Frederick Town Sav. Inst. v. Michael
| Decision Date | 19 June 1895 |
| Citation | 32 A. 189,81 Md. 487 |
| Parties | FREDERICK TOWN SAV. INST. v. MICHAEL. [1] |
| Court | Maryland Court of Appeals |
Appeal from circuit court, Frederick county.
Action by the Frederick Town Savings Institution against John L Michael on a promissory note. Judgment was rendered for defendant, and plaintiff appeals. Affirmed.
Argued before ROBINSON, C.J., and BRYAN, BRISCOE, McSHERRY, FOWLER ROBERTS, PAGE, and BOYD, JJ.
Charles W. Ross and J. S. Newman, for appellant.
John C Motter and Wm. P. Maulsby, for appellee.
The record of this appeal contains three exceptions, two of which relate to the admissibility of the proof offered, and one to the rulings of the court below in rejecting the prayers of the plaintiff and granting that of the defendant. The questions are interesting and important, not only on account of the large sum involved, but of the principles of law invoked, and which we are now called upon to consider and apply. This is an action brought upon a promissory note in the circuit court for Frederick county. The note sued upon is as follows: ."
The principal question in the case arises on the issue taken on the replication to the second plea. The plea states that William Wilcoxon, the principal in said note, satisfied and discharged the same by payment before suit brought thereon. It is not, however, a technical question of pleading which we are called upon to decide. The material inquiry is, did said Wilcoxon satisfy and discharge said note by payment, in such manner as to relieve the appellee, Michael, from further liability as surety thereon? This is the plain issue presented, and which we are now to determine. The facts shown by the record touching the question of payment pleaded by the appellee are that the appellant bank was on the 21st of March, 1893, the holder of four notes of said Wilcoxon and sureties, variously dated, and for various sums, and which together aggregated the sum of $11,300. The note sued on was one of the four making up said last-mentioned sum. Being thus indebted, and repeatedly pressed by the appellant for additional security to that then held by it, Wilcoxon and wife agreed to give to the appellant their note for the sum of $11,300, secured by mortgage on his real estate. This offer was accepted by the appellant without qualification or condition. The mortgage was thereupon executed and delivered to the appellant, and the new note then discounted by it. From the proceeds of the said new note the indebtedness of said Wilcoxon, evidenced by said four notes, was paid, and the same were then delivered by the appellant to said Wilcoxon. Within four months after the execution of said mortgage, Wilcoxon applied for the benefit of the insolvent laws of the state of Maryland, and was adjudged to be insolvent. Trustees having been selected under the provisions of the law, they filed, with the sanction of the court, a bill in equity to set aside said mortgage, as giving to the appellant a fraudulent preference, under the provisions of the insolvent laws. Wilcoxon being a merchant or trader, and found to be insolvent at the time of the execution and delivery of the mortgage, the court decreed it to be an unlawful preference, and struck down the same. An important question arises here as to the effect resulting from depriving said mortgage of its character as a legal preference. It is contended by the appellant that the action of the court in the insolvency proceedings not only deprived said mortgage of its quality as a lien or preference in the distribution of the assets of the insolvent estate of Wilcoxon, but that such action extinguished the liability of the surety in said note, for the payment of which the mortgage was given to secure. We have been referred to many cases touching the liability of sureties, as to what constitutes payment and what does not, and we fully concur in the doctrine announced thereon. This, however, is not a case where, in the renewal of a note, the signature of the surety has been subsequently ascertained to be a forgery. In such a case the renewal is invalid, and does not operate as a payment of the original note, nor does it effect an extinguishment of the right of action thereon.
This is the almost universal concession of the declared doctrine of the courts in England and in this country. There is, however, but small analogy between the case of a forged signature to a note and the case now under consideration. In the one instance, as far as the surety is concerned, the note is a nullity. In the other, which is the case now before us, we have a mortgage given to secure a perfectly valid note, but in consequence of the provisions of the insolvent law the mortgage is not allowed to stand as a legal preference in the appellant's favor, in the distribution of the assets of the insolvent estate, only, however, because it has been executed and recorded within the inhibited period contained in the statute. This view of the law in no sense contravenes the doctrine of the cases of Goodrich v. Tracy, 43 Vt. 314; Markle v. Hatfield, 2 Johns. 455; Bank v. Smith, 5 Conn. 71. This case was, by agreement of counsel, tried before the court below without the intervention of a jury. The facts contained in the record are fully and satisfactorily stated by the reporter in his notes placed at the head of this case. The first exception taken by the appellant relates to the admissibility in evidence of the record of proceedings in equity cause No. 6,128, on the docket of the circuit court for Frederick county, to which the appellee was not a party, and in no wise concluded from making in this action any defense which he had the legal right to interpose. This exception brings up for consideration the primary and leading question on this appeal: Has the appellee, by the action of Wilcoxon, been discharged of liability as surety on the note sued upon?
It will be necessary to consider, in the first place, the legal attributes of the joint note of...
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