Case ID: sc-eq_1/html/0315-01.html
Source: Caselaw Access Project
Author: {"author": "chancellor Rutledge", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Present — Chancellors IIdtsos-, Mathews and Rotiedge.
    CASElXtTSUS,
    The executors of Shubrick vs. N. Russell, executor of Livingston.
    jjECIir,T;,uioH P-9?>-
    A security is not released iv0tr_ his iia bility by the king'collate-nil security, duigfnp^tliat security,
    
      Theco e l;';: ants’ bill --'ated that Abraham Livings- , . . ion, together with Stacey Hepburn, now deceased, and J. Dorsius, were jointly bound unto complainants’ testator* Thomas Shubrick, by their two several bonds, bearing date the 30th July 1779, in the penal sum of 29,000?. of the then currency, conditioned for the payment of 145,000k. like money, on the first day of January 1780, with in-Merest from the date. That before the said bonds became payable, to wit, in August 1779, their testator died, having first duly executed his will, whereof he appointed the complainants’ executors, who qualified on the said will. That Stacey Hepburn died some years since in the state of Pennsylvania or New-York insolvent; and that the said Abraham Livingston died in 1780, in affluent circumstances, and of his will appointed Nathaniel Russell executor, who has alone qualified thereon, and possessed himself of property belonging to the said Abraham Livingston more than sufficient to pay all his debts. That John Dorsius is and has been for many years past insolvent — that as the said bonds with interest thereon remain unpaid, your orators applied to the said Nathaniel Russell to discharge iliesamc, hut he having refused to doso, they applied to the attorney at law to compel the payment thereof. That the said attorney discovering that the bonds were joint bonds, and not joint and several, applied to the attorney of said N. Russell, informed him thereof, and requested to know whether he would waive the objection which in strictness of law he might insist on from the said bonds being joint, or whether he would compel complainants to seek their remedy in the court of equity; but the said N. Russell insisted that complainants should pursue their remedy in equity, alleging that it appears from indorsements on the bonds that a bond of John McQueen was received by your orators, which if paid was to go to the exoneration of Abraham Livingston’s bond, and charging moreover the complainants with having neglected to recover the amount of the said J. McQueen’s bond, and inferring from thence that the loss should fall on the estate of complainants’ testator, and that Abraham Livingston’s estate should be freed from the debt — -whereas, the complainants insist that the bonds of the said John M‘Queen was intended by the parties to be received as a collateral security, and not a? an absolute payment. That very shortly after the ssüd bond was given, the said J. Mc Queen withdrew to the state of Georgia, from thence he went to Europe, returned again to Georgia, and there remained until he withdre w with his property to Saint Augustine. That frequent applications were made to the said John M‘Queen for payment whilst he was in Georgia, but from the disturbed state of all money transactions from the time the said bond was given until the said John M‘Queen went off to East Florida, it was impracticable to enforce the payment, and the complainants insist that they used more diligence for the receipt of the money than they were hound to do.- — . The complainants therefore pray that the said N. Russell may true answer make to all and singular the matters and things in bill charged; that he may admit assets, and be compelled by decree of the court of equity to pay what may appear to be justly due them.
    
      MARCH, 1793.
    
      The defendant admits that his testator the said Abraham Livingston, deceased, did join with one John Bor-sius as the securities of Stacey Hepburn in the bonds in bill mentioned, which said bonds were given to secure the purchase money of a certain plantation or tract of land situate on Santee river, sold by the said Thomas Shu-brick, deceased, to the said Stacey Hepburn, and that the complainants are the qualified and acting executors of the said Thomas Shubrick, deceased, whom he believes to liave died at the time, and made the will in bill mentioned. That this defendant is the qualified and acting executor of the said Abraham Livingston, and is possessed of the assets belonging to his testator’s estate. That John Borsius is at present generally thought to be insolvent, hut the defendant positively asserts that he has been informed, and believes that Stacey Hepburn in hill mentioned, is still alive and resident in the state of Pennsylvania or New-York. Defendant admits that application was made to his attorney to prevent an action to be instituted against him as executor aforesaid at common law, and that the same has been refused, founded on a conviction that complainants’ demand is illegal, and that their conduct had long since discharged his testator’s estate from all responsibility as joint obligor or security to the bonds in bill mentioned: for defendant swears that he was not only ignorant of the negociation entered into between Mr. Hepburn and the complainants with respect to John M'Quecn’s bond, but never knew or heard of the existence of Livingston’s bond, now attempted to be set up, until some time in the month of June last, when he received a letter from Thomas Shubrick, one of the complainants, a c opy whereof is filed with the bill. The defendant admits that he refuses to pay any part of the bond in bill mentioned, and trusts that .the honourable court will discharge his testator’s estate from all demands on account thereof; for that independently of complainants’ neglect to use diligence to recover the debt in the first instance of Stacey Hepburn, (instead of accepting of John M‘Queen’s bonds, and afterwards neglecting to pursue like measures with due diligence to recover the money due by John M‘Queen, by which the same is said to be lost) if application had been made to his testator in his life time after the said bonds became due, it was always in his power cither to have discharged the same, or to have indemnified himself by retaining the amount; for that in March 1780, near three months after the said bonds were due, Mr. Livingston paid to Stacey Hepburn for the purchase of the very land bought by him of Mr. Shubrick 500,000i. of the then currency: And that even at the time that the complainants took upon themselves to accept of John M‘Q,ueen’s bond, as is in bill set forth, Mr. Hepburn was in good circumstances, and fully adequate to tlic payment of his debt: or had the complainant then made known to defendant the existence of the said bonds, it was in his power to have secured 1ns testator’s estate against the same, as at the time John McQueen’s bonds were received from Mr. Hepburn, the estate of Mr. Livingston was still indebted to the latter in a sum nearly, if not equal to the amount of his securityship: And which, for want of information on the subject, this defendant lias since paid or assumed to pay, as will appear by the testimony of several persons: or this defendant might have prevailed on Hepburn, who was then competent thereto, to give more Certain and effectual means of indemnifying his testator’s estate, than what John M*'Queen’s bonds proved. That Dorsius (although he believes he is now insolvent) had resources soon after the war, ho thinks to have answered the debt, if he had been timely resorted to, or might have contributed in part. The defendant submits to the decree that may be made, but prays that the estate of Livingston may be discharged.
    This cause came to a hearing. John Price was examined as a witness: He stated that he went to Georgia in the year 1788, to settle some affairs with John Queen, and he offered him lands and negroes in payment.
    Mr. Stick proved that he forwarded to Mr. M‘Queen in East Florida a statement of debts to the amount of 20,000i. without including the interest; and that was not one half of his debts. M‘Queen left Georgia for Florida in February 1791. The whole of his property was not nearly sufficient to pay his debts. The tender law of Georgia expired on the 14th August 1790.
    Sir. Holmes and Mr. E. Rutledge for the complainants
    argued, that a person signing his name as security to a bond, makes no difference in his responsibility: He is as liable as the principal. The only use of a security so distinguishing himself on the bond is, that if he should be obliged to pay the debt, he may more easily shew his real character, and recover over from the principal. This was the opinion of the court of law in the case of Rivers •os. Kennedy. The court said that either principal or security might be sued as they could bo got at; tine holder of the bond taking a collateral security, as was done in this case by taking M‘Queen’s bond, does not extinguish the original debt, or diminish the liability of the security. It is not aprejudicetohim, but a benefit; and the renewal of that collateral bond, or taking a new for an old one, did not diminish the value of that collateral security.
    Mr. Ward for the defendant
    insisted, that Mr .Livingston, the security for Hepburn, was discharged by the conduct of the creditor. Livingston became largely indebted by a purchase to Hepburn, and great payments were made by lúm, and afterwards by his executors down to 1784. If the executors had been apprised of this de-maud, they could have protected Livingston’s estate by reserving funds, instead of paying them away to Hepburn and his assignee Mr. Hazlehurst.
    No resort has been had to the pi’incipal Hepburn — but the principal ought to be first resorted to. See 2 P. Wms. 542. 1 Vern. 196. 2 Vernon, 393, 688, 3 Atk. 91. Dyer, 56. 2 Bro. C. C, 579, Nisbet vs. Smith and others, which is a strong case to this point.
    If twopersons are jointly bound in a bond, and one dies, you cannot sue the executor of the deceased obligor, but. must have recourse to the surviving obligor. 2 Bacon, 697. 2 Vern. 99.
    Again, a person taking a collateral security, and it fails, he cannot come on a security in the original contract, having varied the nature of the debt. 2 Atk. 341. At all events, when the collateral security was taken in, 1783, it should have been strictly pursued, and the money recovered. The bond debt of McQueen might have been recovered, and Livingston the security exonerated. Instead of which, the old bond was given up to him, a new one taken, and the time of payment extended to 1785. In May 1784, Bose sold McQueen’s negroes to the amount of 50001. sterling, and other property; land was also sold. In 1785, he had still a large estate in lands and slaves, yet no steps were taken to recover the debt on bond which had been taken as a collateral security. In 1791, Mr. Shubrick saw him at Savannah, and still took no steps against him. It was the fault therefore of the executors of Shubrick that the debt from M‘Queen was finally lost, and Livingston’s estate ought to be exonerated.
    Mr. Pringle for defendant
    argued, that joint obligors (as in this case) could not be made to pay more than their respective proportions, pari passu. 2 Ventris, 348. If time join in a bond, and one or two die, the obligation survives in the nature of joint tenants, and the surviving obligor only is liable. 2 Comyn’s Digest, 318, 324. 1 Eq. Cas. abr. 93. 1 Vernon, 196. In the case of Bivers and Kennedy, (quoted on the other side) the bond was joint and several. Where a person has taken the bond of another foi’, or as collateral to, a bond due to himself, he cannot sue the bond duo him till he has shewn that ho has used due diligence to recover the money from the collateral bond and lias failed. See Domat. 377.
    
    General Pinckney for complainant
    said, no substantial objection can be made for want of parties to tbe bili, because the- proper mode of objection would have been by demurrer or plea. But neither demurrer or plea codd have had any effect, ao the bill charges that one of the parties is without the limits of the statej and the complainant has a right to have recourse-to those within the jurisdiction of the court, You may also take oat a joint execution against several persons,' bet you may order the sheriff to levy on the property of either. See 2 Comyn’s, 323.
    It is the duty of the obligor to make payment on the day the bond is due, and not of the obligee to demand payment. 3 Bacon, 693, 713. The obligee besides, could not demand payment of the principal when the bond foil due. Tbe state was then in the hands of the enemy, and the (Courts of justice were shut up. Tins accounts for some of the delay in pursuing Hepburn. Afterwards he went away. 2 Atk, 31. 2 Ves. 371. Mr. Shubrick was not bound to take payment from McQueen (on the collateral bond) in lands and negroes, as it seems his other creditors were obliged to do, which shews how difficult It was to get payments from him, and how little reliance could he placed on that collateral security.
    
    
      
       What acts an obligee may do in favour of an obligor, without releasing the liability of another obligor, especially if he be only surety in the bond, and what will amount to a release, it requires some care to ascertain. It does seem to be established, that a creditor giving further time to the principal debtor for payment, without communicating with the security, releases the surety. See Nisbett vs. Smith ..nd others, decided by lord chancellor Thurlow, 2 Bro. C. C. 579, and Rees vs. Berrington, decided by lord Loughborough, 2 Vesey jr. 540: and both are grounded on the decision of lord Hardwicke, in Skip vs. Huey, in 3 Atk. 91, and even on much older cases.
      Lord Eldon, in the case of Wright vs. Simpson, 6 Vesey, 734, expressly agrees with these cases. Bui he seems to doubt whether mere is any obligation, as between the obligee and the surety, of active diligence against the principal. He considered the surety as guarantees and that it was his business to see that the principal pays the debt, and not that of the creditor. The holder of the security may therefore, in general, exact payment of the surety. But in late cases, it has been decided, that the surety has a right to call oir the creditor to do the most he can for his benefit. And some cases have gone one step further, and required the creditor to place the surety in his situation, provided there was no risk, delay, or expense to the creditor. See Cooke’s bankrupt law, 211. 3 Bro. C. C. 237. 3 Vesey, 243.
      The subject however requires very critical examination. See the. cases collected by Mr. Cooper, in his notes to Justinian’s Institutes, 462, 3, 4, and 613. See too 6 Vesey, 805, 6, 7, exparte Gifford. 10 Vesey 409 10, &c. exparte Rushforth. See also 2 Vern. 608. 11 Vesey 22. 14 Vesey, 160.
    
   In Match 1793,

chancellor Rutledge

delivered the decree of the court.

This is a suit brought by the executors of an obligee, against the executors of a deceased joint obligor, the sur-Thing obligor being insolvent. For the defendant it was contended, that he was not liable, because the bond being joint, the survivor alone is chargeable. At law, the ob-ligee’s only remedy is against the survivor alone. In equity, the obligee has a remedy, and an equitable, though not a legal lien (claim) on the estate of the deceased obli-gor. It is objected that the surviving obligor (who is out of the state) should have been made a party. If the defendant would take advantage of this omission, he should have pleaded or demurred for want of parties; but the defendant having answered, he cannot now take advantage of it. It is not denied by the answer that the surviving obligors are insolvent, and that one of them is out of the state, if he is not dead. The case is reduced to a single question, whether, as there is no legal remedy for the ob-ligee, there is an equitable one: and undoubtedly there is— for though a joint obligation, the heirs and executors are bound by the bond, and must be answerable. It was also objected that the deceased (defendant’s testator) was only a security to this bond, and was not liable, because the obligee had varied the original contract by taking a new security, whereby the original security was discharged. The facts are as follow. The debt on the original bond was due on the 1st of January, 1780; it was notpaid. The enemy soon after got possession of the country, and did not evacuate it till December, 1782. In March, 1783, the legislature interposed andpreventedsuitsbeingbrought for recovery of debts, but permitted the demand of seen-rity. One of the obligors was insolvent, and defendant’s testator, Livingston, was dead, and he had no representative here till 1784. The obligee was also dead, and his executor could not compel payment from Hepburn, ano-then of the obligors. They did what they deemed the next best tiling, which was to demand security under the law from Hepburn. He prevailed upon Mr. M'Qucen (then in possession of great property, and in high credit) to give, his bond on the 30th of November, 1783, as additional collateral security for the debt, not as payment, or the original bonds would have been given up; and the receipts on them shew- that they were not to be considered as discharged, until Mr. M‘Q,ucen’s bond should be paid. This caséis not therefore like Skip vs. Huey in Atkins, for there the original bond was given up; nor like the case of Ratcliffc vs. Graves, Yernon, 19G, where the ad-moil bond had been given up. The complainants in those cases did not obtain relief, the bonds having been cancel-led. In the case before the court, the security is not changed nor varied; not destroyed, but strengthened. — ■ The second bond from M4 Queen was a consolidation of principal and interest, and complainant obtained a more substantial security, by taking an assignment of a mortgage of real estate. A new idea has prevailed lately, that the security is not liable for the debt, till measures are taken to recover the debt from principal. But this is erroneous. A case solemnly decided in the common pleas has recently settled that point. And moreover, that taking collateral security, will not discharge the original security to a bond. It would be a harsh doctrine to be established. There is some blame imputable to complainant for not apprising defendant of the transactions with the collateral security; but not so much as to make him lose his debt. He has done nothing to forfeit it. He pursued reasonable measures to recover from M4Queen, and could get nothing but some lands. Referred to the master to report wliat is due on the bonds, and it is decreed that the defendant do forthwith pay the amount. And that thereupon, the complainant assign to defendant the bond and mortgage taken from M‘Queen as collateral security. — • Defendant to pay the costs of this suit. Afterwards, the defendant petitioned the court for a re-hearing in the cause, which was granted; and after argument, chancel-y lor Mathews delivered the following decree of the court:

IrBCEi.'E ROOK, p. 108.

The petitioner complains, that the former decree made *■ L executor of Livingston liable without a previous enquiry, whether the assets in his hands were adequate or not. No suggestion was made at the former trial of any apprehended deficiency; but as it is now brought forward, the court is disposed to open the decree to let in the executor of Livingston, to shew the extent of assets in his hands. And as it now appears that the executor of Shubrick had extended the time of the payment of the bond of Mf Queen, the collateral security, the court thinks it right to extend the. credit to the executor of Livingston to the same periods. But the court cannot, after the renewed argument, on the petition for re hearing, sec any ground to alter the first decree, as to the debt itself; either by releasing the estate of Livingston from the payment of any part thereof, or by restricting the liability of his estate to a mere contributory share.

It was decreed that the executor should submit the accounts of his administration of the estate to the master; and that he should pay out of the assets the amount of complainant’s demand • at certain periods fixed by the, court.