First National Bank v. Hunton , 70 N.H. 224 ( 1899 )

The plaintiffs had a valid claim against the firm of Hunton Barker and against Edwin M. Hunton as a member of that firm for $1,500, which they released for the individual note of Alice E. Hunton for the same amount. Alice received her husband's note for $1,500 to indemnify her for assuming this obligation of her husband to the plaintiffs. Edwin also secured her obligation by assigning to them the insurance policies on his life. Until after the discharge in insolvency of Edwin, all parties treated this transaction as valid.

Alice proved her claim and acquired the right to sixty per cent of it, and obtained Rawson's acceptance of the $500 order. She obtained this in consideration of giving her note to the plaintiffs for her husband's debt to them. It was the proceeds of the note she received from her husband to indemnify her against her indebtedness to the plaintiffs. She now repudiates her note to the plaintiffs on the ground that it was a contract of suretyship or guaranty for her husband, or an undertaking on his behalf, and therefore not binding on her. Although she may lawfully do this and shield herself from this obligation, under the statute in regard to the contracts of married women (First Nat'l Bank v. Hunton, 69 N.H. 509), yet she can neither keep the money which she has acquired the right to receive by virtue of the transaction, or release it to her husband or his creditors. Equity will require her to hold it in trust for the benefit of the plaintiffs' claim, on account of which she received or acquired the right to receive it. If the husband had placed in her hands $1,500 in cash to indemnify her on account of giving her note to the plaintiffs in payment of his claim, although she might under the statute avoid her contract on her note, yet she could not under those circumstances keep the money. She would hold that for the benefit of the plaintiffs. To hold otherwise would allow her to perpetrate a fraud. The same principle will make her answerable to the plaintiffs for what she is entitled to receive from Rawson on account of the note of indemnity given her by her husband.

The valid claim of the plaintiffs against the old partnership or against Edwin was not paid or extinguished by the receipt of the void note of the wife for it. Whether the whole transaction is regarded as one of suretyship on the part of the wife on her husband's obligation, or as a contract by her to pay his debt to the plaintiffs, equity will not permit her, although not personally liable on her obligation to the plaintiffs, to retain what she has received from the debtor as a provision for or an indemnity against its payment. The plaintiffs are entitled to the benefit of any provision of that kind under the well established principles of subrogation. Keene Savings Bank v. Herrick, 62 N.H. 174; Holt v. Savings Bank, 62 N.H. 551; Barton v. Croydon, 63 N.H. 417; AEtna Insurance Co. v. Thompson, 68 N.H. 20; Hunt v. Association, 68 N.H. 305, 308.

The trustee process served on Rawson after the service of the bill in equity could not affect the plaintiffs' rights.

We see no error in the ruling in regard to the insurance policies.

The facts material to the plaintiffs' case having been set forth in the bill, the motion to dismiss was properly denied.

Exceptions overruled.

PARSONS, J., did not sit: the others concurred.