Union Mut. Ins. Co. v. Page

• Decision Date: 02 January 1917
• Docket Number: Case Number: 7038
• Citation: 1917 OK 3,65 Okla. 101,164 P. 116
• Parties: UNION MUT. INS. CO. v. PAGE et al.
• Court: Oklahoma Supreme Court

1917 OK 3

164 P. 116

65 Okla. 101

UNION MUT. INS. CO. v. PAGE et al.

Case Number: 7038

Supreme Court of Oklahoma

Decided: January 2, 1917

Syllabus

¶0 1. Principal and Surety--Liability of Surety--Note. The general liability of a surety upon a note, account, or bond, is not conditioned upon the exercise of diligence by the holder of the obligation to collect of the principal, and the negligence or passive inactivity of the holder is not a defense available to the surety.

2. Same--Proceedings Against Principal--"Require"--Statute. The term "require," as used in section 1058, Rev. Laws 1910, which provides that "a surety may require his creditor to proceed against the principal, * * * and if in such case the creditor neglects to do so, the surety is exonerated to the extent to which he is thereby prejudiced," means, to demand; to insist upon; to claim as by right and authority; to exact; to claim as indispensable, a synonym as understood by its use in this section, for exact; direct; order, and a simple suggestion to, or request of, the creditor will not suffice.

3. Same--Request to Sue Principal. The failure of the payee of a promissory note to sue the principal, upon the oral request of the surety sued, made to the collector or attorney of the creditor, who had the note for collection, without any showing that the collector or attorney was authorized by the creditor to take legal proceedings for the collection of the note, or that such request or notice was communicated to the creditor by the collector or attorney, will not operate as a release of the surety sued, even though the principal at the time the request was made was solvent and amply able to pay the note and in the meantime he had become insolvent, for the reason that it is the duty of the surety upon the failure of the principal to pay the note when due, to pay the same and pursue his remedy against the principal to reimburse himself for the amount paid as such surety for his principal.

Wilson & Scott and S. C. Burnette, for plaintiff in error.

Richard A. Billups, for defendant in error Hays.

ROBBERTS, C.

¶1 This action was brought by the Union Mutual Insurance Company, plaintiff in error, against Hattie Page and J. H. Hays, defendants in error, to recover on a promissory note given by defendants to plaintiff as premium for hail insurance policy on 60 acres of cotton for the season of 1911. The note is as follows:

"Hail Insurance.

"$ 76.00 Enid, Okla., March 18, 1911.

"On or before the first day of October of this year, for value received, I, we, or either of us, promise to pay to The Union Mutual Insurance Company, of Enid, Oklahoma, or order, the sum of seventy-six and 50/100 dollars, payable at the office of said company in Enid, Oklahoma.

"This note is given for premium for insurance on my crop of grain, now growing on the W. 1/2 of section 1, township 11, range 20, and on the acres in all, situated in Washita county, state of Oklahoma, and this indenture, made on the day above written, and between the undersigned and the said company, witnesseth: That the undersigned mortgages to said company the said crop of grain, as security for the payment to said company the above named sum of money on or before the first day of October of this year, and this mortgage shall also cover said grain wherever located after it is harvested. This note to bear interest at 10 per cent. per annum from date, if not paid at maturity. Without interest if paid when due. I agree to pay an attorney fee of ten dollars, if it becomes necessary to collect the above sum of money or any part thereof by law, or if it be placed in the hands of an attorney for collection.

"Hattie Page.

"J. H. Hays.

"Witness: Aug. Gumuster.

"Policy No. 05475.

"P. O., Canute."

No service was had upon defendant Page. Defendant Hays answered as follows:

"Comes now the defendant, J.

H. Hays, and for answer to plaintiff''s bill of particulars denies each, every, and all allegations therein, except such as are hereinafter specifically admitted.

"First. Defendant J. H. Hays admits that he signed the note named in plaintiff''s bill of particulars as a surety, and accommodation signer, and received no benefits in consideration therefor, believing that said company was lawfully authorized by the state of Oklahoma to write the kind of insurance that the principal of said note, Hattie Page, desired, to wit, hail insurance on a cotton crop. That on or about the date of the policy here involved, to wit, March 21, 1911, the State Insurance Commissioner, Hon. Perry A. Ballard, revoked the license of said Union Mutual Insurance Company, stating that said company has no legal right to write hail insurance on crops at that date. That by reason of the foregoing state of facts, consideration for which this defendant, J. H. Hays, signed said note never lawfully existed, or if the same ever existed it wholly failed when the said Insurance Commissioner revoked the license of the said company.

"Second. For a further answer and defense, defendant alleges that the plaintiff herein, in the fall of 1911, and after said note was due and collectable, neglected, failed, and refused to make an effort to collect said note from the principal, Hattie Page; that this defendant, J. H. Hays, asked and requested plaintiff to proceed to collect said note while the principal was in possession of a cotton crop from which this note could have been made, if the same was legal; that this defendant informed plaintiff at the time referred to herein that said cotton crop was all the protection that he as a surety had and that he, defendant, J. H. Hays, wanted this matter settled at once for his protection; that by reason of plaintiff''s failure to so proceed against said principal, Hattie Page, as requested, said cotton has been disposed of by Hattie Page, and said Hattie Page is insolvent and has no means out of which any part of said debt can be made, to the damage of said defendant to the amount of his liability and said note."

¶2 Upon these issues, trial was had to a jury, verdict returned for defendant, and judgment rendered against plaintiff for costs. Plaintiff brings error. It is apparent from the verdict that the jury found for this defendant on the allegation that he was only surety on the note, and, while there might be some question as to that fact, we will adopt the finding of the jury and consider the case upon that theory. This brings us to the proposition as to whether the defendant Hays was released and relieved from payment of the note because of the laches of the plaintiff in failing to proceed against the principal, or taking some steps to obtain payment out of the cotton belonging to the principal and pointed out to the agent of the plaintiff about the time of the maturity of the note. In support of his defense upon that theory, the defendant relies on section 1058, Rev. Laws 1910, which is as follows:

"1058. A surety may require his creditor to proceed against the principal, or to pursue any other remedy in his power which the surety cannot himself pursue, and which would lighten his burden; and if in such case the creditor neglects to do so, the surety is exonerated to the extent to which he is thereby prejudiced."

¶3 We gather from the record that the defendant relies principally upon that part of the section above quoted which provides that a surety may require his creditor to proceed against the principal, and, if the creditor fails to do so, the surety is exonerated to the extent to which he is thereby prejudiced. The particular steps taken by defendant Hays to require the plaintiff to proceed against the principal are detailed in his testimony given at the trial, as follows:

"A. She got the crop insurance provided I signed her note. I signed her note. She wanted it signed for hail insurance, and I signed it. Q. Had she signed the note at the time you did? A. Yes, sir. Q. And came to you afterwards? A. Yes, sir. Q. Did you have any conversation with the company or any of its agents with reference to this note in the year 1911? A. I did. Q. Tell the jury what it was. A. I had no further conversation until fall. The first conversation I had with the agent was in the spring. That fall there came another man, a collector. Q. State whether or not he had this note for collection? A. He did. Mrs. Page refused to pay it, and so did I. I says, ''There''s two bales picked there, three picked, two on the ground and one on the Wagon.'' I says, ''You go and attach that cotton.'' Q. What further statement did you make to him, if any, about attaching the cotton? A. I told him to go ahead and attach the cotton and get his money out of it. Q. Did you tell him in what capacity you had signed the note? A. Yes, sir; he said he didn''t want to attach the cotton. He would rather not, but he finally said he would, but he never did attach it. I told him if he would attach the cotton the parties would undoubtedly make a replevin bond and sell the cotton and he would have a bond the court would take, which would be much better than a note on me and he would get his money. That was the only chance he had on it--for him to take the cotton, I couldn''t get it. Q. What became of the cotton? A. Mrs. Page sold the cotton. Q. About how much cotton was picked and in the field at the time? A. I believe at that time there had been about five bales sold, and I think the crop made about 23 bales. There was three bales picked at that time, or a little better. Q. There was about 18 in the field and on the ground and the wagon? A. Something like that. There was five bales already sold and three bales picked, and the rest was in the field. Twenty-three bales out of the whole crop. Q. Where is Mrs. Page at this time, if you know? A. I don''t know. Q. Do you know whether she has any property at all in this country, or anywhere else? A. If she has any, I don''t know of it. Q. Did she have anything at that time except this cotton? A. She had a few stock. Q. Do you think there was

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