Depuy v. Swart

By the Court, Marcy, J. It is to be regretted a stipulation was substituted for a part of the pleadings in this case. It is somewhat uncertain what would have been the issue. The plaintiff declares on a promissory note transferred to him by the payee. The defendant interposes a discharge < under the insolvent law of 1813. Here the pleadings stop, and a stipulation is entered into to try the cause on the fact. of a new promise with leave to each party to avail himself of the law arising on the whole case. We are thus left to conjecture what the replication would have been. If it had stated a promise to pay, made to the plaintiff subsequent to the discharge, he must have failed on the trial, because it is not pretended that such a promise was ever in fact made-An averment of a promise to the present holder of the note, would not have been sustained by proof of a promise to a former holder. It appears to me there would have been some difficulty in pleading a promise made to the witness Robinson subsequent to the discharge, so as to have it enure to the benefit of the plaintiff and be the basis of his action. [139] It is insisted ont he part of the plaintiff, that a promise to pay, made to the holder of the note, not only revives the debt, but restores the note with all its negotiable properties. The language of the cases which speak of the effect of an insolvent or bankrupt’s discharge upon his existing debts is not very precise or uniform. In some cases, the effect has been considered the same as that of the statute of limitations on debts to which it applies. In other, and in most of the cases, the statute has been considered as affecting the remedy only, while a discharge has been adjudged to reach the cause of action. Without stopping to inquire whether this distinction rests upon a clear difference in the two cases, I shall endeavour to ascertain what is the true effect of a discharge upon the debts due by the insolvent. The act for giving relief in cases of insolvency, (1 R. L. 460,) declares, that upon the petitioner’s complying with its provisions, the officer executing it shall discharge him from all debts, &c. The language of the act, in its fair signification, extends beyond the mere proceedings for enforcing the right, to the right itself; and such, in most cases has been its construction. In the case of Sturges v. Crowningshield, and in several others before the supreme court of the United States, it has been considered that insolvent discharges reach to the contract itself, and impair its obligation; and that in that respect, the laws authorizing these discharges differ from the statute of limitations and enactments concerning usury, which only relate to the remedy. The bare acknowledgement of a debt, barred by the statute of limitations, is held to revive it; but an acknowledgement of a debt from which the defendant has been discharged, be it ever so explicit, gives no cause of action. In the latter case, nothing but a precise and positive new promise will be sufficient to sustain a suit: it was so held in Lynbury v. Wrightman, (5 Esp. R. 198.) In a note to this case, it is said bankrupts and infants, with respect to debts from which they are discharged, stand on different ground from persons whose debts are barred by the statute of limitations, as that statute does not discharge the debt, but only takes away the remedy by action. Even the acknowl [140] edgment or promise, which does away the effect of the statute 0f limitations, is not deemed a continuation of the original promise, but is a new contract. This, Judge Story thinks is settled both upon principle and authority, (1 Peters, 371;) a fortiori, is the promise to pay a debt discharged under an insolvent law a new contract. In the case of Roberts v. Morgan, (2 Esp. R. 736,) Eyre, Ch. J. says, a debt barred by a certificate under a commission of bankruptcy, by a new promise to pay it, becomes a new debt. Lord Mansfield also says, where there has been a new promise after the discharge, the bankrupt is liable as on a new contract. (Douglass, 192.) The moral obligation uniting to the new promise makes what he calls, in the case of Truman v. Fenton, (Cowp. 544,) “a new undertaking and agreement.” What conclusively shews that the new promise creates a new contract is, that if the promise be special or conditional, the plaintiff has Ms remedy upon it pursuant to the condition or the special circumstances of the engagement. (2 H. Black. 116.) These authorities clearly shew that the new promise is the contract upon wMch the action against the defendant must rest. The old debt has no further connection with the suit than what arises from the circumstance that it is resorted to for the purpose of furnishing a consideration for the promise, by reason of its moral obligation, after its legal obligation is destroyed by the discharge. The liability, therefore, of the defendant, is on the new contract; and upon principle, the suit should be in the name of him with whom such contract is made. The discharge of the defendant discharged the debt for wMch the note was given; and the transfer of it, if there had been no new promise, would have been void. The position is supported by an express decision in the case of Baker v. Wheaton, (5 Mass. R. 509.) In such a case, the note is functus officio, and can have no negotiable qualities, because it has no legal existence. It is regarded by the court in that case, in the same light, as a note discharged by payment. What is the effect of the new promise upon the note ? If it does not, and it is clearly settled that it does not, renew the old contract, how does it operate to renovate the note given [141] on that contract ? The note has a valid existence from its execution; and after this existence is destroyed, as it is, according to the case from Massachusetts, and the debt for which it is given discharged according to all the cases, can it be revived and restored to all its former properties by the maker’s entering into a new contract, by which he becomes liable to pay what was due on the old contract? Correct reasoning would not establish such a result, and nothing but the mode of pleading which has been sanctioned in such cases has given any sort of countenance to the notion. It is well established, that the plaintiff may declare on the original cause of action. The inconsistency of making the new promise the basis of the action, and at the same time allowing the plaintiff to declare upon the antecedent debt, which has been discharged or the remedy upon it barred, has been often presented to the courts of England and this country; and although it has been sanctioned, it has been looked upon as a deviation from the general rule requiring a plaintiff to state in his declaration the agreement or whole cause of action whereon his suit is brought. In all the cases however that I have found, the original debt was due to the same person to whom the new promise was made; and the mode of pleading sanctioned by the courts in such cases is entremely well fitted to present the issue upon the new contract. The replication setting up this contract has not been considered a departure," because it is not entirely a new matter ; it derives that which is necessary to support its consideration from the old debt. The issue is, in fact, upon the new contract, and the note given on the old contract is only brought into view as furnishing the consideration which the plaintiff must shew for the new promise. The note, in my opinion has no valid existence for any other purpose; and the plaintiff did not acquire from the transfer of it to him any right to maintain this action. According to the stipulation between the parties, judgment is given for the defendant. .. Judgment for defendant.