Jones v. Scott

The opinion of the court was delivered by Valentine, J.:

The property in controversy in this case was not, exempt from the execution which was levied upon it. The defendant in error (plaintiff below) pledged said property to B. E. Andrews, a creditor of his, as collateral-security for the payment of a debt. He placed it in the possession of Andrews, and there it- remained until it ivas siezed by the officer, under said excution, which was issued on a judgment rendered on the debt for which said property ivas pledged. After the property ivas so seized the defendant in error commenced this action (replevin) to recover said property from the officer, who is now the plaintiff in error, claiming that said properly was exempt from execution. Now Avhile it may be admitted that said property Avas exempt from execution in general, still Ave do not think that it can be legally maintained that it was exempt from the execution Avhich was levied upon it. Any person may if he chooses pledge his personal property as collateral security for the payment of a debt, and make it liable for the payment of such debt, notAvithstanding such property Avould otherwise be exempt by law from seizure or sale on execution, attachment, or any other legal process. The laAV exempting personal property from sale on legal process Avas not intended to prevent the oAvner thereof from seling the same, or mortgaging or pledging it as security for debts.

But it may be claimed that Andrews, the creditor, lost his lien on the property by suing on the debt and by recovering *36 it judgment thereon. We do not think he did. After personal property has been pledged, as it was in this case, as collateral security for the payment of a debt, and the debt has become due, the creditor may sue the debtor and recover a judgment against him for the amount of the debt without destroying or in the least affecting his lien on the property pledged. (See authorities cited in counsel's brief, and Edwards on Bailments, 271, 272, and cases there cited.) It is true that the extinguishment of a debt, if really extinguished, will destroy all liens existing on property pledged for its payment. It is also true that the original debt for which this property was pledged may be said in one sense to have been extinguished by being merged in the judgment, a higher security. It is true that the original debt was so extinguished by having a judgment rendered thereon that another action ■could not be maintained on the original debt. But this is the only way in which it was extinguished. The debt in fact still remains, in a new form, but evidenced by a higher security, and the property pledged for its payment still remains liable therefor. I The debt in fact remains until it is satisfied. In the case of Butler v. Miller, 1 N. Y., 500 , the Court of Appeals of New York (Johnson, J., delivering the opinion of the court,) say: “The-rule that security of a higher nature extinguishes inferior securities will be found only to apply to the state or condition of the debt itself, and means no more than this, that when an account is settled by a note, a note changed to a bond, or a judgment taken upon either, the ■debt, as to its original or inferior condition, is extinguished -or swallowed up in the highest security; and that all memorandums or securities by which such inferior condition was •evidenced lose their vitality. It has never been applied, and I think never should be, to the extinguishment of distinct collateral securities, whether superior or inferior in degree. These are to be canceled by satisfaction of the debt, or voluntary surrender alone.”

We suppose no valid objection can be raised as to the manner of selling the property if sold on execution. It seems to *37 be conceded that the creditor could have given notice and sold the property himself without judgment or execution. Then if the judgment does not destroy the lien, what valid objection can there be to having an execution issued, and having an officer of the law give notice and sell according to law? Must greater care be taken in the sale of this property than the law prescribes for the sale on execution of all personal property? We think not. The judgment of the court below must be reversed.

The agreed statement of facts brought to this court seems-to be an agreed statement of facts made for this court, under the rules for making a case for the supreme court, and not on agreed statement of facts upon which the case was submitted in the court below. In fact, the case does not seem to have-been submitted.at all on an agreed statement of facts in the court below. The “facts agreed to,” mentioned in § 559 of the civil code, which authorize the supreme court to direct the district court “to render such judgment in the premises as it should have rendered on the facts agreed to,” are such facts as are agreed to in the district court, and not such as may be agreed to in the supreme court. For this reason we cannot order that judgment shall be rendered for the defendant below, but must order that a new trial be granted. Judgment reversed and new trial ordered.

All the Justices concurring.