Case ID: serg-rawl_16/html/0079-01.html
Source: Caselaw Access Project
Author: {"author": "Rogers, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

[Lancaster,
    May 29, 1827.]
    RUDY against WOLF and another, Administrators of DAY.
    IN ERROR.
    If the obligee, upon assigning a bond, enter into a covenant with the assignee “ to stand security for the payment of it,” this is an engagement to pay the money on the insolvency of the obligor, provided the assignee use due diligence to obtain payment from the obligor.
    What is due diligence is a fact for the determination of the jury, upon the whole evidence submitted to them.
    On a writ of error to the District Court of York county, it appeared the defendants in error, Jldam Wolf and Magdalena Day, administrators of Frederick Day, deceased, brought this action of covenant against George Rudy, the defendant in error, on an assignment of a bond given by Jacob Lichtenberger to the said George Rudy, dated the 21st of November, 1SI4, conditioned for the payment of three hundred and fifty dollars.
    The assignment,- which bore date the 20th of May, 1816, was in these words:—
    “Know all men by these presents, that for a valuable consideration to me in hand, I do hereby assign all my right, title, interest, and claim of the within bond to Frederick Day, which bond I stand security to the said Day, for the payment of, as witness my hand and seal, &c.”
    The declaration contained an averment that the said George did covenant and agree with the said Frederick, that in case the said Jacob should neglect and fail to pay the said sum of money due on the said bond, that he the said George would pay the same. It also contained an averment of the non-payment of the money by Lichtenberger and of his insolvency.
    It appeared from the evidence given on the trial, that in the year 1817, Rudy told Day, that he would be security no longer, and that he must push Lichtenberger for the money; and the several years after, Day had declared that Rudy had given him notice to push Lichtenberger, or he w'ould no longer be bail, to which he, Day, replied, “ If you wish to have Lichtenberger pushed, come to my house — pay me the money, and I will give you the bond, and you may push him yourself. I will not push him.”
    On the 7th of Jipril, 1824, Day obtained judgment, upon the bond against Lichtenberger, who on the 16th oí August, 1825, was discharged under the insolvent laws: at what term he became insolvent did not appear. Pie had, prior to his discharge, both real and personal property,, but was considerably indebted. When he applied for the benefit of the insolvent laws, he returned no property.
    The court below having charged the jury that the plaintiffs were entitled to recover the principal and interest due upon the bond, a verdict was returned accordingly; and the defendant took a writ of error.
    
      Gardner and Wadsworth, for the plaintiff in error,
    contended that the assignee of the bond, was bound by the nature of the covenant upon which the suit was brought, to use all the means in his power to recover the money from the principal debtor; and unless he showed that he had done so, he had no right to resort to the defendant, who was merely a surety. They cited 4 Dall. 133. 10 Johns. 587. 7 Johns. 332, 339. 1 Madd. Ch. 233. 5 Johns. 176. 13 Serg. & Rawle, 157. Chitty on Bills, 130, 316, 317. 15 Johns. 68.
    
      Barnitz and Durkey, contra,
    
    said that this was not a case in equity, but at law. That the covenant was a positive engagement by the assignor to pay the money, and therefore the assignee was not bpund to sue the obligor. It was quite enough that he offered to permit the assignor to sue.
   The opinion of the court was delivered by

Rogers, J.

The 21st of November, 1814, Jacob Lichtenberger gave a bond for three hundred and fifty dollars to George Rudy, which George Rudy assigned for a valuable consideration, to Frederick Day.

This is an action of covenant brought by the administrators of Frederick Day, on this assignment. The assignment is in the words following:—

May 20th 1814. — “Knoiv all men by these presents, that for a valuable consideration to me in hand paid, I do hereby assign all my right, title, interest, and claim of the within bond, to Frederick Day, which bond, I.stand security to the said Day for the payment of, as witness my hand and seal,” &c.

The breach assigned in the declaration is, that the said George did covenant and agree with the said Frederick, that in case the said Jacob should neglect and fail to pay the said sum of money due on the said bond, that he the said George would pay the same. The declaration, also, contains an averment of the nonpayment of the money, and of the insolvency of Jacob Lichtenberger.

The question to be determined is, what is the character of the writing declared on? Is it an absolute engagement on the part- of Rudy, that if Lichtenberger neglect or fail to pay the money in a reasonable time, that he will pay it for him, or is it a conditional engagement to pay the money on the insolvency of Lichtenberger? It may be remarked that the latter seems to be the construction of the plaintiffs, otherwise the averment of the insolvency of Lichtenberger in the declaration was wholly unnecessary.

After consideration, I have no doubt of the legal construction of the assignment. It is an engagement to pay the money, on the insolvency of Lichtenberger, provided Day uses ordinary diligence for its collection. If Day has been guilty of gross negligence, or has not used due diligence, and in consequence the money has been lost, it would clearly be a discharge of Rudy. The assignment amounts to a guarantee, that if Lichtenberger became insolvent, ánd Day used due and ordinary diligence, then he would pay the amount of the money with its interest.

It does not, in my apprehension, come within the scope of the eases of principal and surety, nor can I perceive a shadow of reason for considering Rudy as a principal debtor, and liable in the first instance to Day. Rudy sold Day the bond, and warranted the recovery of the money if due diligence was used. And this position is rather sustained than weakened by the case of Hunt’s Administrators v. Adams, cited by the defendants in error. The Chief Justice says, “if the note had been made by Chaplin, and delivered to Bennet, the intestate, and afterwards the defendant had been induced to guaranty the payment, it would have been necessary to consider the defendant’s objection.” 5 Mass. R. 361, 362.

It appears from the evidence, that Lichtenberger is now insolvent, but when he became so, does not appear; that Day refused to push him, although repeatedly requested to do so, and at the same time stated, “ If you wish Lichtenberger pushed, come to my house, pay me the money, and 1 will give you the bond, and you may push him yourself. ”

This was founded on the idea, attempted to be sustained here, that Rudy was absolutely bound to Day, which it appears to me most apparent that he was not. It was the duty of Day to push Rudy in a reasonable time, and with reasonable diligence. If any loss accrued by neglect, it should be borne by Day and not by Rudy. He had no right to require Rudy to pay him in the first instance.

It is unnecessary for the court to examine the evidence particularly. It is sufficient if it be laid down, that due diligence to recover the money from the obligor, must be used; and 'what is due diligence, must always be a part of the determination of a jury upon the whole evidence submitted to them.

This was the rule adopted in Virginia, on the covenant implied from the word assigned, which I consider as in point on the express covenant here. Mackie’s Executors v. Davis, 2 Wash. R. 226, since recognized and adopted by Judge Roan, in the case of Berksdale v. Fenwick, 2 Hen. & Munf. 113, Note.

Judgment, reversed, and a venire facias de novo awarded.