Case ID: ohio_2/html/0289-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James and Richard Loines v. James Philips.
    Original application of insolvent debtor is ex parte.
    
    When application of an insolvent debtor is dismissed upon bearing, on the ■ ground that be was not two years a resident, security is liable.
    This was an action of debt', upon a bond executed by the defendant, as security for Stephen Loines, upon his application for the benefit of the act for the relief of insolvent debtors.
    The declaration set out the bond, the condition of which was, that the applicant, Stephen Loines, “ should faithfully assign all his property, for the benefit of his creditors, to such trustee as the court may appoint. The defendant pleaded seven pleas, some of which were demurred to, and to others there were replications and rejoinders, and demurrers again, presenting all the complexity and nicety of special pleading. The state of facts upon which the judgment of the court was required, is as follows: Stephen Loines, being arrested upon mesne process, in October, 1822, applied to the court of common pleas of Boss county, then in session, for the ^benefit of the act for the relief of insolvent debtors. The usual order was made, that it appearing to the court that the applicant had been two years a resident of the state, he should be discharged out of custody upon giving a bond, with security, to assign his property to such trustee as the court might appoint upon the final hearing. The defendant, with the applicant, executed the bond in question, and the applicant was discharged out of custody.
    The regular notice was given, and at the next term the applicant appeared in court, and applied to have a trustee appointed, that he might make the assignment of his property, in compliance with the condition of his bond. The plaintiffs in the action also appeared, and objected to the appointment of the trustee, upon the ground that the applicant had not, in fact, been two years in the state, and, therefore, was not entitled to the benefit of the act for the relief of insolvent debtors. This fact being made out to the satisfaction of the court, they refused to appoint the trustee, and made an order dismissing the petition. The question was, whether, upon this state of facts, the plaintiffs were entitled to recover ?
    Douglas, for the defendant, contended:
    That the defendant, a mere surety, was not liable upon this bond, because the performance of the condition was prevented and rendered impossible, by the interference of the plaintiffs, and by the act of the court.
    Conditions annexed to personal contracts are to be interpreted according to the real intention of the parties. Sir T. Raym. 464.
    If a party undertake that a stranger shall do this or that, and the stranger refuses, the obligation is broken, unless the refusal be procured by the other party. But if the obligation be, that the obligor will do an act upon the performance of another act by a stranger, the obligation is saved, if the first act be not performed. 1 Saund. 216; 1 Term, 642; 6 Term, 200.
    Had the defendant undertaken that the court should appoint a trustee, then the obligation would be broken, if such trustee were not appointed. Even then the interference *of the plaintiff, to prevent the appointment, would have saved the obligation; but here is no such undertaking.
    The court refused to appoint a trustee, thus rendering it impossible that the condition to assign should be performed. The undertaking of the security was only that the applicant should do what the law required him. If the law did not require him to assign, but rendered it impossible for him to do so, the security ought not to be subjected. A security can not be charged unless brought within the strict letter of his undertaking. 9 Wheat. 680.
    
      Leonard, for plaintiff:
    The defendant has not performed the condition, and must, therefore, be liable, unless he is legally excused. He would be excused, if the condition was manifestly impossible at the time the obligation was made. But this is not the case.
    So he would be excused had the performance become impossible by the act of God, as by the death of the petitioner; or if rendered impossible by the act of the obligee, or by some subsequent legislative enactment. The defendant brings himself within none of these rules. The petitioner knew all the facts of the case, including the very fact that prevented the appointment of the trustee. The defendant stands on precisely the same ground.
    The suggestion that the act of the court prevented the performance is but a more plausible mode of stating the proposition. The appointment of the trustee by the court was refused, because the facts of the case did not warrant such appointment. They had no discretion or power over the subject. The fault was in the petitioner, who wrongfully obtained his release from custody, which was the very case the bond was given to cover.
    Brush and Fitzgerald, in reply, made two points:
    1. Is performance excused by the facts of the case?
    2. Are not the plaintiffs estopped by the record of the court, at the time the bond was given, from alleging that Stephen Loines was not two years a citizen of the state?
    *Upon the first point, they argued that the order of the court directing the discharge, upon giving the bond, was the basis of the obligation, and it was entered into by the security in good faith, confiding in the truth of the facts set forth in that order. That if in this there was mistake or error, it could not affect the security, nor charge him on the bond. They maintained that upon any other hypothesis, the proceeding was but a trap to deceive and inveigle honest men into unexpected liabilities.
    Upon the second point, they contended that the facts set forth in the order first made were conclusive as to the matters decided, and that upon the second hearing the only subject of consideration was the fairness of the petitioner’s conduct, and the fidelity of the schedule he might present; that, therefore, the plaintiffs were estopped from alleging the matter of their replication, that the court had .made a subsequent order deciding the same facts different-ly. The plaintiffs were estopped, and the defendant was not, for this reason. They were parties to all the proceedings; the defendant was neither party nor privy. He could not be concluded by the second order. But had a right to contest the facts upon which it was grounded. To these points they cited 10 Mass. 164; 11 Id. 193; 14 Id. 222; 17 Id. 365; 14 Johns. 81.
   By the Court :

The application of a debtor in custody, under the act for the relief of insolvent, debtors, in 1822, when this bond was taken, was altogether ex parte. It was only after the petition was filed, the order made, and the bond taken, that notice was to be given of the proceedings. The object of that notice was to bring in the parties interested to contest the right of the applicant to the relief sought. The facts assumed in the first order can not, therefore, conclude anybody.

The bond is required in the first place, for the security of the plaintiff in the action, that he shall lose nothing by discharging the defendant out of custody; the security of all the debtor’s creditors is a secondary object. The applicant can not be admitted to obtain his discharge upon false ^grounds, and then protect himself upon the plea of ignorance. The power of the court to appoint a trustee,- receive his assignment, and finally discharge him, depended upon the fact that he had been two years a resident of the state. The court were not bound to investigate this allegation when it was made. But it was the right of those interested to make this investigation when they came in under the notice. Parties were then, for the first time, properly before the court, to litigate the applicant’s right to a discharge. The order made, upon that litigation, is the first adjudication between the parties, and it is the first proceeding that concludes them.

The opposition made by the plaintiffs to the appointment of a trustee, and the acceptance of the assignment, is not of that character which discharges the obligation. No act of a plaintiff pursuing and insisting upon his legal rights, can be attended with such a consequence. It is an illegal and a mala fide interference on the part of the plaintiff, that excuses the performance. Here the plaintiffs did nothing but require a legal decision upon facts presented to the court. And this they had a right to do without prejudice to any matter in the case.

The applicant voluntarily undertook to do that which he knew the law did not permit. His object was to obtain a benefit for himself to the prejudice of another’s rights. For this purpose, he imposed upon the court a statement of facts that did not exist. The truth is elicited, and the applicant's purpose is defeated. This can not be a case where the performance of the undertaking may be excused.

The defendant, Philips, was a security only, and it is insisted that he shall not be prejudiced by an error or mistake of the court. But how can he separate himself from the applicant, his principal? He joined him in the undertaking, and must stand or fall with him. He volunteered his aid to procure the applicant’s discharge from custody, at the suit of the plaintiffs. If he did this upon a false statement, surely he to whom it was made, and upon whom it operated so as to produce confidence, ought to suffer, not the plaintiffs, who had no control over the subject, who ^legally were not parties, and who reposed no trust whatever. The error of the court was induced by the applicant. It operated to his advantage, and to the prejudice of the plaintiffs. The security, and not the plaintiffs, incurred the risk. The court are all of opinion that the plaintiffs are entitled to recover.

Judgment for the plaintiffs, and the cause remanded to the Supreme Court of Ross county, for an inquiry of damages.