Court Opinion

ID: 6312973
Source: CourtListenerOpinion
Date Created: 2022-02-18 20:18:03.093189+00
Date Added: 2024-06-11T08:59:08.641255
License: Public Domain

The opinion of the Court was delivered by
Gibson, C. J.
Had the auditor’s report been received without the rest of the record, it might have been deemed error; but the whole was given entire, and to show, what l Not the truth of any fact adjudicated, but how much of the money raised from the *443mortgaged property was paid on the judgment. The order of distribution was itself an independent fact, and, for the end proposed, evidence against, not only parties or privies, but all the world.
The question in regard to the contract declared on, is raised by the first and third exceptions. In' form it is a covenant of guaranty, to which is appended a parol agreement bearing the same date, and executed, it is to be presumed, at the same time. Were it executed subsequently, it would be without consideration, and the original covenant would be unaltered in its character or its terms. But granting the execution of the covenant to be a consideration for the parol agreement, in what respect does the one impinge on the other? Where writings are executed at the same time and on one common subject, they áre to be interpreted so as to be brought into concord with each other as consistent parts of a whole. Now the guarantor covenanted to make up the difference should the mortgaged promises fall short of the debt after payment of the mechanics’ liens; and the mortgagee promised that the guaranty should cease as soon as the liens should be extinguished and a particular part of the debt paid. But it was to stand good in the meantime. How then can its nature, as a specialty, have been altered, or its hue changed by the shadows of coming events? The parol agreement was not to modify the covenant, but to regulate the application of it as a security. Circumstances might happen which would make it unnecessary, and in that event the guarantor was to be released from.it. In Vicary v. Moore the test of collision was the capacity of the two contracts to be executed together. Where that can be done, the one is not substituted for the other; and where there is in fact substitution, it operates as abandonment, the specialty being relinquished except as matter of reference for the terms of the parol contract which has supplanted it. Now it cannot be supposed that this covenant was intended to be relinquished as a specialty the moment it was made; for had it been designed to play the humble part of a parol promise, it would have been put into the garb of one. The action was properly brought in covenant, therefore, and the plaintiff was properly allowed to introduce the specialty without the parol memorandum, which contained nothing but matter of defence.
Its effect as such, however, was not what the guarantor attempted to assign to it. It was a defeasance, but the condition of it had not been performed. The mechanics’ liens had indeed been extinguished, but not by Bozarth, the debtor, as was contemplated, or by the defendant, his surety. They were to be discharged in ease of the mortgage, instead of which they were discharged out of the proceeds of the premises sold subject to them, and in prejudice of the mortgagee; consequently in accordance with neither the letter nor the spirit of the proviso. The p'aintiff consented to take the property alone as security for a *444part of the debt, provided the other part of it and the prior liens were paid by the defendant or his surety. The liens have indeed been'paid; but how? Not byjthe debtor or his surety, but by the mortgaged premises at the plaintiff’s expense. The jury were properly instructed that the agreement, depending as it did on an unperformed condition, was not an obstacle to a verdict for the plaintiff’s demand.
But we are unable to sustain the demurrer to the plea of set-off, which the court should have overruled, and, had it been required, allowed to be withdrawn in order to meet the plea on its merits.
The reverse of the principle assumed on the first ground taken at the argument, has been ruled at the present term: a conclusion towards which our decisions have long been tending. We have gradually enlarged the effect of our act for defalcation by discarding notions derived from the English statute of set-off, till we have brought it to the line of the enactment. There is not a word in the English statute about mutual dealing; or about being indebted by bonds, bills, bargains, promises, or accounts; or about the defendant’s being unable to gainsay the deed, bargain, or assumption — expressions in ours which indicate an unsettled course of dealing — nor is there any thing in it to show that the words, “ mutual debts,” the only descriptive ones contained in it, were not to have their technical effect. In our statute, too, the words “ debt or sum demanded,” seem to have been introduced intentionally to enlarge the purview. True it is that both statutes are susceptible of the same construction without much violence to the words, and that we have been in the habit of receiving English precedents in questions of set-off: but it has seemed that neither justice nor convenience called on us to depart from the obvious and natural meaning of our own. If an unliquidated cross demand may be set-up when it has sprung from the same transaction — and we have constantly ruled that it may — why may it not be set up when it has sprung from a distinct and independent contract? The confusion incident to the trial of distinct issues in the same action is no greater where the demands are independent of each other than where they are connected; nor more embarrassing where they are indefinite than wdiere they are liquidated; nor more complicated where they are set against each other than W'here they are joined in the same declaration or in consolidated actions. The practical difference between a debt properly so called and an indefinite demand of money resting in contract, is more seeming than real. A bond for the payment of a sum certain is strictly a debt and a subject of set-off; yet to ascertain the amount due on it when reduced, as it sometimes is, by failure of consideration or a variety of causes, is often one of the most difficult duties that can be committed to a jury. When its definite character is so often deceptive, what better claim has *445it to be made matter of set-off than a policy of insurance? The trial of cross demands in the same adtion saves expense and the vexation of paying out money to get it back at the risk of losing it by insolvency in the circuit. It is enough, for the occasion, however, that the point has been settled by decision since the cause before us was tried..
Nor is it material under the 27 Eliz., c. 5, that the plea contains no direct averment of an interest in.the property insured. It is not to be denied that the want of such an averment would be fatal on special demurrer-; for the 14 G. 3, c. 48, which enacts that insurance shall not be made by one who has not an interest in the property, seems to be declaratory of the common law; and it is unimportant that it is not in force here. Lord King had held such an interest necessary so early as Lynch v. Dalzell, (4 Bro. P. C. 431), and Lord Hardwicke had held the same thing in The Sadlers’ Company v. Badcock, (2 Atk. 554). But independent of positive enactment, as insurance is now held to be a contract of indemnity and not of wager, it would be difficult to see how any one could claim compensation for a loss which he had not suffered. In Pritchet v. The North American Insurance Company, (3 Yeates 464), and Craig v. Murgatroyd, (4 Yeates 168), it was held that the leading principles of the 19 G. 2, c. 37, which requires an interest for the foundation of a marine insurance, have been adopted in Pennsylvania by commercial usage. Perhaps it might have been more accurately said, that the statute was designed to restore the original principles, of the contract, which had been prostituted to gambling purposes by the insertion of the words “ interest or no interest.” These words never found their way into policies against fire, and as there was no necessity for a restorative, the 14 G. 3 was perhaps unnecessary. Lord Hardwicke said, in The Sadlers’ Company v. Badcock, that insurances against fire were introduced in later times, and that they differ from marine insurances in this very particular. At all events, it might be said that the leading principles of the 14 G. 3, like those of its marine fellow, have been followed by us in practice. So far the plaintiff’s argument is incontrovertible. But though the plea in this instance contains no direct averment of interest, it contains a direct averment of loss which could spring from nothing but an interest. Grant that such a plea is argumentative, yet it is certainly good on general demurrer. It was to remedy such slips that the 27 Eliz., c. 5, required the party to put his finger on the very point. At the common law a demurrer confessed all things formally pleaded : since the statute, it confesses all things informally pleaded, which are helped by the 4 and 5 Anne, c. 16, and not specially set down as causes of demurrer. This is said to be the rule by the text writers, particularly Sergeant Williams, in Hancocke v. Prowd, (1 Saund. 337 n. 3), and it was so laid down *446by Chief Justice Kent, in Spencer v. Southwick, (9 Johns. 314). The existence of an interest here was informally asserted; but as the demurrer was not a special one, it ought not to have been sustained.
Judgment reversed, and a venire facias de novo awarded.