaintiff (appellee) instituted this action against defendants, Plunkett and' others, to recover the amount of two negotiable promissory notes, each for $830, executed by the latter to the plaintiff. The defendants filed their answer, stating in substance that the consideration for said notes passed to the Peoples’ Pire Insurance Company; that they executed the notes for the accommodation of said company, and not for their own benefit, and that these facts were known to the plaintiff; that the notes were executed as renewals of certain notes which were signed by said insurance company, and that at that time the company deposited with plaintiff as collateral security certain notes which plaintiff still holds, and which, if collected, would satisfy the debt of plaintiff; that the said insurance company is now in the hands of a receiver appointed by the chancery court of Ptilaski County. They prayed that the cause be transferred to the chancery court, where the receivership case is pending, and that they be subrogated to the rights of the plaintiff, and said insurance company as to the collateral notes held by plaintiff. The plaintiff filed a demurrer to this' answer, but on a later day of the term, without passing on the demurrer, and in the absence of the defendants and their attorneys, the court rendered judgment in favor' of plaintiff for the full amount of the notes with interest. On a later day of the term the defendants, appeared and filed a motion to set aside said judgment. The court overruled this motion, and the defendants have appealed to this court. The plaintiff abandoned its demurrer by failing to call for a ruling of the court thereon and in asking for a judgment on the merits of the case. The court should not have rendered judgment absolute against the defendants in their absence, as they should have been given an opportunity to amend their answer if they desired to do so. However, in the motion to set aside the judgment, defendants set up no defense other than that stated in their answer; and the question recurs on the sufficiency of their answer. If the answer presented a ■valid defense, they were entitled to be heard on it, and judgment should not have been rendered in their absence. On the other hand, if their answer was insufficient to tender a valid defense, and as no additional matter was set up in their motion by way of defense, there was no error either in rendering judgment in the first instance or in refusing to set it aside if no valid defense was tendered. We are of the opinion that the answer stated no defense to the action, and that the demurrer thereto should have been sustained. Plaintiff had the right to prosecute its action against defendants without being compelled to pursue its remedies for the enforcement of the other notes held as collateral security. It had the right to pursue both remedies at the same time, though there could be but one satisfaction of the demand. West v. Carolina Life Ins. Co., 31 Ark. 476; Barnes v. Bradley, 56 Ark. 105; Neely v. Black, 80 Ark. 212. Defendants could not demand the right of subrogation without having first paid the whole of plaintiff’s debt, and could not force the latter into a court of equity for the purpose of enforcing the collection of the collateral notes. Jones v. Harris, ante p. 51; 1 Brandt on Suretyship and Guaranty § 339. As no valid defense was stated to the plaintiff’s cause of action on the notes, the circuit court was’ right in rendering judgment thereon. Affirmed.