Locke v. Homer

• Decision Date: 08 April 1881
• Citation: 131 Mass. 93
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: Lyman Locke & another v. George H. Homer

131 Mass. 93

Lyman Locke & another v. George H. Homer

Supreme Court of Massachusetts

April 8, 1881

Argued November 18, 1879

Suffolk.

Exceptions overruled.

J. F Colby, for the defendant.

L. W Howes, for the plaintiffs.

OPINION

Gray C. J.

This is an action of contract. The facts of the case, as found by the Chief Justice of the Superior Court, before whom it was tried without a jury, are as follows:

On September 20, 1873, the plaintiffs, being the owners of a parcel of land in Newton, mortgaged it to Margaret Aitken to secure the payment in three years from date of their promissory note to her for $ 4000; and on June 12, 1875, conveyed the land to the defendant by a deed, expressed to be "in consideration of six thousand dollars paid by" him, describing the land by metes and bounds, and containing covenants of seisin in fee, good right to sell and convey, freedom from incumbrances "except a mortgage to Margaret Aitken of four thousand dollars, which the grantee assumes and agrees to hold the grantors harmless from," and of warranty against all lawful claims and demands except as aforesaid. The consideration of this deed in fact consisted of $ 2000 paid in money or its equivalent, and of the defendant's promise to pay the note and mortgage for $ 4000.

On August 9, 1877, the defendant conveyed the land to George W. Miller, describing it by metes and bounds, and as being the same premises conveyed to the defendant by the plaintiffs by deed dated June 12, 1875. The deed to Miller was admitted in evidence against the defendant's objection, but was clearly competent to prove that he had accepted the previous deed therein mentioned, and is not shown to have been offered or admitted for any other purpose.

The plaintiffs paid the interest which fell due on the mortgage note before their conveyance to the defendant. The defendant paid some interest falling due after that conveyance, and $ 1500 of the principal sum, and then refused to make any further payments. On July 1, 1878, the land was sold by Aitken under a power of sale in the mortgage, after due notice to the defendant and all other persons interested, for the sum of $ 850; and this sum (deducting $ 45, the expenses of sale), as well as the other sums paid as aforesaid, was applied by Aitken toward the payment of the note.

The plaintiffs in their declaration set forth the facts above stated, and sought to recover the amount remaining due upon the note. They have never paid any part of the principal of the note, or of the interest except as above mentioned.

The defendant asked the judge to rule that the language in the deed from the plaintiffs to him did not show a contract on his part to pay the mortgage, but a contract to indemnify the grantors in case they sustained any loss; and that, if they had sustained no loss, they could not recover. But the judge refused so to rule; and ruled that if the defendant accepted the deed from the plaintiffs to him, and agreed to pay the mortgage note as part of the consideration of the conveyance, he thereby contracted to pay the amount then due and unpaid on the note, and the plaintiffs were entitled to recover in this action a sum of money equal to that amount; and ordered judgment for the plaintiffs for the amount claimed and interest; and the defendant alleged exceptions.

The case, having been submitted on briefs, has been considered by all the judges. The plaintiffs, in support of their action, rely upon the decision in Furnas v. Durgin, 119 Mass. 500. The defendant contends that that case is distinguishable from this; in other cases which have come up while this has been under advisement, it has been argued that the decision in Furnas v. Durgin is erroneous in principle; and the court, after much consideration, is not unanimous. It is therefore proper to state somewhat fully the grounds and authorities upon which that decision rests.

By the common law, where the condition of an obligation was merely to indemnify and save harmless, the defendant might plead non damnificatus; but where the condition was to discharge or acquit the plaintiff from such and such a bond, or other particular thing, the plea must aver performance, and a plea of non damnificatus was bad. 1 Saund. 116, note.

Although a surety, whose rights against his principal rest only upon the liability implied by law from the relation between them, can maintain no action against his principal until he has himself paid the debt for which they are both liable to their creditor, yet, as long ago as 1797, it was determined, by concurrent decisions of the Courts of King's Bench and Common Pleas, that if a surety on a bond for the payment of money at a certain day took a bond from his principal to pay the money, according to the terms of the first bond, to the obligee therein, and to indemnify and save harmless the surety against his liability on that bond, the surety, on the failure of the principal to pay the money on the day when it became due and payable by the first bond, might maintain an action against him on the second bond without having himself paid the money. Hodgson v. Bell, 7 T. R. 97. Holmes v. Rhodes, 1 B. & P. 638. And it was afterwards held by Lord Tenterden and Mr. Justice Bayley that where a man made a bond, reciting that certain land of the obligee was charged with the payment of an annuity which the obligee had engaged to pay, and conditioned that the obligor should pay the annuity and indemnify the obligee from the same, the obligee was entitled, in an action on the bond, to recover the amount of due and unpaid instalments of the annuity without proving that he had paid them. Penny v. Foy, 8 B. & C. 11, S. C. 2 Man. & Ryl. 181.

So where two persons being jointly indebted on a promissory note, the one as principal and the other as surety, the principal covenanted with the surety to pay the amount of the note to the payees on a given day, but made default, and was sued upon his covenant, it was ruled by Lord Abinger at nisi prius, and held by Barons Parke, Alderson, Gurney and Rolfe in banc, that the plaintiff was entitled to recover the whole amount, although the note had not been paid; notwithstanding the argument of Erle for the defendant, that the plaintiff had suffered no substantial injury, and was entitled to nominal damages only, and that there was nothing to prevent the payees of the note from suing the defendant, in which case he would have to pay the money twice over. Baron Parke said: "This is an absolute and positive covenant by the defendant to pay a sum of money on a day certain. The money was not paid on that day, nor has it been paid since. Under these circumstances, I think the jury were warranted in giving the plaintiff the full amount of the money due upon the covenant. If any money had been paid in respect of the note since the day fixed for the payment, that would relieve the plaintiff pro tanto from his responsibility. The defendant may perhaps have an equity that the money he may pay to the plaintiff shall be applied in discharge of his debt; but at law the plaintiff is entitled to be placed in the same situation under this agreement as if he had paid the money to the payees of the bill." Loosemore v. Radford, 9 M. & W. 657.

In Robinson v. Robinson, 24 L. T. Rep. 112, by an indenture of dissolution of a partnership between the plaintiff and defendant, the defendant, to whom all the partnership property was transferred, covenanted to pay and satisfy within eighteen months all the debts of the partnership, (a schedule of which was annexed to the indenture,) and also to indemnify and save harmless the plaintiff against all costs, losses, charges, damages, claims and demands which he might incur or become liable to in respect of the partnership debts. In an action on the defendant's covenant to pay the debts of the partnership, Lord Campbell and Justices Wightman and Erle held that the measure of damages was the whole amount of the debts which he had not paid, whether they had been paid by the plaintiff or he had given promissory notes for them or not. Like decisions have been made in New York, Connecticut and Illinois. In re Negus, 7 Wend. 499. Lathrop v. Atwood, 21 Conn. 117. Redfield v. Haight, 27 Conn. 31. Gage v. Lewis, 68 Ill. 604.

In Robinson v. Robinson, Lord Campbell said: "There is an absolute covenant by the defendant to pay on a day certain, which covenant he has broken, and the plaintiff has been called upon to pay the debt. If the plaintiff had paid the whole in promissory notes, could he not have maintained an action at all during the currency of the notes? He certainly could for the breach of covenant. Then what is the measure of damages? No other can be suggested than the amount of the debt, including that for which promissory notes have been given. It is clear that the plaintiff could bring no fresh action for this same breach of covenant when he had paid the promissory notes; and if he cannot recover the amount in this action he cannot be indemnified. It is true that the defendant incurs the peril of having to pay twice; but that arises from his own default in not performing his covenant. So the case stands upon reason; and there is a superfluity of authority on the same side. The case of Loosemore v. Radford is on all fours with this case." And Mr. Justice Erle (who had been of counsel in Loosemore v. Radford) in his concurring opinion observed that in that case "the point of hardship upon the defendant was fully before the court; because they throw out that the plaintiff would hold the money recovered as trustee for the defendant, who might perhaps have a remedy in equity against any misappropriation of it."

In an earlier case, a man, by a settlement made on his marriage conveyed...