Court Opinion

ID: 6314472
Source: CourtListenerOpinion
Date Created: 2022-02-18 20:22:04.753428+00
Date Added: 2024-06-11T08:59:12.481459
License: Public Domain

The opinion of the Court was delivered by
Huston, J.
This case is not the only one within my recollection, in which one of the parties has endeavoured to put his cause on points not appearing in the contract, or in the evidence.
It is said the turnpike company never was indebted to the Bank of the United States, and William Trimble never was indebted to the *386bank. It is said Jones and Hamilton borrowed for themselves, and loaned.the money to the turnpike company, and could have sued them next day. It is said the engagement of the turnpike company might be put out of the case, and then Trimble was liable to pay as soon as the company received the money: That the resolution of the managers, and the engagement of the defendant, and others, must be considered as separate and distinct agreements, not connected with each other. In short, that we ought to disregard the agreement of the parties, the objects of the parties, and the engagements and covenants of the parties, and try the cause, as if it had been what it is not. , ’
That Jones and Hamilton even after they received this money from the bank might have employed it in some other way, or required some other security from the turnpike company, is all true, but as they did give it to the company, and did not require any other security than the resolution of the managers, and the written guarantee of the defendant and others, each for one twelfth, we may throw away all supposed and supposeable cases, and decide on. the facts and documents in íhé cause. Whether, if 'Jones and Hamilton had become insolvent, and the company been rich and prosperous, the bank could have recovered this loan from the company, need not be decided, though I apprehend the Circuit .Court of the United States on a bill in chancery, would not have thought it a difficult case.
Although Jones and Hamilton procured this money for the company, yet there were certain events which might have happened, after which they could not have sued the company with effect, e.g-., if the company could have sold for cash all its shares of stock, it could lawfully'and properly have paid this twelve thousand dollars to the bank, as that stock was pledged to indemnify Jones and Hamilton. When the bank called for certain, portions of the money at stated periods, or in the phrase used here, resolved to cut down the note, if the company as they were requested by the plaintiffs to do, could have paid those portions as they were called for, it would have been a compliance with their agreement as stated in their resolution, and Jones and Hamilton so far from having a right to sue the next hour after they paid the money to the treasurer, would never have had any right of action against the company, or the defendant; so too if the company had procured other drawers and indorsers to be substituted instead of Jones and Hamilton. But it is argued that the plaintiffs had a right of action as soon as the sixty days expired, and they gave a new note. There are cases in which giving a negotiable note may discharge a debt,, even a debt on bond and mortgage, or on judgment, but it is in cases where by the agreement of the parties, this effect is to be produced ; where the understanding and agreement is otherwise, such is not the effect; for instance, where an indorser wishes to be discharged, and the bank agree to accept another indorser, the latter becomes liable and the first indorser is discharged from his liability for that debt; but where the borrower from a bank, whose accomodation *387is to last for some time, gives the bank, or gives his indorser, a mortgage to secure the payment of the money borrowed, that mortgage continues a security for the money borrowed, for the debt, and that is not discharged by giving a new note every sixty- days.
The words of the resolution and guarantee, (for they form but one sentence,) are, “Resolved that Nathan’Jones and Gavin Hamilton be authorised to borrow twelve thousand dollars of the Bank of the United States, for which the stock of the company is pledged, and we of the managers whose names are hereunto subscribed, do agree to guaranty each one twelfth part of the above sum to the said Nathan Jones arid Gavin Hamilton, if the above stock should not' be sufficient.” This was signed by the defendant and four.or five others, and then follows the resolution as to the application of the money, &c. &c. ' -
Nothing is here found relating to the -time, for which the loan should be obtained, nor any time limited after which the liability of guarantors should cease. The defendant and others guarantied the payment of the sum, not of any particular note, or evidence of debt, and it is now to be decided whether a plain undertaking can be avoided, by supposing the agreement, the parties and the contingency on which the defendant was to be liable, to be any thing else than-what the evidence proves them to have been. Some cases decided in our own courts, but which were not brought to the consideration of the Common Pleas or of this court, must govern this case.
Thursby Assignee v. Gray, 4 Yeates, 518, decides that a surety is not discharged though the note is not sued when it becomes due. It was there contended that Gray was-surety only till the day of payment in the note, &c.; the court decided that whoever is surety, or guaranties payment of a debt, continues liable after the day has passed when the -debtor' ought to have paid, unless in special cases and circumstances. The notion that a security in a bond or note to pay money at a fixed period, was not liable unless the money .was demanded, and if not paid sued for at the end of the period, was again brought before this court in Cope v. Smith, 8 Serg. & Rawle, 110, the matter fully considered, and the doctrine, there established, repeatedly recognised since, but not extended. On the principles there settled, the defendant, even if the loan had been for one year, and he had guarantied the payment, would have continued as much liable after the year had expired as he was at first, and could only be released by giving the plaintiffs express notice to wind up the business as soon as possible, for he would not continue liable any longer. I say he could only have been discharged by such notice, but I do not mean to be understood as laying it down that he could in this case have extricated himself from his engagement by such notice; See Gibbs v. Cannon, 9 Serg. & Rawle, 199. Although the money was borrowed not for the defendant but for a company, yet it was borrowed on an express promise by the defendant, that if the company did not supply funds to discharge the debt, he would be personally *388bound for one twelfth part of it. No time was mentioned within which the loan was to be repaid, and nothing said about its being repaid at one payment, or by instalments. To attempt to insert in the agreement that it was to be paid at sixty days, or three hundred and sixty-five days, and if not then paid or sued for, the defendant to be discharged, is both unjust and unreasonable, and the position, that if the plaintiffs were unable to raise the large sum of twelve thousand dollars at once, the defendant might be discharged, is still worse. The defendant, then, continued liable as long as the loan continued, and became liable to the plaintiffs as soon as they had paid the bank, and not before. Pigou v. French, 1 Wash. C. C. Rep. 278. Or at most when they were sued and judgment obtained against them. Gardner v. Grove, 10 Serg. & Rawle, 137. But was he liable to suit as often as they paid any part of it, or was it one entire contract, and the defendant’s responsibility to be determined and settled in one suit, after the whole extent of liability was ascertained ? I know of no case in which it has been decided that a surety as often as he pays a small part of a debt for his principal, can sue that principal, and I know of no case where it has been attempted. I do not say there may not be a coritract in which a guarantor may sue as often as he is obliged to pay, but I do say this is not such a contract. It is very plain; the stock of the company was first pledged, and if that should not be sufficient, each of the subscribers agree to guaranty one twelfth of the sum borrowed.
Overton v. Tracey, 14 Serg. & Rawle, 311, was a stronger case than this. Overton in payment for land purchased by him, assigned a bond payable by six annual instalments, and a mortgage to secure the money due on the bond, and asserted that Drew, the obligor and mortgagor was a man of property and would pay the instalments as they fell due, and if he did not do so, Overton said that he would pay them; but he also said the property mortgaged was a sufficient security for the money, and if it did not produce the money he would make it good. Tracey wanted this guarantee put in writing, but Overton said,. ‘ here are witnesses to my engagement, it is as good as if written.’ The witnesses agreed in substance; contradicted each other in no respect, but each mentioned matters not stated by the other. On the testimony of the first, perhaps, Tracey could have sued Over-ton on each instalment; but on that of the second, perhaps, he could not sue until after the mortgage was resorted to; in other words, the liability arose on two contingencies — Drew failing to pay, and the mortgage not producing the money. Drew never was worth the amount of one instalment, and the land mortgaged was not worth the costs of suing the mortgage. It was contended, first, that Overton, on the evidence, was liable to an action for deceit, and six years having elapsed and suit not being brought, no other action could lie, — and that at all events he was liable as each instalment fell due, and could only be held to answer for those within six years before suit brought. The Court of Common Pleas decided against the defendant on both *389points, and their judgment was affirmed. Although the statute of limitations would, after six years, have barred the action for deceit, it did not bar the assumpsit on the guarantee, and this is often the case. A man takes my goods, and I may bring trespass; after four or five years he sells them and receives the price; I may bring assumpsit for money had and received, though my action of trespass would be barred. On the other point Judge Duncan put it on the testimony of the other witness who proved the guaranty of the sufficiency of the mortgage, and that if suit was brought within six years after that failed, the statute was no bar. That is enough for the plaintiffs in this case. The meaning of the agreement cannot be misunderstood; to entitle the plaintiffs at all, they must have been damnified by their engagement for this company, and the amount of their damage was to be compensated, first, out of the stock of the company, and if that failed the defendant was to pay one twelfth until the whole money was paid to the bank by the plaintiffs. It could not be known what the situation of the company would be. If the defendant could have proved at the trial, that the company, on the day when this suit was commenced, had stock which would sell for the amount of the plaintiffs’ claim, the plaintiffs must have failed, precisely as in the case cited, the plaintiffs would have failed if proof had been made that the mortgage was available. I am then of opinion, that this contract was an entire one; that the cause of action arose when the whole money was paid, and the company then insolvent, (for its materials in roads and bridges could not be dug up, or pulled down and sold) and that if suit was brought within six years of that time, the statute of limitations was not a bar. As to this last point, see Williams v. Moore, 9 Pick. 434.
Some expressions, “ that sureties are favoured,” and the like, seem to have introduced a little confusion on that subject. Sureties are not bound beyond the plain intent and meaning of their engagement ; but so far they are bound equally as the principal. Where security is required and given, it is because without it the money cannot be gotten. It would be unjust that the surety should not comply with his engagement. The person who gets and uses the money or property, may be bound to pay for it, and this may be evidenced by a note, a parol promise, or a bond; that note or bond may be void for want of legal form. The law will imply a promise from him who got and used the property, or equity will reform the instrument in some cases and make it binding on him who enjoyed the benefit; but this is not done to affect the surety unless the defect of the instrument was occasioned by him, or some fault can be attached to him; but if the instrument of writing is formal, plain and legal, and expresses clearly the obligations entered into by the parties, they are bound to comply 'with them according to their true import; and this extends as well to sureties as principals. See 3 Yeates, 344. 4 Dall. 79. Roth v. Miller, 15 Serg. & Rawle, 100. And as to the liability of guarantor, see Gibbs v. Cannon, 9 Serg. & Rawle, 199.
*390This view of the matter makes it unnecessary to remark on the' parole testimony, and the judge’s construction of it. It is not usual that a man is bound to pay by his silence, and can only happen where another in his presence and hearing speaks in his behalf and name, and alleges authority to do so, and is not contradicted. I would not put the same construction on the testimony which the judge did ; but in the view taken of the cause, no new agreement by the defendant was necessary; his first agreement in writing, in terms, and according to the obvious intent and meaning of all parties to it bound him, and continued to bind him for six years after the last payment was made by the plaintiffs, and in less than that time suit was brought.
Judgment reversed, and a venire facias de novo awarded.