Case ID: me_4/html/0492-01.html
Source: Caselaw Access Project
Author: {"author": "Preble J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Knight vs. Gorham & Trustee.
    Where one', for an agreed premium, entered into a contract with the payee of a noto, to guaranty its payment at maturity by the maker, but without the request or knowledge of the latter ; and afterwards the maker, being in failing circumstances, but still ignorant of the guaranty, was induced by the payee to convey property to the guarantor, as a friend, in order to make provision for the payment of the note ; — it was holden that the latter could not retain this property against a foreign attachment, the guaranty having created no contract between him and the maker of the note, and the conveyance of the property being without consideration.
    It appeared in the disclosure of George Willis, who was summoned as the trustee of the defendant in this case, that on the 15th of May 1826, Gorham, the defendant, gave to Millions & Lmdit Ms promissory note for $608 02.payable in six month' Ill July following, Millions & Leavitt being alarmed for the safety of several debts due to them, and of this among the others, procured Willis, for an agreed premium, to guaranty their punctual payment. This was done by a separate writing, and it was agreed that the transaction should be kept secret, lest it should injure the credit of the several debtors. The premium, given for the guaranty of this debt was about twenty-five dollars. In about a month afterwards Gorham failed ; and was at that time induced by Millions & Leavitt, at the suggestion of Willis, to place in the hands of the .latter the schooner SeaJUmcr, and her fare of fish, to secure the payment of this debt. But it did not appear that he knew any thing of the guaranty till some days after the transfer ; nor was ary notice taken of the debt in the transfer of the property, which was made by an absolute conveyance to Willis, whe, at the same time, accepted a draft, payable to Gorham's own order, for the amount of the proceeds, after paying any demands he might ’¡ave against Gorham, fie stated* however, that at this time ha had no such demand. The note was then in ene, of Os© banks, where it had been discounted, on the indorsement of the payees alone. Soon after this transaction Willis informed the president of the bank that he should see the note paid at its maturity; tuid h© accordingly paid it, some time after ho was nrs trapico, in this action. The value of ike property ttreatsihnred to biro did not exceed ilia amount of the iíOÍO.
    
    Willis, for the trustee,
    insisted upon his right to retain the property. The transaction was Iona fide, and the property was placed in Ms hands expressly for the payment of that debt. Upon the faith of the assignment, the trustee promised to pay the debt io the bank, and afterwards actually paid it. The object of the debtor was to provide funds for its payment ; and it was of no consequence to him in whose hands it was placed, or who was liable as guarantor or indorser. His object, which was a ¡awful one, is effected by applying the funds to that specific purpose j and they ought not now to be withdrawn from the possession of m. innocent party, to be applied at his expense to any other. 
      Owen v. Estes 5 Mass. 330. Cushing v. Gore 15 Mass. 69. Stevens v. Bell 6 Mass. 339. 16 Mass. 275. 1 Pick. 462. 16 .Mass-476. Van Staphorstv. Pierce 4 Mass. 258.
    Fessenden, Deblois and Anderson, for the plaintiff,
    denied the right of the trustee to retain the property, on the ground that Siis guaranty of the debt created no contract between him and Gorham ; and that he stood merely in the situation of a creditor, happening to have specific articles belonging to the debtor in his hands. Alien v. Megguire & trustee 15 Mass. 490.
   Preble J.

in delivering the opinion of the court, observed that the conveyance, instead of being made for the benefit of Willis, was evidently intended for the security of Millions & Leavitt as payees of the note. It was manifest that Gorham, at the time of the transfer, had no knowledge that Willis had guarantied the payment ; and between them, therefore, there was no privity, and no contract created by that guaranty. Had Willis been called upon for the amount of the note, by reason of his separate stipulation, the payment of that amount would not, of itself, have given him a right of action against Gorham. It was a distinct matter, collateral to the note ; between other parties, and upon another consideration. There being therefore no consideration moving from Willis, for the conveyance of the property in question, he holds it as the trustee of Gorham, and must be charged as such in this action,