Court Opinion

ID: 6314997
Source: CourtListenerOpinion
Date Created: 2022-02-18 20:24:29.599034+00
Date Added: 2024-06-11T08:59:13.518436
License: Public Domain

The opinion of the court was delivered by
Gibson, C..J.
'The execution having been in due ti,mc, and; *380founded on an actual judgment, was neither erroneous nor irregular; and the question therefore is whether it were fraudulent by the dial. 13 Eliz. in consequence of having issued before actual payment of the debt for which the counter bond was given as an indemnity. The chief obstacle to a satisfactory conclusion, is a tendency in the mind to view the case as it stood originally, and to consider the question of indebtedness, as still depending on the naked relation of principal and surety. Undoubtedly a surety though presently liable to an action, or even an execution, may no,t main-lain indebitatus assumpsit, before actual payment, because the implied promise which is the foundation of that action, arises out of the fact of payment and nothing else. It is implied from the consideration of money paid, laid out, and expended to the defendant’s use. But the strictness of the rule by which the fact of payment is determinable, has been relaxed where a negotiable note, or bill of exchange was given, and received in satisfaction, which, it has been held, will support a count for money paid. Morrison v. Becky, 7 Serg. & Rawle, 246, Cumming v. Hackley, 8 Johns. 206. Where, however, the surety holds a counter bond, in the very sum for which his responsibility stands pledged, his right of action depends on considerations entirely different. Being founded on the undoubted consideration of his individual liability, such a bond is far from" being a gift of the money. In Rosewelt v. Mack, 6 Johns. Ch. 281, it was treated as a debt provable under a commission qf bankruptcy; and that decision made, as it was, in reference to a process of distribution among creditors, which has been aptly called a statutory execution, goes the length of the present question. The same thing was predicated in Toussaint v. Martinnant, 2 T. R. 100. Martin v. Court, Id. 640, and Hodgson v. Bell, 7 T. R. 97, which certainly would not have been done had the bond been deemed fraudulent. In fact the question of fraud was expressly made and decided, Mr. Justice Buller, declaring in Toussaint v. Martinnant, that there was a sufficient consideration, though the counter bond was payable before theoriginal bond became due; in which respect that case was much stronger than the present. .Here the transaction was an arrangement by which the surety having become paymaster, was to raise the funds from the effects of the principal, by the instrumentality of an execution; and it is admitted, that.the object might have be'en accomplished by an assignment to the surety, who would then have been accountable as a trustee, but who, it is supposed, might, consistently with the actual arrangement, retain what should be recovered, as his proper money, and leave the original debt to fall on the remaining property of the principal. Such was not the notion entertained in Rosewelt v. Mack, and Toussaint v. Martinnant; where it was considered that equity would compel him to refund; and though we *381have not the direct powers of a court of chancery, wo would find means to produce the same effect. If, then, there was a sufficient consideration for a present debt, what right have the other creditors to interfere? In settling the construction of the statutes of Elizabeth, the judges undoubtedly set out with a determination to cutup voluntary gifts and conveyances by the roots; yet, as has been justly remarked by a respectable writer, they showed an inclination to restrict the import of the word voluntary to cases, where no inducement of interest appeared, and to extend the notion of a valuable consideration to every case which admitted of a supposition that one act was made the condition of another. Roberts on Fraud. Conv. 15. It is said by the same writer, that an assignment to a stranger is not to be supported under these statutes, the mere destination of the property to the payment of debts,affording no consideration,because passing nothing from the assignee to the assignor, which can prejudice theformer or benefit the latter; but that where a creditor is a party to the assignment, a valuable consideration is found in the forbearance of suit, or mutual accommodation, which is expressly stipulated, or implied from the very nature of the transation. Id. 429, 431, 432. This would bring the question back to the point from which it started — was the surety a creditor, and was there a mutual accommodation of the parties? Undoubtedly there was a contingent liability of the principal to the surety, which in transactions of the sort, is invariably the subject of special protection, a provision for indorsers, who have not paid the debt, being an article of almost every assignment. Then, of the existence of mutual accommodation, there can be as little doubt. As has justly been remarked by Mr. Justice Butter, the surety is always the effective and responsible man, having been taken because the credit of the principal was doubted, and an arrangement like the present, is a measure to secure him by means intended to produce payment of the debt, out of the effects of the principal by whom it is due, and to satisfy a responsibility which is invariably incurred under a promise of payment or indemnity. It would seem, therefore, that the surety is entitled to the amount of his bond.
Judgment affirmed.