Welton v. Scott

The contract by indorsement in blank of a note not negotiable, is, that such note is collectible according to its tenor, by the use of due diligence. The assignee of such note is not an agent, but virtually a purchaser; and the contract of assignment is the measure of his rights and duties. The diligence required of the assignee, in general, is to put the note in suit, by attachment, as soon as it is due. If, however, the maker, when the note falls due, is insolvent, and without property sufficient to pay it, that fact of itself constitutes a breach of the warranty, and gives the assignee an immediate right of action against the assignor. If the maker be not insolvent, and yet property sufficient to satisfy the debt cannot be taken by attachment, it is the duty of the assignee to arrest his body. In no case, is it incumbent on the assignee of a note payable in money, in order to subject the assignor, to attach the land of the maker. Nor is it the duty of the assignee to attach personal property of the maker insufficient to satisfy the debt. Nor is it the duty of the assignee to give any special directions to the officer as to the service of the attachment. If the assignee direct the officer to take specific articles of personal property of less value than the debt, this will not limit his search to those articles, nor absolve him from any duty which the law prescribes.

This was an action of assumpsit, in favour of the assignee, against the assignor of a promissory note not negotiable, made by one Orlando Porter. The cause was tried at Litchfield, February term, 1822, before Chapman, J. The making of the note, and the assignment of it, by an indorsement in blank, were admitted. The defence was, that due diligence had not been exercised in obtaining payment of it. To make out this defence, the defendant offered evidence to prove, and claimed that he had proved, that Porter, at the time when the note was sold and delivered to the plaintiff, and at the time when a writ of attachment on the note was delivered into the hands of the officer, owned and possessed a sufficient estate, real and personal, in the town of Waterbury, where he lived, and so situated that the officer could, by the exercise of due diligence, have secured thereby the full amount of the note and costs. The defendant also proved, that while the officer had said writ of attachment in his hands, he met with Porter, at an attorney’s office in Waterbury, and might, without any difficulty, if he had chosen so to do, have taken his body. This the officer neglected to do, at that time; though the body of Porter was afterwards, on the same day, arrested, by him. The defendant also introduced evidence to prove, and claimed that he had proved, that the plaintiff, when he delivered said writ of attachment to the officer, directed him to levy it on a wagon and pair of horses belonging to Porter; in consequence of which, the officer did not feel himself bound to search for other property, or to take the body of Porter. The defendant, therefore, claimed, that neither the plaintiff, nor the officer, had used due diligence in the prosecution of said writ of attachment; and he prayed the judge to instruct the jury, that if they should find, that the plaintiff or the officer had not exercised due diligence in securing the debt;or if they should find, that Porter was possessed of personal property, partly, though not fully, sufficient to satisfy the claim, on which the officer might, by the use of due diligence, have levied the attachment, he was bound by law to do so; or if they should find, that Porter owned and possessed real estate, he was bound by law to have attached it, or to have taken the body. The judge charged the jury as follows: “The only question is as to the plaintiff’s having used due diligence in endeavouring to collect the note. The court instructs you, that the plaintiff was not bound to take either the real estate, or the body, of the maker of the note. He was bound immediately to pray out an attachment, and deliver it to an officer, whose duty it was, to attach personal property sufficient to satisfy the damages, which might be recovered in the suit; and for that purpose, he was bound to make all reasonable search. If personal property, sufficient to pay a part only of the note could be found, he was not bound to attach it. If the maker of the note had personal property to a greater amount than sufficient to pay the damages, which might be recovered; yet if the officer did not know the fact, and could not find such property, by diligent search; this will form no objection to the plaintiff’s right of recovery. Bankruptcy in the maker of the note, was not necessary to be proved, to entitle the plaintiff to recover; nor was it necessary, that the plaintiff, when he gave the officer the attachment, should have given him any special directions as to the service of it.” The jury gave a verdict for the plaintiff; and the defendant moved for a new trial, on the ground of a misdirection. contended, 1. That that part of the judge’s charge, which stated, that the assignee of a note not negotiable, is not bound to take the body of the maker, in order to charge the assignor, was incorrect. He is bound to take it, when, by so doing, there is reasonable ground to believe, that it will cause the payment of the debt. Swift's Evid. 346, 7. And there is such reasonable ground, when the maker is the owner of real estate sufficient to pay the debt. 2. That the holder of the note, in this case, was bound to attach real estate. The engagement of the assignor, is, that the note is collectible. A debt of any description is no otherwise collectible than out of the estate of the debtor. The question, then, is, out of what estate does the assignor contract that the note shall be satisfied? Does his engagement require a payment of the note in money only? Or, if it be satisfied, by a levy on land, is not his warranty complied with? It will be said, that the debt is due in money; and that this is what the assignor, when he assigns the note, engages that the assignee shall receive. But this argument is unsound. If money only is to be received, why is the assignee bound to attach personal estate? It is because he is bound to use his endeavours to obtain satisfaction of the note. The assignor becomes liable, not merely because the maker does not pay at the day, or indeed afterwards; nor is it because he cannot pay the money; but it is because he has not estate, out of which the note can be satisfied. Now, why is it not reasonable, that if property of any description can be found, it should be taken? And what injustice is done to the holder? Why ought not the term "collectible" to be understood as meaning a satisfaction out of any estate, which, by law, can be applied to produce it? Would not an attorney, acting with a general discretionary power, be obliged to take real estate? And is not the assignee, in contemplation of law, the agent of the assignor? Colbourn v. Rossiter, 2 Conn. Rep. 503. 505, 6. In Phelps v. Foot, 1 Conn. Rep. 387. 390, 1. the agreement was, to have the writ special, and to direct the officer to secure the debt, if he could; which is precisely the engagement implied in the assignment of a note not negotiable; and yet the court, in that case, decided, that the party was bound to secure the debt, by taking land, if in his power. See also Swift's Evid. 347. 3. That the direction to the jury, that if personal property sufficient to pay a part only of the note, could be found, the officer was not bound to attach it, was incorrect. Why ought he not to take what he can get? And what injury is sustained, if he does? An act so perfectly reasonable, and subjecting the assignor to no possible loss, nor inconvenience, ought not to be prohibited, or dispensed with, except upon the most solid grounds. The law requires process by attachment, for the benefit of the assignor; not merely to enable the holder to charge him with the debt. This part of the charge is evidently founded upon the case of Sheldon v. Ackley, 4 Day 458. Some of the considerations, which led to that decision, are not applicable to the present case; and the principles adopted by the majority of the court, are hardly reconcileable with justice or good policy. The mere fact of the holder’s taking part payment of a bill, has never been considered as discharging the indorser; it being in aid of all the parties liable upon the bill. Gould & al. v. Robson & al. 8 East 576. 580. James v. Badgers, 1 Johns. Ca. 131. Chitt. Bills 304. 4. That the judge ought to have instructed the jury, that although the officer had used due diligence, yet if the holder had not, there could be no recovery. According to the charge given, the holder had nothing to do, but to pray out a writ of attachment, and deliver it to the officer; and was not bound to give any special directions concerning the service of it. The case shews, that there was personal property belonging to the maker, which the holder of the note knew of; but by the charge, it was immaterial whether he did, or did not, know; if the officer could not find any, the defendant was to be subjected. Is it true, that nothing can be required of the holder, but to put a writ of attachment into the hands of an officer? Is the whole duty thenceforth cast upon the officer? Suppose the holder knew of property, which could not be found by the officer-e. g. oxen at a distance, goods in the possession of another, &c.-would it not be his duty to point it out to the officer? 5. That the judge should have instructed the jury, that if they should find, that the assignee gave special directions to attach particular articles of personal property (of which the defendant gave evidence) the officer was not bound to make search elsewhere; that it exonerated him from any further duty; and that this interference, on the part of the assignee, discharged the assignor. The effect of these directions might have been, to prevent the officer from making any further search; and thus the debt might have been lost. remarked, that the judge was requested to charge the jury on two points only, viz. whether the officer was bound to take land, and whether he was bound to take an insufficient amount of personal property; that the body of the debtor was in fact taken; and that, therefore, the question whether the officer was bound to take it, did not properly arise in the case. They, however, contended, 1. That that part of the charge, which related to the taking of the body, was in itself correct. It will not be claimed, that due diligence requires an arrest of the body in all cases. This is clearly not implied in the contract of assignment. 4 Day 464. per N. Smith, J. Then, is the law so, that there must, in each case, be a trial, to ascertain whether an arrest would be available or not, before the party or the officer can know his duty? Or must the officer arrest or not, at his peril, accordingly as it may afterwards appear, that the probable result was one way or the other? Who, in such a situation, would be willing to act at all? Such an uncertainty would put an end to the assignment of notes. 2. That the plaintiff was not bound to take land. By the assignment, the assignor stipulated, that the maker should pay the note according to its tenor, which was in money; or that the assignee, by the use of due diligence, should obtain payment in money. The taking of land could have no effect upon a breach of this stipulation. 3. That the plaintiff was not bound to attach personal property, if he could not find enough to pay the debt. The case of Sheldon v. Ackley, 4 Day 458. is decisive of this point. The contract of assignment requires that the whole debt should be paid; not merely that the assignor shall be liable for the balance, after deducting all which might, by possibility, have been secured from the maker. A partial satisfaction would, undoubtedly, enure to the benefit of the assignor, as it would extinguish the debt pro tanto; and the assignee may frequently, without impropriety, seek such partial satisfaction. But, as was said, in the case referred to, there is nothing in the contract of assignment, that imposes this upon him as a duty. He is obliged only to pursue, with diligence, the proper legal measures for the recovery of the money; and if these fail, the assignor is liable. [On the other points the counsel were stopped by the court.]