Jones v. Pierce , 35 N.H. 295 ( 1857 )

PeRHGy, C. J.

It appears by the case that the railroad, in discharge of the claims which the plaintiffs had for work done on the road, agreed in writing to pay debts of the plaintiffs contracted while they were engaged in building the road, to the amount, with sums already paid, or agreed to be paid, of ten thousand dollars, the payments to be designated by Jones, to be paid within three months, and not to be incompatible with the legal liabilities'of the road, as trustees-of Hale and Jones ; and the defendants signed the contract as sureties for the performance of it.

The breach assigned is that the railroad did not pay $>2453.30 to the Piscataqua Exchange Bank, as was designated by Jones ; and that the plaintiffs have in consequence been obliged to pay the bank that sum, to take up their bill drawn for that amount on the railroad, and accepted, but not paid. The case finds that the bill has not been paid to the bank, either by the railroad or the plaintiffs, and the claim of the plaintiffs rests not on an actual payment by them of the bill, but on^ the ground that their debt to the bank has not been paid according to the contract of the railroad. . .

The draft of the plaintiffs on the road was accepted and delivered to the bank. The bank thus became the holder; and, taking it for granted that by an understanding between the plaintiffs and the road, the bill was a good designation under the contract, the payment is still to be made according to the bill. So far as the rights and duties of the drawers and holders are concerned, there is nothing to distinguish this from the ordinary ease of an accepted bill, payable at a future day, and delivered by the drawer to his creditor on account of an existing debt. After acceptance, the railroad were primarily liable on the bill; the plaintiffs, being drawers, were only liable in case the bill was duly presented for payment, and not paid by the acceptors, and notice given of non-payment. The ease does not find that the bill was presented for payment, nor any fact to excuse want of presentation ; and consequently the bank have no claim on the plaintiffs as drawers. By neglecting to present the bill for payment, the bank have discharged the plaintiffs as drawers, and must rely on the railroad alone. Whether the bill was taken by the bank as an original or collateral security, the effect is the same ; the bank became chargeable with the bill, and it paid so much of their debt against the plaintiffs. Story on Bills, secs. 109 and 326.

On this ground the plaintiffs must fail in their action. This sum of $2453.30, so far as the plaintiffs are concerned, has been paid and discharged by the acceptance of the railroad. The agreement for which the defendants were sureties, was that the railroad should pay, to a certain amount, sueh debts as Jones should designate. Taking this debt to have been sufficiently designated, it has been paid by the railroad. The bill has been so treated by the bank that it has paid the plaintiffs’ debt to that amount. It is paid by the legal operation of the transaction; and the payment is as effectual and as beneficial to the plaintiffs as if the bill had been paid in money to the bank when it fell due. The liability of the railroad on the acceptance remains, but the debt of the plaintiffs to the amount of the bill is paid and extinguished.

It is possible that the bill was in fact presented for payment, and due notice of non-payment given, and that by some oversight the evidence was not produced on trial; if so, perhaps the omission might be supplied in some future proceeding. But there is another fatal objection to the plaintiffs’ case.

At the time when this agreement was made, two foreign attachments were pending, in which the plaintiffs were sued as principal defendants, and the railroad summoned as their trustees— the attachments in the two suits amounting to $23,000. The demand which the plaintiffs then had on the road appears bj the case to have been for a balance due to the plaintiffs on account of work due in building the road, and would be a fund, liable to attachment by our trustee process. The debt due to the plaintiffs from the road was therefore attached in those suits at the time when the agreement was made, and the road was legally liable to pay the debt to the plaintiffs in these suits, if they should recover judgment against these plaintiffs. The obligation of the defendants to pay, and the right of the plaintiffs to receive the debt, were suspended by the defendant. If the road had paid the debt to these plaintiffs while those suits were pending, they would be liable to pay it again, if judgment were recovered against the principal defendants in those suits. There does not appear to have been any case in which the liability of the road, as trustees of the plaintiffs, was then fixed by a judgment ; and we must understand that the liability of the road, as trustees of the plaintiffs, mentioned in the written contract, must mean this contingent liability, to be charged as trustees in those pending suits. There was no other liability of that kind to which the contract could refer.

The plaintiffs in those suits afterwards recovered judgment for above $8,000, and the road became liable, at the election of the plaintiffs in those suits, to be charged as trustees to that amount, provided they owed as much to these plaintiffs. It was, therefore, a substantial and not a fanciful liability which hung over the road when the written contract was made; a payment of $10,000, or any other sum, was incompatible with that liability; and the road, by the terms of their contract, would not be bound to pay till that liability was removed. Actual payment, as trustees under a judgment, -would be necessary to constitute a final discharge of the plaintiffs’ demand against the road. But, as sureties for the performance of this agreement, the defendants cannot be held to answer for a breach of it, if payment of the debt was incompatible with the liability of the road in those suits. The suits remained pending until after the three months, limited by the contract for payment of the designated sums, had elapsed; and payment was incompatible with the liability to pay the same debt again, as trustees in those suits. If these suits had been settled by the plaintiffs, and the liability of the railroad, as trustees, discharged, then this objection would have been removed; but on the facts of this case it appears to be insurmountable.

Several other points arise in the case, but the court have not found it necessary to consider them.

Judgment on the verdict.