Graham v. Pepple

• Decision Date: 02 July 1923
• Docket Number: 23420
• Court: Mississippi Supreme Court
• Parties: GRAHAM v. PEPPLE

97 So. 180

132 Miss. 612

GRAHAM v. PEPPLE

No. 23420

Supreme Court of Mississippi

July 2, 1923

Division B

Suggestion of Error Overruled July 21, 1923.

APPEAL from circuit court of Sunflower county, HON. S. F. DAVIS Judge.

Suit by A. C. Graham against W. O. Pepple. From a judgment for defendant, plaintiff appeals. Reversed and judgment here for appellant.

Reversed.

Shands, Elmore & Causey, for appellant.

Let us first consider the provisions of section 3731 of the Code of 1906. This statute provides that if an accommodation endorser or surety intends to invoke the statute to obtain a release from his contract, he must "give notice in writing to the creditor to commence and prosecute legal proceedings against the principal debtor," and it further provides that "if the creditor fails to commence legal proceedings by the next term of the court in which the same may be instituted to be held after the expiration of thirty days from the giving of the notice, and to prosecute the same to effect, the surety who shall have given the notice, shall be discharged from liability."

Attention is directed to a letter which the appellant wrote the appellee on December 24, 1920, making demand of the appellee for the payment of the note. In this alleged notice to the appellant it is suggested that he proceed against the makers of this note and against the property secured by the deed of trust to get his money. This notice is not such a notice as is contemplated by the statute. It is not such a notice as will arrest the attention of the creditor and cause him to commence the proceeding to protect himself against the forfeiture. We have not been able to find a case decided by the supreme court of Mississippi which has determined the sufficiency of a notice under our statute, but we find that a majority of the states of the United States have statutes with similar provisions and in many instances, the statutes of other states are the same as in this state. We therefore suggest that decisions from courts of sister states should be persuasive with the court in deciding this proposition. We call the attention of the court to the following cases: Benge's Adm'r v. Eversole, 160 S.W. 911; Edmonson v. Potts, 68 S.E. 254; Moorman v. Vass, 83 N.E. 76.

We will now discuss that part of the defense in which the appellee says that the appellant, by agreement with Bolen and Miller, extended the time for the payment of the note, thereby releasing the appellee as an endorser. By such plea, the appellee invokes section 2698 of Hemingway's Code, same being section 120 of Brannan's Negotiable Instruments Law appearing at page 324. Even before the above statute was enacted the law as announced in the statute was the law of Mississippi, and I suspect it has been the law since man became civilized. We direct the attention of the court to a case decided in 1840 styled Newell v. Hamer, 4 How. 684, which case was subsequently followed by the court in Wade v. Stanton, 5 How. 631; Miller, Sheriff, v. Lewis, 103 Miss. 598, 60 So. 654; Banks v. Gilvin, 152 S.W. 652; Dies v. Wilson County Bank, 165 S.W. 248; Thompson v. Wynne, 127 Miss. 773, 90 So. 482; John M. Parker & Co. v. Guillot et al. 42 So. 782. We, therefore, insist that the indulgence granted to Bolen was a favor extended to him by his creditor without any consideration whatever. Bolen did not offer consideration for the favor and Graham accepted no offer and received no consideration. This is one of those indulgences granted every day in the year by a creditor to his debtor.

Pepple's liability was fixed when the note became due. Notice to pay and protest was waived in the note by the endorsers. It was his duty to see that Bolen and Miller paid the debt, or pay it himself. The rule announced by Vol. 3, R. C. L., page 1273, section 503, therefore, applies. See also 3 R. C. L., page 1120, paragraph 336; Rogers v. Detroit Savings Bank, 18 L. R. A. 539, note G, citing numerous cases under the heading "Exhausting Security;" First National Bank v. Wood, 71 N.Y. 405, 27 Am. Rep. 66; Bank v. Shields, 55 Hun. 274, 8 N.Y.S. 298; Pearl v. Cartwright, 81 Miss. 300.

Franklin & Easterling, for appellee.

The appellant, having been notified in writing to proceed against the makers of the note, Mr. Pepple as a surety only on said note, thereby became discharged from all further liability under the expressed terms of section 3731, Code of 1906, Hemingway's Code, 2907. It will be observed from the reading of the statute set out herein that all the law requires of a surety or an accommodation endorser for another is that such surety, at any time after the debt has become due or liability incurred, give notice in writing to the creditor to commence and prosecute legal proceedings against the principal debtor, if living and resident within this state, for the recovery of the debt. That is all that is required on the part of a surety. This is a remedial statute and all that is required is that there be a substantial compliance with this requirement. The authorities cited by counsel for appellant are to this effect, and in fact this is the correct rule. Iliff v. Weymouth, 40 Ohio St. 101; 6 Words & Phrases, page 5631; Planters Bank v. Houser, 57 Ga. 140, 141; 8 Words & Phrases, page 7765. In our view of the law no exact phraseology is necessary to comply with the statute. All that a surety is required to do is to give notice substantially in the terms of the statute. The notice in this case clearly informs Mr. Graham, the creditor and holder of the note, to proceed against the makers of the note and against the property secured by the deed of trust to get his money. Mr. Graham did not misunderstand the notice and we contend was not misled by it. See Prescott National Bank v. Head, 11 Ariz. 213, 21 Ann. Cas. 991. We earnestly contend that considering the verbiage, intent, and purpose of our statute the notice given in the instant case is a substantial compliance with the statute and that its purport was fully understood by the creditor as shown by his letter in reply to the notice. We, therefore, most respectfully submit that on this point the peremptory instruction for the defendant was properly given.

We contend in the light of section 527 of Hemingway's Code, section 744 of the Code of 1906, that the notice under the general issue clearly alleging that the plaintiff had extended the note without the knowledge or consent of the endorser, the appellee here, it became necessary for the plaintiff to reply to this notice if he intended to disprove any of the facts averred in said notice, or to prove any fact in avoidance thereof.

As to what consideration is sufficient to support an agreement of extension, we call the court's attention to the case of Govan v. Binford, 25 Miss. 151. See also Moore v. Redding, 69 Miss. 841, 13 So. 849. This court deals with the release of a surety in the case of Miller v. Lewis, 103 Miss. 598, 60 So. 654.

OPINION

COOK, J.

This suit was begun in the circuit court of Sunflower county by the appellant, plaintiff in the court below, against A. H. Jenkins, on whom process was not served because he was a nonresident, W. B. Bolen, O. C. Miller, and the appellee, W. O. Pepple. The suit is based on a promissory note, which was signed by the appellee and said Bolen and Miller, and delivered to the said A. H. Jenkins, to evidence the sum owing Jenkins as the purchase money for a grist mill and other machinery, and which was indorsed by Jenkins and transferred in due course of trade, for value, before maturity, to the appellant. A contract was executed contemporaneously with the note evidencing the sale of the grist mill and other property from Jenkins to Bolen and Miller, in which the note is described and the terms and conditions of the sale set forth.

The appellant, in his declaration, exhibited the said note claimed a lien securing it under chapter 83 of the Code of 1906 (sections 2436, 2437, and 2438 of Hemingway's Code) for the purchase money for the property, and filed his affidavit designating the said property, and averring that it was liable for the said indebtedness. A writ of summons and seizure was issued and personally served on the appellee and on the said Bolen and Miller, and the sheriff took possession of the property. On the return day pleas were filed by the appellee, and a default judgment was entered against Bolen and Miller, and the property was condemned and ordered to be sold to satisfy the said judgment, and by agreement of appellant and appellee the property was sold, and the net proceeds of the sale, amounting to three hundred and thirty-seven dollars was applied as a credit on the note, leaving a balance due on the note of nine hundred and seventy-three dollars and seventy-two cents. At the trial there was no dispute about the amount of the balance due on the note, but the appellee disputed his liability to pay this balance by a notice filed under the plea of the general issue averring, in substance: First, that he was an accommodation indorser on the note; that after the maturity of the note he gave the appellant notice as provided by section 3731, Code of 1906 (section 2907, Hemingway's Code), to commence and prosecute legal proceedings against the said Bolen and Miller, and because the appellant failed to commence such proceedings by the next term of the circuit court held after the expiration of thirty days from the giving of the notice, that he was thereby discharged from further liability; and, second, that Bolen and Miller were solvent at the time the note became due; that after the note became due the appellant extended the time for the payment of the note without the knowledge or consent of the appellee, and neglected to take steps to collect the same;...