New-York State Bank v. Fletcher

By the Court, Marcy, J. Reed, who claims the right lo enforce the judgment in the above cause, must claim such right either on the ground of a purchase or on the principle that lie is entitled to be substituted in the place of the plaintiffs as the surety of their debtor, he having paid the debt. [87] He is not the bona fide assignee of the judgment. I think the fads show that the judgment was paid before he paid the debt of his principal. In some cases, the giving of negotiable paper is equivalent to the payment of money. 8 Johns. R. 202. In the case of Barclay & Proctor v. Gooch, 2 Esp. Rep. 571, lite plaintiffs were security for the defendant for money that Ire held belonging to third persons. The defendant failed, and the plaintiffs were called on as sureties to pay and gave their note with interest. This was ruled at the circuit by Lord Kenyon to be a payment to QooclVs creditors, and the plaintiffs were allowed to maintain an action against him for money paid by them for his use. Chief Justice Parsons remarks, in the case of Thatcher v. Dinsmore, (5 Mass. R. 299,) that it has long been settled as law in that stale, that a negotiable note, given in consideration of a simple contract debt due, is a discharge of the simple contract, The doctrine, as laid down in these decisions, is perhaps a little broader than that which has been adopted in this state. The rule established here is, that negotiable paper is not payment of a pre-existing debt, unless it is expressly agreed to be accepted as such. I take the law to be that it is payment, if expressly accepted as such, whatever be the grade of the pre-existing debt. In Tobey v. Barber, 6 Johns. R. 68, a note was taken for rent due on a lease, and an absolute receipt of the payment of rent endorsed thereon. The plaintiff was permitted to recover in covenant for the rent, the note not being payment.. The court say that a note, either of the debtor or of a third person for a pre-existing debt is no payment, unless the creditor expressly agree to take it as payment, and to run the risk of its being paid, or unless he parts with the note, or is guilty of loches in not presenting it for payment in due time. No distinction was taken in the application of the rule founded on the character of the previous debt, whether a simple contract debt, judgment, or a specialty debt. A negotiable note taken by express agreement in payment thereof by the creditor, is an extinguishment of such previous debt. The rule that I have quoted from Tobey v. Barber, is laid down with great caution. It is there stated that the note must [88] be expressly agreed to be taken as payment, and that the crec¡¡¡01- will run the risk of its being paid. I am not sure ^iat letter member of the sentence varies the rule. If the paper is accepted in payment by an express agreement, the risk of payment is of course on him who takes it. To apply this doctrine to the case before us: Was the note drawn by Adams and Reed taken in payment! It is explicitly stated in the affidavit of the attorney for the plaintiffs, read in opposition to this motion, that after the recovery of the judgment in this case, and of another judgment for the same demand against Adams, lie (Adams) applied to know whether, if he should procure Reed’s note, it would be accepted in payment of the two judgments, and the attorney assured him that it would be so accepted. The joint note of Adams and Reed was procured, delivered to the cashier of the plaintiffs, discounted, the amount due on the above judgment retained by them, and the balance paid to Adams. Here is proof of an express agreement to take the note in payment; it is in fact discounted and the avails to the amount of the judgments retained by the plaintiffs. This note was not paid when it fell due; Adams and Reed were prosecuted on it, and Reed paid to the attorney of the bank (he full amount of the principal of the note with interest and costs; and then it was agreed by the cashier and the attorney of the bank that Reed should have the benefit of the above judgment as well as that against Adams. Thus it appears, that in addition to the agreement to take the note in payment, appropriating the avails of it when discounted to the payment of the judgment, the note has in fact been paid. The plaintiffs had in truth no valid subsisting judgment to assign to Reed, at the time their cashier and attorney agreed to give him the benefit of the judgment obtained in the above suit. I am of opinion, therefore, that Reed has no right as the legal assignee of the bank to enforce the judgment. His right was not sought to be enforced so much in the character of an assignee, as that of a surely paying the debt of his principal; and in that character he claimed upon a principle of equity to succeed to the creditor’s rights against the principal. The case of Clason v. Morris, 10 Johns. R. [89] 524, lays down a very salutary rule upon this subject, which I shall feel every inclination lo apply lo every case to which it's fairly applicable. A surety who pays a debt for his principal has a right to he put in the place of the creditor, and lo avail himself of everv means possessed bj' the creditor to enforce payment against the principal. Reed was not the surely of Fletcher, the defendant in this cause, but of Adams. He has a right to be put in the place of ihe bank, so far as respected their means to enforce payment against Adams, but not against Flelcber. By ihe relationship of principal and surety between Adams and Reed, and the payment of the debt by the latter, he acquires no right to assert a claim against Fle.tcher that Adams, his principal, could not have asserted. I do not mean lo sny, that if Adams, by paying the plaintiffs, could have enforced the judgment against Fletcher, that Reed having done the same thing as surety of Adams, would not have a similar right to enforce that judgment; but Fletcher 1ms paid Adams the amount of the judgment on the allegation by-Adams that he had paid it to the plaintiffs. Adams could not, therefore, invoke any equity powers of this or any other court to aid him lo enforce the judgment against Fletcher; and Reed, succeeding to Ihe rights of Adams, must be under the same interdict. Equity will not. pul Reed into the shoes of Adams, though he has paid the debt for which Adams was surely for Fletcher, to enable him to do what it would restrain Adams from doing. Motion granted.