Ainslie v. Wilson , 7 Cow. 662 ( 1827 )

Curia, per Woodworth, J.

There is no sufficient evidence to impeach the transaction between the Murrays and Bronson, as being in fraudem legis, or done with intent to defeat the operation of the defendant’s discharge. But if it be conceded that the transfer to Bronson was collusive, and that the Murrays continued to be the real holders till after the defendant’s discharge, it will not defeat the plaintiff’s right of action, provided that, subsequent to the discharge, he, as first indorser, was liable to the Murrays; and actually made the payment in question.

*The evidence sought to be derived from the bill in equity, I consider as irrelevant; for whatever may have been the equity between the plaintiff and the Murrays, it is a sufficient answer here, that no right of action could accrue to the plaintiff by reason of a contract which was not carried into effect. The Murrays refused to recognize the alleged agreement. It remained, therefore, unexecuted; and for this cause the plaintiff applied to a court of equity for relief.

The mortgage was a security merely, not a payment; and, therefore, did not place the plaintiff in a situation to demand anything of. Wilson, the defendant. He had not, then, become a creditor of the defendant by taking up the notes, or paying any part, at the time of the discharge under the insolvent act of 1813; and could not be barred by it. Neither was the covenant in the mortgage an exoneration from liability as indorser of the notes. It left that liability as it found it; and merely provided against personal responsibility by reason of the mortgage, evidently meaning that the Murrays should avail themselves of nothing more than the lots.

According to this view, the plaintiff, having no cause of action against the defendant, at either of the times when he was discharged under the insolvent acts, is not affected by them.

The plaintiff’s right of action then, if any, arose upon his execution of his deed to the Murrays, on the 3d of February, 1821. The consideration of that deed was expressed at 1200 dollars; and it was received in payment of so much of the notes; that sum being the value of the lots as estimated by the Murrays. On the same day, they executed to the plaintiff a writing, by which, for the consideration of this 1200 dollars, they released him from all further liability as indorser. The remainder due on the notes constituted a valid claim in favor of the Murrays, against Wilson, the maker. No money was paid, as the consideration of the equity of redemption.

Hall’s purchase and release of the notes to the maker, is wholly unimportant in respect to these parties. The Murrays, "having received 1200 dollars of the indorser, discharged his liability only; and ‘consequently, by a-transfer of the notes to Hall, he acquired the right of calling on the maker for the balance remaining due. The plaintiff’s right rests on the claim of having paid the 1200 dollars previously.

There is some question whether the equity of redemption taken subject to the previous mortgage, was equal in value to the 1200 dollars. The jury found $804 45 only ; and, from the evidence, I think they were warranted in finding that amount.

The view which I have so far taken of the case, obviates the objections for variance between the special counts and the evidence. But if I am mistaken, then the point remains to be considered, whether the conveyance of land by a surety, to satisfy the money debt of the principal, will support the money counts. It was not a voluntary payment; for the plaintiff* was liable at the time to be prosecuted by the Murrays on the notes. He was originally liable; and continued so notwithstanding the mortgage, which was' given as a contingent security to indemnify the Murrays, in case they should be compelled to pay. At' this time, the Murrays were not the holders of the notes; but Bronson. Whenever the indorser pays after he has been fixed, the liability of the maker commences. I have no doubt that, as the conveyance of the land was received in discharge of a money debt due from the plaintiff, it' is, in' judgment of law, to be considered the same thing as if the' plaintiff had actually paid money. The Murrays received it as money, or an equivalent for money. They had' the right of electing. To the defendant it was "immaterial'whether the payment was made in one way or the other. If an agent receives property for his principal, and there is no presumption that it has been converted into "money, the action for money had and received will not lie: but if the agent appointed to collect a money debt, should accept from the debter in extinguishment, property as money, he would not be permitted to question this form of action. I am not aware that this express point has been ^decided. The authorities cited by the defendant’s counsel do not, I- apprehend, apply to the facts before us. In the case of Taylor v. Higgins, (3 East, 170,) the plaintiff was surety for the defendant in a bond before his discharge under' an insolvent debtor’s act; and was afterwards obliged to give a new security by bond and warrant of attorney. It was held that the new security could not be considered as so much money paid to the defendant’s use. In the case of Cumming v. Hackley & Fisher, (8 John. 202,) the same doctrine is recognized. The question was, whether giving a bond in dis' charge of the liability of the plaintiffs as indorsers of two negotiable promissory notes drawn by the defendants, was be considered as payment of money • and it was held to be no payment; that the obligation to pay was not the same thing as payment. By the same case, it seems to be admitted that the giving of negotiable paper would be considered equivalent to the payment of money; for otherwise a party might be obliged to pay a debt twice, if the paper should pass into the hands of an innocent indorsee. These cases go very satisfactorily to show, that the giving of the mortgage by the plaintiff, did not give him a right of action; but leave the question, whether actual payment by the conveyance of land, is sufficient to maintain the money count, undecided. And although it is said, it must appear that money was actually advanced, the expression is to be understood that nothing short of actual payment will support the count. The mere extinguishment of the original liability by way of new security will not avail. In the case of Randall v. Rich, (11 Mass. Rep. 494,) this question has been considered. A negotiable promissory note was indorsed to a lessor, as collateral security for the rent of the premises. The lessor commenced an action on the note; and caused an execution to be levied on the debtor’s land. In an action by the lessee for money had and received, he was held entitled to recover the balance of the note after deducting the rent in arrear. The court observed, that “ the satisfaction of the execution ought to '-'be considered as a payment of the debt in money; and although land is taken, it is taken at money’s worth; and the debt, which might have been exacted in money at all events, has been discharged.” ^[1]

My opinion is that the motion for a new trial be denied.

Motion denied.

Sutherland, J., not having heard the argument, gave no opinion.

[1] See N. Y. Dig., vol. 3, tit. Payment Waterman’s Am. Ch. Dig., tit. Payment.