Court Opinion

ID: 6314258
Source: CourtListenerOpinion
Date Created: 2022-02-18 20:21:43.992863+00
Date Added: 2024-06-11T08:59:11.786865
License: Public Domain

The opinion of the court was delivered by
Tod, J.
There are certain rules of equity which deal favourably with the contracts of sureties; yet those rules do not seem to us *71strictly to apply to the present case. Shields, the testator, had his name upon the notes as indorser; but he did not receive the money, nor any part of it, nor was the original loan upon his credit, nor was he in any manner bound until induced to become indorser by a written stipulation of indemnity. As far as one may be called a surety, who, without personal interest or prospect of gain to himself, lends his credit, and becomes bound for the debts of others, so far it would appear, that Shields, the testator himself, stood as a surety, rather than as a principal. Shortly, the case is—The Baptist Church in Sansom Street, being in debt about forty thousand dollars, and about six thousand dollars of it being due to the Philadelphia Bank and the Bank of Pennsylvania, on loans obtained some years before, not upon the credit of the corporation but upon the notes of Mr. Maylin and Mr. Regnault, and the banks becoming dissatisfied with the security, and refusing to renew without an additional indorser, Mr. Shields, the testator, agreed to become this additional indorser, upon a previous written contract of indemnity, signed by Shields, himself, and by thirty other members of the congregation, among the rest by Mr. Oivens, the defendant. Upon that contract the present suit is brought: (His Honour here stated the contents of the agreement of the 28th of July, 1817.)
According to this agreement, Shields, the testator, continued to renew his indorsements at intervals of ninety days, as long as he lived, which was two or three years. At his death the two debts had been diminished by payments to about one half. His four sons, the plaintiffs, were left devisees of his estate, and executors of his will. They were applied to on the part of the congregation, to renew and continue the indorsement of the notes. Two of them were willing, and two refused. There was some uncertainty of proof whether the banks would take an indorsement by men in the character of executors; but that matter was left as a fact to the jury, and I take it to be settled by the verdict, that the banks would have accepted such indorsement. The notes were protested, and the executors, not waiting to be sued, paid the money and took up the notes; and after some years they bring this suit against Mr. Oivens, claiming from him his contribution; viz. his share of the instalments of ten per cent, due at the time of commencement of the action.
The defence is founded upon the words of the agreement, which, it is argued, expressly require Shields, the testator, and of course his representatives, to continue the indorsements, and renew them to the end of the ten years, and that the executors, by paying off the notes instead of renewing them, and by becoming themselves the creditors in lieu of the banks, have forfeited their indemnity and all their right to the ten per cent, instalments. Now I do not understand such to be the right construction of the agreement. Manifestly the only object was to get credit, to gain a prolonged time of *72payment, to enable the congregation to pay off these debts gradually. The banks were no parties to the instrument. It was not for their profit. The notes were transferrable property, and known to be so by the contributors. In substance they have been fairly and legally transferred to these executors; and by the transfer no conceivable injury is done to the congregation, or to the signers of the indemnity, unless it is an injury to their estates or to their credit to owe money to individuals rather than to a bank, and to pay six per cent, interest for it rather than the bank interest of nearly seven per cent. According to the true intent and meaning of the paper, I should say that Shields, the testator himself, by paying off the notes at any time, had lie been able, would not thereby have lost his indemnity, provided that in consequence he demanded nothing more than the annual instalments from the signers. But we do not decide that point. The testator did not pay. He continued the indorsements while he lived. He could do it without much inconvenience. But the case seems very different as to the executors. We are all of opinion they took the only fair and practicable mode of performing their father’s contract, by paying the notes, taking them up and waiting for the yearly instalments for their reimbursement. How they and the other parties to the notes could be able, consistently with the rules of law or convenience, to get along for a series of years, binding by indorsements every ninety days, not themselves but the estate of a man deceased, is a difficulty which need not be settled, because the law is clear that executors having assets, giving a note for a debt due from their testator’s estate, though they expressly name themselves executors in the contract, do not thereby bind their testator’s estate; but they, themselves, are bound personally. Geyer v. Smith, l Dall. 347. Toller's Law of Executors, 464. Therefore, by indorsing, here would have been six indorsers instead of three, and the executors liable personally for the default, not only of the two original indorsers, but of each other.
It is denied by the plaintiffs’ counsel, that the engagement by the testator to lend his credit, is that sort of contract which can be legally binding upon his representatives; being but a mere personal undertaking. Without entering into that inquiry, it is certain that the contribution promised by Owens and the rest, being conditional, the condition must be substantially performed somehow before the indemnity can be claimed. We think, that in substance, the condition has been performed by the executors.
In this court and in the court below, the cause has been placed partly on the ground of injury done by the plaintiffs, by not only refusing to indorse, but by demanding immediate inpayment of the money to them. Some proof was given that the conduct of the plaintiffs stopped certain payments which would have been made by the members of the church, and was pernicious to the corporation.' Upon the credit which the jury might think fit to give to that evidence, the cause was put, in part at least, by the charge of the court. *73It appears to us, that the plaintiffs’ demand of the money, if made upon the corporation, was frivolous; if upon the signers of the indemnity, before the instalments, or some of them, had become payable, it was nugatory. Notwithstanding the demand, the executors wisely forbore to sue; and whatever injury has followed, seems to have been produced by a cause too small for the law to take cognizance of. Upon the whole, our opinion is, that there is error, and that the judgment be reversed, and a venire facias de novo awarded.
Judgment reversed, and a venire facias de novo awarded.