Court Opinion

ID: 6581175
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:38:24.825662+00
Date Added: 2024-06-11T15:57:16.365421
License: Public Domain

Carpenter, J.
The petitioners claim a decree upon the *518familiar principle that security to a surety inures in equity to the benefit of the creditor. Our first inquiry is, therefore, whether Bissell, the surety, had any security which he could enforce against subsequent encumbrancers. Of course it is not necessary to inquire what rights he may have as against Dart.
The condition in the mortgage under consideration is as follows:—“ The condition of this deed is such, that whereas the said grantor has executed a certain bond or obligation, dated August 28tli, 1862, payable to the said grantee or assigns, conditioned that the said grantee endorse the notes or paper of the said grantor for the term of five years from the date of said bond, to an amount not exceeding at any one time the sum of five thousand dollars; now therefore, if the said grantor shall well and truly pay said notes or paper so endorsed according to the provisions of said bond and save the said Bissell harmless therefrom, then this deed shall be void.”
The instrument thus described is not evidence of any indebtedness from Dart to Bissell. The writing was not intended as evidence of debt, but was intended as collateral security for a contingent liability. Now this writing, such as it was, was not by its terms to be delivered to Bissell until he liad indorsed to the full amount of $5,000. He never did so indorse, and the writing was never in fact delivered to him, or to any holder of the indorsed paper. It remained in the hands of Bull and of Dart until three years after Thompson’s death, which occurred in 1875, when, after a controversy had arisen between Dart and White, Dart delivered it to the attorney for Thompson’s executors. Up to that time it was inoperative—so much dead paper. We do not think that such a delivery imparted any vitality to it.
But if it may be regarded as a good delivery they took nothing by it, because by its terms they were not entitled to it.
It is said however that the mortgage was not intended to secure that writing, but the notes or paper indorsed by Bis-sell. That is true with this qualification, that it was intended only to secure notes and paper indorsed according to the *519terms of that writing, and by those terms the full amount of $5,000 must be indorsed before the writing could take effect, as we cannot presume that the writing was to take effect until delivered.
But it may be said that Bissell, in respect to the note signed by him, was a mere surety, and that that was in substance what the parties contemplated. That might do as between the original parties, but it will not do as between the mortgagee and subsequent incumbrancers. That would be substituting one debt, entirely different in its nature and character, for another; an absolute indebtedness for a contingent liability; and that is not allowable. Bramhall v. Flood, 41 Conn., 68; Merrills v. Swift, 18 Conn., 257.
It is further contended that the two notes were indorsed by Bissell pursuant to the arrangement, that the transaction of May 1 st, 1867, was not a payment but a renewal of them, and that, notwithstanding the amount was less than was contemplated, the mortgage should in equity be regarded as securing those notes.
It looks very much as though Dart intended to induce Bis-sell to indorse for the full amount by providing that he should have no security before he had so indorsed. If that be so we cannot hold that to be within the mortgage which the parties have carefully excluded. But however this may be, there are two other fatal objections to this claim. Eirst, there is no evidence that Bissell was liable on those notes when the note for $5,000 was signed by him. . One note had run over four years and the other over three. It is found that Bissell had never been notified of the non-payment of either of these notes, and it does not appear that they were not then due. The burden was on the petitioners to show a then existing liability, and they have not shown it. If the indorser had been discharged by the laches of the holder the security was gone, and no waiver by the indorser would revive it. Second, it is not found, and the transaction as reported does not show, that the notes were renewed; on the contrary it shows that the parties did not intend to continue that form of liability. Presumptively the notes were overdue, and the *520indorser discharged; the interest was computed on them, the indebtedness was largely increased, the old notes were destroyed and a new note taken for the increased amount, which Bissell signed as maker. In the absence of any finding to that effect we cannot presume that the parties intended by this a renewal of the old notes.
It is unnecessary to consider the other questions in the case.
Judgment is advised for the respondents.
In this opinion the other judges concurred.