Seymour v. Minturn — 17 Johns. 169

Majority

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Seymour against Jonas Minturn.

Headnote

The plaintiff airthtf promí sorynote, pay-fendan/or order, who en-procuredS^'lo be discounted of Neic-York, and received the money.

The note was protested for non-payment; and the defendant being insolvent, the plaintiff, signed a written agreement discharging him from all debts and demands, &c. The bank, (with other creditors,) a ho executed the agreement by its corporate seal. Afterwards, the plaintiff paid the bank, as holders, the amount of the note, and brought an action against the defendant for so much money paid to his use: Held, that the release of the defendant, by the bank, did not discharge the plaintiff, as maker, especially as the bank did not know for whose accommodation the note was discounted^ and that, therefore, the plaintiff did not pay the money, afterwards, in his own wrong.

That the agreement, for want of the seal of the plaintiff, could not operate as a release; and the consideration being merely nominal, it could not operate as an accord and satisfaction.

Though a promise, by words, may be discharged by parol, before it is broken ; yet where an agreement is, on an adequate consideration, to pay a sum certain, it cannot be discharged by an agreement to receive a less sum.

Besides, the plaintiff having no debt or existing demand, at the time the agreement to discharge the defendant was executed, that agreement could not have the effect to discharge a right of action acquired subsequently, by the payment of the money by the plaintiff, to the holders of the note.

THIS was an action of assumpsit, tried at the New-Yorlc sittings, in November, 1818, before the late chief justice.

*The declaration contained the usual money counts, an insi-mul computassent, besides special counts.

In the year 1814, the plaintiff lent to the defendant and his partner, William. Minturn, his promissory note, dated Septem-her, 13, 1814, for 2,900 dollars, payable to them, or order, sixty days after date. The note was discounted at the bank of New-York, for the accommodation of W. and J. Minturn,

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who received the money thereon ; when the note became due, it was protested for non-payment; and afterwards, on the 1st of June, 1816, the plaintiff paid 1,100 dollars on account of the note, and on the 3d of January, 1818, after this suit was commenced, he paid the residue of the principal and interest thereon ; to recover the amount so first paid by the plaintiff, the present suit was brought. The bank did not know for whose accommodation the note was discounted.

The defendant’s counsel read in evidence a writing, dated Nn-imber 24, 1814, signed by the plaintiff and other creditors of ft. and M. and to which the president and directors of the bank of New-York, were, also, parties, having executed it by their corporate seal. This writing, after reciting that the said It . and J. M. were indebted to the subscribers, respectively, on promissory notes or book accounts, which they, in consequence of losses and misfortunes, were unable to pay, and that in consideration of their inability to pay and satisfy their several demands, they (the subscribers) had consented, respectively, to discharge them, (W. and J. M.,) and each of them, of and from all future claims and demands on account thereof: therefore, in consideration of the premises, and of one dollar, &c., they, the subscribers, did thereby release and discharge the said W. and J. M. of and from all debts, dues, and demands, which they had against them, or either of them, as drawers or endorsors upon any promissory notes, or upon accounts, or any contract, agreement, or obligation, whatsoever.

It appeared, that the note in question was held by the bank of New-York, under protest, at the time that the above-mentioned release was executed.

A verdict was taken for the plaintiff for the 1,100 dollars, and interest, after deducting a sum received before the suit, #on account of the demand, subject to the opinion of the court, on a case containing the facts above stated.

Banner, for the plaintiff.

On the face of the case, the plaintiff is entitled to recover. It was objected, at the trial, that the demand being for money paid to the use of William and Jonas Minium, the proof would not sustain an action against the defendant alone; and that the variance was fatal. The answer is, that this should have been pleaded in abatement. ( 2 Johns. Cas. 383 . Rice v. Shute, 5 Burr. 2611. 2 111. .Rep. 947.) Then, as to the release or discharge set up by the defendant, we contend that, as between these parties, it is void, not being under seal, for want of a consideration. It can neither operate as a release, nor by way of accord and satisfaction. ( 4 Johns. Rep. 235 . 6 Johns. Rep. 194 . 8 Johns. JRcp. 444. 9 Johns. Rep. 358 . 2 Johns. Rep. 186 . 5 Johns. Rep, 387 .)

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The bank of Ncw-YorJc, it is true, affixed their seal, but no assent can be implied, to make it the deed of the plaintiff.

This case does not come within the principle of law, that the discharge of the principal debtor discharges the surety. The case of Fenton v. Pocock, (5 Taunt. Rep. 192.) is in point. It was there held, that if the holder of a bill of exchange, accepted for the accommodation of the drawer, takes a cognovit from the drawer, for payment by instalments, he does not thereby discharge the acceptor; and that there was no difference between an acceptance for accommodation and an acceptance for value ; and that the cases of Laxton v. Peat, (2 Campb. N. P. 185.) and Collot v. Haigh, (3 Campb. 281.) decided by Lord Ettenhorough, were not law.

On the face of the note, as between the parties, the maker is the principal debtor, and the endorsor the conditional security. The holder may discharge a prior endorsor and sue a subsequent one. (Hayling v. Mulhall, 2 Wm. Bl. 1235.)

D. B. Ogden and T. A. Emmet, contra,

It is admitted, that the objection as to this not being a joint action comes too late. The only point is, whether the release or agreement in writing was not a discharge of the plaintiff’s right of #action : There was no consideration paid for this note. It was merely lent by the plaintiff to the defendant and his partner, for their accommodation. The same motive or desire to benefit his friend induced the plaintiff to execute the release. The plaintiff, by writing, promises to pay the defendant a certain sum of money ; he then proves, by parol, that he was a mere lender of his name, by note. Surely if an agreement exists by parol, it may be released by parol. Solvitur eo Kgamine quo ligatur. If the defendant had brought an action on the note against the plaintiff, the latter might have shown, by parol evidence, that he never received any consideration, but was a mere lender of his note to M. and his partner. It is said, here was no release, because it was not under seal. The plaintiff being a parly to the instrument, to which the bank of New-York affixed their seal, intended, no doubt, to confer a benefit on M. and his partner, and to release them from all liability to him. If lie did not so intend, it was a fraud on the other creditors who signed the discharge. When the writing was signed there was no debt to be released, nothing but a mere liability. Before a right of action accrues, a promise or liability may be released by parol. A promise before it is broken may be discharged by a parol agreement; (May v. King 12 Mod. 538. per Holt. Ch. J. Cro. Car. 383. 2 Lkv. 214.) for until there is a debt or duty, there is nothing on which a release can operate. It was uncertain whether there would be a debt: so we admit that it could not be an accord and satisfaction, for there was no debt to be satisfied. But a less sum, paid before the right of action

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accrues and accepted by the party, is a good accord and satisfaction. ( Watkinson v. Inglesby & Stokes, 5 Johns. Rep. 3S6. 391. per Van Ness, J. Co. Litt. 212. b. 5 Co. 117.) A promise to discharge a promise does not require any consideration to give it validity. There is a pecuniary consideration of one dollar, in this agreement, and that is enough to prevent its being a n udum pactum.

Again; the plaintiff does not declare on the note, but for money paid to the use of the defendant. We were debtors, if at all, to the Bank of New-York, the holders of the note; and they, by their corporate seal, do release this debt. The plaintiff, afterwards, pays the money. But for whose debt ? %ot for the debt of the defendant and his partner, for they were, then, duly discharged by the holders. How, then, can it be money paid to the use of the defendant ? The plaintiff' paid the money, because, being the maker of the note, he was legally liable to pay it. The bank executed the instrument with the assent of the plaintiff, who was, also, a party to it. It is an universal principle, applicable to all cases where the relation of principal and surety exists, that a discharge of the principal is a discharge of the surety.

S. Jones, jun., in reply.

Though, as between these parties, this was an accommodation note; yet as regards the holders, the bank, S. was the principal, and M. and his partner the sureties. The bank, when they discharged the sureties, still retained their right of action against the principal, the plaintiff', who was the maker of the note. As to the objection, that the money was not paid to the use of the defendant, it would equally apply in every other case where the principal is discharged under a bankrupt or insolvent law.

If there was no existing debt, or no debt until the plaintiff paid the money, on what could the agreement or release operate: It was no matter, then, whether it was sealed or not. It could not operate to discharge what did not exist. Suppose it, however, to be the release of a promise, it cannot be valid without a consideration, there being no seal. A seal imports a consideration. But without a seal, it was a simple naked promise. It is agreed, that this agreement could not be pleaded as a release; if good, it might, then, be pleaded as an accord and satisfaction; for there can be no valid defence which cannot be put into the form of a special plea. But would a mere nominal consideration of one dollar be sufficient to support a plea of accord and satisfaction ? Such a consideration is nothing, unless to support a right. No matter how the case stands between the original parties to the note. It is true, that we cannot sue on the note ; that would be absurd. The plaintiff' sues on the agreement between him and the defendant, between whom it is a case of principal and surety.

Admitting that this was a parol agreement, and that, as

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*such, it may be released by parol, still there must be a consideration to support it.

But it is said, as the plaintiff assented to the release by the bank, it is, in effect, a release by the plaintiff. There is, however, no evidence that the paper was signed by the common consent of all the parties. The plaintiff signed first and separately, then certain creditors, and after them the bank. It does not appear that the plaintiff, when he signed the agreement, knew that the bank would execute it.

delivered the opinion of the court. The non-joinder of William Mint urn, as a co-defendant, has very properly been abandoned. The objection could have been taken only under a plea in abatement. The case of Price and Shute, (5 Burr. Rep. 2611.) which has never been questioned, is decisive.

„ The first question is, whether the release by the Bank of New- York, to the Miniums, destroyed their remedy against the plaintiff, as drawer of the note; so that his subsequent payment to the bank was in his own wrong ? The fact is fully made out, that the note was discounted for the accommodation of the Miniums, it being unknown to the bank, at any time, for whose accommodation the note was made. The release by the bank was operative as a discharge of the Miniums; but the bank had a right to presume, that the plaintiff was the real debtor, for he was the maker of the note ; and they had also a right to consider him as consenting to the discharge of the endorsers. It is not to be doubted, that a compounding by the holder of a note with the endorser, with the consent of the drawer, does not discharge the holder’s remedy against the latter.

It is indisputable, that the paper writing, signed by the plaintiff, cannot operate as a release, for the want of a seal;^[1] but it is insisted, that it may be available as an accord and satisfaction. The want of an adequate consideration is an insuperable objection to its operating in that way. The consideration expressed is one dollar. The cases of Harrison v. Wilcox and Close, ( 2 Johns. Rep. 449 .) Fitch v. Sutton, (5 East, 232.) and Cumber v. Warn, (1 Str. 426.) are decided authorities to show, that the payment of a less sum *of money than the real debt will be no satisfaction of a larger sum, without a release by deed. But again, it has been urged, that the unsealed discharge having been given before the plaintiff had paid any thing to the bank, the implied promise raised by law on the subsequent payment by the plaintiff, would be discharged by parol, without a consideration, oh the ground that a promise before it be broken maybe discharged by parol; and we are referred to the cases of Langdon v. Stokes. (Cro. Car.

(a) (a) A release, without consideration, and not under seal, is void. Jackson v Stackhouse, 1 Cowen, 122. Strang v. Holmes, 7 Cowen, 224.

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383.) and May v. King, (12 Mod. 538.) These eases, undoubtedly, decide, that a promise by words may be discharged by words, before a breach of the promise ; but in the broad extent in which the proposition is laid down, these cases cannot be Where there is an agreement, upon an adequate eoiwderation, to pay a sum certain, the promisor cannot avoid that agreement, by an agreement to receive a less sum; this abundantly appears by the cases already cited. An agreement, as in the case of Langdon v. Stokes, to go such a voyage before a particular day, may be discharged by parol, before it is broken; for non constat, that the promisee has any fixed or certain advantage in the performance of the voyage.

There is a decisive objection to the defence set up. The plaintilf had no existing demand when he signed the paper writing; the discharge is only of such claims, debts, dues and demands which the parties signing it respectively had against the Mini urns, or either of them, as drawers and endorsors upon any promissory notes then held by either of the persons subscribing the discharge ; and the recital to the discharge is, that the Miniums stood indebted to the subscribers respectively, upon promissory notes, or book accounts, and that, in consequence of their inability to pay, and satisfy the demands against them, the subscribers had agreed to discharge them from all future claims and demands for or on account thereof. Now, the plaintiff had no claim, debt, due or demand when he signed the discharge, nor did the Miniums then stand indebted to him upon promissory notes, or book account, nor had he any claim against them as drawers or endorsors upon any promissory notes. The plaintiffs claim arose subsequently, and in consequence of his payment to the bank ; and he does not bring, nor could he maintain a suit #against the Miniums, as endorsors of the note, for the plaintiff is the maker of the note, the payment of which gives rise to this action. The discharge, therefore, does not, in terms, release the plaintiffs right; and, arguing from it, it could not have been the intention of the parties, that the plaintiff’s demand, which was then altogether uncertain and contingent, should be discharged. The plaintiff has a right to say, and he can say it successfully, that the discharge does not embrace his present cause of action. The plaintiff is, therefore, entitled to judgment.

Judgment for the plaintiff.