Whatcheer Bank v. Cushing

6 R.I. 303

• Court: Supreme Court of Rhode Island
• Decided: September 6, 1859
• Status: Published

Opinion

Bosworth, J.

The defence in this case is, that there was an agreement on the part of the plaintiff to release the defendant. The proof shows that Zachariah Allen was the maker of three notes, payable to the Whatcheer Bank, each for the sum of $2,000, on one of which the defendant in this suit was indorser. A short time before the failure in business of said Allen, he, desiring to have his indorser secured, went to the bank in company with the defendant and made a proposition, that if the bank would discharge the defendant from payment of the note, the three notes held by the bank should be put in the first class of preferred creditors in the assignment which the said Allen was about to make. At the same time it was stated, that unless the proposition was acceded to, the said Allen would feel bound to secure the defendant; and in that case would put the said notes in another class in his assignment. The bank acceded to the proposition. No release was however executed to the defendant; and Allen made his assignment, placing the notes of the bank in a class of preferred creditors denominated the first class; though the claims of this class were in fact postponed to a class of creditors whose claims were to be first paid in full, and amounted in the aggregate to about $31,000.

We do not see how this defence can avail to discharge the defendant. His liability as indorser of the note was fixed; and no release was in fact executed. If the plaintiffs made an agreement with Mr. Allen of the nature set up, it could avail the defendant in this suit only on the ground of an estoppel, since his liability as indorser had become fixed and no release had actually been executed. The agreement to release was made with Allen on" the faith that, the plaintiff’s three notes should be put in the first class of preferred creditors’ claims. The class in which they were put was denominated in the 'assignment, class first; but the fact, that a class of creditors whose claims in the aggregate amounted to the large sum of $31,000, were preferred to this class, and were to be paid in full, before anything could be received by this first class, renders this denomination a misnomer. It appears by the testimony of the president of'" the bank, that when the proposition was made to put the three notes in the first class with the other banks, Mr. Allen was asked what he called the first class; if it was the first thing preferred in the assignment ? and he said it was. It also appears by the testimony of the same witness, that prior to the assignment of Allen the defendant called upon the bank and asked to have his name released from the paper; and that the bank answered that his name could not be released from the paper until the assignment was on record, and Mr. Allen had carried out what he h#d agreed to do. In this state of proof the defendant had no reason to expect that the plaintiffs would discharge him from the note, unless the three notes were put in a class of claims first preferred in the assignment of Mr. Allen. This we think was not done in the manner in which the plaintiffs did understand, and had a right to understand, that it should be. They hold the note, therefore, unaffected by the 'agreement, and must have judgment for' the amount of it, with interest and costs.