Kelly v. Matlock

Works, J. The appellants and one Ausmus, for the accommodation of the respondent, executed to him their two promissory notes for one thousand dollars and fifteen hundred dollars, respectively, which notes were negotiated by the respondent; and upon his failure to meet them, they were paid and taken up by the appellants.

The respondent and his wife, to secure the appellants and Ausmus from loss on these accommodation notes, executed to them a mortgage on an undivided interest in certain real estate in the state of Oregon owned by the respondent. He also assigned and delivered to them, as further collateral security, a note of his brother to him for two thousand five hundred dollars and a mortgage on a part of the same real estate given to secure said note.

Upon the payment of the accommodation notes by them, the appellants secured an assignment from Ausmus of his interest in the securities above mentioned, brought an action against the respondent and his wife to foreclose the mortgage given by them, recovered a [127]decree of foreclosure thereof, sold the land, realizing less than their claim, and procured the entry of a deficiency judgment for the balance. They also brought an action against respondent’s brother to foreclose the mortgage given by him, and assigned to them as collateral security. The respondent was made a party to this proceeding, but was not served with process.

Instead of proceeding to a judgment in this case, the appellants took a deed from the mortgagor in satisfaction of their claim against him, and agreed to and did dismiss the action, and deliver up and satisfy the mortgage of record.

This action was brought by the appellants to recover the amount of the deficiency judgment above mentioned. The respondent answered, alleging payment in full, and set up a counterclaim alleging the facts with reference to the collateral mortgage, and praying that the plaintiffs be charged with the amount thereof on account of their acceptance of a conveyance of the laud and satisfaction of the mortgage; that enough thereof to satisfy the deficiency judgment sued on be applied to the payment thereof, and that he have judgment for the balance. The court found in favor of the defendant, and decreed the satisfaction of the judgment, and rendered judgment in his favor for $1,397.09. From this judgment the plaintiffs appeal.

It is contended by the appellants, and conceded by the respondent, that the transfer and delivery of the mortgage as collateral security was a pledge of personal property. The appellants further claim that, being a simple pledge of personal property, the appellants had no power to accept a conveyance of the property and release the mortgage; that such release was a nullity, so far as the respondent was concerned, and that therefore they could do nothing but ignore that transaction, and sue upon, the deficiency judgment as if no such transaction had taken place.