Beaver Trust Co. v. Morgan

Citations

• 259 Pa. 567
• 103 A. 367
• 1918 Pa. LEXIS 450

Syllabus

<p>Principal and surety — Assignment of debt — Transfer of collateral security — Default—Sale of collateral — Application of proceeds to unsecured debt — Value of stock — Evidence—Discharge of surety.</p> <p>1. A purchase of a debt is a purchase of all securities for it, whether named or not named at the time of the assignment, unless expressly agreed at the time that they shall not pass.</p> <p>2. A surety is entitled to every remedy which the creditor has against the principal, to enforce every security and all means of payment, and to stand in the place of the creditor, not only through the medium of the security pledged but even of securities taken without his knowledge.</p> <p>3. If a creditor releases the principal from the payment of the debt, he thereby releases the surety entirely, but if he releases the principal from a part only, the surety is released only pro tanto.</p> <p>4. While ordinarily the price obtained for an article in the open market is the best evidence of its value, where a creditor sells a pledged security on default of the debtor and buys it at its own sale and improperly applies the proceeds to a debt other than the one secured, such appropriation easts sufficient discredit upon the bona tides of the sale to warrant a finding that the real value of the security was greater than the price obtained.</p> <p>5. Where collateral pledged as security for a note upon which there is a surety is applied by the holder of the note to the payment of another obligation of the maker, without the consent of the surety, the surety is relieved from liability on the note pro tanto.</p> <p>6. Where in such case the value of the collateral was sufficient to discharge the note and such collateral was sold and the proceeds applied to the payment of another obligation of the maker of the note, the debtor could not thereafter successfully claim any part of the proceeds of a sheriff’s sale of the real estate of the surety, although his judgment was prior to that