Court Opinion

ID: 3626641
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:07:03.705949+00
Date Added: 2024-06-11T14:22:18.141128
License: Public Domain

If the instrument called the discharge, dated on the 8th of February, 1840, signed by Davis, Brooks  Co., did not absolutely and entirely discharge Thomas B. Coddington from all liability on the ten thousand dollar note as maker, it operated, beyond a doubt, as it appears to me, to extend the time for the payment of that debt until the expiration of seven years from the date of the instrument. So far as respects the right of Davis,Brooks  Co. to recover against Samuel Coddington the endorser, it is immaterial whether it is an entire discharge or an extension of time. In either case the action against the endorser is barred, and unless the suit on the note could have been maintained by Davis, Brooks  Co. against Thomas B.Coddington, the maker, then action against Samuel Coddington,
the endorser, must fail.
Want of consideration furnishes no good ground of objection to the validity of the discharge. The pecuniary consideration expressed in it, is alone sufficient, although nominal in amount, it was inserted doubtless for the purpose of giving validity to the instrument, and is as effectual for that purpose as if it had been a larger sum. If the instrument had been under seal, the parties would have been estopped from denying it. Not being under seal that rule may not apply. But the recital in the instrument is evidence of payment until proof be given to the contrary, and no such proof was offered. The sum of one dollar, expressed as the consideration, is not a part of the debt to be paid, but a separate and independent sum; and the creditors cannot now avoid this agreement on the ground of want of consideration, without committing a manifest fraud upon Thomas B. Coddington. The assignment is also a sufficient consideration to support the agreement. If it should be answered that this was a past consideration, not appearing on the face of the instrument to have been made at the request of the creditors, the answer is, that if the objection had been made at the trial, no jury would have hesitated *Page 195 
a moment, from the beneficial nature of the transaction, to have inferred a request.
Let us then look at the discharge with a view to ascertain whether Davis, Brooks  Co. could, after having executed it, and within the seven years mentioned in it, have sued Thomas B.Coddington, the maker, upon the note in question.
First. It was admitted on the argument by the counsel for the defendants in error, that the words in the body of the instrument, if considered alone, were abundantly sufficient to comprehend and include the note in question, and to acquit the maker of any liability at least during the period of seven years. It purports "to release, discharge, and forever acquit him from all claims, demands, liabilities, judgments, and other responsibilities now existing against said Coddington." But these comprehensive words were supposed to be limited and restrained in their effect by something in the recital. Let us refer to it. The recital is, "that Thomas B. Coddington is indebted to us for certain debts and liabilities heretofore incurred." Thiscertainly embraced the $10,000 note. The recital then proceeds, as follows: "And said Coddington has made an assignment of his property to Charles Davis, Esq., for the benefit of us
and other creditors of said Coddington," c. Now the question arises whether the assignment was made for the benefit of Davis,Brooks  Co., as well in respect of this $10,000 debt, as with respect to the other debts he owed them, and which were mentioned in the schedules. The assignment was for the benefit of those who were to take the dividends, and if they were entitled to the dividends on that debt as well as on the others, then it follows that the recital, instead of excluding the $10,000 debt from the operation of the discharge, brings it conclusively within its scope and meaning.
Here it becomes necessary to refer to the assignment and schedule annexed to it; for it was rightly said by the Supreme Court in its opinion on this case, that the assignment being referred to in the discharge, both papers should be examined for the purpose of ascertaining the intention of the parties. *Page 196 
The trust created in the assignment is that the assignee, "out of the monies realized from the property, shall pay and discharge the debts owing by me, the said Thomas B. Coddington, mentioned and contained in the schedule hereto annexed, marked A, and if there should not be sufficient to pay said debts in full, then to pay them in equal proportions according to their amounts."
Schedule A is as follows:
  Samuel Coddington for endorsement,          $10,000 00 do.       do.          do.                 1,185 44 do.       do. for balance of account       2,178 40 __________ 13,363 84 Davis, Brooks  Co.,                         $1,000 00 James Taylor for account,                       373 79 Joseph Meeks for rent,                          250 00
It was assumed, upon the argument, and treated by all parties as an undisputed fact, that the $10,000 debt in schedule A, opposite the name of Samuel Coddington, as endorser, is the debt due upon the note in question; and it is to be observed that although the debt is set down in the schedule opposite the name of Samuel Coddington, he is not set down as a creditor in the ordinary sense, but he is shown by the entry to be an endorser. It does not appear, however, in the case that his name was put into the column of creditors by his act or with his consent. It was the act of the parties to the assignment, and not his; and they knew that he was in fact an endorser merely and not a creditor. But the debt was nevertheless preferred. It stood at the head of the preferred schedule. And for whose benefit? or in other words, who were entitled to the dividends accruing upon it under the assignment? Most undoubtedly Davis, Brooks  Co., and they only. They were the creditors. Thomas B. Coddington was the debtor, and Samuel Coddington the surety. It is a well settled principle of equity that the creditor is entitled to the benefit of all the securities which the principal debtor has given to his surety; and if it be supposed that one of the objects *Page 197 
of the assignment was to secure Samuel Coddington, as endorser, the assignment immediately enured to the benefit of Davis,Brooks  Co., the creditor; and they were as much entitled to the avails of the assignment, and to the control of it, as if their names had been put down in the schedule as creditors. (Burge on Suretyship 324; 1 Story's Eq. Com., Sec. 502;Pitman on Pr. and Surety 89, 113.)
As soon as a dividend was declared, the share set apart to this debt was payable instantly to Davis, Brooks  Co. The assignee (one of that firm) had the power and the right so to apply it.Davis, Brooks  Co. could lawfully require it to be so applied.Samuel Coddington had no right to require it to be paid to him. The effect of the assignment, therefore, is in all respects the same as if Davis, Brooks  Co. had been named in schedule A, instead of Samuel Coddington, as creditors for the $10,000 debt; and without reference to the order by which Samuel Coddington,
on the 24th of January, directed the assignee to pay the dividends to them, the assignment, was as much for their benefit in regard to this debt as if Samuel Coddington's name had been omitted, and theirs inserted as creditors; and being so, the note in question comes as well within the letter as within the spirit of the recital in the discharge. The recital refers to the assignment in general terms, but not to the schedule specially. It does not point to the debts standing in the name of Davis,Brooks  Co., as the debts on which the discharge was to operate, but to the debts due from T.B. Coddington to them, and upon which the assigned property was to be applied. Indeed, nothing can be clearer to my mind than that the discharge was to operate upon all the debts on which the creditors who signed it were entitled to dividends. The assignment was mainly the consideration on which the discharge was founded, and upon no other construction can the two instruments have a consistent and harmonious operation. It will be borne in mind that the order made by Samuel Coddington, on the 24th of January, directing his dividends to be paid to Davis, Brooks  Co., had no effect whatever upon the dividend to be paid on the *Page 198 
$10,000 debt. Before that order was given, and without any aid from it, that dividend belonged to them, by the legal operation of the assignment. But the order was effectual to give to Davis,Brooks  Co. the dividends upon the other debts in schedule A standing in Samuel Coddington's name; and for that purpose only it ought to be understood to have been made, because for every other purpose it was a dead letter.
In the opinion delivered in the Supreme Court it is said to be evident, from what transpired between Samuel Coddington and the plaintiffs, that both the Coddingtons treated this as the proper debt of the defendant to the plaintiffs, and that it was not at that time considered as a debt against T.B. Coddington. But I find no evidence in the case shewing that Samuel Coddington so treated it. It has before been observed that the insertion of his name in schedule A, in connection with the note in question, does not appear to have been his act, or done with his assent. His waiver of the protest recognizes himself as the endorser, and Thomas B. Coddington as the principal debtor. The purpose of the order to pay over the dividends to the plaintiffs, has already been adverted to; and the discharge of Thomas B. Coddington by the creditors appears, as far as the evidence goes, to have been made without his knowledge or concurrence. There never was any assumption on his part to pay the debt except in his character as endorser; and it is in that character only that the plaintiffs have sought in this suit to make him responsible; and unless the note in question then was and now is due from Thomas B.Coddington, as principal debtor, they must fail.
If the assignment of the 23d of January, and the order made bySamuel Coddington on the following day, should, from the dates or otherwise, be regarded as part of the same transaction, and be looked upon as evidence that Samuel Coddington, as well as the parties to this suit, were privy to the execution of the assignment and to the making of schedule A, then, on that hypothesis, another conclusion follows equally fatal to the plaintiffs. It is this, that it must have been understood and agreed between all the parties at the time that *Page 199 Davis, Brooks  Co. were to have the dividends on the $10,000 debt. This effectually brings that debt within the terms of the discharge and its recital.
It was urged upon the argument that Davis, Brooks  Co. could not have intended to discharge a solvent endorser by giving time to the insolvent maker of the note in question.
The solvency of the endorser is not a fact proved in the case. But if it were proved, the argument is entitled to very little weight when applied to the consideration of a written instrument. But when considered in connection with other facts proved in the case, it falls to the ground entirely. When the discharge was given, Charles Davis, one of the plaintiffs, held the assignment of property amounting nominally to $32,000. The preferred debts, of which the note in question was a part, amounted to less than $15,000; and by Samuel Coddington's order of the 24th of January, the plaintiffs became entitled to receive the dividends on other preferred debts due to him of between $3,000 and $4,000, and to apply them to the $10,000 note in question. There was no proof of the insufficiency of the property assigned to pay the entire debt. Part of the assigned property remained, at the time of the trial, undisposed of, and the assignment had not been closed.
There is another paper in this case not yet mentioned which throws light on the question between the parties. It is the promise which Thomas B. Coddington gave in writing to the plaintiffs, at the time they executed the discharge, to pay at the expiration of seven years, the balance of his indebtedness to them which might be left after deducting what might be realized from the assignment. A reference to that instrument will shew that like the discharge and its recital, it was evidently intended to include the note in question.
Finally. From reading the three instruments together, that is to say the assignment and schedules, the discharge and the written promise of T.B. Coddington, I am brought to the following conclusions:
First. That by the assignment and schedules, without reference to any other paper, Davis, Brooks  Co. were entitled *Page 200 
to the dividends on the $10,000 debt, mentioned in schedule A as the creditors of T.B. Coddington, although that debt was set down against the name of Samuel Coddington as endorser.
Secondly. That by the recitals in the discharge, Davis, Brooks Co. referred to the debts due from T.B. Coddington to them, of which this was the principal one, and therefore include this debt; that they do not refer to the debts set down to the names of Davis, Brooks  Co., and therefore do not exclude it.
Thirdly. That the operative words in the body of the discharge are amply sufficient to include the debt in question, and do include it.
Fourthly. That the obvious meaning of the discharge was, that it should operate on all the debts on which the creditors who signed it were respectively entitled to dividends; and
Fifthly. That Davis, Brooks  Co. in conformity with this construction, took Thomas B. Coddington's written promise to pay, at the end of seven years, the balance that might remain due on this note, and on his other debts, after deducting what might be realized from the assignment.
I am therefore of opinion that the judgment of the Supreme Court should be reversed, and that a new trial should be awarded.
GRAY and JOHNSON, Js., were also for reversal.
Judgment affirmed. *Page 201