Perrine v. Fireman's Insurance

PHELAN, J; '"Where a creditor has the means of satis [577] faction in bis bands, and chooses not to retain it, but suffers it to pass into tbe bands of tbe principal, tbe surety to that extent will be discharged. This is a well established prinei-pie. But will this principle apply to tbe case of tbe plaintiff in error? What are we to understand by tbe terms “means of satisfaction in bis bands?” It does not signify that whenever a creditor happens to come into actual possession, or be in actual possession of money or property of bis principal debtor, whose debt is past due, be must seize and retain it; and that, if be does not do so, be will lose bis remedy against a surety. If this were so, a bank which received tbe money of tbe principal on deposit, would be bound to refuse to pay it over on demand, or otherwise release the surety; or a creditor, who borrowed tbe horse of bis principal debtor to ride a few. miles, would not be allowed to surrender him back, without incurring tbe same consequence. “ Means of satisfaction in his hands,” then, signifies, property or money of tbe principal debtor in bis lawful possession, which be may rigEtiullyretain and appropriate to tbe satisfaction ofbis debt, without violating any duty or subjecting himself to an action; in other words, there must be a lien in bis favor on tbe property in his bands, conferred either by law or tbe owner, which is defined to be a right of retainer. What were tbe facts in regard to the stock of Jeanarett, at the time be transferred it, and when be owed tbe Company the debt for which plaintiff in error was surety ? Did the Insurance Company then have any lien upon bis stock for tbe debt be then owed ? Tbe statute makes it optional with the Company, “to retain dividends, and prohibit transfers of stock,” by those stockholders who may be indebted. Until that option is made, no lien is created. To say that tbe words of tbe statute create a lien of themselves, would be to destroy tbe right of option, which is expressly given. Until such option is exerted, no lien is created upon tbe stock of a stockholder, and consequently no right to retain tbe same for tbe satisfaction of debts due. By allowing tbe stock to be transferred, without making choice to retain it for tbe satisfaction of debts due, tbe Company did no more than exert a lawful privilege; and if so, they could not thereby [578] forfeit any right they had to look to the surety. That it would be the right of a surety, in such a case, to call upon the Company to retain the dividends, or prohibit the transfer of the stock of a stockholder for his protection, seems consistent with principle; and if the Company should refuse or neglect to do so when called upon, they would lose their remedy against him; just as a creditor may be required by a surety to sue the principal, and if he neglects to do so, and the principal becomes insolvent, the surety is discharged. But if the Company did not actually fix its lien on the stock, by refusing to permit it to be transferred, because the owner was its debtor; or, if no requisition was made upon the Company by the surety to refuse for his- protection to permit his principal to transfer, the Company might lawfully allow the transfer to be made, without losing any right to go upon the surety. The charge of the court is altogether consistent with these views, and the judgment below is therefore affirmed.