Montgomery v. Sayre

California Supreme Court Oct 27, 1893 No. No. 18132Published

Before: McFarland

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Holding. The court held that Sayre was a surety for the underlying debt and was exonerated from liability because the appellant released the principal debtor, Chapman, and because the court did not err in its evidentiary rulings regarding the fair market value of land.

Issues

Whether Sayre was a surety for the promissory note sued upon.
Whether the appellant's release of the principal debtor exonerated the surety.
Whether the trial court erred in admitting evidence of fair market value based on methods other than a forced cash sale.

Disposition. affirmed

Quotations verified verbatim against the opinion

“From the foregoing averments it seems quite clear to us that Sayre was a surety for Chapman—for Chapman as well as for the mining company.”

“In arriving at the real value of the land the jury were not confined in this case, any more than they would have been in any other case, to what it would have brought at a forced sale for cash.”

Synopsis

Suretyship for Maker and Indorser of Note—Pleading.—A complaint averring that a mining company executed its note to plaintiff, ■which was indorsed by a third party, and that at the time of the delivery of the note and to secure the payment of the same, there was delivered to plaintiff by way of pledge, all of the capital stock of the mining company and a mortgage on its mine, and a note from the testator of whom defendant was the executor for a smaller sum hearing the same date with the larger note and mortgage, upon which smaller note the action is brought after foreclosure of the mortgage on the mine, and the docketing of a deficiency judgment against the corporation and the indorser of the larger note, and averring that there remains due and unpaid on the note and judgment a sum greater than the amount of the smaller note, and that the corporation has no other property, and that its capital stock is valueless, sufficiently shows that the defendant’s testator was a surety both for the mining company and for the indorser of its note.

Id.—Exoneration of Surety—Release of Indorser.—Where the note of a surety is given to secure payment of a larger note both by the maker and indorser of the larger note, the surety is exonerated, if the payee has released such indorser from all liability under a deficiency judgment rendered against the indorser, after foreclosure of a mortgage given by the maker to secure the larger note.

Id.—Sale of Land at Less Than Value.—The surety is also exonerated if the payee of the larger note having a judgment lien upon the land of the indorsor, which, if sold at its real value, would have realized a sufficient amount of money to pay the judgment, united with the indorser to sell and convey the land at private sale for less than its real value.

Id.—Evidence—Determination of Market Value.—In determining the real value of the land thus sold, the jury are not confined to evidence of what it would have brought at a forced sale for cash,Tat public auction, and the court may admit evidence showing the terms of credit upon which tracts of land in the region of the land in question were usually sold, and what was its fair market value at the time of the private sale, the question before the jury being as to the difference between the amount for which it was sold and its fair market value at that time,

Id.—Evidence of Value at Other Dates—Discretion.—Evidence of value for short periods, before and after the date in question, ma.y be allowed in the discretion of the court, where such discretion is not abused.

McFarland, J. This is an appeal by plaintiff from, a an denying a motion for a new trial. The main history of the case is stated in the opinion of this court upon a former appeal (Montgomery v. Sayre, 91 Cal. 206); and it need not be repeated here.

The first question in the case is whether or not Sayre, deceased, made the ten thousand dollar promissory note to appellant sued on as surety for W. S. Chapman. Respondent contends that this question was decided affirmatively by this court on the former appeal, and that such decision is the law of the case. This court did say in its opinion on that appeal that “ Sayre was, in law, a surety”; but we will not inquire into the somewhat complicated question whether that statement was necessary to the determination of that appeal, and therefore the law of the case; because we think that the correctness of that statement otherwise appears. Indeed it appears from the complaint itself," which includes the presentation of the claim to the executor.

It is not pretended in the complaint that the Sayre note for ten thousand dollars was not given as security in some form, or that an action could be maintained upon it as on any ordinary promissory note, without averring extrinsic facts other than those appearing upon its face. The complaint avers that on April 19, 1884, the Pioneer Mining Company, a corporation, made and delivered to appellant (Montgomery) its promissory note for one hundred and ten thousand dollars, and “ that said note was indorsed by Wm. S. Chapman.” (The evidence shows that the indorsement was preceded by the words: “ Demand, notice, and protest waived April 19, 1884.”) It is then averred: “That at the time of said delivery of said note, and to secure the [184]payment of the same, there was delivered to plaintiff by way of pledge all the capital stock of said corporation except thirty shares thereof, and said corporation did execute to plaintiff its mortgage on the Pioneer mine in Sierra county, in said state, and said A. L. Sayre, now deceased, who was then living, did make, execute, and deliver his promissory note, hereafter designated as the ‘ Sayre note,’ bearing even date' herewith, for the sum of ten thousand dollars ($10,000”), the same being the note here sued on. It is then further averred that several payments were made from time to time on said note for one hundred and ten thousand dollars; that afterwards plaintiff foreclosed said mortgage on the Pioneer mine; that the proceeds of the sale of the mine underpaid foreclosure was applied to the payment of said note, but wás not sufficient to satisfy it; that a deficiency judgment was entered and docketed against said corporation and against said Chapman for sixty-one thousand five hundred and fifty-four dollars and thirteen cents; that thereafter certain payments were made on said note and judgment; and that there remains due and unpaid on said note and judgment the sum of thirty-four thousand five hundred and fifty-one dollars and twenty cents. It is further averred that said corporation has no other property, and that its capital stock is valueless; and upon these averments plaintiff bases his right to recover the amount of the Sayre note.

Montgomery v. Sayre

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