Grisard v. Hinson

• Decision Date: 28 January 1888
• Citation: 6 S.W. 906
• Parties: GRISARD <I>v.</I> HINSON.
• Court: Arkansas Supreme Court

6 S.W. 906

GRISARD

v. HINSON.

Supreme Court of Arkansas.

January 28, 1888.

Appeal from Faulkner chancery court; D. W. CARROLL, Chancellor.

E. A. Bolton, for appellants. J. H. Harrod, for appellee.

BATTLE, J.

This action is upon a promissory note made by one Price, as the principal debtor, and by A. B. Hinson, as his surety. The defense of Hinson is that Grisard & Gist, the payees of the note, received from Price two mortgages on personal property to secure the payment of the note; and that they negligently permitted some of the property to be lost and disposed of, and thereby lost the right of action against him. On motion of Hinson, this cause was transferred, as to him, from the Faulkner circuit court, in which it was brought, to the Faulkner chancery court. Decree was rendered in favor of Hinson against Grisard & Gist, and they appealed.

The evidence shows that the two mortgages were executed by Price to secure the note sued on, and his account with appellants. One was executed on the twenty-eighth of January, 1884, the date of the note, and the other on the eleventh of March, 1885. The property embraced in the first was the crops raised by Price in 1884, one mule, and some cattle and their increase; and, in the second, the crops raised by Price in 1885, and the mule and cattle. Price raised in 1884 three bales of cotton, and about sixty bushels of corn. He delivered to appellants two of these bales, which they sold, and placed the proceeds, first, to the satisfaction of his account with them for 1884, which was secured by the mortgage, and the overplus to the part payment of the note. The other bale Price sold, and used the proceeds. Price also used the corn. In 1885 he raised one bale of cotton, and about one hundred and five bushels of corn. He delivered the bale of cotton to appellants, which they sold, and applied the proceeds to the part payment of his account with them for 1885, which was secured by the second mortgage. He sold seven bushels of the corn, and used the money, and the remainder of the corn of 1885 except ten bushels. Price also sold two of the cows and one yearling described in the mortgages. The remainder of the cattle except one yearling, and the mule, and the ten bushels of corn were sold under the mortgages, and applied by appellants to the satisfaction of the account of 1885, and part payment of the note. One yearling still remains unsold, and in the possession of Price. Appellants at first refused to advance to or credit Price for 1885. Price then procured a writing from Hinson requesting them to advance to Price, on account, such things as he needed for that year, and take a mortgage on his property to secure the note and account; saying he would still remain liable or bound by the note. At the time he gave this writing he knew that Price had sold the one bale of the crop of 1884. Pursuant to this request, the second mortgage was taken.

As to the cattle sold by Price, there is no evidence that they have been lost, ceased to exist, or cannot now be sold to satisfy the mortgages. The fact they were sold does not release them from the mortgages, or show that Hinson is exonerated from any part of his liability to pay the note. As to the corn of 1884, Hinson virtually consented that appellants might permit Price to use it, when he requested them to let him have such things as he needed, in 1885. Price was a farmer, and needed the corn. When he gave the writing, Hinson knew that Price had used the one bale of the crop of 1884, and waived any advantage he might have had, if any, on account of it. Was he entitled to any relief on account of Price using and consuming 95 bushels of the corn of 1885?

Whenever funds or securities are placed in the hands of a creditor by a principal for the security of a debt, and they are lost through the want of ordinary diligence of the creditor, the surety bound for the payment of the debt so secured is discharged to the extent of the loss. The creditor, in such a case, assumes the duty of preserving such funds or securities, and is bound to be diligent in the discharge of the duty. If he surrenders or abandons the funds or securities, or fails to perform any act necessary to preserve their validity or legal force and effect, or, in case of the security consisting of perishable property, he allows it to be taken out of his possession and destroyed, or if, for the want of ordinary care and attention, he allows it to perish and become worthless in his hands, the loss should fall on him, and the surety should be exonerated to the extent of the injury. Kemmerer v. Wilson, 31 Pa. St. 110; Pickens v. Yarborough, 26 Ala. 417; Noland v. Clark, 10 B. Mon. 239; Jennison v. Parker, 7 Mich. 355; Sellers v. Jones, 22 Pa. St. 423; Slevin v. Morrow, 4 Ind. 425; Lee v. Baldwin, 10 Ga. 208; Shippen...