BEFORE ROY NOBLE LEE, DAN LEE and PRATHER
ROY NOBLE LEE, PRESIDING JUSTICE, FOR THE COURT:
Smith & Hitt Construction Company, Inc. [Smith & Hitt] filed a complaint and an amended complaint in the Circuit Court of Sunflower County against JDM Productions & Delta Sound Studio, a partnership organized under the laws of Mississippi, and Charlie Fowler, a/k/a Charles Henry Fowler, Jr., Robert E. Wiggins, Sr., Robert E. Wiggins, Jr., and Bobby G. Chrestman for the balance due on a promissory note, alleged to be thirty thousand seven hundred seventeen dollars fifty cents ($30,717.50), together with interest and attorney's fees.
The lower court heard the case without a jury and, at the conclusion of the evidence, found that as of July 24, 1981, there was due on the note the sum of twenty-six thousand six hundred thirty-eight dollars thirty-eight cents ($26,638.38); that on said date the holder of the note assigned same to Smith & Hitt without assigning its lien and thereby the security on the note was impaired to the extent of twenty-five thousand dollars ($25,000). Judgment was rendered in behalf of Smith & Hitt for sixteen hundred thirty-four dollars thirty-eight cents ($1,634.38), together with interest thereon, and ten percent (10%) attorney's fees. Smith & Hitt has appealed here and assigns three errors in the trial below. We reverse and remand for a new trial.
The assignments of error present the contentions that (1) JDM Productions & Delta Sound Studio, the partnership, maker and principal obligor on the note sued on,
was not entitled to the suretyship defense of impairment of collateral stated in Mississippi Code Annotated 75-3-606 (1)(b) (1972) and that Robert E. Wiggins, Sr. and Robert E. Wiggins, Jr., as partners in JDM, were not entitled to invoke impairment of collateral with respect to their liabilities under the partnership; (2) Bobby G. Chrestman was an accommodation maker only as to the interest of his son-in-law, Charlie Fowler, and Marion T. Smith was a beneficiary of that accommodation, hence Chrestman was not entitled to invoke the impairment of collateral suretyship defense under 75-3-606 as to Fowler's twenty-five percent (25%) pro rata partnership liability on the note; and (3) Chrestman and Wiggins, individually, and Smith, individually, were all accommodation parties to the note; Smith's individual property was collateral only in his capacity as accommodation party; Chrestman and Wiggins, as individuals, were entitled to the impairment of collateral defense for the release of Smith's individual property as security only to the extent of their recourse against Smith and his property, viz, twenty-five percent (25%).
In view of our conclusion in this case, it is unnecessary for us to make a detailed discussion of the assignments of errors and points raised by the appellant.
In August, 1979, Charles Harry Fowler, Jr., Marion T. Smith, Dr. Robert E. Wiggins, Sr., and Robert E. Wiggins, Jr., entered into a partnership agreement for the purpose of forming a general recording and production business known as J.D.M. Productions and Delta Sound Studio. The articles of partnership provided that the partners were entitled to the capital and profits of the partnership in the following percentages:
Marion T. Smith 45% Dr. Robert E. Wiggins, Sr. 20% Charles Harry Fowler, Jr. 20% Robert E. Wiggins, Jr. 15%
The partnership agreement stated that all taxes, debts, losses, damages and other expenses were to be paid out of the funds of the partnership, and in case the partnership funds were not sufficient, by the partners in equal portions. *fn1
In order to obtain capital necessary to operate the partnership and purchase equipment for its operation, the partnership borrowed $25,000 from the Peoples Bank of Indianola evidenced by note dated August 29, 1979. All of the
partners signed the note as partners and as individuals. In addition to the partners, Bobby G. Chrestman and Doris Faye Smith, the wife of Marion T. Smith, signed the note. Chrestman (father-in-law of Fowler) signed the note at the request of Smith, who refused to sign the note until Chrestman and Dr. Robert E. Wiggins, Sr. executed it.
The following collateral was given to the ...