Champion v. Buckingham

• Decision Date: 01 January 1896
• Parties: CHAMPION v. BUCKINGHAM.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

165 Mass. 76

42 N.E. 498

CHAMPION v. BUCKINGHAM.

Supreme Judicial Court of Massachusetts, Worcester.

January 1, 1896

COUNSEL

Herbert Parker and Charles C. Milton, for plaintiff.

Thomas G. Kent and George T. Dewey, for defendant.

OPINION

MORTON J.

The policy was assigned to McFarland "as collateral security for the amount of his demands subsisting against Reuben Champion at his decease, as creditor or as surety." It is evident that McFarland had subsisting demands, as creditor, against Champion when the latter took the benefit of the bankrupt act. The first question is, what effect did the discharge which Champion obtained have upon the demands so held by McFarland? If it extinguished them, then clearly they were not subsisting at the time of the former's decease. If they were not extinguished, then it must follow that they were subsisting in some form at the time of Champion's death, since it is not contended that they were paid or satisfied; and the question then arises whether McFarland's estate held them, as creditor, within the fair construction of the assignment. It is to be observed that one of the notes was proved in bankruptcy by McFarland against Champion (a debt of the former to the latter being allowed in the proof in set-off), but that the other and larger note was not proved, though it is found that it was due and provable. The operation of the discharge upon this note was not affected, however, by the fact that it was not proved.

We think that the discharge did not extinguish the debt or demand. It released the debtor from the legal obligation which he was under to pay the notes, and took away from the creditor the right to enforce the payment of them. But the debt was not paid or satisfied. That still remained as a several obligation on the part of the debtor and was sufficient to sustain a new promise, if he had seen fit to make one, waiving the statute bar. Maxim v. Morse, 8 Mass. 127; Mills v. Wyman, 3 Pick. 207; Valentine v. Foster, 1 Metc. (Mass.) 520, 522; Way v. Sperry, 6 Cush. 238; Cook v Shearman, 103 Mass. 21; Dusenbury v. Hoyt, 53 N.Y. 521; Shippey v. Henderson, 14 Johns. 178; Betton v. Cutts, 11 N.H. 170, 179; Fletcher v Neally, 20 N.H. 464; Corliss v. Shepherd, 28 Me. 550; Otis v. Gazlin, 31 Me. 567; Penn v. Bennet, 4 Camp. 205; Trueman v. Fenton, Cowp. 544. The effect of a discharge in bankruptcy is analogous to that of the bar of the statute of limitations as of infancy, except in the case of necessaries; though it is said that a party is not to be deprived of his right to rely on his discharge, unless he has used words that plainly mean to renounce it. Bigelow v. Norris, 139 Mass. 12, 29 N.E. 61; Allen v. Ferguson, 18 Wall. 1. The running of the statute of limitations puts an end to the remedy to which it applies, not to the debt. Ilsley v. Jewett, 3 Metc. (Mass.) 439; Foster v. Shaw, 2 Gray, 148; Hancock v. Insurance Co., 114 Mass. 155; Shaw v. Silloway, 145 Mass. 503, 506, 507, 14 N.E. 783. If the debt was not extinguished by the discharge, and has not been paid or satisfied, then it follows that the security may be availed of for the payment of it, if McFarland or his estate can be regarded as a creditor having a subsisting demand at the time of Champion's decease, and there is no other valid objection. Thayer v. Mann, 19 Pick. 535; Manufacturing Co. v. Story, 5 Metc. (Mass.) 312; Hancock v. Insurance Co., supra; Norton v. Palmer, 142 Mass. 433, 435, 8 N.E. 346; Shaw v. Silloway, supra. We are not aware of any case which holds that the word "creditor" means, under all circumstances, a person having an obligation against another which is capable of legal enforcement. To give it that meaning here would be to decide, in substance, that the parties contemplated that the security should continue if Champion remained solvent, but not if he became bankrupt, and got a discharge. The object of the parties in giving and taking the assignment was clearly to secure to McFarland the payment of any debt that was due, or that might become due, to him from Champion; and we think that the debt, which the assignment was given to secure, not having been paid or satisfied at Champion's decease, McFarland fairly may be regarded as a creditor having a subsisting demand, within the meaning of the assignment.

The plaintiff further...