Case ID: sc-eq_17/html/0508-01.html
Source: Caselaw Access Project
Author: {"author": "\n      \n      Per Curiam.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

D. R. Baubien vs. George M. Stoney.
    
    1. Defendant, and one Z., a master workman, entered into a covenant in February, 1838, by which the latter undertook and obligated himself to build and finish for the former, by the 1st of May, 1839, a dwelling house and out buildings; to furnish materials of every description, for commencing and completing the same, in a workmanlike manner. Defendant, on his part, undertaking to pay the said Z., when the work should be finished, and not before, the sum of thirteen thousand dollars. On or about the time aforesaid, and in pursuance of his agreement, Z. commenced and prosecuted the work, until about the 20th of July, 1839, when he abandoned it. On the 13th December, 1838, Z. applied to defendant for a loan of $700, which he consented to make, provided Z. would give his note for the amount, with an indorser, payable 1st May, 1839, the day the work was to be completed. Immediately after, and upon Z’s. request, complainant wrote his name in blank, on the back of a note signed by Z., and made payable to defendant, or order, at the time above stated. The money was advanced, and in October, 1839, complainant was sued on the note, as drawer. A recovery was had against him, which was sustained by the Law Court of Appeals. Between the date of the note. (13th Dec. 1838,) and the time at which the work was abandoned, defendant paid to Z., on the 11th February, 1839, $200 as an advance on the contract, and at other times, between said periods, about $4,690, to mechanics in Z’s. employment, and other persons, for work done, and materials furnished.
    2. It was alleged, on the part of complainant, that the advance was for the purchase of materials for the buildings, and so used, but denied in the answer; and although, in the absence of the denial of the defendant, there were grounds for conjecture that the fact was as stated, yet it was too' vague to amount to more than circumstantial testimony, and could not defeat the answer. -f
    
    3. As defendant, in his answer, admitted a payment to complainant, and also, payments to divers mechanics and other persons in his employment, for work done and materials furnished in the execution of the contract, and as he was entitled, by the terms of the building contract, to hold the whole price of the work until it should be finished, it was insisted that defendant had a security in his own hands, which, to the extent of the sums paid, was parted from to complainant’s prejudice, who was, therefore, discharged. But, held by the Court, that as the money was paid on a contract entirely independent of that made by complainent, the ground taken could not be sustained. It might have been otherwise, if complainant had engaged for the completion of the work by Z., and had.suffered on that contract, or been held responsible for it.
    
      4. A surety, in order to claim a discharge, must have some connexion or privity with the money paid over, or security parted from.
    5. A security given up, must, in order to discharge a surety, he a real and valid thing; something available, and enforcible, in law.
    6. Complainant not concluded by the result of the trial at law, the law court regarding him as a co-maker, and not having received the equitable grounds insisted on in the bill as grounds of defence.
    The bill states, that on or about the-day of February, A. D. 1838, one John M. Zealy, a master workman, and George M. Stoney, entered into a contract, by which the said John M. Zealy bound himself to build and finish, on or before the -— day of May, which would be in the year 1839, in the town of Beaufort, for the said Geo. M. Stoney, a large two story frame house, and out buildings, cfec.; and to furnish the materials of every description, necessary for commencing and completely finishing the said work, in a faithful and workmanlike manner. And the said George M. Stoney covenanted, on his part, among other things, to pay the said John M. Zealy therefor, when the said house, (fee. should be completed and finished, and not before, the sum of thirteen thousand dollars.
    The bill further states, that the said John M. Zealy, on or about the time aforesaid, and in pursuance of his aforesaid covenant, commenced to build the dwelling house and out houses, &c., in the town of Beaufort, for the said Geo. M. Stoney, and continued to work thereon, furnishing, from time to time, large quantities of materials of all kinds, and which were used in and for the construction of the said houses, (fee., until about the 20th day of July, in the year 1839, when the said houses, (fee., being nearly completed, the said John M. Zealy, for reasons not known to complainant, was either compelled by the said George M. Stony to abandon the work, or of his own accord refused further to proceed therewith; but long previous to the time of the said abandonment, complainant, on or about the 13th day of December, A. D. 1838, the said John M. Zealy, being in want of funds to purchase other materials for the said work, applied to the said George M. Stony for an advance of S|700, which the said George M. Stony consented to make, provided the said John M. Zealy would give his note for the amount, with an endorser, payable on the 1st day of May, A. D. 1839, being the day on which the said John M. Zealy had bound himself, under a certain penalty, to complete the aforesaid contract.
    The bill further states, that shortly after, at the request of the said John M. Zealy, and to enable him to obtain the said advance, complainant wrote his name in blank, on the back of a note signed by the said John M. Zealy, and drawn in the words and figures following: “$700. On or before the 1st day of May next, I promise to pay to George M. Stoney, or order, the sum of seven hundred dollars, for value received. Beaufort, 13th December, 1838.” Which note, so indorsed, was delivered by the said John M. Zealy, on or about the day of the date thereof, to the said George M. Stoney, who thereupon advanced, or loaned, to the said John M. Zealy, the aforesaid sum of $700; but the said George M. Stoney then well knew that the said money was to be used for the purchase of materials, and that it was afterwards so applied, and that the said materials therewith purchased, were all used, either by the said John M. Zealy, or others, to and for the use of the said George M. Stoney, in the construction and building of the aforesaid houses. And the said George M. Stoney also well knew, that complainant derived no kind of benefit or advantage from the said loan, or advance, but that, in fact, he was, as lie intended, merely a surety for the re-payment of the said sum of money, only in case the said John M. Zealy should fail to indemnify the aforesaid George M. Stoney, by his work and labor under the aforesaid covenant, or re-pay him otherwise.
    The bill states, that on or about the --day of October, A. D. 1839, the said George M. Stoney commenced a suit in the Court of Common Pleas, for Beaufort district, against complainant, as drawer of the said note, and at April term of the year 1841, under the charge of the presiding Judge, “that complainant, by his indorsement, had made himself liable as drawer of the note, in the first instance,” the jury found a verdict for the said George M. Stoney, for the full amount of the principal and interest; from which charge and finding the complainant hath, nevertheless, appealed, and his appeal is now pending, to be heard at the next regular term of the Appeal Court of Law, in Charleston ; but complainant has lately, and since the aforesaid trial, discovered, and believes that he shall, by very satisfactory evidence, be able to shew, that between the day of the date of the said note, and the time of the abandonment of the said work, in July, 1839, the said George M. Stoney paid, in cash, to the said John M. Zealy, himself, and to his orders, from time to time, the entire balance which he supposed was due to him under and by virtue of the aforesaid covenant, being a sum, in all, greatly exceeding two thousand dollars, notwithstanding the said George M. Stoney well knew that the said John M. Zealy was then, as he is now, and has been ever since, hopelessly insolvent, and therefore that complainant did look to the means which, at'the date of the said note, the said George M. Stony had in his own hands, or would have before the said note became due, of procuring satisfaction of the said note, as complainant’s only indemnity against his liability as surety for the said John M. Zealy.
    The bill states, that complainant has frequently applied to the said George M. Stoney, in a friendly manner, and representing the foregoing facts, many of which have only been recently discovered by complainant, and also that the agreement or understanding between him, the said George M. Stoney, and the said John M. Zealy, made at the time of the aforesaid loan, or advance, was that the money which he then owed, and would thereafter owe, to the said John M. Zealy, under or by virtue of the aforesaid covenant, should be the first, and if sufficient, the only security for the re-payment of the said sum of $700, requested him to stay all further proceedings at law, in his aforesaid action against complainant, or enter satisfaction thereon, for the aforesaid verdict; with which reasonable request complainant well hoped that the said George M. Stoney would have readily complied, as, in equity and good conscience, he ought. But the said George M. Stoney not only refuses to comply therewith, but threatens and will, as complainant believes, unless restrained by the injunction of this court, should complainant’s appeal be dismissed, proceed to enter his judgment and execution, and levy upon complainant’s property for satisfaction.
    
      To the end that the said George M. Stoney may answer, and that he may discover and set forth the several sums of money paid by him to the said John M. Zealy, or to his order, between the 13th day of December, A. D. 1838, and the 20th day of July, A. D. 1839, and produce and exhibit to this court, the aforesaid deed of covenant, made and executed between him, the said George M. Stoney, and the said John M. Zealy, in February, in the year 1838; and that the said George M. Stoney may be personally enjoined from entering up his said judgment against complainant, or otherwise using the aforesaid verdict; and that complainant may be discharged from all and every responsibility as surety for the said John M. Zealy, on the said note, and have such other and further relief touching the premises, as your Honors shall deem meet. Bill prays writ of subpoena and injunction.
    
      The answer of George M. Stoney
    
    Admits that be did enter into a contract, under seal, with one John M. Zealy, of the import and effect set forth by complainant, but that the same, although bearing date the 26th of February, A. D. 1838, was not executed until the July following; and that the said John M. Zealy did, in the early part of the spring, commence the building of a dwelling house, and out houses, for defendant, in the town of Beaufort, and continued working thereon, although very slowly and negligently, until some time in July, A. D. 1839, when he abandoned the work, without assigning to defendant any cause for so doing, leaving a considerable part of said wmrk unfinished, wdiich hath continued incomplete to this day. He admits that subsequently to the 13th of December, A. D. 1838, to wit, on the 11th of February, A. D. 1839, he paid to the said Zealy the sum of $200, as so much advanced on his said contract, and that between the said 13th of December, A. D. 1838, and the July following, he paid to divers mechanics, in the employment of the said John M. Zealy, and other persons, for work done and materials furnished in the execution of said contract, about the further sum of $4,690. He admits that he has obtained a judgment at law against complainant on a certain note, in the words and figures set forth by complainant, and that the verdict of the jury, under the charge of his Honor, Judge O’Neall, is now under appeal, on motion of complainant. But this defendant doth absolutely deny that the sum of $700, paid by this deponent, to the said Zealy, on the 13th of December, A. D. 1838, and for the loan of which this defendant took said note, had any reference, bearing, or relation whatever, to the building contract, or any advantage of indemnity this defendant had, or might have, thereby. He denies that he ever understood so himself, or that he ever heard the said Zealy or complainant so understood the matter.
    He was applied to by the said Zealy for a loan, and a loan simply, on the credit of complainant, whose name he found written on the back of said note, which was .sent by the said Zealy, enclosed in a letter, to this defendant, from Beaufort, to this defendant’s plantation on Hilton Head. The said Zealy never stated in his said lettei*, which is now unhappily lost, for what purpose he wanted the money, nor does this defendant now know for what purpose he wanted it, or how he spent it. Indeed, so far from this defendant’s having the benefit of said loan, as complainant charges, he has been informed that complainant received a part of the proceeds thereof, for his own use. But he positively denies that the payments made by him, to the said Zealy, and to others, by his orders, subsequently to the 13th December, A. D. 1838, were unknown to complainant before the institution of this defendant’s suit at law. On the contrary, he avers that the said Zealy, on the trial of said cause, was put on the stand by complainant, and fully and particularly interrogated concerning the matter in dispute with complainant. And this defendant submits whether, on a pretence of right so shallow, this honorable court will entertain j urisdiction of complainant’s cause, after the same hath been solemnly and fairly adjudged at law. And this defendant denies all combination, <&c.
    The cause came on to be heard before his Honor, Chancellor Johnston, Beaufort,.May Term, 1842, who delivered the following decree:
    Johnston, Ch. The bill and answer state the case. The only evidence offered at the hearing, was the report of the trial at law, which was affirmed upon appeal, and the two letters from the defendant to the plaintiff.
    
      Hilton Head, 14th December, 1838.
    “ Dear Sir : — By man Prophet, I have, in accordance to your request, inclosed in a separate package, sealed, seven hundred dollars, which I hope will reach you in safety. I have received your obligation with Mr. BeaUbien’s endorsement for the amount remitted you. In conclusion, allow me to remark, that now you are in possession of lumber sufficient to complete your contract with me, that you be advised by me, and dispose of none, to any person whatever, until you finish your contract. Your basement story, all of your fences, and your cross fences, and your out buildings, will take a great deal of lumber; and you should look closely to this fact, that when the whole of the money is expended, resources through me must stop; and I beg that you keep in mind the items yet that will require funds to procure' them, and that too, exclusive of your workmen’s hire. I should say that it will take all of 40,000 feet of lumber, at least, to finish for me ; that is, to take it as you find it, out of the rafts, &c.
    GEORGE M. STONEY.”
    “Capt. John M. Zealy, Beaufort.”
    
      “Hilton Head, 3d May, 1839.
    
      D. R. Beaubien, Esq.
    
    Dear Sir In conformity to the usages and customs of business, I hereby notify you that the note given in my favor, against Capt. John M. Zealy, for seven hundred dollars, for which you are indorser, came due on the 1st inst.
    Respectfully, &c. GEORGE M. STONEY.”
    I think it sufficiently appears from these letters, that the plaintiff was merely surety. The court of law, it appears, not being able to regard him in the light of an indorser, was compelled to consider him as a co-maker of the note; and not finding in the instrument evidences of suretyship, cannot have received the equitable grounds insisted on in the bill, as grounds of defence, on the trial at law. The plaintiff is not, therefore, concluded by the result of that trial.
    
      The first position of the plaintiff is, that the money was advanced for the purchase of materials for the buildings, and was so employed by Zealy. This the answer positively denies. There is much in the defendant’s letter of the 14th of December, the day succeeding the date of the note, to countenance the suggestion that the money was loaned for the purpose mentioned, but it may be otherwise. The letter certainly does not say so in terms; and although it might furnish sufficient ground for conjecture that the fact was as stated by the plaintiff, in the absence of the denial of the defendant it is too vague to amount to more than circumstantial testimony, and cannot defeat the answer.
    The next ground taken by the plaintiff, is based upon the following admission in the answer: “7th,” (the defendant,) “admits that subsequently to the 13th of December, 1838,” (the date of the note,) “to wit, on the 11th February, 1839, he paid to the said Zealy, the sum of two hundred dollars, as so much advanced on his said contract, and that between the said 13th of December, 1838, and the July following, he paid to divers mechanics, in the employment of the said Zealy, and other persons, for work done and materials furnished in the execution of said contract, about the further sum of $4,690.” On this the plaintiff contends, that by the terms of the building contract, the defendant was entitled to hold the whole price of the work until it should be finished, and, therefore, held a security in his hands, which, to the extent of the sums above mentioned, he parted from, and thereby discharged the plaintiff. The case of Law vs. The East India Company, 4 Yes. 814, is relied on to sustain this position ; if that case is applicable to this, it does sustain it. But there is this distinction between the cases, that in the former, the fund parted from was paid over to the principal in the contract, to which taw was surety. In this case it was paid on one entirely independent of the contract made by Beaubien. The cases would be parallel, if Beaubien had engaged for the completion of the work by Zealy, and had suffered on that contract, or been held responsible for it. “I have never known,” says the Lord Chancellor, in Eyre vs. Everett, 3 Cond. Eng. Ch. Rep. 161, “a case in which, when a principal and surety on the same bond, a dealing with the principal by considering him as a debtor in another sum of money, or on another security, was held to discharge the surety in the first obligation.” I think the surety, in order to claim a discharge, must have some connexion or privity with the money paid over, or security parted from; and I perceive none here. It would embarrass the affairs of men too much for the practical purposes of life and of business, to say that one holding a note on two should not voluntarily pay a note due by him to one of them; and that is, substantially, this case.
    The argument in this case is, that the plaintiff is prejudiced by the payments voluntarily made by the defendant to Zealy, when, by the terms of the contract, he might have held the money until the work was completed. If the plaintiff had guaranteed the building contract, and the defendant, after parting from the money, had sued him on his guarantee, for the default of Zealy, he might have been prejudiced. But how is he worse off for the payments made 1 If the defendant had withheld them, as owing nothing to Zealy. because the work was not finished, how could the plaintiff, any more than Zealy, have turned the money thus withheld, to his own account, in satisfaction of his note 1 Clearly the fund out of which the payment was made, constituted no security for the plaintiff, until the money was earned. It is said, if the defendant had refrained from the payments, that might have compelled Zealy to finish the work. It might, and it might not. A security given up, must, in order to discharge a surety, be areal and valid thing; something available, and enforceable in law; not a flimsy and conjectural matter, whose efficacy is merely in the moral affections of the principal. But, at the most, upon any view that can be taken of the matter, the plaintiff' could only insist upon a discharge, to the extent of the $200 paid to Zealy on the 11th ofPebrua-ry. The balance of the $4,690, according to the admission, was advanced for materials, and to under vvorkmen for wages; that is to say, in substance, Dr. Stoney, who was entitled to call on Zealy to furnish the materials, and the work, did it himself, so far as money reached; and how did that injure the plaintiff'?
    The plaintiff’s real hardship is not that any security has been parted from upon which he ever had an existing equitable claim, but that, by an unexpected construction given to his endorsement, at law, he was held to be a principal in place of an indorser. I do not perceive that even in that, he has actually sustained any injury; but if he has, this court has no control over the matter.
    It is ordered that the bill be dismissed.
    
      The complainant appealed;
    
    1. Because as the complainant, D.R. Beaubien, was bound to the defendant, George M. Stoney, merely as a surety for the payment by Zealy of his note, on the 1st day of May, 1839, the payments admitted to have been afterwards made by the defendant to Zealy, of monies amounting to $4,800, which the defendant ought to have retained, and applied in the first place to the extinguishment of the said note, operated thereon as a discharge to complainant.
    2. Because the building contract set forth in the bill, and admitted in the answer, and in the performance of which the said Zealy had long been, and was actually engaged, at the time of the undertaking of the complainant, was regarded, as well by the complainant as by the defendant, as security for the payment of Zealy’s note, but whether so regarded or not, it was a security common to both defendant and complainant, with which the defendant had no right to part.
    3. Because the complainant’s evidence established the several allegations of the bill, which were either denied, or not admitted by the answer, and no evidence offered by the defendant; the case, therefore, made by the bill and answer alone, and upon which a Chancellor at Chambers, after argument, had ordered an injunction, not having been barred, except in favor of the complainant, his order ought to have been continued and made perpetual.
    4. Because the decree is, in other respects, erroneous, and ought to be reversed.
    Tremlle, appellant’s solicitor. E. jRhett, contra.
   Per Curiam.

The report of the commissioner, made under the order of the court, has afforded no further information as to the matter in controversy.

We, therefore, concur in the decree of the circuit court. Appeal dismissed.