Bottineau County Bank v. Stafford

Bibdzell, J. Tbis is an appeal from a judgment for $1,736.65 upon a promissory note. Tbe case was tried in tbe district court of Bottineau county before a jury and a verdict returned in favor of tbe •defendant. Subsequently tbe plaintiff moved for a judgment non ob-stante wbieb motion was granted. Tbe facts are as follows: Tbe defendants gave to tbe plaintiffs tbeir note for $1,230, dated November 9, 1918 and due October 1, 1919, wbieb they secured by giving a real estate mortgage. Soon after giving tbe note tbe defendants sold tbe land to one Lagerquist wbo assumed and agreed to pay tbe mortgage indebtedness. Lagerquist subsequently, after tbe maturity of tbe defendants’ note, gave to tbe plaintiff a demand note of $1,400, dated May 22, 1920, and covering tbe same indebtedness. Plaintiff subsequently brought action on tbis note and obtained judgment. Tbis judgment bas not been paid, nor tbe real estate mortgage foreclosed. In defense to tbis action, brought on tbe original note, tbe defendants allege an agreement between tbe plaintiff and Lagerquist extending tbe time of payment of tbe obligation without tbe knowledge or consent of tbe defendants, tbe failure to collect tbe judgment against Lagerquist and tbe failure to foreclose tbe mortgage. Upon tbis appeal it is argued that, as there is evidence supporting tbe defenses alleged in tbe answer, tbe trial court erred in setting aside tbe verdict of tbe jury and ordering judgment for tbe plaintiff. Tbe appellants’ contentions upon tbis appeal are grounded upon a violation of the rights of tbe defendants as sureties. It is claimed that tbe assumption of tbe mortgage indebtedness by Lagerquist with tbe knowledge of tbe plaintiff resulted in creating tbe relationship of principal and surety between Lagerquist and tbe defendants and in imposing upon the plaintiff the obligation to respect tbe rights of tbe defendants as sureties. For tbe purpose of tbis opinion it may be assumed that tbe plaintiff was obliged to treat tbe defendants as sureties. Leach v. Nelson, 48 N. D. 1046, 189 N. W. 251; 3 Pom. Eq. Jur., 4th ed. § 1206; 1 Brandt, Suretyship & Guaranty, 3d ed. §§ 1 and 47. These rights, it is claimed, were violated by tbe plaintiff in taking a demand [944] note from Lagerquist, in reducing it to judgment and failing to collect the judgment and in failing to foreclose tbe real estáte mortgage. None of these acts, in our opinion, involve any violation of the rights of the defendants as sureties. No right has been in any way impaired or suspended by anything the plaintiff has done. The taking of the demand note from Lagerquist did not operate to suspend the right of the sureties to pay the debt, for which they were liable primarily, and to pursue recourse by subrogation against Lagerquist. The latter’s note, being a demand note, was not a contract for an extension of time and consequently afforded no obstruction to an immediate action by the creditor to recover the debt. Shuman v. Citizens State Bank, 27 N. D. 599, L.R.A.1915A, 728, 147 N. W. 388; Mercantile Trust Co. v. Donk (Mo.) 178 S. W. 113; 21 R. C. L. 1025. The record does not show that any steps were taken by the sureties to require the creditors to proceed against the principal debtor under § 6683 of Comp. Laws, of 1913; nor does it show that, had the defendants performed their obligation by paying their note, they would have been embarrassed in any way through any act of the creditor. So far as this record shows, they could have availed themselves of all the security the creditor held at any time. Brioschi-Minuti Co. v. Elson-Williams Constr. Co. 41 N. D. 628, 172 N. W. 239. Thus; they were not exonerated under § 6681 of the Compiled Laws. In the absence of a notice, under § 6683,- the creditor is not hound to proceed originally against the principal debtor nor to foreclose on securities held; but, where tire form of obligation is such that the sureties may be sued in a separate action, the creditor may proceed against them in the first instance. 1 Brandt, Suretyship & Guaranty, 3d ed. § 2. The judgment appealed from is affirmed. BeoksoN, Oh. J., and Nuessle, ChbistiaNsoh, and JbiiNsoN, JJ,, concur. ■