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The First National Bank of Milwaukee vs. Finck.

cipal when acting within the scope of his apparent authority, although he exceeds his specific instructions, yet that is not the rule in the case of a special agent." Bryant v. Bank of Commerce, 95 Wis. 481, and authorities there cited. We are clearly of the opinion that the complaint fails to state a cause of action.

By the Court.-The portion of the judgment of the circuit court appealed from is affirmed.

THE FIRST NATIONAL BANK OF MILWAUKEE, Respondent, vs. FINCK, imp., Appellant.

September 1— September 20, 1898.

(1) Findings: Immaterial error. (2-5) Joint debtors: Assumption of debt by one: Individual note as collateral security: Remedies: Application of proceeds of execution levy and of collaterals.

1. Failure to find upon a particular point is not a material error, in the absence of a specific request, where the evidence upon that point would sustain a finding in accord with the judgment.

2. Assumption of a joint debt by one of the debtors and a promise to hold the other harmless therefrom, do not render the latter a surety merely, as between him and the creditor, where the creditor did not consent to any change of liability, and received no consideration for such a consent.

3. One joint debtor may give his individual note as collateral security for the joint indebtedness, and the taking of it does not affect any rights of the creditor upon the original debt; nor does the prosecution of the collateral note to judgment affect the right of action upon the original debt, at least until satisfaction is obtained.

4. Where a debtor is liable upon a joint note and also upon an individual note, the amount realized on an execution against him, levied under a judgment embracing the entire indebtedness, may properly be applied by the creditor exclusively to the payment of the individual note.

5. The proceeds of collaterals pledged to secure a specific debt can only be applied to the payment of that debt.

The First National Bank of Milwaukee vs. Finck.

APPEAL from a judgment of the circuit court for Milwaukee county: D. H. JOHNSON, Circuit Judge. Affirmed in part; reversed in part.

This is an action in equity to foreclose a lien of the plaintiff upon certain stocks which had been pledged to the plaintiff by the defendants Finck and Meyer, and by the defendant Meyer alone. The facts appearing upon the trial were, in substance, as follows: Prior to January 1, 1896, Meyer and Finck were partners, and, as such, borrowed money of the plaintiff bank to the amount of $17,000, for which they gave their firm notes. The firm was dissolved January 1, 1896; but these notes were not paid, and were afterwards renewed by the giving of joint notes, signed with the individual names of W. A. Meyer and O. A. Finck. Prior to the dissolution of the partnership, the firm of Meyer & Finck had owned the entire capital stock, being 1,200 shares of $10 each, of a real-estate company known as the Globe Trading Company, each owning 600 shares of such stock; and they had pledged the entire 1,200 shares to the bank as collateral. for their indebtedness of $17,000. After the dissolution of the firm of Meyer & Finck, Meyer opened a large retail dry-goods store. On or about July 8, 1896, Meyer, in consideration of the conveyance of certain property, made a written agreement with Finck to pay the said promissory notes of $17,000, with interest, and hold Finck harmless therefrom. This agreement was not shown to the cashier of the plaintiff bank, but Meyer informed him that he had agreed with Finck to pay the $17,000 notes.

After the dissolution of the firm of Meyer & Finck, they desired to divide the property of the Globe Trading Company between themselves, and they went to the cashier of the bank, and suggested that they would each organize a new company, and each take half of the assets of the Globe Trading Company, and that the $17,000 debt should be divided, and each assume half of it, and each pledge his stock

The First National Bank of Milwaukee vs. Finck.

in the new corporations for his half of the debt. To this arrangement the cashier refused to consent. However, Meyer and Finck did thereafter divide the assets of the Globe Trading Company, each forming a new corporation, and causing the old corporation to convey half of its assets to each of the new corporations, respectively. It is claimed in the testimony of Mr. Meyer that the cashier of the bank consented that he might use his half of the Globe Trading Company assets in buying merchandise, but this is denied by the cashier. Finck testifies that he and Meyer agreed that neither should use these assets without consent of the bank. The fact is that Mr. Meyer did use his half of the assets of the Globe Trading Company in buying merchandise for his mercantile business.

After Meyer opened his individual business, he borrowed of the bank $24,000 on his own account, and gave his individual notes therefor. In November, 1896, there was due the bank upon the Meyer & Finck notes $17,000; upon the Meyer notes $24,000 and some accrued interest; and the bank became somewhat apprehensive as to Meyer's solvency, and Meyer executed to the bank a demand note on the 17th of November for $41,260.01, being the total amount due upon all the notes, with interest, at that time. The original notes of Meyer & Finck, for $17,000, were not surrendered; but it is claimed in this action by Meyer that they were in fact paid by his demand note, while, on the other hand, it is claimed by the bank that the demand note was simply received as collateral security. Upon this last note suit was at once brought, judgment obtained, execution issued, and Meyer's stock sold, and the sum of $10,319.44 realized thereon. After payment of the costs of suit, the amount realized upon the execution was claimed to be applied by the bank upon Meyer's individual notes of $24,000. The bank still held the 1,200 shares of Globe Trading Company stock, and also certain other collaterals which had been

The First National Bank of Milwaukee vs. Finck.

deposited by Meyer with them, when this action was brought to foreclose all the collaterals.

An interlocutory order was entered directing the sale of all the collaterals which belonged to Meyer alone; and they were sold, realizing the sum of $100, which was credited upon Meyer's individual debt, but the 1,200 shares of Globe Trading Company stock were left until the final decree. The court found, in substance, that Meyer and Finck still owed the bank the entire sum of $17,000, and that Meyer individually owed the bank $14,414.19, and that the bank had rightfully applied the sum realized upon the execution upon Meyer's individual debt; that the Globe Trading Company stock should be sold; and that the proceeds of 600 shares should be applied upon Meyer's individual debt, and the proceeds of the remaining 600 shares should be applied upon the Meyer & Finck debt. From judgment in accordance with these findings, Finck appeals.

For the appellant there was a brief by Quarles, Spence & Quarles, attorneys, and William C. Quarles, of counsel, and oral argument by Charles Quarles. They contended, inter alia, that the entry of judgment on the $41,000 note was a bar to any further action on any of the indebtedness which it evidenced. By obtaining a judgment of record the bank obtained security of a higher nature, which operated as a merger or extinguishment of the same demand represented by the joint notes. Robertson v. Smith, 18 Johns. 459; Nichols v. Burton, 5 Bush, 320; Peters v. Sanford, 1 Denio, 224; Sydam v. Cannon, 1 Houst. 431; Peoria S., L. & T. Co. v. Elder, 165 Ill. 55; Olmstead v. Webster, 8 N. Y. 413; Averill v. Loucks, 6 Barb. 19, 25; Crosby v. Jeroloman, 37 Ind. 264; Sloo v. Lea, 18 Ohio, 279; Doniphan v. Gill, 1 B. Mon. 199; Smith v. Black, 9 Serg. & R. 142; Ward v. Johnson, 13 Mass. 148; Pierce v. Kearney, 5 Hill, 82–85; In re Herrick, 12 Fed. Cas. 43; McMaster v. Vernon, 3 Duer, 249; Moale v. Hollins, 11 Gill & J. 11. The rule giving a creditor holding several

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The First National Bank of Milwaukee vs. Finck.

obligations or claims against his debtor the right to apply a payment made to him by the debtor in the absence of any application by the latter, is confined to cases of voluntary payments. Orleans Co. Nat. Bank v. Moore, 112 N. Y. 543; Cowperthwaite v. Sheffield, 1 Sandf. 416, 453; Blackstone Bank v. Hill, 10 Pick. 129; Bridenbecker v. Lowell, 32 Barb. 9; Cage v. Iler, 5 Sm. & M. 410; Merrimack Co. Bank v. Brown, 12 N. H. 321; Perris v. Roberts, 1 Vern. Ch. 34; Simmons v. Cates, 56 Ga. 609; 2 Am. & Eng. Ency. of Law (2d ed.), 460, note 1; Randolph, Comm. Paper, § 795, note 4; Story, Bailments, § 312.

For the respondent there was a brief by Miller, Noyes, Miller & Wahl, and oral argument by B. K. Miller, Jr. They argued, among other things, that where the court must make the application it will be made to the debt for which the security is most precarious, viz. will favor the creditor. U.S. v. January, 7 Cranch, 572; Alexandria v. Patten, 4 id. 317; Jones v. U. S. 7 How. 681; U. S. v. Eckford's Ex'rs, 1 id. 250; Backhouse v. Patton, 5 Pet. 160; Tayloe v. Sandiford, 7 Wheat. 13; Field v. Holland, 6 Cranch, 8; Nat. Bank v. Mechanics' Nat. Bank, 94 U. S. 437. Many cases apply the payments to discharge the individual liability and not that upon which there is a surety, in order that the creditor may collect his unpaid debt. Sanborn v. Stark, 31 Fed. Rep. 18; Scheik v. Trustees of Schools, 24 Ill. App. 369; Burks v. Albert, 4 J. J. Marsh. (Ky.), 97; Blanton v. Rice, 5 Mon. 253; White v. Beem, 80 Ind. 239; Livermore v. Claridge, 33 Me. 428; Hunt v. Brewer, 68 id. 262; Poulson v. Collier, 18 Mo. App. 583; Ramsour v. Thomas, 10 Ired. 165; Moss v. Adams, 4 Ired. Eq. 42; Sprinkle v. Martin, 72 N. C. 92; Burt v. Butterworth, 19 R. I. 127; Jones v. Kilgore, 2 Rich. Eq. 63. The rule in favor of the creditor prevails in Wisconsin. Northern Nat. Bank v. Lewis, 78 Wis. 475; Stone v. Talbot, 4 id. 449; Robbins v. Lincoln, 12 id. 7, 8. See, also, Small v. Older, 57 Iowa, 326; Mathews v. Switzler, 46 Mo. 301; Wilson v. Allen,

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