Hamilton v. Callender's executors — 1 U.S. 420

Majority

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Hamilton, Executor, v. Callender’s executors.

Syllabus

Satisfaction.

k. mortgaged lands to B., and after Ms death, his-exeeutora sold part of the mortgaged premises to C., who assumed payment of the principal and interest, and gave Ms bond to B., for the interest due; no receipt was given on the mortgage, for the amount of this bond, and it did not appear, that it was accepted by B. as satisfaction: Held, that the bond was not a payment pro tanto, so as to discharge the executors of A.

This action being referred by consent, the following report was made : “ The referees, upon full consideration of all the circumstances, are doubtful as to the law upon one point, and have agreed to make their award special, subject to the opinion of the court.

“ The case submitted to them appeared to be as follows : On the 16th of March 1773, Robert Callender was indebted to James Hamilton in the sum of 2120?. sterling, for which he gave to the said James Hamilton, a bond and warrant of attorney, and a mortgage upon an estate in the county of Cumberland. It appeared, that interest ivas paid thereon to March 1776, and that -receipts for such payments are indorsed on the mortgage.

“ Robert Callender died, and some time after, his executors sold part of the mortgaged premises to Mark Bird, who undertook to pay off the principal sum, together with the interest that should become due, after the date of his purchase.

“ It is agreed, that James Hamilton remitted one year’s interest to the executors of Callender ; and that Mark Bird gave his bond, bearing date the 3d of May 1783, to James Hamilton, for 651?. sterling, being the whole of the interest then due on the mortgage, exclusive of the year’s interest remitted. No discharge was given upon the mortgage, either for the year’s interest remitted, or for the amount of the bond ; nor does it appear, that the executors of Callender had any notice of the bond, or that they had been applied to for the payment of any interest, after the sale to Bird.

“ Bird has never paid any part of the principal or interest : and in the end of the year 1784, a scire facias issued on the mortgage ; but the sale was postponed from time to time ; and, in the meantime, Bird became a bankrupt. On the 19th of May 1787, however, the estate held by Bird was sold under the scire * facias, for 5500?. : and another part of Callen- r* der’s estate ivas sold, under the same execution, for about 1000?. [*421

“ The point which the referees wished to submit to the opinion of the court is : — Whether James Hamilton, by taking the bond from Bird, under the circumstances stated, has exonerated the executors of Callender from the payment of 651?. sterling, the sum for which the said bond was given? Or, whether the mortgaged premises are bound to the executors of Hamilton, notwithstanding the said bond ?

“ If the court shall be of opinion, that the estate of Callender is exonerated from so much of the interest as the bond of Bird was given for, then we find, that there Avas due to the executors of Hamilton, on the 19th of May last (when the premises were sold), for principal and interest upon the mortgage, 4988?. 18s. 2d. current money of Pennsylvania. But, nevertheless, if the court should so determine, the referees award, that the whole of the money arising from the sale of that part of the mortgaged premises belonging to Bird, and which is stated to have sold for 5500?. should be applied, in the

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first place, to the payment of the aforesaid sum of 1988?. 18s. 2c?. and the residue to so much of Bird’s bond to Hamilton, as it will extend to.

“But if the court shall be of opinion, that the executors of Callender are not exonerated from the payment of so much of the interest as the bond aforesaid specifies, then we award, that there was due from the defendants to the plaintiff, on the 19th day of May last, the sum of 6264?. 18s. ''id. current money aforesaid.”

Whether the bond given by Mark Bird to the plaintiff’s testator operated as an extinguishment of so much of the money due upon Callender’s mortgage, was the question?

And it was argued, in July term 1788, by Bewis and Wilcoclcs, for the plaintiff, and by Wilson and Bradford, for the defendant.

For the plaintiff,

it was contended, that the bond in question was taken merely as a collateral security, in order to entitle Hamilton to interest upon the amount. The report (though it is sufficient to give judgment upon) does not say, that it was received or given in satisfaction ; it is, therefore, to be presumed, that no evidence of that kind was submitted to the referees, and the court must determine the law, upon the facts contained in the report.

But even if the report was amended, and it were expressly set forth, that the bond was given and received in satisfaction, it would not be an extinguishment of the preceding demand, founded on the mortgage. The rule is clear, that a subsequent security, of equal dignity, is not an extinguishment, so as to annihilate the party’s remedy upon his original contract ; for that purpose, the security must’ be of a higher nature. Nor will the mere improvement of the security, by adding another surety, amount to an ex-*4221 *(Cro. Jac. 579; Hob. 68, 69; Moore 872; Cro. Car. 85, 86; see 2 Bac. Abr. 452); whether, indeed, by accord or not, one bond is not an extinguishment of another (3 Lev. 55; Brownl. 47, 71). Nay, the party’s own agreement to accept is not sufficient; for, it must, appear to be a reasonable satisfaction. 1 Str. 426-7.

The bond given by Bird was certainly not of a higher nature than the previous security ; it was, in fact, inferior ; for a mortgage is a security on real estate, a bond is only personal; and in the case of a bankruptcy, though neither bonds nor judgments stand against the general creditors, yet mortgages do.

For the defendants,

it was urged, that the legal doctrine of collateral ex-tinguishments does not apply; for some cases go further than those pro duced, and show that an estate worth a million, would not discharge a bond conditioned for the payment of 10?. Yet, at common law, the doctrine appears to differ from what the adverse counsel wish to establish (Co. Litt. 212 b) ; though, it must be admitted, that many subsequent decisions have greatly deviated from the principle laid down by Lord Coke, that the party’s acceptance of anything, provided it be not of less value than the original contract, in satisfaction, is sufficient. But notwithstanding the admission that the authorities seem now to extend so far, that a bond from the same party, increasing the sum, or, even where another surety is added, will not be a discharge of a prior obligation ; yet, none of them are so extrava

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gant as to assert, that it is no discharge, where the ad-v tntage of converting interest into principal has been obtained; which is, in itself, a reasonable satisfaction to ground the extinguishment; and independently of the cases, the broad principle of equity declares, that when a party is bettered by his bargain, he shall be bound by it.

But, it appears from the report of the referees, that there was an absolute giving and taking of the bond ; and as the payment must be according to the will of the defendant (Cro. Eliz. 68), if Bird gave the bond in question, in payment, we show that it was accepted, and it is no matter whether that acceptance was in satisfaction, or not, since the bond must be received to the intent with which it was given. 1 Ld. Raym. 60, 61.

The case, however, does not, after.all, depend upon the doctrine of extinguishment, but upon the act for defalcation ; by virtue of which the acceptance of the bond in question may be given in evidence by way of set-off against the plaintiff’s demand. (1 Sm. L. 49.)

For the plaintiff, in reply,

it was insisted, that the object of the act of defalcation was to prevent a multiplicity of suits, and that it could have no possible effect upon the general question, whether Bird’s bond operated as a payment or extinguishment pro tanto of the preceding debt ? This question has been agitated in England, as well since as before the statute, and the present idea has never been suggested. The act of assembly speaks of two or more being mutually indebted ; and, although it authorises a defalcation, *it does not define what shall be deemed a payment or . extinguishment. [*423

There is no fair ground to assert that Hamilton received an adequate satisfaction, by converting the interest into principal; for he was entitled to have his interest punctually paid ; and the books of chancery have gone so far as to declare, that, where money is in arrear upon a mortgage, it was not usury to take interest upon the interest. In the case from Cro. Jac. 579, indeed, the interest was also added to the principal; but this the court did not consider a sufficient bar. Nor was Hamilton benefited in respect to time ; for the bond was given not to shorten the period of payment but to protract it: as the money was actually due, and ought to have been previously paid.

After considering the case and arguments, the chief justice, at the present term, delivered the opinion of the court.

The case appears to be this : That the testa tor of the defendants gave a mortgage to the testator of the plaintiff, on four several tracts of land. The heirs of the mortgagor sold the equity of redemption of three of these tracts to Mark Bird, who, afterwards (on the 3d day of May 1783), executed a bond for 651i. to the mortgagee ; and this bond being for the amount of the interest then due upon the mortgage, also bore interest. No receipt, however, for the bond, for the interest, nor, indeed, any minute of the proceeding, was entered upon the mortgage ; m/r h as -any express proof been offered, that the bond (upon which there has not been anything paid) was accepted as a satisfaction pro tanto of the mcney due on the mortgage. The three tracts of land conveyed to Mark Bird have been sold, in order to satisfy the mortgage ; but proving insufficient, the question now arises, on the circumstances which I have stated, whether the

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bond given by Mark Bird is to be taken, either in Aw or equity, as a payment, discharge or recompense for so much of the mortgage-money ?

The court, having maturely considered the case, are of opinion, that the bond is not a payment pro tanto of the mortgage-money : for which opinion they will content themselves with declaring the general prineijiles, and referring to the authorities whence those ¡irinciples are deduced.

1. First, then, one judgment cannot be pleaded in bar of another, which is of equal nature and dignity, no more than one bond or obligation can be pleaded in bar of another. Cro. Eliz. 817; 2 Bac. Abr. 552.

2. In the second place, a bond, which is no satisfaction of another bond, cannot be deemed a satisfaction of a mortgage, which is a security of a higher nature. To render it a satisfaction, it ought to better the plaintiff’s case, in point of safety, and expedite the time of payment; for a bond with sureties will not be a satisfaction of one without, unless the time of payment *424] *shortened. 1 Str. 427; 1 Brownl. 47, 71; Hob. 68, 69; 1 Mod. 225; 2 Id. 186; Cro. Jac. 579; Cro. Car. 85, 86; 3 Lev. 55; 1 Salk. 124; 1 Burr. 9; 2 Wils. 87.

3. And in the third place, as there is no entry of the bond in question upon the mortgage, showing that it was received in payment or satisfaction of the interest then due, nor any proof that it was so intended by the parties, a presumption naturally arises, that the bond was merely taken as a collateral or supplementary security ; and no debt or duty can be extinguished, but by a security of a higher nature than the first.

For these reasons, we decide the question submitted by the referees to the court, in favor of the plaintiff, and direct judgment to be accordingly entered upon the report,^[1]

(a) (a) See Musgrove v. Gibbs, ante, p. 216, and the cases cited in the note. 1

Footnotes

1 The receipt of a security of equal degree, either from the debtor, or from a stranger, is no extinguishment of the original cause of action. Oliphant v. Church, 19 Penn. St. 318 . Whether it is to operate as a satisfaction, by substitution, depends on the intention of the parties. Reed v. Defebaugh, 24 Id. 495. The transfer of a chose in action to a creditor is presumed to be a collateral security, not a satisfaction, unless so expressed. Leas v. James, 10 S. & E. 307; Stone v. Miller, 16 Penn. St. 450 ; League v. Waring, 85 Id. 244 And see Bank v. Cheney, 10 W. N. C. 137 .