Two propositions of law are presented by the record, as follows:,
1. Can Thomas H. Boykin show by parol evidence that he signed the $14,090.00 note to Bailey Banking Co. as surety for his brother, A. H. Boykin ?
2. Does Thomas H. Boykin lose his right of subrogation by reason of cancellation of the mortgage securing the $14,090.00 note?
In determining the merits of the first proposition the general rule is that in the hands of an original payee an endorsement may be shown to be upon certain conditions; but a bona fide holder for value before maturity and without notice is not affected by any equities existing between the original parties. Sykes v. Everett, 167 N. C., 600.
“It is well settled that the agreement upon which the endorser of another’s obligation signed, and the liability which he intended to assume, may (at least between the original parties, or those parties and holders with notice) be shown by parol evidence, and he will be held only according to such agreement and intention.” Southerland v. Fremont, 107 N. C., 570.
In Williams v. Lewis, 158 N. C., 571, it was held that “as between signers of a negotiable instrument it may be shown who is principal and who is surety provided the rights of the payee are not injuriously affected.” And, further, in Smith v. Carr, 128 N. C., 150, it is said: “However, their relationships, whether principal or surety, when questioned, become a matter of fact to be established by evidence, either written or oral, and found by the jury.” Forbes v. Sheppard, 98 N. C., *266111; Foster v. Davis, 175 N. C., 541; Kennedy v. Trust Co., 180 N. C., 225; Gillam v. Walker, 189 N. C., 189.
It will be observed that neither Finch nor Sanders was a party to the $14,090.00 note paid by Thomas H. Boykin and had no relationship whatever thereto. Sanders held a deed for one of the lots executed subsequently to the execution of the $14,090.00 note and the registration of the mortgage securing it. Pinch held a second deed of trust upon lot No. 2, which was subject to the rights of the parties in and to the $14,090.00 note and the mortgage securing it.
So that, the rights and equities of both Sanders and Pinch were subject to the rights of Thomas H. Boykin for the reason that both the deed of Sanders and the deed of trust of Finch were executed subsequently to the note and mortgage of $14,090.00 to Bailey Banking Co. Therefore, it is permissible, under the law, for Thomas H. Boykin to show by parol evidence that he was surety on the $14,090.00 note. If it should be found by the jury that he was surety on said note, then, nothing else appearing he would be entitled to the equity of subrogation, having discharged the note out of his own funds.
Pinch and Sanders contend that, even if it be established that Thomas H. Boykin was a surety, his right of subrogation is destroyed by reason of the fact that he procured the cancellation of the mortgage securing the $14,090.00 note. The principle of law applicable to this contention is thus stated by Justice Hoke in Davie v. Sprinkle, 180 N. C., 582: “As to collateral paper held by the creditor, the surety, on payment of the principal debt, is ordinarily entitled to the full equitable doctrine of subrogation, but if he pays the principal debt on which he is himself bound, whether by judgment bond or other, without the assignment as suggested, the original obligation is extinguished and he becomes the simple contract creditor of the principal.” Hanner v. Douglass, 57 N. C., 265; Liles v. Rogers, 113 N. C., 200; Tripp v. Harris, 154 N. C., 296; Liverman v. Cahoon, 156 N. C., 187.
Upon this principle of law, Thomas H. Boykin, having failed to have the mortgage assigned for his benefit, would lose his right of subrogation so far as the mortgage is concerned, but it appears from the record that the Bailey Banking Co. had reduced its note of $14,090.00 to judgment in a proceeding to foreclose the mortgage securing same. When this judgment was rendered the note, as evidence of indebtedness, was extinguished by the higher evidence of record. Gibson v. Smith, 63 N. C., 103. In other words, the judgment merged the debt upon which it was rendered. The rule is thus expressed in Wagner v. Cochrane, 35 Ill., 152, quoted with approval by Ruffin, J., in Grant v. Burgwyn, 88 N. C., 99: “It is said that by judgment, the contract upon which it is based becomes entirely merged — loses all its vitality — and ceases to be obliga*267tory upon tbe parties. Its force and effect are wholly expended, and all remaining liability is transferred to tbe judgmtent, wbicb tben becomes tbe evidence, and tbe only evidence tbat can be used in a court, of tbe existence of tbe original debt.”
Applying tbis rule of law to tbe case under consideration, we bold tbat tbe cancellation of tbe mortgage, after tbe debt bad become merged in a judgment, did not of itself destroy tbe right of subrogation. It does not appear from tbe record whether tbe judgment has been canceled or whether it has been assigned fpr tbe benefit of Thomas H. Boykin. Neither does tbe date or form of tbe judgment appear.
We therefore express no opinion as to tbe rights of tbe parties under tbe judgment. An expression of opinion as to tbis matter in tbe present state of tbe record would tend to-confuse rather than to clarify.
Eeversed.