Case ID: mass_27/html/0539-01.html
Source: Caselaw Access Project
Author: {"author": "Putnam J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The President &c. of Gloucester Bank versus David Worcester.
    The maker of a note which was indorsed, made a general assignment of his property in trust to pay his debts, which was executed by the holder and by the indorser of the note, and which contained a general release of all claims against the assign- or, t( provided that nothing contained in the assignment should be construed to impair or affect any lien or pledge theretofore created or obtained as security fora debt or claim due from the assignor.” It was hcldt that the security by the indorsement was 66 a lien or pledge ” within the meaning of the proviso, and that the release of the maker did not discharge the indorser, he having agreed to the release by becoming a party to the assignment.
    Assumpsit upon a promissory note given by Winthrop Sargent to the defendant, dated November 11th, 1828, for $ 3600, payable in fifty-seven days, indorsed by the defendant and Judith Worcester. The cause was tried before Putnam J.
    A demand on the maker and notice to the indorser, were proved.
    Before the note became due, the maker failed, and on the 5th of January, 1829, he executed an indenture of three parts, whereby he assigned his property to trustees for the benefit of his creditors. The indenture was executed by the plaintiffs on the same day, and by the defendant before the note in suit became due. According to the assignment, the property transferred was to be applied by the trustees, first, to the payment of the expenses of the trust; secondly, to the payment of sums due, or which should become due, to the United States for duties, or which should be paid by Worcester, the defendant, as the surety of Sargent on bonds given at the custom-house; and thirdly, to the payment in full, of 0 5500 due to the plaintiffs, of “ a certain note made by Sargent for the sum of $ 3600 and indorsed by David and Judith Worcester,” and of certain other preferred debts ; and the residue was to be applied, pro rata, towards the satisfaction of the demands of other creditors who should become parties to the assignment.
    The indenture contains the following provisions : — And each of said parties for himself, and not one for the other, doth hereby remise, release and for ever acquit and discharge said Sargent of and from their respective claims, debts, dues, demands, actions and causes of actions, and from every liability, whether contingent or absolute, and of every name and nature. And each of them doth covenant for himself, to and with said Sargent, that he will not, and no person claiming under him shall, sue, molest or trouble said Sargent, for or on account of any debt, claim or demapd whatever, or by reason of his having indorsed &c. or otherwise become responsible on the contracts or engagements of said Sargent, &c. Provided always, that nothing herein contained shall be construed to impair or affect any lien or pledge heretofore created or obtained as security for a debt or claim due from said Sargent.”
    The defendant contended that the plaintiffs, having discharged the maker of the note by their covenants and release contained in the assignment, were precluded from maintaining this action.
    The plaintiffs "then offered parol evidence to prove that the covenants and release were not intended to extend to or affect this note, or certain other notes, which in the whole amounted to $ 23,212, and which were secured by good indorsers ; but related only to the sum of $ 5500, for which the plaintiffs had no security. The defendant objected to the parol evidence, but it was admitted with a view to ascertain the facts.
    A verdict was taken for the plaintiffs ; but if the parol evidence should have been rejected, and if the plaintiffs were precluded from maintaining the action by their release of Sargent in the assignment, the verdict was to be set aside and the plaintiffs were to become nonsuit.
    
      Nov. Ib6 .
    
      Saltonstall and B. Merrill, for the defendant.
    The release in the indenture is in the most comprehensive terms. It is an entire release of Sargent, the maker of the note, and consequently of the defendant as indorser. King v. Baldwin, 2 Johns. Ch. R. 559 ; Rathbone v. Warren, 10 Johns. R. 595. But here was a substantial payment. One contract was substituted for another. The property of Sargent was transferred to stakeholders, but in trust for the plaintiffs, and equitably it vested immediately in the plaintiffs. They had the voucher, and they alone could call on the assignees for a distributive share. The assignees became debtors to them, and Sargent and the defendant were discharged.
    As to the inadmissibility of the parol evidence, they cited Deland v. Amesbury &c. Man. Co. 7 Pick. 244.
    
      Fletcher and Choate, contrà,
    
    contended that by the proviso in the assignment, this note was excepted from the operation of the release, the words pledge and lien being used in their broadest sense and embracing all collateral security. If the word pledge has not a fixed, inflexible meaning, parol evidence was admissible to show in what sense it was taken by the parties to the indenture. Peisch v. Dickson, 1 Mason, 11 ; Birch v. Depeyster, 1 Stark. Cas. 210 ; Livingston v. Tenbroeck, 16 Johns. R. 14 ; Ely v. Adams, 19 Johns. R. 313 ; Cole v. Wendel, 8 Johns. R. 90 ; Dolan v. Briggs, 4 Binney, 496 ; Nichols v. Arnold, 8 Pick. 172 ; Mechanics’ Bank v. Bank of Columbia, 5 Wheat. 326. The case of Bruen v. Marquand, 17 Johns. R. 58, cannot be distinguished from the case under consideration.
    The indorser here, by becoming a party to the assignment, assented to the release of the maker, and thereupon his own liability became absolute. Bayl. on Bills, (Phillips and Se-wall’s 1st ed.) 226; Stevens v. Lynch, 12 East, 38.
    
      
      Saltonstall, in reply, said that the words pledge ¿nd lien were not ambiguous, and therefore parol evidence was not admissible to explain them to mean security by indorsement; and further, that the parol evidence in the case was not offered for that purpose.
    There was no assent on the part of the defendant, to prevent the release from operating on this note. At the time when he signed the indenture, he was already discharged, and his signing had reference to other demands existing between him and Sargent, which are mentioned in the indenture. It has been said that the indenture is to be considered as having been executed at the same time by all the creditors ; as between Sargent and the creditors it may be so ; but not as between the creditors themselves. A deed takes effect from the time of delivery ; which, in an instrument of this kind, is, in regard to the creditors respectively, the time when each one executes it.
    
      
       See the ooinion of the Court in the next case of Parsons v. Gloucester Bank.
      
    
   Putnam J.

afterward drew up the opinion of the Court. We think that it is very clear from the assignment or indenture itself, independently of the parol evidence, that the plaintiffs did not intend to discharge the defendant from his liability as indorser, and that the discharge contained therein, of the maker, by the plaintiffs, was by the approbation of the defendant. The general words of. release are broad enough to discharge the maker ; for the bank released all claims it had against him by reason of having any note against him. But the parties provided always, “that nothing therein contained should be construed to impair or affect any lien or pledge, theretofore created or obtained as security for a debt or claim due from Sargent, the party of the first part.” The plaintiffs held the defendant’s indorsement as security for the payment of the note in question.

But it is contended that the indorsement is not strictly and properly a pledge or lien, and so not within the proviso ; that those terms apply to personal property given to a creditor as a pledge, or the right of lien which creditors may have by law on property or funds in their hands. We do not think it necessary to resort to the parol evidence to ascertain the meaning of the word u pledge,” as used in the assignment. It has a legal and well-defined interpretation, which is more broad than that which is suggested for the defendant. It may be derived (says Cowell, verb. Pledge) from “ the French pleige, fidejussor ; pleiger aucun, i. e. fide-jubere pro aliquo. In the same signification is plegius used by Glanv. lib. 10, c. 5, and plegiatio, for the act of suretiship. In the Interpreter of the Grand Custumary of Normandy, c. 60, plegii dicuntur persona, qua se obligant ad hoc, ad quod qui eos mittit, tenebatur.’’’’ “ Pledgery,” Cowell defines to be “ suretiship, an undertak ing, or answering for.” And the remedy of a surety which is found in Fitzh. N. B. fiol. 137, and Reg. 158, is a writ called de plegiis acquietandis. “ It lies for a surety against him for whom he is surety, if he pay not the money at the day.”

Now the defendant, by his indorsement, undertook and became answerable for the maker of the note. The plaintiffs had obtained the pledge of his name and responsibility for their security ; and they say expressly that they do not mean to discharge it. There is no necessity for the parol evidence, to ascertain the intent of the instrument, so far as the plaintiffs are concerned.

And the defendant himself became a party to the assign ment. The note now in question was to be paid as preferred paper, for the benefit of the defendant, who was by bis indorsement an honorary creditor. It was to be treated as the custom-house bonds were, which the defendant had executed as surety for Sargent, the party of the first part. The defendant had no other right to claim for this note, than what accrued to him as an indorser. The defendant, by becoming a party, agreed to the arrangement, that the principal debtor should be discharged, in consideration of the property assigned by him to be distributed, and that the pledge or undertaking which he had given by his indorsement should continue. The defendant himself released the maker from any claims he could have against him as indorser of any of his notes ; so he could not suffer any prejudice by the release which the plaintiffs made to the maker.

On the whole view of the instrument, it would be doing vioence to its reasonable and obvious meaning to construe it to be a discharge of the defendant’s liability upon his indorsement.

The case of Bruen v. Marquand, 17 Johns. R. 58, has a most remarkable resemblance to the case at bar. The “intent of the parties,” said Van Mess J., “ clearly appears to have been, that the holders of the note should set the makers free, but that the remedy against the indorser should remain.” The facts of that case are almost identical with those of this ; and the reasoning of the court we think to be very conclusive and just.

The opinion of the whole Court is, that judgment should be rendered for the plaintiffs upon the verdict. 
      
       See Rich v. Lord, 18 Pick. 322.