* Corpus Juris-Cyc References: Appeal and Error, 4CJ, p. 900, n. 96; Bills and Notes, 8CJ, p. 466, n. 29; p. 467, n. 31; p. 468, n. 35; p. 742, n. 13; Pledges, 31Cyc, p. 796, n. 18; p. 830, n. 64. The appellee filed his bill in the chancery court of Noxubee county against the appellant to recover a balance claimed to be due appellee by Elijah Cotton and wife on a promissory note, owned and held by appellee by transfer from Miss Velma Dent, to whose order the note was payable, as collateral security, for the payment of which Elijah Cotton and wife had transferred to Miss Dent two notes of one hundred dollars each, which appellant had executed to Cotton and wife, and which collateral notes, in turn, had been transferred by Miss Dent along with the Cotton note to appellee. The cause was tried on bill, answer, and proofs, and a decree rendered in favor of the appellee against appellant in the sum of one hundred twenty-three dollars and fifty cents, from which decree appellant prosecutes this appeal.
There was no real conflict in the evidence as to the material facts. Cotton and wife were the owners of one hundred sixty acres of land in Noxubee county. On the 5th day of December, 1918, they borrowed three hundred dollars from Miss Dent through her agent, A.T. Dent, for the payment of which they executed their note, *Page 714 negotiable in form, due twelve months after date, and to secure the same gave a deed of trust on their one hundred sixty acres of land. On November 29, 1920, Cotton and wife, the appellant, and A.T. Dent, the latter representing Miss Dent, agreed that Cotton and wife might sell and convey by deed to appellant the timber on their land, which they had mortgaged to Miss Dent, for two hundred fifty dollars; that to that end the timber on the land be released from Miss Dent's deed of trust, and appellant pay fifty dollars cash on the purchase price of the timber and give his two notes for one hundred dollars each, one due January 15, 1921, and the other April 1, 1921. The agreement was thereupon executed according to its terms, although a written release of the deed of trust was not executed by Miss Dent. These timber notes were negotiable in form, and were by Cotton and wife, in consideration of the release of the timber on the land by Miss Dent from her deed of trust, transferred to her as collateral security for the payment of their note to her of three hundred dollars. On November 21, 1924, the appellee purchased from Miss Dent the Cotton note and deed of trust for three hundred dollars and appellant's two timber notes of one hundred dollars each, held by Miss Dent, as further security for the payment of the Cotton note. At the time appellee purchased the Cotton note and securities for its payment and received a transfer thereof, the Cotton note, as well as the collateral notes, were overdue.
Prior to the time appellee became the owner of the cotton note and the securities for its payment, by transfer from Miss Dent, without the knowledge or consent of either Miss Dent or appellee, the appellant and the Cottons agreed to cancel the timber trade between them. The Cottons agreed to retain the timber not already cut from the land by appellant; the appellant agreed to return the timber he had already cut, and to surrender to the Cottons his timber notes of two hundred dollars. This agreement was not in writing, but was made orally and *Page 715 was never executed. Appellee released forty acres of the land conveyed by the deed of trust of the Cottons, and the deed of trust was foreclosed on the remaining one hundred twenty acres, at which foreclosure sale the land was purchased by appellee for two hundred dollars, which amount was credited by appellee on the Cotton note. Cotton and his wife were made defendants to the bill. The court in its decree dismissed the bill as to the Cottons and rendered a decree in favor of the appellee against the appellant for the balance due on the Cotton note, which was less than the amount of appellant's notes of two hundred dollars, held by appellee as collateral security.
The appellant contends that, by virtue of the cancellation of the timber trade between the Cottons and him, he thereafter occupied the relation of an accommodation guarantor or indorser of the Cotton note. We are of the opinion, in the first place, that the evidence failed to show that there was any cancellation of the timber trade between the appellant and the Cottons; that, at most, the evidence showed there was an oral agreement to cancel the trade which was never carried out. The appellant had cut part of the timber on the land; the timber notes held by the appellee were not returned to the appellant; and no effort was made by the appellant to have them surrendered to him so far as the record shows; and, furthermore, under the law, no agreement entered into between appellant and the Cottons with reference to the timber notes could operate to prejudice the rights of appellee, the holder of such notes as collateral security for the payment of the Cotton note. The timber notes were negotiable in form; Miss Dent became holder thereof for value in due course before their maturity; and, as such holder, she was protected against any agreement between appellant and the Cottons with reference thereto which might prejudice her rights. Under section 58 of the Negotiable Instruments Act (Hemingway's Code, section 2636), the appellee, although the holder by purchase *Page 716 and transfer of the notes after maturity, occupied exactly the same relation to the timber notes as did Miss Dent. That section of the Negotiable Instruments Act provides, among other things, that:
"A holder who derives his title through a holder in due course, and who is not himself a party to any fraud or illegality affecting the instrument, has all the rights of such former holder in respect of all parties prior to the latter."
It was held in Bank v. McGrath, 111 Miss. 872, 72 So. 701, that where a negotiable note is assigned before maturity as collateral for an indebtedness then made, the assignee becomes a holder for value of the same in due course, and such note is thereby freed from any defenses existing between the maker and the payee. It is true that appellant's timber notes were not transferred to Miss Dent to secure an indebtedness then incurred by the Cottons to Miss Dent. Nevertheless, a valuable consideration passed for such transfer, in that Miss Dent released her deed of trust from the timber on the land conveyed by the deed of trust on condition that the purchase-money notes of the appellant for such timber should be transferred to her as security for the Cotton note. Miss Dent's indebtedness against the Cottons was secured by a deed of trust on land, and also by the timber notes of the appellant. While she held the notes, Miss Dent had a right to resort to either or both of those securities to satisfy her indebtedness. As between Miss Dent and the appellant, the former was under no duty to resort to one of the securities in preference to the other. She had the choice, under the law, to enforce the payment of the Cotton note either by foreclosing the deed of trust on the land, or by enforcing payment of the appellant's timber notes, or she had the right to resort to the enforcement of both securities, if necessary. And, as between appellant and Miss Dent, the latter had the right, if she saw fit, to release her deed of trust entirely from the Cotton land and resort alone to the enforcement *Page 717 of appellant's timber notes for the payment of her indebtedness, and, as the indorsee of Miss Dent, appellee succeeded to all of her rights in the matter. We are unable to see any element of guarantorship or suretyship growing out of appellant's relation to the transaction.
The appellant contends that the court erred in dismissing the bill as to the Cottons, without dismissing it as to the appellant, because the latter was only secondarily liable for the indebtedness due appellee. What we have already said disposes of this question. Appellee only could be prejudiced by the dismissal of the bill as to the Cottons, and, therefore, if the court erred in its dismissal, the appellee alone could complain. It is true that the Cottons were liable to appellee for the balance due on their three hundred dollar note held by the appellee against them, but it is also true that appellant was primarily and not secondarily liable to appellee for such balance, provided it did not exceed the amount due on the timber notes held by appellee as security for the Cotton note; the evidence showed there was more due on the former than the latter. Therefore, under the law, appellee had the right to recover the balance of the indebtedness due him either in a suit against the Cottons alone, or appellant alone, or the Cottons and the appellant jointly.
The appellant contends, further, that the court erred in rendering a decree against appellant for a greater amount than was due on the Cotton note. The balance due on the note involved a question of fact. There was sufficient evidence to sustain the finding of the chancellor that the balance due was one hundred twenty-three dollars and fifty cents. In order to overturn the decree as to the amount, it would be necessary for the overwhelming weight of evidence to show that the finding of the chancellor was wrong. We cannot say that the evidence so shows. *Page 718
We see no merit in the other questions argued by appellant, and they do not appear sufficiently serious to call for a discussion.
Affirmed.