Gilpin v. President of the Bank of Wilmington

3 Del. Cas. 89
CourtSupreme Court of Delaware
DecidedAugust 15, 1824
StatusPublished

This text of 3 Del. Cas. 89 (Gilpin v. President of the Bank of Wilmington) is published on Counsel Stack Legal Research, covering Supreme Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gilpin v. President of the Bank of Wilmington, 3 Del. Cas. 89 (Del. 1824).

Opinions

The Chancellor.

I shall in the first place advert to the charge as to the question of due diligence. The court states that the action was brought against Edward Gilpin as the assignor of [96]*96the bond and mortgage and that in the assignment he acknowledges he executed it for a valuable consideration paid to him by the Bank and that it was done to release him from his indorsement of the notes. If, therefore, says the court, the consideration for which the notes were given up and the compensation intended to be made by the assignment of the bond and mortgage to the Bank, has failed without any default on the part of the Bank, Edward Gilpin, the7 defendant, is responsible in an action for the amount of such failure. The assignment of a bond or mortgage to another for a valuable consideration creates, continues the court, an obligation or implied undertaking on the part of the assignor to pay, if the amount can not be recovered of the obligee or mortgagee, provided there is no stipulation of the parties to the contrary (whether expressed or implied), and provided too, that the assignee has used due diligence to recover the amount.

It was first settled by a judicial decision in the Supreme Court in Kent County in the year 1796, in the case of Graviston v. Freeman that the assignor was liable in an action for money had and received in the case the money due on the bond could not be recovered from the obligor, upon the principle stated by the court in this cause that the money or compensation paid the assignee to the assignor for the bond assigned was paid without a valuable consideration. And the court then said in substance, as the Court of Common Pleas here has said, that a valuable consideration being paid by the assignee creates an obligation or implied undertaking on the part of the assignor to repay the money or compensation given upon the assignment if the money due or to be paid on the bond cannot be recovered. The Court of Common Pleas added, without any default on the part of the Bank. However, notwithstanding the language of the Court of Common Pleas here cited, it is not to be understood when taking with the rest of the charge, to mean unless the bond be sued or prosecuted speedily, the assignee can not recover the money paid upon the assignment.

Here were two specialties assigned by Edward Gilpin on the 21st July 1817 to the Bank: one a bond and the other a mortgage; both dated September 16, 1816. Both were given by John Smith and Joseph Gilpin to Edward Gilpin for the same consideration; and both were assigned by Edward Gilpin to the Bank. Though they were different instruments they were both given to secure to Edward Gilpin the amount of the notes which he had indorsed for Smith and Gilpin, and they were both assigned to the. Bank by Edward Gilpin to satisfy those notes, and discharge him from his liability as indorsor. The bond and mortgage re[97]*97lieved Smith and Gilpin from their liability to Edward Gilpin as indorsor; and they being assigned to the Bank discharged Edward Gilpin from the obligation created by the indorsements. Both assignments, not one alone, made Edward Gilpin liable in case of the failure of both securities. The Bank had both the bond and mortgage assigned to pay the same amount of money; and any default in the Bank in regard to the bond or mortgage operated to discharge the assignor from his liability on both assignments; for these securities were given and assigned to effect a payment or recovery of the same sum of money, so that if the mortgage failed the bond might be effectual, and a default in either operated alike to discharge Edward Gilpin from each and both assignments. The bond never was put in suit, nor was any legal remedy used by the Bank to enforce the payment or recovery of the debt on the bond. This was such a want of diligence on the part of the Bank as to discharge Edward from all liability created by the assignments.

In the opinion of the Supreme Court, in the case of Ruth’s Administrator v. Snow, it was laid down that the assignor is liable if the obligee fails, provided due diligence has been used in speedily prosecuting legal remedies for the recovery of the money; but due diligence must be used or the assignee can revert to the assignor. This opinion is referred to by Chief Justice Read in the case of Ruth’s Administrator v. Snow as having been the principle upon which the court decided in the case of Graviston v. Freeman that the assignor is liable in case of failure by obligor. The case of Graviston v. Freeman was first tried; afterwards, the case of Ruth’s Administrator v. Snow in 1796, and the Chief Justice, in delivering the opinion of the court in the last mentioned case, stated that the counsel for Kuth’s Administrator had referred to a case in the Court of Common Pleas where it was laid down that when it was proved that the obligor had no property, the same diligence was not necessary. But the court said, before the assignor can be made liable the assignee shall lose no time in proceeding and taking all legal means for the recovery of the money. This will depend on the particular circumstances; as to this case the court will consider the several defenses. And, after adverting to the pleas of discount and limitation, he said:

We now pass to the third point. The first process against Smith was nine months and two days and the fourth term after the assignment, three terms having elapsed. The Court consider themselves in duty bound to say this proceeding has not been with that due diligence as to make the assignor liable. But the plaintiff contends that this lapse of time had no tendency to cause this debt to be lost owing to [98]*98Smith’s insolvent circumstances; and a number of judgments and executions against Smith are exhibited to prove this and to satisfy the Court. 1 Esp.N.P. 55, Bickersdike v. Bollman is cited by plaintiff’s counsel (here the judge reads the case).
This case is not analogous to the case before the Court which is founded on an assignment of a bond made by Smith to Snow under the Act of Assembly. No part of the bond had been paid although all the instalments became due 15th September, 1791. We are to consider the circumstances. Smith was well known to Kuth who had been security for Smith. It is presumed Kuth expected that he would get the money from Smith and it is incumbent on the assignee to take legal steps to recover. Here are nine months elapsed after the assignment before suit brought; the judgments and executions are debts of record. When we consider the situation of these parties, the circumstances, and knowledge Kuth had of Smith, the judgments being of record, and that Kuth took the obligation of Smith, it must have been under the expectation and chance of receiving the money from Smith. After Kuth did sue Smith the suit was not prosecuted with reasonable diligence. The suit was brought to August, 1790. No declaration was filed until June, 1795. We are therefore of opinion that the plaintiff cannot recover in this action.

Notwithstanding this charge the jury found verdict for the plaintiff. The defendant’s counsel moved for a new trial and, after argument, Chief Justice Read delivered the following opinion of the Court:

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Bluebook (online)
3 Del. Cas. 89, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gilpin-v-president-of-the-bank-of-wilmington-del-1824.