Patch v. King

The opinion of the Court, (Howard, J. taking no part in the decision, having been engaged in the case, and Siiepley, C. J. not concurring.) was delivered by Tenney, J. This suit was commenced in 1842, and is upon a promissory note of hand, dated on Nov. 9, 1832, for the sum of $1300, signed by the defendant and one Jacob D. Brown, as principals, and other persons as sureties. An indorsement was made by Brown, in 1838, of one dollar, and another by his clerk, who has since died, of $200, in the year 1840. On Sept. 4, 1834, the two principals upon the note, conveyed in mortgage certain real estate to the plaintiff, as security for the note. Upon the margin of the record of this mortgage, are the words and figures following : — “ Oxford, ss. Jan. 4, 1836. I hereby acknowledge to have received of the within named Jacob D. Brown and Samuel H. King, the full and just sum, to secure the payment of which sum, the within mortgage was executed, and do therefore hereby discharge the same. Levi Patch.” “ Attest, Alanson Mellen, Register.” The plaintiff was proved to have said, that Brown told him, it was his debt to pay, and that Brown offered to pay him all which was due, as soon as he could go to Boston and back, if he could raise the mortgage. The plea of non-assumpsit, and the statute of limitations was relied upon in defence. It is insisted that the acknowledgment of payment on the record, is proof of the discharge of the debt; and that the subsequent recognition by Brown of the existence of the note as an outstanding claim, cannot revive it against the defendant, especially as the plaintiff had declared subsequent to the execution of the mortgage, that it was his debt to pay. If it can be shown, that a note of two joint promisers is paid, one of the makers cannot revive it, so as to create any liability in the other. A mortgage has for its basis, the contract, the obligation of which is intended to be secured; and [452] it ceases to have validity by the discharge of that contract. It is undoubtedly competent, for the parties to annul the collateral security without affecting the debt secured. And a deed o/ release of an estate conveyed in the mortgage, from the one having the right of the mortgagee, would not be conclusive proof of the payment of the debt secured thereby. The mortgagee may also discharge his claim, as provided in R. S. c. 125, § 28. This is similar in most respects to the statute of 1821, c. 39, § 1; which was in force when the mortgage in this case was discharged. This provides that “ the mortgagee may also discharge his claim, by causing satisfaction and payment to be entered on the margin of the record of such mortgage in the register’s office, and shall sign the same, which shall forever discharge and release the mortgage, and perpetually bar all actions to be brought thereupon, in any court of record. It was probably contemplated by the authors of this statute, that ordinarily the mortgage would continue effectual, as long as any part of the indebtedness secured by it, should remain ; and hence the form prescribed. The manifest purpose of the provision was to furnish and perpetuate the proof, that the incumbrance no longer existed, and that the constructive notice of the mortgage by the record, should be accompanied by that of the discharge. Accordingly the statute has declared expressly the effect of such a discharge, and it cannot have a more enlarged construction than was manifestly designed. And when we consider the object to be secured, and the language used limiting the discharge to that object, the acknowledgment of the receipt of payment cannot have given to it, a character and importance which it would not have, when unconnected with the discharge of the mortgage. And it is a well settled principle, that a receipt, simply acknowledging that a debt referred to therein, has been paid, is prima facie evidence only of such payment; and it is open to explanation. If so explained that its effect according to its terms is controlled, the debt is not to be regarded as having been discharged by the receipt, and revived by the controlling proof, but as always having subsisted, notwithstanding the receipt. [453] By the agreement of the parties, the determination of the facts as well as the law, is submitted to the Court upon the case reported. The entry made upon the margin of the record, unaffected by any other proof, is sufficient to show payment of the note, and it is to be ascertained by all the evidence, whether this acknowledgment is rebutted and controlled. The indorse-ments upon the note, may both be regarded as made by Brown, one being in his own and the other in the handwriting of his clerk. These were made after the discharge of the mortgage. The case exhibits nothing, which could constitute a reasonable motive in him, to make these indorsements at the time of their respective dates, unless it was in discharge pro tanto of a known indebtedness. So far as it regards Brown, therefore, no doubt can exist on this point. But he is not a party to the suit, and his liability is material for our present purpose, only as having an influence upon the question, whether the note is unpaid or not. There is no declaration or act of the defendant reported, which tends to show that he has admitted his continued indebtedness, since the discharge of the mortgage; but there are facts and circumstances sufficient to lead us to the conclusion, that the note was not paid at the time of this discharge. The entry upon the record must be treated as an act of deliberation. The plaintiff must have gone to the registry of deeds, and there have made the discharge. This was evidently the result of an understanding between him and the principals upon the note. There was either an agreement, that the mortgage should be discharged, and the note remain effectual, or the money due thereon was actually paid. No attempt is made to explain, why the note should be permitted to remain uncanceled in the hands of the payee after it ceased to be obligatory, if it, was really paid. If no collateral security had been given for its payment, and it was really intended to be outstanding, it is difficult to imagine a motive which could influence the plaintiff to give to the makers a written acknowledgment of full payment. But the note being secured by a mortgage upon real estate, there was an important object to bo obtained by the entry, which was made upon the records. This [454] object was the discharge of the mortgage ; and it could be done without affecting in the least the personal security. If the design of the parties to the transaction, when the entry was made upon the record was for this purpose alone, they adopted one of the modes provided by the statute for its accomplishment, and the purpose entertained was secured. For some purpose it might have been desirable on the part of the principals on the note, that the incumbrance should be removed from the land, before the note secured should be paid ; and the defendant has shown by the declaration of the plaintiff, that Brown offered to pay him all which was due, after bis return from Boston, if the estate could be previously relieved from the mortgage. It was not unreasonable that the plaintiff should have expected, that if Brown could present in Boston, an unincumbered fdtle to the land, about the first of January, 1836, when it was notorious as matter of history, that lands in Maine were believed to possess great value, and were much sought after by purchasers, he would be able to pay all which was due to the plaintiff, and take up the note. The plaintiff had taken and held the same note for a considerable time, with no collateral security which the. case discloses, and there is nothing, which shows a want of confidence in Brown’s ability through the land, to obtain the means of payment after the discharge of the mortgage. Is this action barred by the statute of limitations? The payments made by Brown and indorsed on the note were before the revision of the statutes, which took effect in .1841, and the provision in chap. 146, § 20 and 24, are by the 27th section of the same chapter, to have no effect thereon. In this State, before the operation of the Revised Statutes, a new promise made by one of two joint promisers would take the case out of the statute of limitations as to both. Greenleaf v. Quincy, 3 Fairf. 14; Pike v. Warren, 3 Shepl. 390; Dinsmore v. Dinsmore, 8 Shepl. 433; Shepley v. Waterhouse, 9 Shepl. 497. It is contended, that as Brown had made a contract with the defendant, on April 6, 1835, in which he engaged to save [455] harmless the defendant from all liability on the note in suit, which was known to the plaintiff, the doctrine that a surety is exonerated by the holder of a note, giving time upon consideration to a principal, without his consent or knowledge, is applicable to this case. It is not contended, that time was given in its ordinary acceptation to the principal, but that the note having been discharged by the entry upon the record, its effect upon the defendant, who was really at that time, as between him and Brown, a surety only, should be the same. This proposition cannot be sustained either by the facts or the law of. the case. The entry on the record is all the evidence relied upon, to show a discharge of the debt. But by the fair import of this entry unconnected with other facts in the case, the payment was made by Brown and the defendant, and whatever was done, was equally known to both. But the debt was never in fact paid and the defendant had full knowledge that it was not. But if it were otherwise, we have found no case, which authorizes the application of this doctrine, when joint contractors, who were both principals, at the time the note first became effectual in the hands of the payee, have changed their relations afterwards, so that one has contracted with the other to pay the whole debt, although this change may be known to the holder. The holder of a note is not restricted in his rights by any arrangements of the makers among themselves, made after the note has passed from their hands, when he was not a party thereto. Defendant defaulted.