S. Omaha Nat. Bank v. Wright

• Decision Date: 01 May 1895
• Citation: S. Omaha Nat. Bank v. Wright, 45 Neb. 23, 63 N.W. 126 (Neb. 1895)
• Parties: SOUTH OMAHA NAT. BANK v. WRIGHT ET AL.
• Court: Nebraska Supreme Court

45 Neb. 23

63 N.W. 126

SOUTH OMAHA NAT. BANK

v.WRIGHT ET AL.

Supreme Court of Nebraska.

May 1, 1895.

Syllabus by the Court.

1. Where a surety for the payment of a debt receives a security for his indemnity and to discharge such indebtedness, the principal creditor is, in equity, entitled to the full benefit of that security. Richards v. Yoder, 6 N. W. 629, 10 Neb. 429, followed.

2. The doctrine of subrogation is not administered by courts of equity as a legal right, but the principle is applied to subserve the ends of justice, and to do equity in the particular case under consideration. It does not rest on contract, and no general rule can be laid down which will afford a test in all cases for its application. Whether the doctrine is applicable to any particular case depends upon the peculiar facts and circumstances of such case.

3. A surety on a note to indemnify her against loss by reason of her suretyship, and also to secure the payment of a debt due to her from her principal, took from him a mortgage. The principal afterwards gave to the payee of the note signed by the surety a mortgage to secure its payment. This mortgage pledged the same property pledged to the surety, and by its terms was made subject thereto. In a suit to foreclose the mortgage given to secure the note signed by the surety, the latter answered, and claimed a first lien on the mortgaged property, to satisfy the debt owing her by her principal, and which was then due. Held, that the holder of the note signed by the surety should be subrogated to her lien on the mortgaged property.

Appeal from district court, Douglas county; Walton, Judge.

Action by the South Omaha National Bank against S. C. Wright, A. J. Baldwin, and Flora M. Wright to foreclose a chattel mortgage. From the judgment rendered, plaintiff appeals. Reversed.Chas. Offutt, for appellant.

Slabaugh & Rush, for appellees.

RAGAN, C.

On the 7th of January, 1891, S. C. Wright and A. J. Baldwin executed and delivered their promissory note to the South Omaha National Bank for the sum of $3,000, due in 90 days. This note Flora M. Wright signed as surety. October 3, 1891, Wright & Baldwin executed and delivered another note to the said bank for $2,500, due 30 days after date. On the 10th day of January, 1891, Wright & Baldwin executed and delivered their note for $1,000 to Flora M. Wright, due in 90 days. This note was given for money borrowed by Wright & Baldwin of Flora M. Wright. On the 9th of November, 1891, Wright & Baldwin executed and delivered to Flora M. Wright two chattel mortgages, and thereby conveyed to her certain personal property. One of these mortgages was given to secure the payment of the note of $1,000 given to her on January 10, 1891, by Wright & Baldwin. The other mortgage was given to her to indemnify and keep her harmless from any loss which she might sustain by reason of having signed as surety the note of Wright & Baldwin for $3,000, dated January 7, 1891. These two mortgages were filed in the office of the county clerk of Douglas county at 3 o'clock and 20 minutes in the afternoon of the day of their execution. On the 9th of November, 1891, Wright & Baldwin executed and delivered a chattel mortgage to the South Omaha National Bank, and thereby conveyed to said bank the same personal property covered by the mortgages given to Flora M. Wright. This mortgage to the bank was given to secure the payment of the note for $3,000, dated January 7, 1891, and the note of $2,500, dated October 3, 1891. The mortgage recited that it was given subject to the two mortgages given by Wright & Baldwin to Flora M. Wright, and it was filed in the office of the county clerk of Douglas county after the filing of the mortgages to Flora M. Wright. The South Omaha National Bank brought this suit to the district court of Douglas county to foreclose the chattel mortgage given to it by Wright & Baldwin, and they and Flora M. Wright as well were made parties to the action. Flora M. Wright filed an answer in the nature of a cross petition, claiming that Wright & Baldwin were indebted to her in the sum of $1,000, and interest thereon from January 10, 1891, on the promissory note of that date given her by them, and that to secure the payment of such indebtedness she was entitled to a first lien upon the mortgaged property by reason of the chattel mortgage executed to her thereon by Wright & Baldwin on November 9, 1891. Pending the action, a receiver was appointed, who took charge of the mortgaged property, and converted the same into cash. The district court found that there was due from Wright & Baldwin to Flora M. Wright $1,184.66; that there was due...