Betts v. Turner — 2 Cai. Cas. 305

Majority

p. 305

(Supreme Court.)

Betts against Turner.

Headnote

On the sale of a note not negotiable, `with a covenant by the vendor, to pay the vendee a certain sum, "if the vendee should take alt and every legal step the law directs, to prose.~ cute to effect, the maker and payee, to wit~ if the vendee~ and no one in his name, or i0. that of the ma ker, could recover judgment legally, against the maker on the note, or against the payee, in case he had, at the date of the covenant, or should, previous to the suit against the maker, discharge the note if, in an action against the maker, the payee, according to the laws of the country, go into court and deny authorising the suit by the assignee against the maker, the assignee cannot maintain an action on the covenant against the vendor, if by the law of the country the payee be, in such case, liable for the amount, without first showing a legal endeavour, by suit, to recover the amount against the payee. Covenants are to be construed, not merely by their letter, but their spirit.

THIS was an action of covenant, and the declaration stated in substance, that John Baker, on the 17th October, 1795, gave a promissory note to WilHam Hooker, by which he promised to pay to him, or his order, on the 1st day of April, 1797, 833 dollarsand 33 cents; that the defendant sold the note to the plaintiff, 'to be by him collected at his own risk and costs, as it respected the ability of Baker and Hooker, and that the defendant covenanted to and with the plaintiff, to pay him 2,000 dollars when re quireci, "in case the plaintiff should take all and

p. 306

every legal step as the law directed, to prosecute to effect, Baker and Hooker ; to wit, if the plaintiff, and no one in his name, or in Hooker’s name, could recover judgment legally against Baker, on the note, or against Hooker, in case he had, at the date of the covenant, or should, previous to the suit against Baker, discharge the note.”

The declaration further stated, that Baker resided -in Massachusetts, and that on the 31st July, 1797, the plaintiff sued Baker in Hooker’s name, according to the laws of Massachusetts ; that Hooker came into court, and denying that he had ever authorised the suit, the court dismissed it. That the plaintiff had taken all legal steps to sue Baker upon the note, and that he. could not sue upon it in his own name, either Baker or Hooker. That Hooker had never negotiated the note, so as that any person could sue upon it in his name, but himself; and that. Hooker had never discharged the note.

To this declaration the defendant pleaded, that Baker.and Hooker reside in Massachusetts, and that the note was sold by Hooker to one Cole, and by him to one Booth, and by Booth to the defendant, who sold it to the plaintiff; that such notes were not negotiable by the laws of Massachusetts, so as to enable the assignee to sue in his own name, but that he could sue in the name of the original payee, and that if the payee released the suit or discharged the note, he became liable to the holder, for the amount of such note, of which law the plaintiff, at the time of the delivery of the note, had notice; and that the plaintiff did not prosecute Hooker, nor attempt to recover a judgment against him on the note, as he might and ought to have done, according to the laws of Massachusetts.

p. 307

To this plea there was a general demurrer and joinder.

By the co~ venant, it appears, that the plaintiff was to do a previous act, to entitle him to maintain a suit on the covenant. This previous act, like all other stipulations in covenants, must be done fairly and faithfully, according to the spirit and intention of the agreement. It may be proper to observe, as a rule in the construction of covenants, that they are to be performed according to their spirit rather than their letter, “ ut res magis valeat quam per eat.”

The beneficial end that the parties had in view, is to be primarily regarded and enforced ; and, therefore, where an obligee engaged to deliver up his obligation to the obligor, by such a day, and he, in the mean time, put it in suit, recovered upon it, and then delivered it; this, although a compliance with the words of the agreement, was held no performance of the intent.^[3] So, where A. covenanted with B. that he should enjoy a term of six years, discharged from tithes, and a suit was brought, after the expiration of the term, for the intermediate tithes, it was held, that B. was as much prejudiced by a suit after the term, as he would have been before, and that the intent of the covenant was, that he should be freed from suit and payment; the covenant, therefore, broken.^[4] By the same just and liberal rule of interpretation, it is declared, that if one covenant to deliver the grains made in a brew-house, and in the mean time, he mix them with hops, so as to render them unpalatable to cattle; or engage to deliver so many yards of cloth, and he cut it in pieces, and then deliver it; or if he covenant to leave the timber on the land, at the expiration of a lease, and he

p. 308

cut it down and so leave it,^[3] these, and other numerous instances of the like kind, to be met with in the". books,^[4] are all alleged to be breaches of the covenant; because, the law regards not a literal but a real and . . Jaithjul performance of contracts, according to the intent of the parties-.

These principles ought to be kept steadily in view, as having an application to the present case.

It is pretty obvious, that the defendant did not intend to pay the 2,000 dollars, until the plaintiff had faithfully tried, and .tried in vain, to recover the amount of the note from Baker, and from Hooker. The note was sold to the plaintiff, to collect at his own risk, so far as respected the ability of Baker and Hooker; and it was a condition precedent to the payment of the money by the defendant, that the plaintiff should take all and every legal step, as the law directed, to prosecute to effect, Baker and Hooker. He did take those steps to prosecute Baker, but not to prosecute Hooker, although the latter became liable to him, for releasing the suit he had instituted in his name, against Baker.

Here, then, appears a palpable failure on the-part of the plaintiff, of an act which was necessary to entitle him to his suit against the defendant; I mean the failure of taking the steps by law directed, to prosecute to effect, Hooker as well as Baker.

It may, however, be objected, that the case in which Hooker is to be prosecuted, is afterwards particularly stated in the covenant, and that Hooker was only to be prosecuted, if he had, at the date of the covenant, or should, previous to the suit against Baker, discharge the note; and, that, never having

* T. Raym. 464.

† † See 1 Sid. 48. 151.

p. 309

discharged the note, the plaintiff was under no necessity, by the covenant, of prosecuting him. To this, I answer, that, although this be the letter, it cannot be the intent of the agreement. The agreement, in the first instance, provides generally, that the plaintiff shall prosecute to effect, both Hooker and Baker, and it then proceeds to specify the instance, in which Hooker is to be prosecuted; to wit, if he had then already, or should, previous to a suit against Baker, discharge the note. But the rational meaning of the covenant, deficient as it may be in perspicuity and precision, cannot be otherwise than this, that the plaintiff should first prosecute Baker, and, if Hooker should prevent him from recovery against Baker, that he should then prosecute Hooker.

The defendant seems to have contemplated but a single case, in which Hooker could prevent a recovery, and that case, which was the discharge of the note, he has specified ; whereas, an interference in Hooker, by discharging or releasing the suit, was an equal impediment to a recovery, and equally exposed Hooker to a prosecution.

The plaintiff was to take every legal step to obtain a recovery, both against Baker and Hooker, but he omitted to take any step against Hooker, and now alleges, as his sufficient excuse, that Hooker did not prevent a recovery against Baker in the manner mentioned and expressly provided for in the covenant. — - It is true, he prevented a recovery by discharging the suit; but he did not prevent a recovery by discharging the note, and he must prevent the recovery

p. 310

in the latter mode, and not in the former : otherwise he was not to be prosecuted.

I dislike any such subtle distinction, calculated, as it appears to me, to elude the end and design of the covenant; for I cannot conceive any possible inducement, on the part of the defendant, to stipulate, that the plaintiff should previously prosecute Hooker, if he prevented a recovery against Baker, by discharging the note, which would not equally be felt, and equally operate, if Hooker prevented a recovery against Baker, by discharging the suit. And for the plaintiff to pretend, that he was bound to prosecute Hooker, in the one case, because it was expressly mentioned in the covenant, and not bound in, the other case, because it happened to be omitted, although precisely within the same reason, is for him to construé the article by its letter, and to disregard its spirit. It is, in allusion to the cases mentioned, to deliver up the obligation by the day, but in the mean time, to prosecute and recover upon it. It is to deliver the cloth, but after it is cut to pieces. It is to leave the timber on the land, but to leave it prostrate.

I am, accordingly, of opinion, that the plaintiff lias not shown, in his declaration, the requisite previous performance on his part, and that judgment ought to be rendered for the defendant.

Judgment for the defendant

Footnotes

* Cro. E. 7.
† † Cro. E. 916.