Roberts v. Miles

• Decision Date: 19 April 1864
• Citation: Roberts v. Miles, 12 Mich. 297 (Mich. 1864)
• Court: Michigan Supreme Court
• Parties: Nelson Roberts v. Cyrus Miles and others

12 Mich. 297

Nelson Roberts v. Cyrus Miles and others

Supreme Court of Michigan

April 19, 1864

Heard January 7, 1864; January 8, 1864[Syllabus Material]

Appeal in chancery from St. Clair Circuit.The facts are stated in the opinion.

Decree enjoining further proceedings against Roberts, affirmed, with costs.

Crellin & Atkinson and A. B. Maynard, for complainant:

1.The assignment to Miller, as affecting Roberts, is the same as if made to Miles & Co.If he, being a member of the firm accepts securities for the payment of a debt due to them, but applies them to a different purpose, Roberts in equity and justice should be discharged.

2.Putting the claim into judgment does not affect the equitable rights of Roberts to be discharged therefrom: 2 Lead. Cas. in Eq., 566, 567, and cases cited.

3.It is well settled that if a creditor surrenders up or releases any sureties of the principal, whether acquired by proceedings instituted against him, or voluntarily placed in his hands, then, to the value of such securities, the surety is discharged.The same result would follow if a wrongful application should be made: 8 S. & R., 453;8 Pick. 121;2 Amer. Lead. Cas., 343.

Whatever funds came into the hands of Miller, as such assignee to be applied in payment of the individual debts of Bailey and Bancroft to Cyrus Miles & Co., should have been applied equally on their several indebtedness, and no different application could properly be made without the consent of both Bailey and Roberts.Upon every principle of equity and justice, Roberts should be discharged from the judgment, to the extent, at least, of the moneys which Miller should have paid thereon.

4.Roberts evidently placed full confidence in the statement of Miles, that the judgment was satisfied.After that he took no measures for his own protection, though Bailey had then, and for some time afterwards, personal property subject to levy sufficient to have satisfied the judgment.This, we claim, discharges Roberts, and whether the judgment was paid or not, is of no importance, as the defendants are equitably estopped from disputing its payment: 9 Met. 511, 517;21 Pick. 195;12 Met. 545;7 Hill 250;9 Met. 511.

5.The $ 1,500 note given by Bailey to Miller, secured by a chattel mortgage on his furniture, was several months after the assignment had been made, and after one of the defendants had repeatedly assured Roberts that they should not look to him, and that the judgment was satisfied.Whether taken to secure the payment of the judgment, or to aid Bailey in defrauding his creditors, is immaterial, as affecting the rights of Roberts.No one would claim in a court of equity that a creditor could aid his debtor in covering up his property, in this manner, without discharging the surety.He can not, willfully, shift the burden of a debt from the property of his principal debtor, and impose it on the surety.

A. E. Chadwick and W. T. Mitchell, for defendants:

All the material allegations of the bill are distinctly and definitely defined by the answer, and the complainant has failed to meet these denials by sufficient proof.In no case has he met a denial by the testimony of two witnesses; and in points where the complainant's testimony is added to Bailey's, the defendants have counterbalanced the testimony so as to leave the allegations of the bill unsupported by prepondering testimony.

When the facts stated in the complainant's bill are denied in the answer, it is a general principle that they must be proved by two credible witnesses, or one witness and strong corroborating circumstances: Adams'Eq., 21;6 Johns. 522;Story'sEq. Juris., § 1528.

Complainant, not having charged that the judgment sought to be avoided, was obtained by fraud, mistake or surprise, is estopped from proof of such fact.It is then clear that complainant is estopped from going into matters arising before the judgment; and by his default he waived all legal and equitable rights, even had he covered such matters by his bill.

A court of equity will not enjoin a party from pursuing a judgment at law, upon any ground which afforded a defense at law, unless he shows some good reason for not making the defense; as that he was prevented by accident, surprise or mistake, or by the fraud of the opposite party, without his fault or neglect: 13 Vt. 477;1 Johns. Ch., 465;1 Johns. Ch., 49.

Roberts is not released by any act of defendants since the judgment.It is not shown that time was given to Bailey, and complainant has not been deprived of any right of recourse to Bailey, nor has there been any misappropriation of moneys which he was entitled to have applied on the judgment.The proofs in regard to the chattel mortgage are immaterial, as there is no charge in the bill concerning it.The facts stated in the bill in equity constitute the sole ground of relief: 7 Conn. 496;1 Bland, 236;2 Bland, 45;2 Ired. Ch., 575;3 Swanst. 472;6 Price 240;18 Ves. 302;11 Wheat. 103;11 Pet. 229;7 Vt. 229;15 Vt. 110.

As indorser, Roberts did not stand in the relation of a surety.There is a broad distinction between them.And to the extent of this distinction, complainant's allegations are wide of the issue.When the indorser has notice of dishonor, he is bound to pay at once.Mere indulgence or passiveness on the part of the holder can not impair his right.The demand may, at the option of the holder, be enforced against the indorser separately.

OPINION

Campbell J.

The bill in this case was filed to restrain the sale of property under execution.

Defendants hold a judgment against complainant as indorser, he being sued jointly with Mark T. Bailey the maker of a promissory note indorsed for Bailey's accommodation, and the judgment being against both, and rendered July 6, 1859.

The facts show that when the note was indorsed, Roberts, who was an illiterate man, was assured by Miles (the partner in a bank consisting of all the defendants) that the indorsement was a mere form, and that complainant should never receive any trouble about it.No defense, however, was interposed in the suit at law.

July 14, 1859, an execution was issued on this judgment, but no attempt appears to have been made to serve it.In August an assignment was made by Bailey and his partner, W. L. Bancroft, to Miller, providing, among other things, for the payment of all claims held against them, or either of them, by defendants.Bailey and Bancroft were to be at liberty to draw $ 1,000 for individual purposes.

There was, during the season of 1859, a sum of money which is testified to as $ 1,000 or $ 1,500, held by the bank, belonging to Bailey and Bancroft, of which Bailey directed Miles to credit one-half on this judgment, which he promised to do, but afterwards credited all upon debts of Bancroft.

After the assignment, and in August, Miles swears he told complainant that the debt was fully secured by the assignment, and that he would, or probably would, never be troubled about it.In October, 1859, complainant testifies that Miles told him it was settled by money on hand.Bailey testifies Miles told Roberts it was all got along with.

November 16, 1859, Bailey executed to Miller, without any new consideration, a chattel mortgage for $ 1,500, payable in one year.This does not appear to have been a bona fide transaction, but the mortgage was subsequently claimed by Miles and Miller as security for the judgment.The mortgage was on Bailey's furniture, which was of its full value.The furniture was afterwards secreted, and Miller claimed, under oath, that he had been defrauded by the removal.He held no other claim against Bailey except the judgment.

In March, 1860, an execution having been issued on the judgment, and levied on complainant's property, Roberts applied to Miles, who released it, saying the execution was issued against both, because the judgment was against both, but that he did not intend to have complainant's property levied on, and that the levy was a mistake of the sheriff.

In October, 1861, the levy sought to be enjoined was made on property belonging to complainant.No application is shown by any one to have ever been made to complainant for payment.In June, 1861, as appears from Mr. Crellin's testimony, Miller said to him that he supposed Roberts was not liable.This was while proceedings were going on against Bailey for the fraudulent secretion of the mortgaged chattels, which were then claimed as security for this judgment.Eddison's testimony is to the effect that defendants claimed the chattel mortgage as security for this debt.

It is claimed by complainant, as one ground of relief, that time was given by this chattel mortgage, and that this operated as an independent ground of discharge.The objection of the defendants' counsel to this ground of relief is well taken.The proofs do not come up to the allegations.It is very clear that the attempt to hold this mortgage as a security for the judgment was an after-thought of defendants, and that it at first was taken by Miller as an assistant to Bailey in putting the property out of the reach of his creditors.But while this specific ground of relief fails, the facts connected with the mortgage are admissible, so far as they tend to explain the other transactions.

The principal ground of relief set up is, that Roberts has been uniformly assured that no liability would be enforced against him, and under such circumstances as would dissuade him from securing himself against loss, which the evidence shows he might easily have done by means of Bailey's furniture before it was mortgaged to Miller; and, further, that defendants, when they had out an execution, and knew Bailey had ample property to be levied on, did not make any such...