Couch v. Waring

Bissell, J.

It has been strongly insisted upon, in the argument of this case, that the judgment and execution offered in the court below, being res inter alios actae, were admissible only to prove a payment pro tanto. To this it may be answered, that the records offered, are evidence of the facts therein contained; and of the legal consequences which result from those facts. If, therefore, the legal effect of the facts disclosed upon these records be to discharge Waterbury, the maker of the note, it is idle to contend, that the evidence is not available for this purpose, as well as to prove payment.

What, then, is the legal effect of the facts, appearing upon this record l This is the question now presented for decision.

Some principles, regarding bills of exchange and promissory notes, and having a bearing on this case, are too well settled to admit of dispute or doubt.

There is, for instance, no principle better established, than that a judgment against the maker, discharges none of the subsequent parties to a promissory note. Nor does a mere technical satisfaction constitute, for them, any defence : As where the acceptor of a bill of exchange was charged in execution, and discharged under the lordf’ act. And where the maker of a promissory note, being taken in execution, was discharged *272under an insolvent debtor’s act, it was holden, that the subsequent parties still remained liable. Chitty on Bills, 161. 362. Macdonald v. Bovinglon, 4 Term Rep. 285. Nadin v. Battie. & al. 5 East, 147.

So also, if the maker become a bankrupt, and the holder prove his debt under the commission, and receive a* dividend ; this will not prevent him from resorting to the subsequent parties to the note. Nor will he be thus precluded, although he receive part payment from the maker; or levy a part under a fi. fa. against him; for this is for the benefit of all parties. Gould v. Robson & al. 8 East, 580. Walwyn v. St. Quintin, 1 Bos. Pul. 652. Ex parte Wilson, 11 Ves. 412. Kenworthy v. Hopkins, 1 Johns. Ca. 107.

On the other hand, it is equally well settled, that if the, holder give time to the maker, or take from him any new security payable at a future day, without the assent of the other parties to the note, they are thereby discharged from their liability.

So also, if the holder enter into a composition with the maker, or discharge him, or do any act, the effect of which is to discharge him, (as by letting him out of custody upon a ca. sa.) the subsequent parties to the note are also discharged. Claxton v. Swift, 3 Mod. 87. English v. Earley, 2 Bos. & Pul. 61. S. C. 3 Esp. Rep. 49. Clark & al. v. Devlin, 3 Bos. & Pul. 363. Gould v. Robson, 8 East, 580. James v. Badger, 1 Johns. Ca. 131.

The principles involved in these decisions, are obviously these:

1. That the holder of a promissory note is entitled to actual payment of it. This right the mere act of the law never takes from him, and so long as he remains passive, or does no act to impair this right, he may enforce such payment from any or all the parties liable. But

2. As the maker of a note is previously liable ; and the in-dorsers are in the nature of sureties, for the performance of his act, and have a right to look to him for indemnity; if the holder do any act, the effect of which is to suspend, or to impair, or to destroy that right, he cannot afterwards resort to them.

Within which of these principles does the case before us fall ? It seems to me to fall clearly within the latter ; and that the maker of this note is forever discharged, by the acts of the

*273plaintiff. He had the entire dominion ofthe note, upon which he caused the action to be brought. He stated his own demand ; prayed out execution, and procured that execution to be satisfied out of the goods and estate of the maker. In this the plaintiff has acted voluntarily. No part of the proceedings were, as to him, in invitum. He was not bound to take judgment for a less sum than was due on the note ; nor was he obliged to enforce that judgment even after it was obtained.

He might then have resorted to the indorser. He did not choose to do so; but proceeded to compel the actual payment

of his judgment against the maker.

What is the effect of these acts of the plaintiff? Is it not to discharge the maker of the note from all liability ? That the plaintiff cannot again resort to him, is clear beyond all doubt. This would be to defy all principle and all analogy,

The debt, as to him, is extinguished ; and as against Mm, the maker has the highest discharge known to the law. He can have no relief even by petition for a new trial. Can he, then, by proceeding against the indorser, authorize him to resort to the maker? Or, in other words, may he do that indirectiy, which he has precluded himself from doing directly ? It has been gravely contended, that he may. It is said, this action is sustainable, because the defendant may have his remedy over, against the maker of the note.

If the premises were true, the conclusion would, undoubt-ediy, follow. But they are denied; and if found to be false, it is admitted, that the conclusion must fail. Now, I very well know, that there are cases, in which the holder of a note is pre-eluded from resorting to the maker, and yet may proceed against the subsequent parties ; and they, having paid the note, may resort to the maker for their indemnity. As where he is discharged under the lords’ act, or under the insolvent debtor's act, or has become bankrupt, and obtained Ids certificate. But in all these cases, an act of the law has intervened, and prevented the holder from resorting to the drawer of thfe note, on the ground, that as between them, there is a technical satisfaction.

But these cases do not go one step towards establishing the principle here contended for. Here the holder has, by his own voluntary fíete, precluded himself from resorting to the maker, And is there a ease to be found, where this has been done, and the subsequent parties to the note have still been held liable ? *274Can a debt be extinguished, by the act of its owner, and yet the surety for that debt remain answerable ? Upon what principle is it, that where time is given to the maker, the subsequent parties to the note are discharged 1 Clearly, upon this principle; that if payment might be enforced against a subsequent party, he would have an immediate right of action against the maker: And the law will not \ endure, that the holder may do that indirectly, which he has precluded himself from doing directly. It would be a breach of faith.

But here the holder has done an act, which prevents him from resorting to the maker in all time. He has discharged him. Can he, then, without a violation of all principle, authorize á subsequent party to the note, to do that which he can never do ? and which he is prevented from doing, not by an act of the law, but by a course of proceedings entirely voluntary on his part ?

But it has been Urged, that the undertaking of the indorser is, that the maker shall pay the entire sum due on the note; and as only a part has been paid, the indorser is liable.

If the preceding observations are correct, they furnish a decisive answer to this claim.

But why was not the whole sum due on the note paid 1 The only reason assigned, is, that the holder saw fit to take judgment for a less sum. And having enforced payment of the judgment, he now resorts to the indorser to recover the balance. And this, it is contended, he has a legal right to do : that is, the holder of a promissory note may so sever and divide an entire contract, as to sue for and recover distinct portions of it, of each of the párties liable. If, for instance, he hold a note of 3000 dollars, with two indorsements, he may sue for and recover 1000 dollars of the maker, and 1000 dollars of each of the indorsers ; and they, in their turn, may have their remedies over against the maker for the sums recovered of them respectively: so that after having satisfied one judgment, the maker is still liable to two further judgments on one and the same undertaking. In what book of authority, or upon what principle, is this doctrine sanctioned ?

It has, indeed, been urged, that this is nothing more than what obtains, almost daily, in practice.

It is said, that the holder of a note, may proceed against all the parlies to it, may recover judgment against all, andimav obtain a partial satisfaction of one party, and the residue of *275another. All this is true. But he can- obtain but one satisfaction and his costs. And I have yet to learn, that where a tv has rightfully paid a judgment recovered against him, he »nay be a second time subjected upon the contract, which was the foundation of that judgment.

In Windham v. Wither, 1 Stra. 515. the plaintiff brought two actions on a promissory note; one against the maker and another against the indorser, and recovered in both. And the principal in one judgment and the costs in both having been tendered, it was moved, that no execution might be taken out, which was ordered accordingly ; and the court said, they would have laid the plaintiff by the heels, if he had taken out execution upon both.

I am of opinion that this action cannot be sustained; and that the rule to shew cause must be discharged.

The other Judges were of the same opinion.

New trial not to be granted.