Case of Field's Estate

A promise to pay a specialty debt, which has been discharged by a certificate of bankruptcy, does not revive the original .debt, as a debt by specialty. The original debt is merely a consideration, which renders the new promise available.

Appeal from the decree of the Orphans’ Court of Philadelphia county, on the settlement of the account of Joseph Field, administrator of John Field, deceased, and the distribution of the assets among the creditors of the said intestate. The auditors to whom this case was referred, made to the Orphans’ Court a report, of which the following part only is material: “ The auditors further report, that John Field, the intestate, was, on the 8th day of March, 1804, discharged under the bankrupt law of the United States, and regularly obtained his certificate of having conformed in all things to the provisions of the act of congress on that subject: That the specialties or bonds, on which Messrs. West and Yarnall claim, are both dated previous to that time; but, in relation to the claim of William West, the auditors were satisfied that the intestate, after his discharge re-assumed the said debt and continued to make payments on account of principal and interest, until the 15th Jipril, 1823: That an amicable action of debt was entered on said note in the District Court for the city and county of Philadelphia, to September term, 1819; and that, on the 8th of May, 1820, John Field, the defendant, delivered to the plaintiff certain promissory notes of 'David Kendrick, (which notes have not been paid) as a collateral security for the balance due on the said note, and took a receipt for the said collateral security, particularly describing the original sealed note. The auditors, conceiving that these circumstances amount to a re-sealing and delivery of the original note, have allowed the same as a specialty. The claim of E. and E. Yarnall, is on a bond dated February 21, 1799, of John Field, in favour of Nicholas Wain and William Wilson, guardians of Joseph Head, Ellis Yarnall and Samuel Coates, conditioned for the payment of three thousand dollars, with interest, in the following proportions, to wit: one thousand dollars to Nicholas Wain and William Wilson, one thousand to Ellis Yarnall, and one thousand to Samuel Coates. In relation to this claim, it appeared in evidence, by the testimony of Ellis Yarnall, one of the original obligees, who assigned his interest in this demand to the claimants, at one of the meetings of the auditors, that immediately before, or just after the discharge of John Field under the bankrupt law, he informed the witness he had placed notes in the hands of his friends to meet this debt: That, several years after, (the money not having been paid) the witness again applied to John Field, and was then informed by him that he-had a judgment against the estate of Daniel Williams, on which execution had been issued, and the real estate of the defendant, situate in the Neck, levied on and sold by the sheriff, and purchased for the use of said Field: That the title of Williams was disputed, but he had brought a suit against the person in possession, and, in case he recovered the land, he would pay this debt. The witness was not certain whether he was to pay it out of the money to be received for the said land, if it was recovered, or not. The intestate offered, if the witness was not satisfied with this, that he would make an assignment of the suit to him. He also stated that there were other lands of D. Williams, on which he had levied his execution, and he had no doubt that, out of these lands, enough would be received to pay this debt. A few days previous to the last of June, 1823, the witness again urged John Field for payment; he answered, he always considered Daniel Williams’ property ought to pay this debt, because the original security was on it, though the money was for his, John Field’s, use; he levied his judgment on that estate, and would pay out of it. The original bond was accompanied by a mortgage of John Field and wife, on property which descended to her from her father, Daniel Williams, but which was sold by the sheriff, and the whole of the proceeds appropriated to the payment of prior incumbrances. The property in the Neck levied on and sold by the sheriff, as the property of Daniel Williams,, contained eighty-seven acres, one quarter and twenty perches; it was purchased by Joseph Clark, for John Field, and conveyed to Field o.n the 18th day of April, 1818. On the 24th of April, 1818, Field conveyed a part of it (nine acres, three quarters and twenty-seven perches) to Stephen Girard, in consideration of the sum of three thousand dollars, but whether he ever obtained possession of the remainder, or any part of it, the auditors had no evidence. Conceiving this- to be a promise to pay out of a particular fund, the auditors have allowed the amount proved to have been received from that fund by John Field, with interest; but as there was no evidence of any re-sealing or delivery of the bond, they have allowed it as a simple contract debt.” To this report, the following exceptions were filed: “1. That the auditors have erred in not allowing the claim of the above named Filis H., Edward and Charles Yarnall, assignees of Ellis Yarnall and Samuel Coates, who survived Nicho~ las Wain and William Wilson, as a specialty debt, the same claim being founded on a bond made and executed by John Field, the above named intestate, in favour of Ellis Yarnall, Samuel Coates, Nicholas Wain and William Wilson, which bond bears date the 21st of February, 1799. “2. That the said auditors have further erred in calculating the interest from the 24th day of Jlpril, 1818, instead of calculating from the day of the date of the said bond, when it commenced, allowing a credit for the payments of the interest which have been made, and which are indorsed on said bond, until the interest should amount, together with the real debt, payable by the condition of the said bond, to a sum equal to tbe penalty thereof,, or until the day the auditors signed the report.” Decree of the Orphans’ Court, pronounced by King, President.: “ The exceptions to the report of the auditors, raise two questions for the decision of the court. First, Whether the exceptants are specialty creditors? Second, From what period is interest to' be calculated upon the debt? The facts are few and unequivocal. John Field, the intestate, on the 2d February, 1799, executed a bond to Nicholas Wain and others, conditioned for the payment of three thousand dollars. On the eighth of March, 1804, the bond being due and unpaid, Field obtained his certificate as a bankrupt, under the existing act of congress of the United States. There is no evidence in the cause, that Wain and others, ever proved their debt under the commission, or received any dividend of the effects of the bankrupt. On repeated occasions, between the time of his bankruptcy and his death, which took place in ---- Field promised the exceptants to pay this bond as soon as he could realize funds from a particular source, to which he referred. Before his death, the property from which he contemplated payment came into his hands. The auditors have considered the claim of the exceptants as arising from simple contract, and not as a bond debt, and have allowed interest upon it from the 24th February, 1S18, the day upon which Field received three thousand dollars from a purchase of part of some land recovered by him, and which was the source from which, when rendered available, he promised payment to the exceptants. The questions involved in this case lie in a narrow compass, though the result of their decision is of considerable pecuniary interest to the parties. It is unquestionable law that a promise made by a' bankrupt to pay a debt barred by his certificate, again subjects him to a legal liability for its payment. The only dispute appears to be, whether it revives the old debt, or whether the old debt is a good consideration for the new promise. It seems, in practice, that declarations are framed upon either and both these views, and have been equally sustained. Trueman v. Fenton, Cowp. 544. Cooke B. L. 526, Selwyn N. P. 272, 1 Chitty, 40. 8 Mass. Rep. 127. 4 Johns. Rep. 36. 14 Johns. Rep. 178. Comyn on Cont. 427. All these cases have arisen from original parol contracts, where no settled rule of pleading was interfered with, by either mode of declaring. When, however, a debt, due before bankruptcy, arose from a specialty, it is difficult to understand how any other than an action upon the specialty could be sustained against the bankrupt in the event of a new promise. It is a rule as firmly settled as any in the law, that assumpsit will not lie upon a promise to pay a debt secured by specialty, unless upon a new consideration. Landis v. Urie, 10 Serg. & Rawle, 321. Cowp. 129. 1 Dallas, 208. 1 Bac. Ab. 257. Assumpsit, A. Upon a promise, then, after bankruptcy, to pay a bond debt, and where the only consideration for the promise is the old debt, the promisee must recover on his bond, or he cannot recover at all. This view of the subject would seem to go far towards supporting the doctrine contended for by the exceptants. But the technical rules of pleading are only important so far as they serve to illustrate principles, and the question before the court must depend for its solution upon what is the legal effect of bankruptcy upon antecedent debts. Considered with reference to a subsequent promise of payment made by the bankrupt, my view of the statutes of bankruptcy and limitations is, that they are but legal exemptions, which, if judicially interposed, relieve a party from obligations otherwise enforceable in law, and subsisting in morality and good conscience. If the party entitled to avail himself of the exemption, either expressly waives it, or tacitly, as by omitting to plead it, it is the same with reference to the claim which is.the subject of controversy, as if these statutes had never operated on it. Before the waiver the obligation was imperfect; a subsisting right, the remedy for which was arrested by positive law, from reasons of general convenience; by it, right and remedy are reunited, and the obligation becomes complete. These are apparently the views of the Chief Justice, as expressed in Jones v. Moore, 5 Binn. 577. He says that a debt barred by the statute of limitations is not extinguished; that it remains due in conscience, and, in some respects, at law; for, if the defendant omits to plead it, he is considered as having waived the benefitof it, and the plaintiff may recover against him. In the recent case of Willing v. Peters, 12 Serg. Rawle, 177, the same doctrine is considered as applicable to the case of bankruptcy. Indeed the language of the court, in this case, goes far towards the decision of that before us. ‘ No recovery,’ says the Chief Justice, ‘can be had against the bankrupt; yet, by the common sense and ' feeling of mankind, the debt exists, until it be actually paid.’ The necessity of pleading bankruptcy, (Chilly, 474) is strong evidence that it is viewed ás only affecting the remedy. If this is correct doctrine, and 1 do not doubt it, the present question is settled by it. Nicholas Wain and others were the just bond creditors of John Field. By law their remedy against him was destroyed, although their right, abstractedly considered, remained unimpaired. He voluntarily, as he could lawfully do, removed this legal bar, and in doing so remitted the exceptants to all their original rights. In the opinion of the court, the first exception is sustained. “ The question of interest I can scarcely consider as open, after the decision of the Supreme Court in the case of Schultz’s Appeal, 11 Serg. S¡' Rawle, 182. There a bond creditor of an insolvent estate was allowed interest upon his bond to the time when the assets were apportioned. The exceptants are entitled to interest upon their bond, until principal and interest equal their penalty, which is all they ask for. Upon this principle the auditors will settle the interest account. The report of the auditors is set aside, and recommitted to them, with directions to report a new distribution, according to the principles of this decree.” Exception to the Recree of the Orphans’ Court. “ That the said court have admitted E. PI. and E. Yarnall to a claim upon the fund in the hands of the administrator, as specialty creditors, when they were no more than simple contract creditors.”