Haven v. Foley

1. The payee of a note will be entitled to the benefit of any counter security given for the indemnity of an indorser, and a party to whom the debt evidenced by the note is transferred, will also be entitled to the benefit of the counter security. (Haven v. Foley $ Papin, 18 Mo. Rep. 136, affirmed.) 2. Where the payee of a note, indorsed by one who holds a deed of trust for his indemnity, agrees to accept the note of a third party, and substitute him as the creditor of the ' maker of the original note, to which agreement the indorser is a party, the substituted creditor will be entitled to the benefit of the deed of trust, although it was a part of the agreement that the original note should be delivered to the indorser. 3 The substituted creditor, when sued for the, property by a subsequent incumbrancer, will be protected in equity, although the note was not assigned to him, if the debt evidenced by the note was transferred to him.

Appeal from St. Louis Court of Common Pleas. This was an action for the" recovery of personal property or its value. The defence set up in the answer is stated in the opinion of the court, delivered when the cause was formerly here. 18 Mo. Rep. 186. The case now comes here after a trial upon the issue made by the answer. The defendants read in evidence the deed of trust given by James Shepard to secure E. H. Shepard, as his indorser, upon the two notes made by him to Emerson, and also the assignment of the said deed of trust and of the property therein described, by E. H. Shepard and the trustee to the defendants. They then proved by Emerson that it was agreed between himself andE. H. Shepard and the defendants, that the latter should execute to him their own note, with indorsers, for the amount of the notes of James Shepard, in exchange for those notes, and that E. II. Shepard should assign to the defendants the deed of trust; that the defendants did execute to him their notes for the amount, indorsed by C. D. Sulliyan & Co. ; that he (Emerson) thereupon delivered up the notes of James Shepard to E. H. Shepard, who was to indorse the same without recourse to the defendants. Emerson stated that it was no part of the agreement that he himself should indorse the notes. E. H. Shepard stated the agreement to be that the defendants should execute their own notes, indorsed by C. D. Sullivan & Co., to Emerson, in payment of the notes of James Shepard, indorsed by him and held by Emerson, in consideration of which he was to assign to the defendants the deed of trust, which was executed by James Shepard to him for his indemnity as indorser, and deliver to them the property covered by said deed of trust, which he did. He stated that he never agreed to assign nor deliver the notes of James Shepard to the defendants, but that the understanding was that he (E. II. S.) should keep the notes ; that he had since offered to deliver the notes to the defendants after taking off his name, if they would pay certain expenses, which they refused to do. The court below gave the following among other instructions : 2. If the jury find from the evidence, that it was agreed between Emerson, E. H. Shepard and Eoley & Papin that E. & P. should execute and deliver to said Emerson their notes, for the same amount as those made by James Shepard, in lieu thereof, and payable at the same times, and indorsed by C. D. Sullivan & Co., and that, in consideration thereof, the deed of trust from said James to E. II. Shepard’s trustee, given in evidence by the defendants, should be assigned and delivered to said Eoley & Papin, and the said notes of the said James should be delivered to saidE. II. S., and if they also find that, by said agreement, the defendants were to take the place of said Emerson, as the creditors of said James Shepard, and that the notes of the defendants, indorsed by C. D. Sullivan & Co., as above described, were executed and delivered in pursuance of said agreement to said Emerson, who, thereupon, delivered the said notes of said James to said Elihu H., and that said deed of trust was assigned and delivered to said Foley & Papin, together with the property therein described, and that said property is the same sued for in this action, then the plaintiff cannot recover.” The plaintiff asked the court to direct the jury that the defence was not made out, if Emerson did not agree to indorse or assign the old notes to Foley & Papin, and did not indorse or assign them, which the court refused to do. After a verdict and judgment for the defendants, the plaintiff again appealed to this court. 1. The court erred in refusing to direct the jury as asked by the plaintiff. 2. The instruction given is erroneous in leaving out of view the fact whether there was an agreement by Emerson to assign the debt to the defendants. Under that instruction, the jury might find for the defendants, consistently with the idea of a voluntary payment by defendants of James Shepard’s debt. 3. It having been agreed that E. II. Shepard, as the surety on James Shepard’s notes, should be discharged, the deed of trust Avas extinguished, and it makes no difference that there may have been an agreement to deliver the notes to the defendants. 30 Maine, 35. 31 ib. 501. 19 Pick. 434.