Palfrey v. His Creditors

JWathews, J., delivered the opinion of the court. In this case the bank claims a preference and privilege on the proceeds of the sale of certain slaves, which were sold by tbe syndics of the insolvent, &c. This claim was allowed by the court below, from which Millaudon, who appears to be a creditor to a large amount, appealed. The claim of the bank is founded on a transfer to that corporation, of a mortgage made by the insolvent to Louis Lesassier, to secure the latter against loss or damage, which he was liable to suffer in consequence (amongst other obligations assumed in favor of Palfrey, Dyson & Co.) of endorsing certain notes, for'the use and benefit of that firm. The act of hypothecation embraced other property besides the slaves now in question, but the right secured on these only, was transferred to the appellees. The mortgage purports to secure the endorser, not only in relation to the notes given at the time of making it, but also for any renewals that might be made of these notes. Palfrey, Dyson & Co. dissolved partnership previous to the failure of the head of the firm, who was appointed liquidator of its concerns, and in that capacity he executed the note, (about which the present contest arises) in renewal of one which had been given in the name of the company, and to which the mortgage directly attached. The objections raised against the pretensions of the Bank are based on the supposition of novation as to the first note, and consequent extinguishment of the debt for which the [279] mortgage was given, and as a corollary, the extinguishment of that act itself, being only an accessory which could not survive the principal obligation. The renewal of a note secured by mortgage, does not novate the original note and debt, so as to extinguish itandreleasethe mortgage as its accessory, when a renewal is provided for in the mortgage, even if it be made in a different name, but proven to be the same debt. These objections would perhaps be well founded and ought to prevail, were it not that the act of mortgage provides a security in favor of the endorsee, in the event of renewals. The same parties to the hypothecation continued throughout this entire transaction, and had the parties to the note remained precisely the same, no question in relation to the continued validity of the whole contract could possibly have arisen. After the dissolution of the partnership, it is in evidence that Palfrey acted for the firm, in liquidating its concerns. Whether, in his capacity as liquidator, he could have renewed a note so as to bind his partners, is a question not involved in the present case, they not being parties to this suit. Bound in solido, the debt may be considered quo ad the creditors, as entirely his own; and the testimony of Colson proves the note, on which the appellees claim, to have been made in renewal of that which was directly secured by the mortgage. This testimony, it is true, was excepted to, but we do not consider the objections legally substantial. The facts disclosed do not tend to alter the substance and nature of the contract; they have a tendency merely to show its origin and nature. It is, therefore, ordered, adjudged and decreed, that the judgment of the District Court be affirmed, at the costs of the appellant.