Mueller v. Jagerson Fuel Co.

• Decision Date: 09 December 1930
• Citation: 203 Wis. 453,233 N.W. 633
• Parties: MUELLER v. JAGERSON FUEL CO. ET AL.
• Court: Wisconsin Supreme Court

203 Wis. 453

233 N.W. 633

MUELLER

v.JAGERSON FUEL CO. ET AL.^a1

Supreme Court of Wisconsin.

Dec. 9, 1930.

Appeal from a judgment of the Circuit Court for Waukesha County; C. M. Davison, Circuit Judge presiding.

Action by Christ Mueller against the Jagerson Fuel Company and others. Judgment for plaintiff, and defendant named appeals.--[By Editorial Staff.]

Affirmed.

Action begun October 24, 1929; judgment entered April 11, 1930. Negotiable instruments.Subrogation. The plaintiff, on March 10, 1914, executed and delivered to one August Reinke his promissory note for the sum of $11,000, payable ten years after date with interest at 5 per cent. Payment of the note was secured by a mortgage duly executed and recorded. The note and mortgage were transferred by Reinke to Edward R. Kundert on November 1, 1917. Kundert later died, and, in the course of the administration of his estate, the note and mortgage were assigned to his widow, Mary E. Kundert, and his daughter, Lucinda Kundert. On May 17, 1917, the plaintiff sold the premises upon which he had given the mortgage to George F. Reddy and conveyed the premises to him subject to the mortgage. On February 2, 1918, Reddy sold the premises to Wendelin Schneider. The warranty deed conveying the premises to Schneider contained the following clause inserted after the description of the premises: “Subject to one certain mortgage in the principal sum of $11,000.00 with interest thereon from the date hereof at the rate of 5% per annum, which said mortgage said second party hereby assumes and agrees to pay.” The premises in question passed by mesne conveyances to Mary Thomas, all of the conveyances being made subject to the mortgage, but none except the one to Schneider contained an agreement to pay the mortgage. The defendant Mary Thomas became the owner of the premises March 3, 1927. On April 26, 1926, the defendant Jagerson Fuel Company docketed a judgment against Mary Thomas in the sum of $868.29, upon which $50 has since been paid. After Mrs. and Miss Kundert became owners of the mortgage and some time prior to September 11, 1929, being unable to secure payment from the owner of the premises or from Schneider, they demanded payment of the note and mortgage from the plaintiff, who was the original maker of the note in question. Under a threat of foreclosure and in order as he supposed to protect himself and assert his equities, plaintiff paid $9,500 and took an assignment of the mortgage on September 11, 1929. Subsequently this action was begun, Mary Thomas, the present owner, and Wendelin Schneider, who had promised and agreed to pay the mortgage, and the Jagerson Fuel Company being made parties defendant. There was no appearance by the defendants except the defendant Jagerson Fuel Company, which appeared, set up the facts already stated, and claimed that the plaintiff was not a holder in due course; that by taking the note and mortgage in question he paid his own debt; that the mortgage given as security for the payment of the note is no longer a lien prior to the judgment of the defendant upon the real estate in question, and asked judgment that the lien of the defendant upon the real estate described in the complaint be adjudged to be paramount and prior to the lien of the mortgage.

The court was of the opinion that the rights of the plaintiff were paramount and prior to those of the defendant Jagerson Fuel Company. Judgment was entered accordingly, and from that part of the judgment the Jagerson Fuel Company appeals. Judgment of foreclosure was also entered, but as to that there is no appeal.

Geo. E. Robinson, of Oconomowoc, for appellant.

Knuese & Knuese, of Milwaukee, for respondents.

ROSENBERRY, C. J.

The facts in this case are not in dispute, but the contention made on behalf of the defendant Jagerson Fuel Company raises an interesting question of law. The defendant contends that by the provisions of the Negotiable Instruments Act the note was discharged when the plaintiff, the maker thereof, became the owner of it on September 11, 1929. The particular provision relied upon is as follows: “A negotiable instrument is discharged: * * * (5) When the principal debtor becomes the holder of the instrument at or after maturity in his own right.” (Wis. Stats. 117.37)

[1] That the extinguishment of the debt extinguishes the mortgage cannot be denied. See Doyon & Rayne Lumber Co. v. Nichols, 196 Wis. 387, 220 N. W. 181, and cases there cited. Nor can it be said that the plaintiff was not the person primarily liable on the instrument by its terms. Wis. Stats. 116.01. It is the contention here that, because the Negotiable Instruments Act fails to recognize the relationship of surety and principal, the act supersedes the law as it stood prior thereto, and hence the law of suretyship no longer applies to negotiable instruments. It has been so held. Union Trust Co. v. McGinty, 202 Mass. 205,Jamesson v. Citizens' National Bank, 130 Md. 75, 99 A. 994, Ann. Cas. 1918A, 1097;Bradley Eng. and Mfg. Co. v. Heyburn et al., 56 Wash. 628, 106 P. 170, 134 Am. St. Rep. 1127;Oklahoma State Bank v. Seaton, 69 Okl. 99, 170 P. 477;Lumbermen's Nat'l Bank v. Campbell, 61 Or. 123, 121 P. 427;Richards v. Market Exch. Bank, 81 Ohio St. 348, 90 N. E. 1000, 26 L. R. A. (N. S.) 99;Merchants' Nat'l Bank v. Smith, 59 Mont. 280, 196 P. 523, 525, 15 A. L. R. 430.

The holding of these cases is well epitomized in the case last cited, where the court said: “If the primary purpose of this act was to secure uniformity in the law of negotiable instruments, as is generally conceded to be the...