President of the Agawam Bank v. Morris

Shaw, C. J.

This is a petition to the court, under its summary jurisdiction in cases of insolvency, in the nature of an appeal from the decision of the respondent, as the commissioner of insolvency for the county of Hampden, in the matter of the insolvency of Veranus Chapin.

The facts of the case, as set forth in the petition, and in the statement of the testimony before the commissioner, are, by the agreement of. the parties in interest, admitted to be true.

The court are of opinion, upon the evidence, that the notes held by the Agawam Bank, signed by Veranus Chapin and John S. Leonard, were partnership notes, and as such constituted a partnership debt of the two promisors to the bank. The proof of these notes, therefore, was rightly admitted in proceedings against the separate estate of Veranus Chapin in insolvency, because, as a partner and joint debtor, he owed

them. But it will be the duty of the assignee to keep distinct accounts of the separate debts and separate assets of the insolvent, and the separate assets must first be applied to pay his separate debts, until they are fully discharged;

then, if there be any surplus, it will be added to the fund of partnership assets, if any, and applied to the payment of the partnership debts of Chapin & Leonard. Barclay v. Phelps, 4 Met. 397.

Upon the other point, it is contended, that the collateral security given by Leonard to Chester W. Chapin should first be applied to the payment of these notes, before proving this debt against the estate of Veranus Chapin. It happened, that Chester W. Chapin, who was the second indorser on the notes, was also president of the bank. We are of opinion, upon the evidence, that the security given by Leonard, a copromisor, to Chester W. Chapin, president of the bank, after the debt against Veranus Chapin had been proved and allowed, was given to him as a personal security, to indemnify him as second indorser, for such sum as he plight be held to pay, being the balance which would be due after deducting the dividend received on the estate of Veranus Chapin. This collateral security was not given or intended *104as a security to the bank; was not one of which they could avail themselves; and therefore not one which they were bound to surrender, or apply, before proof of then- debt. The order of the commissioner, therefore, striking out the proof of the debt, because the bank had not applied or surrendered that security, was in our opinion erroneous, and must be reversed, and that proof reinstated.

This renders it unnecessary to consider and decide the more general question, whether, after proof of debt, in cases of insolvency, the commissioner has authority, without some order or direction of this court, to revise and reverse his own former decisions, allowing proof, and to decide, upon new facts or new views of the law, that such proof shall be expunged. Order to the commissioner accordingly.