Court Opinion

ID: 6558369
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:04:54.094072+00
Date Added: 2024-06-11T15:56:25.281719
License: Public Domain

Johns, Jr.,Chancellor.
The determination of this case must depend on the relation which Bradun as an indorser, liable absolutely to pay, sustained to Joseph Robinson, the maker. The term creditor has, by numerous decisions in cases of bankruptcy, acquired a legal meaning; and, in all cases of that description, its proper import is well understood. In ascertaining who are entitled as creditors to prove under the commission in bankruptcy the rights of an indorser, absolutely liable, have invariably been held to depend on the fact of payment, unless he has taken some legal evidence of debt, for which the liability of the surety is a good consideration. The fact of payment is declared to be essential, as well in a court of equity as at law. ' The difference in the practice of the respective courts is as to the time when it should be made,—the former requiring it to be prior to the act of bankruptcy, the latter considering the precedent liability accompanied by subsequent payment sufficient to entitle the indorser or surety to prove.
If the claim presented by the complainants in this suit comes within the principles settled by the decisions in cases of bankruptcy, there can be no ground on which it can be sustained; for even when the surety has taken from his principal some legal evidence of debt to secure himself, he shall not be permitted to receive a dividend on such *414proof, until he shall have discharged the debt which he is under obligation to pay ; nor shall his dividend amount to more than his actual payment, though his counter security may entitle him to prove a much greater amount. Ex parte Wildman, 1 Atk. 110 : 2 Ves. Sr. 113. S. C. Ex parte Marshall, 1 Atk. 129 ; Howis vs. Wiggins, 4 T. R. 714.
But, independently of the decisions referred to in cases' of bankruptcy, what are the liabilities and rights of an indorser, when the note discounted is for the accommodation of the maker, and the indorser simply lends his name, and thereby becomes conditionally responsible to the holder of the note ? By the act of indorsement he enables the maker to obtain credit with the holder, who advances the money, and he incurs a qualified liability. It is not until the maker fails to make payment, and he receives notice under the protest, that his liability becomes absolute; nor even then, although fixed,can he sustain a claim aganist the maker, of such a nature as would authorize him to institute an action at law against him. Does the proceeding on the part of the holder of the note to enforce payment by pursuing his legal remedy vary the liability of the indorser ? When judgment is obtained, it is but a security of a higher nature, and does not discharge the debt of the principal; and if there be execution against the property audonothing obtained under it, so long as the holder of the note fails to obtain payment out of the property or from the indorser, he retains the right of property in the note, and the indebtedness of the maker to the holder remains undiminished and absolute. The only right the indorser can have is purely conditional, as against the maker. If, as set forth in the bill, his being a security or absolutely liable render him a creditor, then clearly it must follow he has a legal claim upon the maker, and such claim cannot exist without a legal remedy; but until the indorser pays and takes up the note he cannot maintain assumpsit against the maker,—which is an equitable action, *415and is founded on the implied promise which the law raises in his favor.
This question may be considered in another view, as against the estate of a deceased person. Under the circumstances of this case, could the indorser claim and make probate of such a demand as a debt ? It does appear to me impossible; for it cannot be contended that a mere liability to pay as surety entitles the party so liable to a credit for a debt. And, clearly, the relation of creditor presupposes that of debtor. The terms are cor-relative. My opinion in relation to this case is in accordance with that delivered by Washington, J., in the case of Taylor vs. Gardiner, garnishee of Lees, Sergeant on Attachment, 103. In that case there was a scire facias against the garnishee, upon an attachment and judgment against Lees. The question of law arose upon the following facts, viz: The attachment was laid on the 14th of September, 1807. In. answer to the interrogatories put to the defendant, under the Act of Assembly, he stated that on the 19th of September, 1807,he received fifty crates of earthen ware belonging to Lees, which netted upwards of $900, but that Lees was under acceptances of certain bills indorsed by the defendant, which the defendant had been obliged to pay, the bills having been protested for non-payment. These bills were protested in August, and were taken up and paid by the defendant in October and November, 1807. Washington, J., in charging the jury, said,-“ this is a hard case upon the defendant, who, “ at the time this attachment was levied, was liable ¿to pay “ these bills as indorser, to a much greater amount than “ the value of thefunds ofLees in his hands : and if he had “then paid them, he would not have had in his hands any “ effects of Lees. But until he paid them he was not a “ creditor of Lees ; and, of course, the attachment bound “ the effects of Lees in his hands at the time it was laid,— “ which could not be diminished by subsequent credits to “ which he might be entitled. Uow, until these bills were *416“ paid by the defendant, he had no claim against Lees, and “ on the 19th of September, he had goods of Lees in his “hands,-—which must decide the issue in favor of the “ plaintiff.”
As the complainants have come into this Court to obtain relief by substitution, and have founded their claim to a dividend under the assignment, upon the right of Thomas Bradun, as a creditor of Joseph Robinson ; and as I am of opinion that Bradun, as an indorser, fixed and absolutely liable, cannot, until payment, have any claim, or be considered as a creditor of Joseph Robinson,—therefore, in every view which I have been able to take of this case, the complainant must fail. As the bill has been taken pro confesso against some of the defendants, who are jointly interested in this trust fund, and those who have appeared and answered have disproved the complainant’s case, the bill must be dismissed as to all the defendants, with costs. Vide. Classon vs. Morris, on Appeal. 10 Johns’ Rep. 524.
This decree was affirmed by the Court of Errors and Appeals, at the June Term, 1835. See 1 Harring. Rep. 561.