Champion v. Buckingham

Mobton, J. The policy was assigned to McFarland “ as collateral security for the amount of his demands subsisting against Reuben Champion at his decease, as creditor or as surety.” It is evident that McFarland had subsisting demands as creditor against Champion when the latter took the benefit of the bank-rapt act. The first question is, what effect did the discharge which Champion obtained have upon the demands so held by McFarland. If it extinguished them, then clearly they were not subsisting at the time of the farmer’s decease. If they were not extinguished, then it must follow that they were subsi sting in some form at the time of Champion’s death, since it is not contended that they were paid or satisfied; and the question then arises whether McFarland’s estate held them as creditor within the fair construction of the assignment. It is to be observed that one of the notes was proved in bankruptcy by McFarland against Champion, a debt of the former to the latter being allowed in the proof in set-off, but that the other and larger note was not proved, though it is found that it was due and provable. The operation of the discharge upon this note was not affected, however, by the fact that it was not proved. We think that the discharge did not extinguish the debt or demand. It released the debtor from the legal obligation which [79] he was under to pay the notes, and took away from the creditor the right to enforce the payment of them. But the debt was not paid or satisfied. That still remained as a moral obligation on the part of the debtor, and was sufficient to sustain a new promise if he had seen fit to make one waiving the statute bar. Maxim v. Morse, 8 Mass. 127. Mills v. Wyman, 3 Pick. 207. Valentine v. Foster, 1 Met. 520, 522. Way v. Sperry, 6 Cush. 238. Cook v. Shearman, 103 Mass. 21. Dusenbury v. Hoyt, 53 N. Y. 521. Shippey v. Henderson, 14 Johns. 178. Betton v. Cutts, 11 N. H. 170, 179. Fletcher v. Neally, 20 N. H. 464. Corliss v. Shepherd, 28 Maine, 550. Otis v. Gazlin, 31 Maine, 567. Penn v. Bennet, 4 Camp. 205. Trueman v. Fenton, Cowp. 544. The effect of a discharge in bankruptcy is analogous to that of the bar of the statute of limitations or of infancy except in the case of necessaries; though it is said that a party is not to be deprived of his right to rely on his discharge unless he has used words that plainly mean to renounce it. Bigelow v. Norris, 139 Mass. 12. Allen v. Ferguson, 18 Wall. 1. The running of the statute of limitations puts an end to the remedy to which it applies, not to the debt. Ilsley v. Jewett, 3 Met. 439. Foster v. Shaw, 2 Gray, 148. Hancock v. Franklin Ins. Co. 114 Mass. 155. Shaw v. Silloway, 145 Mass. 503, 506, 507. If the debt was not extinguished by the discharge, and has not been paid or satisfied, then it follows that the security may be availed of for the payment of it, if McFarland or his estate can be regarded as a creditor having a subsisting demand at the time of Champion’s decease, and there is no other valid objection. Thayer v. Mann, 19 Pick. 535. Ipswich Manuf. Co. v. Story, 5 Met. 310, 312. Hancock v. Franklin Ins. Co. 114 Mass. 155. Norton v. Palmer, 142 Mass. 433, 435. Shaw v. Silloway, 145 Mass. 503. We are not aware of any case which holds that the word “ creditor ” means under all circumstances a person having an obligation against another which is capable of legal enforcement. To give it that meaning here would be to hold that the parties contemplated that the security should continue if Champion remained solvent, but not if he became bankrupt and got a discharge. The object of the parties in giving and taking the assignment was clearly to secure to McFarland the payment [80] of any debt that was due or that might become due to him from Champion. And we think that, the debt which the assignment was given to secure not having been paid or satisfied at Champion’s' decease, McFarland fairly may be regarded as a creditor having a subsisting demand within the meaning of the assignment. The plaintiff further objects, that McFarland waived the security by omitting in the proof any "reference to it, and by making oath that he had no security, and by assenting to the discharge. The policy, though issued upon the life of Champion, was for the use of his wife, and was made payable to her. She was the beneficiary, and entitled to the proceeds, and she executed the assignment with her husband. The case presented is therefore one where the security really comes, not from the bankrupt, but from a third party. We have not deemed it necessary to consider whether, under such circumstances, in a case to which the United States bankrupt act applies, the rule laid down in Lanckton v. Wolcott, 6 Met. 305, should govern, or that which appears to have been followed in the United States courts and in England. In re Cram, 1 Nat. Bankr. Reg. 504. In re Alexander, 1 Lowell, 470, 472. In re Holbrook, 2 Lowell, 259. The plaintiff is the executrix of Reuben Champion, and his widow. As executrix, her only interest in the policy is to collect the proceeds and pay them over to herself as beneficiary. In either capacity it is immaterial to her whether McFarland did or did not refer to the policy in his proof, or did or did not assent to the discharge. The only parties interested were the assignee and creditors, and they do not appear to have interposed any objection, and the plaintiff does not appear to have acquired any rights under them so as to be able to set up McFarland’s proceedings as an estoppel. Cook v. Farrington, 104 Mass. 212. It may be added, that so far as the assent to ■ the discharge was concerned, it was, if anything, favorable to Champion’s estate, and not a matter of which the plaintiff justly could complain. Decree affirmed.