The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1873-12-13
Important Observation-Disclosures OF Ap.
peals under. tho E3ankrupt Law.

p~osot AlkeaGEs GkkC G13HAEupk Law. .
The Syracuse Journal has the following
In relation to late decision, of the New
York Court of Appeals, which viii De oil
interestto the legul fraternity:.. = -
Some months ago q decision of Judge
Hall, of the United States District, Court,
was published extensively, holding that
where the makers Of a. note are In bank
ruptcy, the accommodation endorser having
taken from them q security TO himself and
for his own protection without the kuow!.
edge or prixity- ofthe creditor who holds
the note, such security in effect belongs 10
the creditor, and If the. latter proves the
note as debt against the estate of the bank
rupt makers the security is destroyed by
that act and the endorser released from his
liability also, that although the endorser
may still be held liable in consequence of
having procured or assented to the act of so
proving the note against the makers estate,
get bis security Is destroyed and gone.
This decision Of Judge Hall was made In
the matter of JaycoX & Green, Of Syracuse,
baDkrupts Before their bankruptcy George
+. Comstock had endorsed their notes as
surety merely for their accommodation to
the amount of $4,000, and he held sec u
rity BY mortgage Of their real estate worth
from $4,000 to 100000. This security he
had taken for his own protection, without
the knowledge of the parties who discounted
the notes and who advanced tue money
thereon to the bankrupt firm. He was not
in any sense priyy to the discounts, and the
discounters' had nothing to do with the tax.
ing OF the security. Alter the bankruptcy
Mr.. Comstock insisted that the various
holders of this large amount of notes had a
right to prove and ought to prove their
notes rs debts against the bankrupts, and to
share in the dividends out of the general
estate like other creditors, and he also
claimed that having done 40 they could look
to him as the endorser for any deficiency,
and that be would hold his security for his
own ultimate indemnity.
Accordingly, the holders Of the endorsed
notes proved them for the full amount
against the estate of the makers, and claimed
to share in the dividends. The question de-
clded by Judge Hall arose out of the oppo-
sing pretensions Of the other class Of credit
ors, and out Of their motion to expunge the
proof of the notes. On that motion the
learned Judge gaye the opinion above re-
ferred to-, holding that the security which
the endorser had taken for himself WAS in
reality for the benefit of the holders, coDse-
quently that they were secured creditors of
the bankrupts, and that the security was re-
leased aud destroyed by their proving the
notes for the full amount. As the endorser
had not only assented to such proof, but IN.
sisted upon it as the proper course to be
taken, the opinion of the Judge would leave
him liable for some $1,000 deficiency with
out any security at all.
A suit in the mean time was pending in
the Supreme Court Of the State which d.
rectly involved in another form the very
question whether the security which the en-
dorser had so taken was in any manner I'M
paired or affected by the proof which the
holders of the notes had made against the
estate of the makers. For the purpose Of
obtaining final and conclusive decision that
case was carried to the Court Of Appeals,
which has just pronounced unanimous de-
cisioD affirming all the positions taken by
Judge Hall, holding that owners of the
notes were not secured creditors, and had
rightfully proved their notes for the full
amount that by virtue of such proof they
would be entitled to dividends equally with
other creditors out Of the general estate OF
the bankrupts ; that the security belonged
to the epdorser, and not being affected by
such proof, be was entitled to hold it for his
final indemnity after the exhaustion OF the
bankrupts' general estate. These questions,
which have attracted considerable attention
among professional and business men, must
now be deemed at rest in this State by the
decision of the court of last resort.