Rutledge v. Greenwood

A petition for a re-hearing was afterwards presented to *407the court, and fully argued before Chancellors Jahes and rji THOMPSON.

For the petitioner, it was contended by Mr. K. L. Si-mons, that the petitioner sets up a claim to the relief of ’ 1 r tile court, upon two grounds: '

1st. That being only a surety for the debt, defendant’s Conduct to the principal, has discharged his responsibility.

2d. That the defendant virtually agreed to release him on being paid a part of the debt, which was accordingly paid.

The law is admitted that the answer of defendant is evidence. But what is his answer? The bill states that Mr. J. R. was applied to for the payment of the amount filed by complainant, which is admitted.

The averment of defendant however is only an inference of which the court is to judge. (Vide p. 3. of the answer.)

The admission of a consequence in law or equity, will not bind defendant. See the case of Pearce vs. Groves, 3d. Atk. 522, Ergo it cannot conclude the complainant.

It must then rest on the account. What privity is there between Greenwood and Higginson, and the petitioner? None.

Could an action be maintained against him? Surely not. The books did'not prove the debt to be the petitioner’s. As well might an action be maintained against any other person.

But the counsel think it immaterial whether an action could be sustained or not, because Mr. John Rutledge, being the head of the family, and there having been some sums advanced to the petitioner, equity will compel him to pay.

The sum advanced to the petitioner was 645/. 19s. 6d, The sum claimed on the bond, is nearly 3000/. Is the principle tolerable as a general rule ? Surely7 it is not. It goes too far.

Does the connection of the parties vary thejustice of the *408case ? Or must the court, because they are brothers, presume the petitioner had no supplies but from his elder brother ?

Then it is material to the consideration whether an ac-tion would lie. If an action would lie against Mr. H. Ri non'e could be maintained against Mr. j. R. to whom the credit was given, and the charge made. What motley principles of justice would this lead to.

But if all these absurdities were reconcileable, still the advances were paid long before the bond was liquidated | for that is admitted to be the fact, provided the remittances were applied to the advances exclusively. Apply them to the entire extent of J. R’s. dealings during the period that H. R. was in England ; apply them as they are in the account, and the entire debt for that period has been satisfied. ’ On the 27th November^ 1767, 645/. 19s. Sd'. was the whole amount advanced for H. R.

The entire balance against Mr. J. R. at that time, was fS7L 17s. 8d. ■■

On the 31st December, of that year, the 'sums paid by" J. R. exceeded that amount by more than 390/.

Did Greenwood ever apply to H. R. ? Who compounded interest and principal ? Who settled the terms of payment? If he'was liable he should have been consulted.

Sed p. 1. and 2 of the' answer, by which it appears that Mr. H. R. was not even consulted.

But it is said it does not appear to the court but that E. R. and H. R. signed for their aliquot parts : but there is no foundation for this idea.

The complainant was regarded as surety in this bond, in the case of H. R. vs. the executor of E. Rutledge.

But the defendant contends that the decree in that suit was res inter alios acta, and not conclusive. This is true; but the decree may surely be evidence' of a fact, though it does not bind the rights of one who is no party to it.

Depositions in a former decree in Chancery are admitted to be read, the same matter being then under exami-ñation as now. Cases in Chancery 73, 175,

*409Though neither the plaintiff, nor any under whom lie claims, were parties to the former cause. Reports of C. Cases, 73. 2 Roll. 679, cited in Comyns. by Kid, vol. 2, p. 306, 3d edition.

If Mr. H. R. should be considered as a principal, on account of the advances for him, he can’t be so for 3000/. when he received but 600/.

It has been said that Mr. J. R. declared his brother H. R. was a principal. This is not proved — if it were, it is not evidence; and it could only extend to the advances.

It appears then that plaintiff was surety and not principal ; and this lets in the equitable rule, That a surety has a right to call on the creditor to sue his principal, and if he refuses, it is at his. own peril.

In Butler and the comptroller general, it was expressly so declared. In Rees & Berrington — “ if the application is made, it is the creditor’s duty to comply.”

There are several grounds upon which this court has re~ leived; but the above is the one which has never varied.

Defendant made no application for payment to petitioner till May, 1799, one year after the five instalments became due — (p. 2 and 6 of the answer.)

All former applications were made to E. and J. R. — ■ (p. 2 and 7 of the answer.)

The defendant was required to sue Mr. J. R. in May, 1799, but he refused — (p. 5.)

There was a positive agreement with Mr. E. R. to extend the time — (p. 5.)

It is said defendant denies it, and that his answer is conclusive. But this is not so, if the answer be carefully examined — (p. 5.)

Again it is said it was with petitioner’s assent the credit was extended. If his assent is proved, there is an end of the question. But defendant cannot give or alter the terms of the assent, by his answer.

It is said thepetitioner had notice of the extension of credit, And the letters of J. R, are relied on to shew it. But *410they are dated in 1799, and petitioner then required plaintiff to sue the bond.

®llt n<ráce cannoi affect the petitioner. It is not like the case of bills and notes. His having notice could not enable him to force defendant to sue the bond.

The bond of indemnity respects other claims besides this one.

The strong equity of the petitioner occurred when the request to sue was made and rejected, in May, ’99. And the case ofNesbitand Smith shews that the bond of indemnity cannot affect it.

It is contended that the decree between H. M. R. and H, R. is a bar to the latter in this suit. The counsel has taken opposite grounds on this point. At one time it is res inter alios acta, and cannot be regarded. At another time it bars petitioner, because it was upon the ground of his being bound to the defendant, that it was made. But the truth is, that it embraces various subjects. The bill of petitioner rests part of his equity upon the liability of the funds embraced by that decree to the debt of defendant.

Had the petitioner dropt that suit, it would have relinquished part of his equity.

But it is said that if petitioner succeeds, defendant will be cut off from those very funds.

But this argument is contradictory. In one breath it is said the petitioner must loose his equity because he has rendered those funds amenable to the demand of the defendant, and yet if he succeeds, defendant will not have the benefit of those funds.

It is said the suit might have been useless against Mr. John Rutledge.

In Rees and Berrington the court said it would not speculate on that question.

The payment made by Mr. H. R. in consequence of the agreement, is said to have been merely on account, because it did not discharge the bond. But the creditor by accepting that payment, ratified the terms on which it was *411offered, and acquiesced therein, and this put an end to the liability of Mr. H. R.

If the court should, after all, not perceive sufficient grounds to reverse the decree, yet it may surely continue the injunction, until the funds destined under the mortgage made by Mr. J. R. to indemnify his brothers, can be añade available, for in agreeing to take 1000/. from Mr. E. R. and the crop of defendant, he is entitled to the benefit of the securities they had, and ought to wait .till they are made productive.

For the defendant, it was argued, where the complainant calls for an answer, that answer is conclusive, unless contradicted by two witnesses. The defendant has denied the allegation that Mr. H. R. was surety, and produced am. account, in which are items for the use and benefit of Mr. H. R. and he is not contradicted..

It must be admitted the bond was given in part for the advances to Mr. H. R. He would not inquire whether an action will lie at law, but Mr. J. R. being the head of the family, upon the principles of equity, Mr. H. R. ought to pay for these advances made for his own use.

Admits the account as far as it respects Mr. H. R. would be discharged, if the credits were applied exclusively to that account. But there is no reason why they should be so applied.

Answer states that defendant believes Mr. J. R. communicated with Mr. H, R. respecting defendant’s application for payment. Mr. J. R’s. letters prove it.

Admitting Mr. H. R. merely a surety, Mr. Greenwood has done nothing to discharge him. Mr. H. R. paid two hundred pounds unconditionally on the bond. Defendant expressly swears he did not intend to receive it in full or under any agreement — but as a general payment.

The decree between the executor of E. R. and petitioner was res inter alios acta, as to this defendant.

Consider Mr. Rutledge as surety, the case of But-*412Ier & Hamilton, if properly examined and applied, con-eludes him. The court refused to release the security.

The Pr^nc^Pa^ c;lses on this suhject, goes upon the circumstance of the obligee extending the time of payment, and depriving the surety of his right to have the principal sued, when he might require it. Mere indulgence is not enough; it must be such an actual extension of the time of payment as varies the contract.

~Was any credit ever given to Mr. J. R. against the consent of the petitioner ? Mr. Greenwood offered to sue all the obligors, but it was refused. This shewed that he considered all to be principals. Greenwood never put it out of his power to sue the principal at any moment.

Mr. H. R. knew G. had indulged before the last instalment became due. The bill states that Mr. H. R. inquired of Iris brother Edward in 179/, respecting this bond, and took a bond of indemnity from Mr. E. R.

There is but one point on which any hope could be reasonably entertained, viz.’ a release. But what proof of that ? The receipt for the 200/. is unconditional. The answer is express to this fact, and it was not against the consent of the security that the creditor waited for the 1000/. promised by Mr. E. R.

If Mr. H. R. was discharged by laches of the creditor, upon what principle did he apply to the court to indemnify her out of the estates of Messrs. E. & J. Rutledge i

The decree in the suit by H. R. against the executors of E. R. directs an indemnification of petitioner against the bond. This surely admits his liability under the bond.— .But if it did not, should a decree made sub sileniio govern the rights of third persons ? Surely not.

afterwards delivered the decree of the court.

Petition for a re-hearing, and to reverse the former decree in this case.

The court have reconsidered this case with much at-tcntjon, and with a determination, that if there should be *413sufficient grounds to retract their former opinion, that they would do so, rather than persist in error. But while they consider it as obstinacy,not to give up a former opinion, although convinced that it is wrong; they are also fully sensible, that until such conviction does take place, that it would argue a want of firmness to waiver or to change. Under these impressions, we have reconsidered this cause, rejecting at the same time, as far as we have been able to do, all former impressions upon the- subject j and we now offer our opinion fully upon the case.

The grounds which the petitioner has offered for consideration, appear to be nearly the same as those which were submitted to us on the former argument. They are four fold.

1st. That he was surety, and not principal in the bond which was given to the defendant,' and therefore entitled to the equity which in certain cases has lately arisen in favor of sureties. „

2d. That the obligee was guilty of laches, in not putting the bond in suit against the principal, when required by the surety, and the principal having afterwards become insolvent, that therefore the surety has become exonerated.

3d. That the obligee has changed the nature of the original contract, by entering into a new one with the petitioner; and that the latter is bound only on such new contract.

4th. That the former decree given in this case is repugnant to the decree given in the case of the petitioner against Henry M. Rutledge, (Exor. of E. Rutledge.)

Besides, taking the above grounds, the petitioner has urged, that if the opinion of the court should be still against him, that the injunction be continued, until the. funds secured to the petitioner by the latter decree can be brought into operation, and the defendant 'receive payment from them, so far as.they may go.

In delivering our present opinion, we will at present waive the first ground taken by the court in the- decree, *414viz: That the petitioner has failed in proving that he was a surety to the bond, and will proceed to examine the question, as if he were acknowledged a surety, which is a stronger ground for the petitioner.

Then upon the 2d. ground- of the alleged laches in the defendant, it appears in evidence that the bond was given on the 8th day of April, 1793, payable in five equal annual instalments — that the first instalment consequently became due on the 8ih April, 1794, and the last, on the 8th April, 1798, and that defendant might have commenced his action against the principal John Rutledge, as soon as the first instalment became due ; that however he did not do so until April, 1800, about two years after the last in-stalment became due. It further appears that defendant applied to the petitioner for the first time for payment of the debt, about fourteen months after the last instalment became due; at which time the petitioner required him to put the bond in suit against the principal, and he declined it, but proposed to put it in suit against all three of the obligors,which petitioner in his turn declined. It is on this statement of facts that the charge of laches against the defendant appears to be founded. Now the equity that is contended for, if it arises at all, must arise in favor of one who is bound by a solemn contract under his hand and seal; and we are of opinion, that before he can on this ground exonerate himself from such contract, he ought first to shew that he himself has been vigilent, “ vigilant-ibusnon dormiejtiibus leges svbveniimt,” is a maxim which appears peculiarly to apply to him who is seeking relief from this court. Besides the very nature of a contract, imposes a duty upon the debtor, either to pay when the debt becomes due, or to shew to the creditor some good cause why he should hot: but a contract does not impose an equal duty upon the creditor, to require his debt as soon as it is due. Hence it will result, that when a debt becomes due, it then becomes tbe duty of the debtor to look out for the creditor, either to pay off the debt, or that if he does not mean to pay it, that he may entitle *415himself to some equity, that may exonerate him from it. But the petitioner having done neither in this case, he it is who has been guilty of the laches, and not the defendant. Upon this kind of reasoning, we apprehend, that that part of the case of Butler vs. the Comptroller is founded, where it is said “ that it is incumbent on the security, before he can expect relief, to apply to the obligee, and require him to sue the principal.” If it is his duty to apply to the obligee, he ought therefore to have applied in a reasonable time, after the first instalment became due; but it appears, that he waited for five years and four months after that period, before he required the obligee to sue jhe principal; and even then, that he did not look out for the obligee, to claim his equity, but the obligee looked out for him, to demand payment of his debt. Therefore, both on the ground of obligation or duty, and on the authority of the cases cited, it appears that it is the petitioner who was guilty of the laches, and not the obligee ; and consequently, that the petitioner is not entitled to the relief prayed upon his second ground. And this point being determined against him as surety, which is the highest ground on which he could stand, vice versa, as in the decree, it now becomes unnecessary to inquire whether he was a principal or not.

We now proceed to the third ground of the petitioner, viz : That defendant has changed the nature of the contract, and therefore has exonerated him from the bond. To establish this ground, the petitioner states in his bill, “ that after the application above mentioned from the said William Greenwood, (“ that is the application from him to the petitioner for payment of the bond,”) and having conversed with Edward Rutledge on the subject, the said Edward and your orator agreed that your orator should pay the said Wm. the nett amount of his crop of that year, after deducting his plantation expenses : and the said Edward promised to pay one thousand pounds, and to assume the balance of the debt, which proposition your orator communicated by letter to the said William, and he ac*416quiesced therein.” Now it is not pretended that the de» fend ant was a party to the agreement between the petition» er’ anc^ Mr. Edward Rutledge. Then let us see how he acquiesced in the pi'oposition of the petitioner. The letter °1 petitioner of the 7th June, 1799, to which he refers, contains no more than the proposition on his part, but the assent of the defendant is necessary before a new contract, can arise.

Then how is this assent to be proved ? His silence of fourteen months is not even urged as an assent; and if it were, we do not see how his silence can be construed into such an assent as to do away an existing contract. But it is attempted to prove his assent by bis letter of the. 22d of August, 1800, and by his answer. We will first turn to the answer. The defendant has stated in it — “ that he denies he ever acceded to the proposition contained in the letter of the 7th of June, 1799, any further than agreeing to wait for the 1000/. from the said Edward Rutledge, and the nett proceeds of the crop of complainant; and that in so doing he had not the most distant idea or intention of releasing or exonerating any of the obligors to the said bond from their liability to the payment of the said debt, or any part thereof.” Now it is contended that it is immaterial what his ideas or intentions were, if he has in fact exonerated the petitioner. But this letter contains no clear and distinct proposition that defendant must look ño further to the petitioner than for his crop of that year ;■ and in fairness, the assent of the defendant must depend upon his idea and intention at the time. If it had been proposed to him clearly, that by thus waiting for his money, he must loose his lien on the bond, is it not to be supposed that he would, in an instant, have rejected the proposal ? He would have been the merest novice in the world if he had not. Then we have no idea that men should be thus concluded in their rights, without having a full statement of facts laid before them; nor that while they are extending favors they should be used as weapons -against them. Proposals of this collateral kind are so com-*417in on from debtors to creditors, and are so often in favor assented to, that were this court upon such grounds to cx-tend relief, it would impair the obligation of contracts.— But independent of these considerations, the answer ap- • • pears to contain a full denial of the assent of the defendant, and therefore it must be taken as evidence against the petitioner, until contradicted by the evidence of two witnesses, or of one witness, and circumstances. However no such contradiction appears. But it is said that defendants letter of the 23d August, 1800, is a partial affirmance of the new contract, and that he is not to affirm in part and deny in part. The passage relied upon in that letter is as follows — “ By your letter of the 7th • of June, 1799, you engage to pay me the nett amount of your crop of that year, deducting plantation expenses;, Upwards of fourteen months have elapsed, and I have received no payment, however you may act with regard to that engagement.”

Here the counsel for the petitioner has always stopped, and has inferred from this passage alone, that the defendant has made a partial affirmance of the contract. But even this will not bear him out, for the words, “ however you may act;” evidently import, that the defendant left . the petitioner to do as he pleased as to that engagement; while he at the same time; and in the same breath declares in the foregoing part of the letter, “ that he must look to him for the debt,” and in the subsequent part of it, “ that he was now-under an absolute necessity .of requiring payment of the whole debt from him.” Taking the whole of this letter together, it therefore appears to us that it is rather a disagreement than an assent, to any new contract.

On the 4th ground of petitioner, the court will be very short. The defendant was no party to the suit between the petitioner and Henry M. Rutledge ; therefore none of the acts of the parties thereto can conclude his rights : the charges in the bill, and the admissions in the answer *418being as to him, res inter alios acta. This we deem a suffix cient answer to this ground.

Therefore upon deliberate reconsideration of this case, the court are clearly of opinion that the petitioner is not entitled to the relief prayed for in his bill' upon his 2d ground^ because he himself was guilty of the laches complained of, and not the defendant: nor upon his third ground, because no new contract has been proved: nor upon his 4th ground, because the decree in the case of the petitioner and H. M. Rutledge can-Slot bind a third person who was no party to the same. It remains to consider whether the injunction should be continued until the funds secured to the petitioner can be brought into operation. And upon this application, the court are of opinion, that as the petitioner has failed hi establishing his grounds, to entitle him to any relief of this court, they cannot now find one principle upon which to decide, that defendant must wait till it would be in the power of petitioner to bring those funds into operation.' — ' We have not determined that defendant is obliged to receive those funds ; therefore there cannot' be any good reason why he should be delayed, until the monies arising from them can be raised. The petitioner has already had in the case against H. M. Rutledge, the assistance of this court as far as it could go, in bringing in those funds to his assistance : and there we must stop. Wherefore for the several reasons above stated, the court are of opinion, that the petition of the complainant be dismissed, and that’ the former decree in this ease be affirmed*

The court took time 'to consider, and Chancellor J ames afterwards delivered the decree of the court.

appf(cation on the part of complainant is for a per», petual injunction against an action at law, brought by the defendant against him on a bond given by John, Edward and Hugh Rutledge, to the defendant, as attorney of William Higginson, survivor of Greenwood and Higgin-son. His principal grounds for obtaining the injunc-'don, are:

1st; That he is only surety, and not principal in the bond.

2d. That the bond was dated the 8th of April, 1793, and payable in five equal annual instalments, and consequently suable when the first instalment became due ; but ■that defendant never put the bond in suit against the principal, until April, 1800, when he was insolvent, though be had been required to do so by the complainant, abmA *405fourteen months after the last instalment became due. That defendant therefore has been guilty of such great la-ches, as to exonerate complainant from his suretyship.

3d. That defendant has changed the nature of the original contract, by a new agreement made with complainant, and by receiving thereon a part of the debt on the bond.

On the other hand, the defendant has alleged, 1st, that the original debt for which the bond was given, was partly for monies advanced to the complainant for his education and necessaries while a minor in England : that therefore he is a principal and not a surety to the bond* 2d. That he never .changed the nature of the original contract, by entering into a new agreement with complainant, and by receiving thereon a part of the debt on the bond.

In the case of Butler vs. Hamilton, it has been decided by the court, that equity will give relief to a surety, where the obligee has not used due diligence to recover his debt from the principal in the first instance, and has refused or neglected to comply with the surety’s request to use that diligence ; and also where the obligee has extended the credit longer than the parties contracted for against the surety’s consent; but • it likewise appears from that case, that it is incumbent on the surety before he can expect relief, to apply to the obligee and require him to sue the principal. However, before we -go into the inquiry, whether the complainant in this case is entitled to relief, upon the grounds stated in his bill, it will be necessary to examine whether he was really a surety to the bond, for if he was a principal, there is at once an end of the question on the second ground. -The bond is joint and several, and nothing appears on the face of it to shew that complainant was a surety. But to prove him a principal, the defendant has produced the original account for which the bond was given, and from this it appears that the debits and credits were made in the name of John Rutledge, but many of the items on the debtor side, are for monies advanced to complainant and his brother. Being jointly charged in the account, there then *406arises a presumption, that they were also joint principals in the bond; but the onus probandi, lies upon the com-. piajnant ■ and to make out his case to the satisfaction, of the court, it was incumbent on him to prove that he was a surety^ yve are therefore of opinion, that complainant is not entitled to relief on the ground of his being only surety. It will of course become needless to examine his second ground. But it is urged in his third ground, that defendant has changed the nature of the original contract, by a new agreement; and therefore that he has released complainant from his bond. Now if the premises are proved, the conclusion will follow. Let us then examine. Complainant states in his bill, that having conversed with Mr. Edward Rutledge on the subject of the bond, they agreed together that Edward Rutledge shAuld pay 1000/. and assume the balance of the debt; and that complainant should pay defendant the nett amount of his crop for the year 1799; which agreement was communicated to defendant by letter, and that he acceded thereto. To prove this, complainant has produced his letter which con<-tains no more than the proposition on his part. But defendant in his answer, denies that he ever acceded to the proposition contained in this letter. Complainant’s allegation being thus denied by the answer, and no proof being brought to contradict it, according to a well known rule of this court, we are obliged to give full credit to the answer. Complainant then having failed to prove that he was only a surety and not a principal; and having also failed in his proof, that defendant has released him from the bond; and these being, in the opinion of the court, only strong grounds alleged in his behalf,

We are therefore obliged to decide that he is not entitled to the relief prayed for by the bill. Wherefore it is • ordered and decreed that the injunction in this case be dissolved, and that complainant do pay the costs of this suit.