.462 STRICKLAND 'V. DYER. [192 STRICKLAND V. DYER. ,4-4234 Opithon delivered March 23, 1936: • 1. PLEDGES.—Where collateral is assigned to secure , the payment of a note, payment of the debt evidenced by note extinguishes both the note and the 'assignment, after which the Assignee has no interest in the collateral thAt he can assign or transfer. So .where a policy of life insurance was assigned as collateral to secure a. note; and , the assignee retained the policy after the note was paid, he could not hold it as . security for a new debt without an agreement to that effect with the insured; and, on the death of the insured, the . assignee had no interest in the policy, since his interest was•extinguished on payment of the first note. C. & M. .Dig., §§ 7885-6:
ARKd S,TRICKLAND v DyER.. 463 2.iIN,SuPANC , E. 2 6 . i., wife named, as beneficlayy in, her . ,husband's life yolicy has a , :qualified interest . therein subject: , to- hi's right , to change ' benefiCiary, and Oral assigninent of policy in her Poses-'sion and without her 6arient . is Iniralid: ' • . • • •ApPea l ,from. Moproe. , Chanc • ery court; A...L. , Ilytelt7 ins., Cho.ncellor • attrrned. • • ,•• • , H. P..SpitA and JaTes, .R. Cawipbel • t, fo . r ap . p • e • l l , a nt„. •W. A.57tarp,, for.appellee. , , ..• , •, . -: McHANE-17,. J. The.facts'in , this- case are,not in dis•- pute;• most , of -them being stipulated. On March , 2, 1929, E.,.T., Dyer, •qeceased , lmsband • of. appellee,. contracted with appellant to finance him to make a . crop during.said year . to the , extent : of, $,00 . 0, On said , date he .. executed and . clellered,his , note . to appellant for said . Surn, .due sectired by . a mortgage Off certain chattels and all • croPs to be grown by him: At appellant s Suggestion -or b',. his requirement, , Mr: : Dyer applied for and was . issued .a policY of life ,insurande in , the . Reliance Life, Insny nee. COMPany in the snm of $3,000; the first premium being . paid . by. appellant and Charged td Dyer!S account., . ThiS.policY waS. deliered April 10, .192 . 9 a , nd appellee , was .named benefieiary therein. , "On.:said mentioned ' clate,Mr. and-Mrs. Dyer execnted and de: liVered to apPellant%the , folldWing . aSsignment, of said policy of inSurance: "For 'N r alite receiNied; I herebyasSign and 'transfer tintd R. Bi. StriCkland,. Clarendon; Arkansas, So . far As hiS. intereSt 'shall appear;-all My right; title and •ntereSt in Policy: No. '451074; iSsited :by the 'Reliance 'Life Insurance COmpany • of Pittsbitrgh 'upon :the life , df E."T. Dyer, of Clarendon;• Arkansas; • and . dated the- 23" day •of -Mare b -,1 °00 --- • • ' •• `.`Witness: my hand.,and,-seal this •1,0 clay — of • ,A . p . r il, nineteen hundred and, twenty-mine • . .• •• f `ASigned). Dyer,,,.; , ".Beneficiary ; Julia. S,byer..!.' -• . This ; assignment was; duly: executed and; acknowledged • on forms : furnished . .by• the.. company; ,and :a ,copy yetained . by. it: and a copy.. delivered to . appellant. . The .note, for which this assignment.was. , given as additional :s, ecurity, was paid in full, On ,October 30, 1929,,.one2day bef ore, its due ..date, 'and ,the ; mote , and mortgage :sur-
464 STRICKLAND V. DYER. [192 rendered and canceled. Thereafter, beginning on No-vember 11, 1929, Mr. Dyer made other small purchases on credit, and on January 1, 1930, owed appellant $40.75. Dyer again arranged for advances in the sum of $2,000 for said year, for which he executed a new note and chattel . mortgage. This year's indebtedness was not paid. On April 20, 1932, a settlement was had between them in which it was agreed that Dyer owed appellant $1,989.63, for which a new note .and chattel mortgage were given at 8 per cent. Other credits were thereafter extended and two payments Of $100 each were made by him. Dyer died in December, 1934. • . • Appellee brought this action against the insurance company to recover the $3,000. It admitted liability, paid the money into court, and . interpleaded appellant on the ground that he Claimed some interest in the proceeds of said policy by reason Of said assignment. He thereupon filed an answer setting up said assignment, Dyer's indebtedness to him at the time of his death, and prayed that he be permitted to recover from the proceeds of said policy the amount of his debt in excess of $2,000 with interest. Trial resulted in a decree for appellee except one quarterly premium paid by appellant in 1930 in the sum of $9.37, which amount was , awarded him. The trial court held that said assignment was given appellant to secure said note for $2,000 dated March 2, 1929, and that when said note was paid on October 30, 1929, the note and. mortgage, as well as said assignment, were extinguished and became null and void. We think the trial court was correct in so holding. Payment . of a negotiable instrument •by the maker discharges the-instrument and all persons secondarily liable. Section 7885 and 7886, Crawford & Moses' Digest. NecessarilY, therefore, all collateral deposited with the payee as secdrity for the debt is discharged when the instrument it secures is discharged. As stated in 5 C. J., page 958: "Where the debt for which the collateral is given is paid, the right to hold the collateral ceases, and after that time the assignee has no interest in the collateral that he can transfer to another." Therefore, when Mr.
ARK.] 465 Dyer paid his debt, appellant had no mare right to hold the assignment than he did the note it was given to secure or the mortgage . which was satisfied. Had he sur rendered the assignment to appellee, as• it was his duty to do, then, to secure any future indebtedness to appellant, a new assignment would have been necessary, or a new agreement regarding the former assignment. It is not contended in this record that this was done. Appel-lee testified, and it is not contradicted, that appellant did not discuss with her any matter relating to Mr: Dyer 's business or the policy after the debt was paid for which the assignment was given. Nor can we agree ,that Mr. Dyer, conceding that he orally agreed with appellant that the policy should stand pledged for the debt now sued upon, could assign the policy without appellee's consent when the policy itself was at all times in appellee's possession. Hoge v. Morgan, ante p. 363, 91 S. W. (2d) 614. She had a qualified interest in said policy, subject to his right to change tbe beneficiary as provided therein. Townes V. Krwmpen, 184 Ark. 910, 43 8: W. (2d) 1083 ; § 5579, .Crawford & Moses' Digest, as amended by act 141 of 1931 ; act 102 of 1933. The decree is correct, and must 'be affirmed. It is so ordered.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.