Court Opinion

ID: 5513362
Source: CourtListenerOpinion
Date Created: 2022-01-10 04:26:10.730484+00
Date Added: 2024-06-11T08:34:13.213834
License: Public Domain

By the Court,

Savage, Ch. J.
The action for money had and received is an equitable action, and, generally speaking, lies in all cases where the defendant has received money, or in some cases its equivalent, which in equity and good conscience he ought to pay the plaintiff. If it be conceded that the defendant has received payment of the note on which he was the holder from Dubois, and afterwards from the plaintiff, a case is presented in which the plaintiff ought to recover back from the defendant the money thus improperly received. Whether the instrument produced is evidence of such payment by Dubois to the defendant, or discharges Dubois from all liability on the note, is the principal question in this case.
It seems to be conceded by the defendant’s counsel that if the instrument operates as a release, it discharges Dubois from his liability to the plaintiff; but he contends that it is a mere covenant on the part of the defendant not to sue Dubois, and leaves him liable to the other parties. The propo*366sition is not denied, that where a creditor covenants not to prosecufe one 0f several joint and several obligors or promissors, the others remain liable to an action; but if the credit- or releases such obligor or promissor, his claim is gone upon all of them; and the reason is that the release discharges the debt itself, but the covenant not to sue one leaves the debt in existence, and merely exempts the covenantee from prosecution. If, however, a creditor covenant not to sue an individual debtor who is solely liable, such covenant has the effect of a release, though not such technically. It may be pleaded in bar to avoid circuity of action. (2 Salk. 575.) The present is not a case of joint and several promissors; each party to the note is liable severally, but not jointly. The maker of a promissory note, when nothing appears to the contrary, is considered the principal debtor, and the endorsers are surities; (16 Johns. R. 73;) but not exactly co-sureties. No joint action can be maintained against them; each must be made severally responsible. There may be cases, and such we have by particular statutes, where a joint action may be brought against all the parties responsible upon a note : I am speaking of the liability of parties in ordinary cases.
The holder of a note may prosecute the maker and endorsers in separate suits, but he can have but one satisfaction. If he collects his money from the principal debtor, he cannot afterwards maintain a suit against the endorsers-Their engagement was that the money should be paid; and when that is done, their liability ceases. Should either of the endorsers be compelled to pay the money, he becomes the creditor, and has a right to be reimbursed from the principal debtor, or prior endorsers if any. If therefore the holder releases the principal debtor, he ought not to recover against the endorsers ; for by releasing the debt, he discharges the principal from all liability upon the note to the endorsers, as well as to himself. If a holder covenant not to sue one of two joint and several makers of a promissory note, he may sue the other; for he remains liable while the debt remains ; but if the creditor covenant not to sue a sole maker of a note, I know of no means of compelling payment. Sup*367pose he has a written, guaranty from a third person that such maker shall pay his note, and he covenant not to sue such maker, can he be permitted to prosecute on his guaranty after he has covenanted that the maker shall not be compelled to pay ? The law, I trust, does not tolerate such injustice. It will not permit him to do indirectly what he has covenanted not to do directly. If he may be permitted to recover of the surety, he (the surety) must have his remedy against the principal, who will thus be compelled to pay where the creditor had covenanted that he should not be so compelled. It will hardly be contended that the surety shall pay, and yet have no remedy against his principal.
But it is not necessary in this case to maintain that proposition. This is the case of a negotiable instrument, and the rights and liabilities of the parties to such an instrument have often been considered, and are well defined. I have had occasion recently to refer to some cases on this subject, (9 Cowen, 206,) and I then quoted the rule as laid down by Chancellor Kent, (2 Johns. C. R. 560.) It is this: “ The surety is entitled to pay the debt when it becomes due, or he may call upon the creditor by the aid of this court to enforce his demand against the principal debtor. On paying the debt, he is entitled to the creditor’s place by substitution. If the creditor, by agreement with the principal debtor without the surety’s consent, has disabled himself from suing when he would otherwise have been entitled to sue under the original on tract, or has deprived the surety on his paying the debt from having immediate recourse to his principal, the contract is varied to his prejudice, and he is consequently discharged. This is the true principle to be extracted from the cases.” Chief Justice Spencer says, “If the holder does an act which takes away and destroys the remedy of the other parties against the maker upon the very bill, he forfeits his right to call upon the prior endorsers. (16 Johns. R. 42, 3.) And again, the surety is bound by the terms of his contract; and if the creditor, by agreement with the principal debtor without the concurrence of the surety, varies these terms by enlarging the time of performance, the surety is discharged; for he is injured, and his risk is in*368creased. (16 Johns. R. 73. 3 Brown’s C. 3. 11 Ves. 410.) These cases speak of discharging or varying the contract with the principal debtor. The same rule is applicable to discharge of any prior endorsers: the subsequent endorsers are discharged. In English v. Darby, (2 Bos. & Pul. 62,) Lord Eldon, speaking of the case of Hayling v. Mulhall, (2 Black. R. 1235,) says, “Had the plaintiff first sued a prior endorser and discharged him from execution, it would have afforded a sufficient objection to an action against a subsequent endorser.” And see 3 Bos. & Pul. 365, 6, and note.
The covenant executed by the defendant speaks of Dubois as the principal debtor, the note being endorsed for his accommodation; but if he was not, the agreement not to sue him diminished the security of the subsequent endorser. If the holder, who was the defendant, thought proper to collect the money from a subsequent endorser, as the plaintiff was, the plaintiff, on payment of the money, was entitled to the creditor’s place by substitution; but when he assumed that place he found the security of a prior endorser discharged, and that might be the very security upon which he relied in becoming an endorser. At all events, his risk was increased by the acts of the holder, and that is sufficient to discharge him.
The objection that the plaintiff should have sought relief on motion, is c f. no weight; he was not bound to pursue that remedy ; a. I he had no opportunity of pleading a defence to the action against him, for while it was pending Dubois was not discharged from his liability.
It is said the payment by Lupton was voluntary. The money was paid by Lupton at the request of the plaintiff; it was therefore paid by the plaintiff, against whom a judgment had been recovered. If this is voluntary, then every payment is voluntary, unless property is sold by the sheriff.
The objection of variance is not tenable. A bill of particulars is indeed considered, in some respects, an amplification of the declaration, but it is considered sufficient if it fairly apprize the opposite party of the nature of the claim, so that there can be no surprize. Here the defendant was in*369formed that the money which the plaintiff had paid was sought to be recovered back ; and though it speaks of $300 paid by Dubois, still, if the transaction amounted in law to a payment or discharge or release of that sum, there could have been no surprize.
I am opinion, also, that the defence offered was properly rejected; the first part, because it was to contradict the defendant’s own written and sealed agreement, and as to the second, if Dubois had previously paid the plaintiff, that might perhaps give Dubois a remedy against him, but could have no influence upon the plaintiff’s right to recover back money which the defendant had unlawfully obtained from him.
The plaintiff is entitled to judgment for the amount paid by him with interest till judgment.