Rathbone v. Warren — 10 Johns. 587

Majority

p. 595

John Rathbone and John Rathbone, jun. Appellants, against James Warren, Respondent.

ALBANY,

March, 1813.

Headnote

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^written*!g«¡-mentwitfr against whom-'judgment, ^ou^oingto sea, that he out execution ffr"thehpurfl*™| after a certain dcfendantpaid the plaintiff a sum of money in consideration of this indulgence, and this arrangement was without the know» ledge and consent of the bail, it was held to discharge them. And the bail being fixed at law, and prosecuted on the recognisance, it was held that a court of equity might afford relief, and grant a perpetual injunction, the remedy at law being doubtful.

Where a court of equity gains jurisdiction of a cause for one purpose, it may retain it generally» Though nothing passes between the bail and the plaintiff in a cause, yet bail are considered, by . act and operation of law, as sureties, and are entitled to the benefit of the general principles restive to sureties, as applicable to them»

ON the 23d October, 1809, Warren, the respondent, filed a bill In chancery against Rathbone # Eon, the appellants. The bill stated that the appellants, in the term of May, 1808, recovered a judgment against Jonas Warren, in the supreme court, for 1,435 dollars and 7 cents damages and costs, and that the respondent and Aaron Hand were special bail for the defendant in that suit, Previous to the commencement of the action, Jonas Warren, on 7 the 19th January, 1808, delivered to Rathbone & 'Son a promissory note, made by Josiah Hatheway, for 635 dollars and 27 cents, payable to Jonas Warren, for which the appellants gave a receipt, specifying the note, and that when paid, it would be on account of the contract for salt. The action, in which the respondent became special bail, was brought on the contract for salt, mentioned in the receipt; that the respondent knew, when he became special bail, that the note had been so delivered, to be eredited, when paid, on the contract for which the suit was brought, That during the months of July and August, 1808, various conversations passed between the respondent and John Rathbone, jun., in which the latter mentioned' the judgment, and aeknowledged that Hatheway had left property with the appellants,

p. 596

which would pay part of the note, and which would be credited on the judgment, and that Hatheway was in the Charleston trade, an(* was making arrangements to pay the note. The bill further stated, that Hatheway, at the time the note was delivered to the appellants, was fully able to pay it, and that when the note was due, John Rathbone, jun. acknowledged that it was good, and said it would be paid; but no credit had been given on the judgment on the note. That the respondent was informed, and believed, that the appellants had not taken any measures to collect and enforce the payment of the note, and it was then doubtful whether he was able to pay the note. That in the conversations above mentioned with John Rathbone, jun., he urged the respondent to make some payment on the judgment against Jonas Warren, which the respondent declined; and to induce him to do so, John Rathbone, jun. declared to the respondent, that if he would pay one hundred dollars, the said appellant would discharge the judgment, would take the notes of Jonas Warren and give him time to pay the balance; that if the respondent; was not disposed to pay the 100 dollars then, he might do it at any time, and the business should be arranged as above stated, when Jonas Warren, who was a seafaring man, would be at liberty to follow his occupation. That upon the respondent’s saying that Jonas Warren would not be able to make any payment, John Rathbone, jun. answered, that he did not wish to take advantage of the bail, but hoped the respondent would accept the proposition, and that he would at any time settle the business on the same terrns.

That in November, 1808, the respondent sent 100 dollars to the appellants by Jonas Warren, who was to take his departure from New-York on a voyage, relying on the assurances of John Rathbone, jun. that the judgment would be discharged, or the bail, at least, exonerated. That on the 11th November, 1808, Jonas Warren paid to John Rathbone, jun. 101 dollars, who gave a receipt for it, and a writing, by which the appellants agreed not to issue execution for the purpose of charging the bail, until after the 20th February then next. That on receiving the wilting, the respondent was dissatisfied with it, and went immediately to New-York, to .see John Rathbone, jun. and if he refused to fulfil Ms engagement, to prevent the departure of Jonas Warren ; but on his arrival at New-York, the respondent found that Jonas Warren had sailed on his voyage; and John Rathbone, ¡un. admified that he received the 101 dollars agreeable to the pro

p. 597

position made to the respondent in Albany, and assured the respondent, that he might rest easy, as this engagement would be strictly kept, though he refused to release the judgment or discharge the bail, That on the 2d May, 1809, before Jonas Warren returned to the state, the respondent was arrested, by a writ issued on the recognisance of bail, returnable the 3d day of May, in the term of May. That Jonas Warren having returned after the term, about the 1st June, the respondent applied to the supreme court, on affidavit, for leave to surrender him, in exoneration of bail, but the application was refused, on the ground that by the practice of the court, the bail were so fixed that a surrender could not be made. That the appellants refused to release the respondent as bail, or to credit the amount of Hathaway’s note on the judgment, but were pressing the suit against the respondent; and the bill concluded with praying an injunction, and for general relief.

To this bill the appellants put in separate answers. John Rathbone, jun., in his answer, denied that he ever made any of the declarations, confessions, acknowledgments, or agreements, in his conversations with the respondent, as stated in the bill. He stated that the note of Hathewdy was taken as collateral security only, for the money due on the salt contract. That Jonas Warren, being about to depart on a voyage to some foreign port, on the 11th November, 1808, called on the said J. Rathbone, jun. and declared his intention of departing on such voyage, and offered to pay the appellants 100 dollars, if they would extend the time in which the bail of the said Jonas Warren were obliged to surrender him; that it was accordingly agreed between them that no execution should be issued, for the purpose of fixing the bail, until after the 20th February then next; and the following writing was thereupon given to the said Jonas: “ We do hereby agree, that we will not issue execution for the purpose of fixing the bail, against Jonas Warren on a judgment we obtained against him in May last, before the supreme court of this state, until after the 20th February next. New-York, IKhjVor. 1808. John Rathbone Sr Son.”

As the opinion of the court turned on the operation and effect of this written agreement, and the facts above stated, and admitted in the answer of one of the appellants, it is unnecessary to state the other parts of the answer, or the mass of evidence contained in the depositions taken in the cause.

p. 598

After hearing the cause argued, the chancellor, in ■ February, 1813, pronounced his decree: That a perpetual injunction issue t° restrain the appellants from enforcing the judgment mentioned in the respondent’s bill, which they had obtained against him in the supreme court, and that the appellants pay to the respondent jjjs costs to be. taxed. From this decree an appeal was entered to this court.

The reasons of this decree we,re thus assigned by

The Chancellor.

(After stating the facts.) The respondent, by becoming bail for Jonas Warren, acquired, as a legal incident flowing from the relation in which he had placed himself with Jonas Warren, as his bail, a right of taking his person, at any time, comporting with his own views of obtaining a discharge, and surrendering him in his exoneration, prior to his becoming fixed. For this purpose, a fair deduction from the relative obligation incurred on the part of Jonas Warren was, that he should do no act by which he might impair the security of his bail, or withdraw himself beyond the jurisdiction of the court, without his privity and consent.

The appellant, John Rathbone, jun. alleges that Jonas War* Yen declared his intention to undertake a voyage to some foreign parts. To facilitate that object, the writing set forth in his answer was given, and the appellants’ right of. issuing execution was suspended.

Hence it was imposed on the court to determine whether the appellants had so essentially changed the - respondent’s responsibility, as to discharge him from all liability.

By the departure pf Jonas Warren to foreign parts, he deprived bis bail' of the legal custody of his person. It was a species of escape. It deprived them of the exercise of the right of surrendering him when they pleased. It exposed him to numerous contingencies, which might retard his return from, or fix him permanently in, foreign parts; to the hazard of shipwreck, or death, under circumstances which might render it impracticable for the bail to show it in their discharge.

These circumstances essentially varied the risk of the bail, and as well might a plaintiff who aided a defendant, confined on his execution, to escape, maintain a suit against the sheriff for the escape. In that case, not a moment’s hesitation could be admitted; .the action would clearly not lie.

p. 599

The law on the subject of sureties is well settled, that a court of chancery will never hold sureties liable where the risk is increased by the act of the party to whose benefit the suretyship is intended to enure.

The application to the supreme court, on the ground on which relief was sought, could not operate against the respondent. It might have been repelled on the formal rules of the court. It was merely on a collateral subject, and the impracticability of obtaining relief there, was a valid reason for resorting to the court of chancery.

I was, therefore, of opinion, that the appellants ought to be perpetually restrained from enforcing their judgment against the respondent, and that the appellants should pay his costs to be taxed.

T. Sedgwick, for the appellants.

The written agreement was for the benefit only of the bail, it was merely to delay the issuing of an execution to fix the bail; and did not prevent the appellants from issuing any other kind of execution. It was for the sake of the bail that the agreement was made. It did not give time to the principal; it exposed the bail to no casualties; but was so far favourable to them, as it gave them a longer time within which to surrender their principal. Besides, the agreement was made with the privity of the respondent, who could not, therefore, be discharged by it. The construction given to this agreement, by the chancellor, is not correct. In no case is a surety discharged, unless he is prejudiced by the transaction between the creditor and the principal.^[14] If the arrangement made is for his benefit, there is no reason or justice in his claim to be discharged.

The parol agreement set up in the bill of the respondent, is wholly denied by the answer of the appellants, and is not proved by the testimony taken in the cause. [Here the counsel entered into an examination of the evidence.]

If, then, he observed, the respondent was privy to the agreement, even as a surety to be favoured, he cannot take advantage of it. It appears that he advanced 10 dollars to Jonas Warren to go to New-York, with a view to his going to sea, and did other acts to facilitate his departure, and to carry into effect the written agreement.

p. 600

Again, the respondent having sought his relief in the supreme-court, without pretending to any discharge, it is evident that he never considered himself discharged by that agreement. He could clearly have availed himself of all these facts, as a ground for his discharge in the supreme court.^[14] The defence is the same at law as in equity. And where the party has a perfect defence at law, and may have defended himself there, and does not, equity will not relieve.f The proceedings at law are conclusive.

Henry, contra.

Sureties are favourites of courts of equity, and

are not to be held beyond the precise terms of their agreement; and, if it be afterwards varied without their assent, they are no longer bound. This principle is laid down and illustrated in the case of Ludlow v. Simonds,^[16] particularly in the opinion delivered by Chief Justice Kent, who supports it by numerous authorities. The cases of Nesbit v. Smith,^[17] Ex parte Smith v. Lewis,^[6] Rees v. Berrington,^[7] and Law v. The East-India Company,^[8] fully establish the position that any act of the obligee which may injure the surety, or any alteration of the agreement, or enlargement of the time of performance, without his assent, discharges the surety; and where the obligee was guilty of a laches, in not prosecuting the principal after a default, as it was bis duty to do, this was deemed to discharge his guaranty.^[9] In Livingston v. Bartics,^[10] where the conduct of the plaintiff had been such as to lull the bail into security, and to induce them to suppose that he did not intend to look to them, the court allowed a surrender, though the bail were absolutely fixed, and the plaintiff had done no act to impair his legal rights.

[The counsel then went into a particular examination and discussion of the parol agreement and evidence.]

Again, it is said that as there was a perfect remedy at law, a court of equity had no jurisdiction. But it was doubtful whether the respondent had a safe defence at law; and in case of doubt, a court of equity has jurisdiction.^[11] The appellants were called on to account, and where a part of the subject is cognizable in a court of equity, that court will take cognizance of the whole matter.^[12] Again, if the matters stated in the respondent’s bill were true, there was a fraud on the part of the appellants; and in all questions of fraud, courts of law and equity have concurrent jurisdiction.^[13] Besides, there had been no trial at law, at which the respondent was to make his defence; and where there is n@

p. 601

trial or verdict, the party may elect his forum.^[14] The respondent had clearly a right to go into a court of equity for a specific performance of an agreement, which a court of law might not enforce.^[15]

Even if this court should be inclined to decide against the respondent, yet he is entitled to have the case referred to a master in order that an account may be stated as to Hatlieway’s note. 'Though the note was due, the appellants were not absolved from the duty of using all due diligence to collect the money, which was the purpose for which they took the note.^[16]

A. Van Vechten, (Attorney-General,) in reply,

insisted, that the respondent did not stand precisely in the light of a surety. The appellants had no agency or volition in making him bail; but be became so by the force of law. If the respondent is a surety, he is only so in relation to Jonas Warren, the principal. In cases of suretyship generally, the surety has not the power to discharge himself, at his pleasure, but here the respondent might, whenever he" thought proper, have surrendered the principal, and thereby exonerate himself from all responsibility. In the case of Livingston v. Barths,^[17] the supreme court did not inferiere on the ground that the terms of the suretyship had been varied without the consent of the bail. They merely, in exercise of their equity powers in regard to bail, enlarged the time for surrender.

As to the allegation of any connivance between the appellants and Jonas Warner, to keep him out of the way; or of fraud in the substitution of the written contract to the parol agreement, it is not warranted by the evidence. The parol agreement could have no force against the subsequent written agreement. But there was no parol agreement concluded; there was a proposition only; and the respondent afterwards sent Jonas Warren with money, and to conclude the agreement. This was a sufficient authority, and if the agent thought proper to accept a written agreement, the respondent can avail himself of no other.

With respect to relief, therules are the same in law and in equity. The respondent sought his relief in the supreme court, and they did not discover any just grounds on which it ought to be given; and the proceedings have gone on in that court. If there had been any fraud, it was equally a ground of defence at law. Admitting that the party may elect his forum, we say that the respondent did elect his forum, and not having succeeded there, he ought met to be allowed to resort to any other.

p. 602

As to the appellants’ being accountable for Hathemay’s note, the receipt shows that it was taken as collateral security only ; the , . , , , J , money when paid was to be applied to the salt contract; but the appellants did not undertake to collect the note, nor were they bound to take any measures for that purpose.

Two questions arise in this case: 1. What is the nature and effect of the parol agreement set up by the respondent? 2. What is the operation of the written agreement, as.it respects the respondent ?

I am satisfied that the decree cannot be maintained,on the verbal agreement, admitting even that such an agreement was made, and that the respondent sent the 100 dollars by Jonas Warren, to be paid on the faith of that agreement; for the proposition or agreement was not valid at the time it was alleged to have been made with one of the appellants; it was an executory agreement founded on no consideration; and there was a locus penitentim to the party, who was at liberty to waive or execute it. Besides, it was not assented to by the respondent, who had time to think of the proposition, and execute the agreement or not, as he should, afterwards, see fit. To render such an agreement valid, both parties must be bound, or neither. When, therefore, Jonas Warren paid the 100 dollars to one of the appellants, he paid it on the faith of the written agreement which he accepted. It would be against established principles to permit a parol agreement to be set up against a written stipulation. The decree must rest, therefore, for its support, entirely on the written agreement.

This agreement is dated the 11th of November, 1808, and was given without the knowledge or assent of the respondent. It stipulated that no execution should be issued, for the purpose .of fixing the bail, on the judgment against Jonas Warren, until after the 20ih February following. It was admitted in the case, and tras proved by Jonas Warren, that when the writing was given, he was about going to sea, and did actually sail a few days afterivards, and that he paid the appellants the 100 dollars, as an inducement to them to grant him this indulgence. The. respondent was arrested on the 2d May, 1809, in a suit on the recognisance of bail, and Jonas Warren did not return to this state until about the first June, 1809; and the respondent became fixed, as bail, in May term, 1809.

p. 603

It has been argued that James Warren, the respondent, was Mot a surety, within the principle's applicable to sureties. But, though there was no communication between him and the appellants, yet he is to be, considered, by act of law, to all intents and purposes, a surety. On his becoming bail, to which the appellants must be deemed to have assented, he undertook that the principal should pay the condemnation money, or surrender himself to prison, or that he would do it for him.

The appellants, who are to be treated precisely as if they were the obligees of a bond, have thought proper, on receiving part of their debt from the principal, to enter into a stipulation not to proceed against him, in the only useful way he could be proceeded against, as he appears to have had no property, until after a certain day. This stipulation undoubtedly induced the principal to leave the state; and the situation of the bail was thereby materially changed, and his risk greatly increased. It appears to me, that on principles of good faith and common honesty, this act must be deemed to have exonerated the bail. In the language of Lord Loughborough, in Rees v. Berrington,^[1] the appellants, by this stipulation, “ put it out of their power to perform that, which the nature of the relation between the surety and the person for whom he is bound, requires. It is a breach of the obligation in conscience and honesty; and, it is not too much to say, of that obligation in point of law.” And his lordship, in that case, refused to “ try the cause, by inquiring what mischief it might have done; for that would lead to a vast variety of speculations, upon which no sound principle could be built.” The principle adopted in the decision of that case was, that there could be no transaction with the principal debtor, without acquainting the surety, who has a deep concern in it. “ You cannot,” says his lordship, “ keep him bound, and transact his affairs,' without consulting him.” Lord Thurlow, in Nesbit v. Smith,^[2] held nearly the same language. The principle of these cases appears to me to be sound and correct, and the facts of this case warrant its application ; for the respondent was not only injured by the arrangement with the principal, and his consequent departure from the state, and not returning until after the time for his surrender had past, but this arrangement was made entirely without his assent.

I have no doubt that this was a case of equity jurisdiction. I do not say that there was no defence at law; but the remedy was doubtful. Besides, the respondent had a right to call the appellants

* 2 Ves. jun. 543.

† † 2 Bro. Ch. Cas. 570. 582.

p. 604

into a court of equity, to account for the money received by them of the principal; and it is a settled rule, that when the court of chancery has gained jurisdiction of a cause for one purpose, it may retain it generally. I am of opinion that the decree of the court below ought to be affirmed.

This being the unanimous opinion of the court, it was thereupon ordered, adjudged, and decreed, that the decree of the court of chancery be affirmed; and that the appellants pay to the respondent one hundred dollars for his costs in defending the appeal, and that the record be remitted, &c.

Judgment affirmed»

END OF CASES IN ERROR.