Court Opinion

ID: 6418073
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:57:39.947352+00
Date Added: 2024-06-11T15:51:39.232053
License: Public Domain

Devens, J.
The only difficulty in determining whether the defendant is liable in this action arises from, the complicated transactions between the parties themselves and the Stoneham Branch Railroad Company, which were assumed as facts in the ruling made by the learned judge who presided at the trial.
The substance of these transactions may, we think, be stated more clearly, and perhaps more briefly, than as they appear upon the bill of exceptions.
All the plaintiffs, with the defendant, were directors of the Stoneham Branch Railroad Company; they had raised money upon the notes payable to Eliza J. Gerry, as well as upon several other notes, for the purpose of completing that road, upon which notes they were themselves the promisors. The money so raised by them had however'been advanced to the railroad corporation, and for the money so advanced they had received its bonds and notes. It was then arranged among them that they would pay the notes thus signed by them in certain proportions, and by the obligation now sued the defendant agreed with the plaintiffs that he would pay as his share one half of the Gerry notes, and gave as collateral security for the performance of bis obligation certain bonds and notes of the Stoneham Branch Railroad Company.
The Stoneham Branch Railroad Company was afterwards sold to the Boston and Lowell Railroad Corporation, and as it was known that the proceeds of the sale would not be sufficient to pay the creditors in full after payment of the bonds which were secured by mortgage, it was agreed between the parties to this suit, who were substantially all the creditors, that the surplus' should be divided among the creditors pro rata.
The Gerry notes, however, instead of being paid by the signers in the proportions arranged, were then paid by a check drawn by order of the directors of the Stoneham Branch Railroad Company, for money which was part of the consideration for the sale of that road. The check as thus drawn represented money that would ultimately become due on the bonds and notes deposited by the *381defendant as collateral and also money a portion of which would ultimately belong to the plaintiff Richardson, it being agreed that the parties should afterwards meet and account together. This transaction was not properly a payment by the Stoneham Branch Railroad Company of the Gerry notes. Upon those notes that corporation was not liable. For the money obtained by them it had given its own bonds and notes, and the act of the directors in drawing the check simply enabled those of its creditors who upon final settlement would be entitled to the money represented by it to use it presently in discharge of the notes. If, therefore, the amounts which ultimately became due upon the defendant’s bonds and notes failed to meet the half of the Gerry notes, the money ultimately becoming due to others also represented in the check was necessarily used to meet this deficit. So far as his money was thus used, Richardson is entitled to the benefit of it as a payment made by him of that which the defendant by his obligation assumed and bound himself to pay.
Upon the subsequent accounting the dividend due to the creditors is calculated, and crediting the defendant with the full dividend on his claims against the corporation it is found that the dividend which the plaintiff Richardson receives is diminished through the failure of the defendant to pay one half of the Gerry notes, by an amount equal to one half of the difference between the value of the defendant’s collateral securities and the half of the Gerry notes. To this extent, therefore, Richardson has been injured by the failure of the defendant to perform his agreement. There has been withheld from him money which would otherwise have come to him as his proper dividend upon his claims against the Stoneham Branch Railroad Company, and it has been devoted to that which the defendant agreed to pay as his “ proper and separate debt.”
We are not impressed with the suggestion that' the remedy of the plaintiff is only in equity. Upon the case as presented, it is a matter entirely between the plaintiff Richardson and the defendant, and no rights of others which require to be adjusted in order to ascertain defendant’s liability are involved in it.

Exceptions sustained.