Christian & Curran v. Naudain's Administrator ( 1862 )

The Court,

Gilpin, C. J.,

charged the jury, that where there was mutuality between the parties, as where the security of the higher and of the lower grade were between the same parties and for the same debt, or one person gives another his promissory note and afterward his bond, or other instrument under seal, to the same person for the absolute payment of a sum of money, the law would presume the bond, or other instrument under seal to have been in satisfaction of all pre-existing indebtedness on the part of the former to the latter up to the time, when such second security was given by him, and the previous security of a lower grade would, upon that presumption, be merged in and extinguished by the latter security of a higher nature in contemplation of law. That, however, was but a legal presumption where the two securities were between the same parties, which might be rebutted by evidence to the contrary. Where, therefore, it appeared from the evidence in any case, that the parties to the two securities were not the same, or that the subsequent security of a higher nature was given and taken as collateral, or additional security only for the former and for the same indebtedness, and was not intended to supersede or extinguish the former security of a lower grade, the lower would not be presumed to be merged in the security of a higher grade, and would consequently not be extinguished, superseded, or affected by it; but both would continue valid and subsisting securities for the purposes for which they were given; and if the jury were satisfied from the evidence which they had heard in the case that the judgment bond executed and delivered by Jacob Y. Eaudain to the plaintiffs for the sum of eight thousand dollars, was only a collateral or general security for whatever indebtedness existed on the part of the late firm of Eaudain & Murphy to the plaintiffs, including the indebtedness for which the promissory note in question was made by them and signed by Elias S. Eaudain as their surety, the action would lie against his administrator, and their verdict should be for the plaintiffs, provided they were also satisfied from the evidence, that the indebtedness on their part for which the promissory note was given to the plaintiffs had not been paid.