Richardson v. President of the City Bank

77 Mass. 261

• Court: Massachusetts Supreme Judicial Court
• Decided: October 15, 1858
• Status: Published

Opinion

Merrick, J.

*

The note of Whittemore, Harrington & Co. for $4160 was properly proved against their estate in insolvency by the President, Directors and Company of the City Bank, by whom it had been discounted and to whom it was due. They were under no obligation to resort to an indorser to obtain payment of the note from him, but might insist upon recovering it from the makers, and, having proved the claim against them, were entitled to receive whatever dividends the assignees should afterwards be ordered in the due course of proceedings to pay upon it. This was a right which, like the note itself, or any other chose in action, might be assigned by them to a third person. And for a valuable consideration paid by Mr. Dewey it was in fact assigned to him ; and he thereupon succeeded to all the rights of the bank in relation to it, and became entitled to receive all future dividends which should be payable upon the claim. It makes no difference, that he was one of the indorsers upon the note, and liable in that relation, and as a surety for the makers, to pay it. The bank,was not thereby prevented from dealing with him as a purchaser, but might, instead of coercing him as an indorser, sell and assign to him its interest in the note. It was just and reasonable that the bank should do so, because this was the most direct and convenient mode in which the rights to which he was legally entitled could be protected. For if he had paid the note as an indorser, and no assignment had been made of it, or of the claim proved by the bank, to him. he would have had a right to prove the amount of that payment as a claim of his own against the makers in insolvency ; thus in another way of proceeding becoming in reality substituted in the place of the original creditor. St. 1838, c. 163, § 3.

Mr. Dewey did not lose his right to avail himself of every legal remedy against the makers of the note, merely by receiving security against his liability upon it from a prior indorser. His acceptance of such security did not in the least degree impair his rights against the makers in their obligation to pay the note. And if, in obtaining entire or partial payment from them, any advantage incidentally results to the prior indorser who had undertaken to indemnify him, neither they nor their creditors have any cause of complaint, for no injustice is done to any of them. The full value of the notes which were transferred to Mr. Dewey as security by S. P. Harrington, the first indorser, and which formerly belonged to the insolvent debtors, was fully paid by him to their assignees upon their demand, and the notes accordingly became his property, to be disposed of at his own pleasure without further accountability therefor. The assignees could afterward have no interest in them, nor any right to insist that the money received upon them by Mr. Dewey should be applied towards payment of the note of Whittemore, Harrington & Co., the makers, upon which the indorsers were merely sureties. Decree affirmed.

Dewet, J. did not sit in this case.