Beardsley v. Warner

By the Court. One ground of objection urged to a recovery in this case is, that the note was void in its origin. The receiver, it is said, was a purely ministerial officer, and had nothing to do, and, without direction from the court of chancery, could do nothing but receive the money from Hildreth, or proceed with the attachment to enforce its payment. If this objection could be well made, it does not appear very gracious, coming as it does from the defendant, if he was, as he contends, a party to the agreement, and claims the benefit of that part of it which reserved a resort to the attachment,. Without deciding that if the receiver had act [612] ed without the advice or direction of the court, it would be with the defendant to impugn his conduct, we think that it is not shown that he acted against his duty. If the general power with which he was invested would not authorize him * in any instance to take security for the fund which it was his duty to collect, we will presume, where he has obtained security while it was in the hands of a bankrupt, that he has acted in so doing by the particular direction of the court from which his authority is derived, especially when the objection comes from one who has no interest in the fund. What is done so manifestly for the benefit of the fund will be presumed, until it "otherwise appears, to be done by the "consent of tli'e court, .the guardian of the fund and the source of the receiver’s power.. We cannot concede that: this case falls within the rule applicable to notes and obligations given to sheriffs and ministerial officers, for not executing process in their hands'. Such contracts are held void, because they are against an express law, or most obvious duty; whilst the duty "of a receiver varies with the instructions which he may receive from the court." But if the analogy'held, it would avail nothing for the defence. It is admitted that the attachment js tantamount to a ca. sa. If a sheriff' receives a note on a" ■ca. sa., the plaintiff may, if he please, affirm .the’act, and ¡he note is valid in his hands. Townsend v. Olin, 5 Wendell, 207. Armstrong v. Garrow, 6 Cowen, 465. 3 Mass. R. 403. The defendant has not shewn that he was a partj1 to that paz t of the arrangement by which the proceedings relative to the attachment were kept on foot, and the rightto "enforce the order of the chanceller reversed, if the note should not be paid ; he is therefore to be viewed in no other light than as an endorser. We were referred to many authorities shewing the duties of a creditor towards the surely of his debtor. Most of the positions contended-for by the defendant are not denied, but it is believed they are but partially applicable to this case. The defendant asks for the unlimited application of the doctrine of the case of Pain v. Packard, 13 Johns. R. 174, which is, that if an obligee or holder of a note is requested by the surety to proceed without delay and collect the money of the principal, who is then solvent, and he neglects to comply with [613] the request, and the principal afterwards becomes insolvent, the surety is exonerated. It has been expressly decided by this court, that the principle of that case is not applicable where the endorser is called on to pay. In Trimble v. Thorne, 16 Johns. R. 152, it is said: “An endorser, though in the nature of a surety, is answerable upon an independent contract, and it is his duty to take up the bill when dishonored.” The distinction between an endorser and a surety is so clear in some respects, that it cannot be needful to run it out by any illustrations; but in others there is a resemblance. If the maker of the note pays, the endorser is discharged from his contract in the same manner as is a surety by the principal’s paying. If the creditor does any act impairing the endorser’s right to resort to the maker for indemnity for what he as endorser has become liable to pay, he can shew such act in exoneration of himself from his engagement to the creditor; but the endorser cannot require of the creditor to exhaust his remedies against the maker, before he calls upon him to perform his contract. It is not of the essence of the contract between the holder and endorser, that he should seek payment from the maker, and not of the endorser only on the contingency of an inability on the part of the maker to pay. 17 Johns. R. 393.3 Wendell, 216. The.moment the note is dishonored, and notice of that fact duly given to the endorser, the holder’s right to sue him is perfect, and this right, is not impaired as long as he remains passive. 9 Cowen, 206. 2 Bos. & Pul. 62. The inquiry does not properly arise in this case, how far the equitable principle, that a surety, who pays the debt of his principal, is entitled to be substituted in the place of the creditor, as to all the securities and means possessed by him to compel payment by the principal debtor, is applicable to an endorser. If a surety and an endorser stand on the same ground, the defendant here has no just reasons to complain that these securities or means have been wit held from him. The equitable principle is, that the surety must indemnify the creditor for the costs and expenses to which he may be exposed, by the use of the creditors security and means for his benefit. 4 Johns. Ch. R. 132. If a court of chancery would [614] not have compelled Elmendorf to use the attachment for the defendant’s advantage without being indemnified, the defendant could not properly require the same thing, without offering to indemnify against the costs. As the cost of the proceeding against the maker of a note cannot be collected of the endorser, it would seem to be unreasonable that the holder, whose right to receive payment is perfect against the endorser, should still be obliged to go against the maker, and incur expenses in a proceeding for the benefit of the endorser, until he is indemnified by him. What excuse can the defendant make for not accepting the offer to let him use the attachment1? If there was no right to resort toil, then Elmendorf could be under no obligation to attempt to use it. If it could be legally used, then, as it was to be used for the defendant’s benefit, he ought to incur the expense; and if his objection to using it himself was on account of the expense, it was unreasonable. Equity only requires that the surely should be substituted, he defraying the expense and running the risk ; and the offer in this case was in effect to substitute the defendant in the place of Elmendorf. The defendant’s requirement was the more unreasonable on account of the insolvency of Hildreth; but it is unnecessary to inquire whether this fact would have constituted an excuse for not proceeding to issue the attachment, because the plaintiff is not shewn to be in a situation to need any such excuse. Another ground of defence assumed on the argument was, that the validity of the proceedings for an attachment were rendered unavailable to the defendant by the transfer of the note. There are two answers to this objection. The defendant cannot interpose such objection, if it was understood when the note was given that the payee was at liberty to negotiate it; and the fact that the note was made negotiable, unless countervailed by some proof of an understanding to the contrary, establishes the payee’s right and a permission to transfer it. If he might do so before it was due, that right was not impaired by his keeping it till after its maturity, before he exercised it. But the more conclusive answer to this part of the defence is, that the transfer is merely nominal; the absolute interests of the parties have not been [615] changed; the fund in the hands of Hildreth belonged to the plaintiff’s wife, and Elmendorf was the agent to" collect it. He took the note in question, and transferred it to the person whom Hildreth knew was the party in interest; Hildreth could not therefore object to the issuing of the attachment on the ground of the transferof the note. The facts do not afford a pretence for saying that time was given on this note to the maker, so as to exonerate the defendant. 5 Wendell, 501. New trial denied.