Merritt v. Bucknam

Wiswell, J. This is an action against the executors of one of the joint makers of a promissory note. The note was signed by L. Leighton & Son, and indorsed, at the inception of the note and before its negotiation, by L. Leighton, H. M. Leighton and Isaac Carleton, the defendants’ testator. They were therefore co-promisors. The defense was, that the payee of the note, by an instrument under seal, had released and discharged from all liability two of the co-promisors, Levi Leighton and Horace M. Leighton, and that thereby the defendants’ testator had been released. The note in suit was dated October 29', 1892. On September 15, 1893, by an instrument under'seal, Levi Leighton and Horace M. Leighton, both individually and as members of the firm of L. Leighton & Son, conveyed, transferred and assigned to the persons therein named all of their property of every description, except such as was by law exempt from attachment, in trust, to sell, dispose of and convert into money and to make a proportional distribution of the net proceeds thereof among such creditors of the assignors as became parties to the assignment, within the time limited. [151] The indenture of assignment contained this clause : u And the creditors whose names are hereunto subscribed, agree to said assignment and to receive their proportional shares of said property-in full of all their claims against said parties of the first part and upon payment thereof they hereby relieve and forever discharge said parties of the first part from their respective claims.” The main question presented is as to the proper construction of this language in the indenture applicable to creditors who became parties thereto; whether it should be regarded merely as an executory agreement to release the assignors upon the subsequent proportional distribution of the property conveyed in trust for this purpose, a covenant not to sue, or as a then present' release of the assignors from all further liability. It is undoubtedly true that the tendency of authority is towards a more liberal construction of such instruments than formerly prevailed, and that the intention of the parties is to be obtained if possible by construing the instrument as a whole and by taking into consideration the circumstances and relations of the parties. It is not always an easy question to decide, but it is the opinion of the court that by the indenture under consideration the parties intended a present release. The assignors conveyed all of their property without limitation or restriction, except as to that exempt by law from attachment, for the benefit of such creditors as became parties. This creditor, together with others who assented to the assignment, immediately acquired thereby something of value, and an advantage over other creditors who did not become parties. The consideration of the conveyance was the release of liability, and the consideration of the release, the immediate and unconditional acquirement by the creditors, who became parties, of all the property of the debtors. The language adopted by the creditors shows, we think, an intention to then and there discharge and release the assignors from further liability. They assent to the assignment, they agree to receive their proportional shares of the property in full of their claims, and upon payment thereof they “ hereby relieve and forever discharge said parties of the first part from their respective claims.” [152] In Tuckerman v. Newhall, 17 Mass. 581, it was held that this language in an assignment for the benefit of creditors, “that the said creditors do severally agree and covenant . . . that they will receive their respective proportions of the moneys arising, etc., in full satisfaction of their several and respective demands, and will further release and discharge the said J. &' I. Newhall from all further claims and demands upon them by reason thereof,” should be construed as a present release. In Dickinson v. Metacomet National Bank, 130 Mass. 132, in which there was an assignment for the benefit of creditors, it was held that the language used by the creditors, “ we do hereby accept,” and “ we do hereby absolutely release,” should not operate as a present release because other portions of the instrument clearly showed that the use of the present tense in the words quoted was incorrect and inaccurate and that this was not the intention of the parties. But in the case under consideration no other portion of the instrument shows a contrary intent from that to be obtained from the- language adopted by the creditors. This then being a technical release under seal of some of the joint promisors must be regarded as a discharge of all. Hale v. Spaulding, 145 Mass. 482, and cases cited; Bradford v. Prescott, 85 Maine, 482, and cases cited. A release may be given to one of several joint debtors and all rights be reserved against the others, but that was not done in this indenture; nor does the instrument show any intention upon the part of creditors to reserve rights .against other joint debtors or promisors. The plaintiff offered in rebuttal the following agreement upon a separate paper: “Columbia Falls, October 14, 1893. It is agreed by the undersigned that by A. Merritt signing the assignment of L. Leighton & Son this day that it shall not debar or prevent Merritt from collecting on his notes full amount due. H. M. Leighton. John L. Dalot, Assignee.” Merritt was the payee and holder of the note at the time of the assignment and at the date of this agreement. This case does not [153] show how or under what circumstances this agreement was signed and given to Merritt, hut we think that it may be fairly inferred that it was a secret agreement, made to induce him to assent to the assignment and without the knowledge of the other creditors. It was repugnant to the terms of tlie indenture of assignment and was a fraud upon the other creditors. It is therefore void. Ramsdell v. Edgartown, 8 Met. 227. The direction of the court to return a verdict for the plaintiff for the amount due upon the note was, therefore, erroneous. Exceptions sustained.