Norton against Plumb and another

Norton against Plumb and another. A, being indebted to C in the sum of 1500 dollars, gave C a note for that sum, signed by himself and by B, his surety, payable in one year. D indorsed this note in blank, and also another note given by A to E for 1080 dollars. A put into D’s hands, as collateral security for such indorsements, a note given by F to A for 5000 dollars, subject to a lien in favour of G to the amount of 1800 dollars, Shortly before A and B’s note to C became due, A, C, J) and F came together, and made an arrangement, in pursuance of which F gave C his (F’s) note of the same amount as A and B’s note to <7, and in lieu thereof, which was indorsed on F’s note to A in the hands of J), and the last-mentioned note was thereupon given up to A, and the note of A and B to C was taken by 2). This arrangement was made without the knowledge or consent of B. A failed ; and D paid A’s note to E. In an action brought by 2?, in the name of G} on A and B’s note to C, it was held, that the arrangement thus made did not necessarily operate as payment, and that the plaintiff was entitled to recover, in this action, to the amount of the moneys paid by 2), on note to E. This was an action on a promissory note of the following form : “ Berlin, October 20th, 1836, One year from date, I promise to pay Philip Norton fifteen hundred dollars, (value received) and interest. James M. Plumb, Mary Yale.” The cause was tried at Hartford, September term, 1841, before Slorrs, J. On the trial, it appeared that the suit was brought and prosecuted exclusively for the benefit of the estate of Frederick Dunham, deceased. The note in suit was given to Norton, for a loan of money amounting to 1500 dollars, made by him _ to the defendant, Plumb ; and was signed by Mary Yale, as surety for Plumb ; and, as further security, Dunham indorsed it in blank. Previous to October, 1837, the credit of Plumb being suspected, and Dunham being indorser not only of the note in suit, but indorser or surety for Plumb on two other notes given by him, one to Barney Powers for 848 dollars, and the other to Sylvester Webster for 200 dollars, Plumb, at Dunham’s request, put into his hands, as collateral security for his indorsement of the note in suit, a note given by Benjamin Wilcox to Plumb for 5000 dollars, subject to a condition thereon that Plumb should procure and deliver to Wilcox a release deed from the heirs of Orrin Beckley of certain real estate, for which the last-mentioned note was given by Wilcox to Plumb, and on which estate the heirs of Beckley had a lien for about 1800 dollars. The plaintiff claimed, that Wilcox’s note was, at the same time, put into Dunham’s hands as security also against said notes to Powers and Webster respectively, as well as against the note in suit; but this fact was not admitted by the defendants. In the fall of 1837, shortly before the note in suit became due, Dunham, being in feeble health, and, for his health, about to take a voyage to the West-Indies, considering his return very uncertain, and desirous of relieving his family from any trouble or embarrassment, by reason of the note in suit falling due in his absence, and not being paid by Plumb; and, as the note of Wilcox was conditional, so that nothing could be realized from it, during Dunham’s absence, to meet his liability on the note in suit, if he should become liable to pay it, without advancing the sum so due to the heirs of Beckley, which it was inconvenient for him to do ; — proposed to Norton and also to Plumb, that an arrangement should be made, by which Norton should take a note of Wilcox, in lieu of the note in suit, for the same amount. To this Norton and Plumb assented ; and it was, accordingly, agreed between Norton, Dunham and Plumb, that, on the 9th of October, they and Wilcox should meet at Dunham’s house, and carry such arrangement into effect. They met at the time and place appointed, and Wilcox gave Norton his (Wilcox’s) note, which was also signed by one of his sons as surety, in lieu of the note in suit, and for the same amount; which was endorsed . on the conditional note of Wilcox in the hands of Dunham ; and the last-mentioned note, there being then only about the sum due to the heirs of Beckley remaining unpaid thereon, was thereupon given up to Plumb, and the note in suit was taken by Dunham. It did not clearly appear, from the evidence on the trial, whether, when Dunham took the note in suit, he received it from the hands of Norton, or whether it was by Norton laid on the table around which Wilcox, Plumb and Dunham were sitting, and Dunham took it from the table. Dunham, however, took the note into his possession, without objection from any of the persons present, and retained the possession thereof ; and, either at that time, or shortly afterwards, erased his name from the back of it. It was also admitted by the parties, that the note for 5000 dollars was given by Wilcox to Plumb for real estate, sold, or contracted to be sold, and conveyed by Plumb to him, Wilcox ; that such note was the sole and exclusive property of Plumb, except so far as Dunham had an interest therein as collateral security; that Dunham ceased to have any interest therein, after it was so given up to Plumb, and that the sole and exclusive interest therein then reverted to Plumb; that Norton never had any interest therein ; and that the notes to Powers and Webster have, since the death of Dunham, been paid out of his estate, by his administrators, and are now held by them for the benefit of the estate. No evidence was offered to prove, that Dunham ever had any knowledge of the fact, whether Mary Yale signed the note in suit as surety for Plumb, or for her own benefit. The plaintiff claimed to have proved the following facts, which, however, were not admitted by the defendants: That when Dunham made said proposal to Norton, Plumb was, and ever since has been, insolvent; that before and at the time when the note in suit was taken by Dunham, it was understood and agreed between Dunham, Norton and Plumb, that Norton should assign the note in suit to Dunham, and Dunham should take and hold it as collateral security to indemnify him against said notes to Powers and Webster; and that the note in suit should be a mere substitute for said note of Wilcox, which was so delivered up by Dunham to Plumb, and not as an extinguishment of the note in suit; that the note so received by Norton from Wilcox, was only received in lieu-of the note in suit; and that what took place when Norton, Plumb, Wilcox and Dunham met as aforesaid, was in pursuance, and in fulfillment, of said arrangement. It was further admitted, that Mary Yale, was not present when said arrangement was made, had no knowledge thereof, and never assented to it; that Norton had never assigned to Dunham the debt, or any part of the debt, for which the note in suit was given to Norton, except so far as the facts above stated would amount to an assignment; and that said debt, as between Norton and Plumb, Mary Yale and Dunham, was entirely extinguished and satisfied, by said note given by Wilcox and his son, to Norton. The only claim made by the plaintiff on the trial, was, to recover the amount of the moneys paid out of the estate of Dunham, in satisfaction of the notes in favour of Powers and Webster. The plaintiff claimed, that, on the facts so admitted and claimed by him to have been proved, he was entitled to recover on the note in suit, to the amount of the moneys paid out of the estate of Dunham upon said notes, and the interest thereon; and requested the court to instruct the jury accordingly. The defendants claimed, that, upon the facts as admitted by the parties, and claimed to be proved, they were entitled to a verdict; and the court so instructed the jury; who returned a verdict for the defendants. The plaintiff thereupon moved for a new trial for a mis-direction. W. W. Ellsworth and Parsons, in support of the motion, contended, that when the note in suit passed from Norton to Dunham, it did not pass as paid and extinguished, but was still subsisting as a note, exchanged for a claim on Wilcox. Dunham certainly had, as he claimed, the note for 5000 dollars as a security for the 1500 dollars and the two other notes to Powers and Webster. It was agreed to exchange notes, and leave the note in suit alive. That this could be done, is clear; for Norton could sell this note to Dunham, or any one else. The question was, did he ? This matter of fact it was the province of the jury to decide. Suppose Mrs. Yale, Plumb, Norton, Dunham and Wilcox had all been present, (as, indeed, all were, except Mrs. Yale,) and, as the plaintiff claims they did, had agreed to it, could not this arrangement pe maje ? JJut the consent of Mrs. Yale is not important. She gave the note and owes it now, unless it has been paid; which is the very question taken from the jury. If her consent was essential, it could be only on the ground of the note’s having been extinguished. Hungerford, contra, insisted, 1. That from the facts appearing upon the motion, the note in suit was paid and satisfied by Plumb. The debt was extinguished, and no recovery can be had upon the note. 2. That there could be no effectual assignment of the note after the debt was paid. Bartrum v. Caddy, 9 Adol. & Ellis, 275. 3. That it was not in the power of Plumb to give effect to the note in suit, by a delivery of it to a third person, after it had been paid. [MAJORITY — Waite, J.] Waite, J. In this case, the court instructed the jury, that, upon the facts admitted by the parties, and claimed by the plaintiff to have been proved, the defendants were entitled to a verdict in their favour. This instruction would have been right, had Dunham been liable only upon the note in suit, and purchased it with the funds of Plumb. But the claim made by the plaintiff on the trial, presents a different case. There is nothing stated in the motion, which shews, that Dunham had not a right to become the purchaser. Neither his situation as an endorser, nor the fact that Mrs. Yale signed the note as a surety of Plumb, will vary that right. Had he bought the note and paid his own money for it, he could have maintained a suit upon it, for his own benefit. The note not being negotiable, such suit must necessarily have been brought in the name of Norton, the payee. The legal effect of the instrument is, that Plumb and Mrs. Yale are jointly and severally bound to pay Norton the sum specified in the note. That obligation is no more affected, by a mere sale to Dunham, than if made to any other person. Suppose Plumb had pledged the Wilcox note to Dunham, to indemnify him against his endorsement of the two notes to Webster and Powers only; and then Dunham had with it purchased the note in suit; what would have been the effect? Clearly, he would be bound to pay those two notes with his - own funds. Having appropriated the pledge to his own use, he would be required to discharge the debts on account of which the pledge was given, — to the amount of the pledge. Now, the claim of the plaintiff is, that the Wilcox note was pledged to Dunham, to secure him, not only against his liability to Norton, but against his liability to Webster and Powers. It was insufficient to satisfy all these liabilities ; and it does not appear that any direction was given by Plumb, as to the note or notes which should first be paid. Dunham had, therefore, a right to make the application as he pleased. Fairchild & al. v. Holley & al. 10 Conn. Rep. 179. Bodenham & al. v. Purchas, 2 B. & A. 45. Bosanquet & al. v. Wray & al. 6 Taun. 597. United States v. Kirkpatrick & al. 9 Wheat. 720. He had a right to apply the Wilcox note, first in discharge of his liabilities to Webster and Powers ; and then, if he paid his own money to Norton, to discharge his liability to him, he might sustain an action against these defendants, for money paid for their use and benefit. The fact that the pledge had been given him, and that he had applied it in discharge of his other liabilities, would have furnished these defendants with no defence to such action. While this pledge is in the hands of Dunham, and his right as to the application remains, an agreement is made.between him and Plumb, that this right shall be relinquished ; that, with the pledge, Dunham shall purchase the note in suit, and hold it in the same manner as he held the other ; that is, as security for his liability to Webster and Powers. Plumb, being a party to this arrangement, cannot complain. Nor has any injustice been done him. But it is said, that Mrs. Yale had no knowledge of this arrangement, and never assented to it. But how has she been injured by it ? The pledge was made by Plumb; and, after it was so made, she had no power to controul the application, further than to require that it should be applied upon some of the liabilities to the full amount of it. If Dunham had a right, without her knowledge or consent, to apply the pledge in discharge of his liabilities to Webster and Norton, and then call upon these defendants to indemnify him against his liability upon the note executed by them, then, by the arrangement, no injustice has been done Mrs. Yale. The plaintiff claims to recover no more for the benefit of Dunham’s estate, than could have been recovered against her, if no such arrangement had ever been made. We think that the purchase of the note in suit, with the note of Wilcox, under the circumstances stated in the claim made by the plaintiff, did not necessarily operate as payment; and consequently, that a new trial must be granted. In this opinion the other Judges concurred. New trial to be granted.