81 Mass. 274 | Mass. | 1860
I. It is quite immaterial to the decision of these cases to consider what would have been the rights and obligations of the parties under the executory agreements of May 1855. Its stipulations were found to be inconvenient and impracticable, and were abandoned by mutual consent. Nor is the fact of any importance, that the plaintiff began his transactions with
In the first place, we think it very clear that the plaintiff cannot claim under this agreement to prove against the estate of the corporation for a loan of forty thousand dollars. Looking at the transaction, as we are bound to do, solely in the light of the written documents in which the contract of the parties is expressed, irrespectively of their previous dealings and verbal agreements, we can see in it none of the characteristics of a loan. The plaintiff did not lend the sum of forty thousand dollars to the corporation upon their promise to repay him that sum absolutely as a debt at a fixed period of time, with lawful interest thereon. He subscribed for four hundred shares in the capital stock of the corporation, which they agreed to redeem at par at certain specified times, and to pay thereon a “ fixed half-yearly dividend of four per cent.” He received certificates of special stock, purporting to be issued in due form according to St. 1855, c. 290, for which he paid partly in notes of the corporation held by him for money previously lent to them, and partly in his own notes. But there was no agreement that this payment, or any part of it, should be considered' in the light of a loan, or that the stock should be held as collateral security for the money paid therefor. Indeed it would be impossible to regard this transaction as a loan of money, without setting aside the express stipulations and agreements of the parties, and treating them, nor as bona fide contracts fairly entered into, but only as a mere form adopted for the purpose of covering up the true character of their dealings with each other. There are no facts disclosed in the case to justify the inference that the parties
The question then arises whether, assuming the transaction to have been in all respects valid and the stock duly issued, the plaintiff as such special stockholder can claim to stand in the position of a creditor entitled to prove the agreement of the corporation to redeem the special stock at par, as a debt against their estate in competition with their general creditors? We think that he cannot. It is doubtful whether such an agreement can be regarded as a debt provable against an insolvent estate under the Sts. of 1838, c. 163, § 3, and 1851, c. 327, § 3. It is rather an executory agreement to do a collateral act, and not a promise to pay a fixed sum as a present debt at a future time, debitum in preesenti solvendum in futuro. Under the English bankrupt laws, a claim for damages not liquidated and ascertained at the time of the commencement of proceedings in insolvency does not constitute a debt provable against an insolvent estate, although the right to recover thereon is founded on a contract or promise; and it is held that it does not make any difference that the damages are susceptible of accurate computation, and that the elements by which to ascertain and fix the amount of such damages are furnished by the contract itself. The agreement is nevertheless executory in its character, to perform some act or pay money, not as a present existing debt or duty, but as a future liability or obligation to arise or grow out of the contract. Yallop v. Ebers, 1 B. & Ad. 698. Atwood v. Partridge, 4 Bing. 209. Toppin v. Field, 4 Ad. & El. N. R. 386. Such seems to have been the nature of the agreement entered into between the plaintiff and the corporation.
But the more decisive objection to the proof of the plaintiff’s claim is, that it would violate the manifest intent and policy of the St. of 1855, c. 290, by which the issue of special stock is
These considerations apply with equal force to the special agreement by which the corporation agreed to redeem in three years thirty thousand dollars of the special stock issued to the plaintiffs. If such special agreement was valid and in conformity with the provisions of St. 1855, c. 290, it cannot be regarded as a debt provable against the estate of the corporation, for the reasons already given.
But it is contended by the plaintiff that both agreements were invalid, and that the corporation never duly authorized the issue of any special stock. On this ground it is claimed that he has a right to surrender and deliver up his certificates of special stock, and prove for the amount of money paid by him therefor. We do not deem it necessary to decide whether the proceedings of the corporation were so conducted as to render the issue of special stock legal and valid, or whether there was any authority in the officers to execute the special agreement of June 28th 1855 for the redemption of thirty thousand dollars of the special stock in three years. Assuming that the whole transaction was unauthorized and illegal, and for that reason not binding on the corporation, we are of opinion that the plaintiff is not entitled to prove his claim against the estate of the corporation in insolvency. The plaintiff, in pursuance of the contract with the corporation, has received not only certificates of shares which he alleges to be worthless, but he has received one dividend thereon in cash and two notes of the corporation, indorsed by a third person, for other dividends. On this state of facts, what
We are therefore of opinion that the plaintiff is entitled to prove against the estate of the corporation only the amount of the two notes given for dividends on the special stock, to which no objection is made, and that he cannot prove for the amount paid by him for the special stock in the corporation, or any part of it.
II. The only ground on which the plaintiff claims to prove against the estate of Tufts under the agreement of November 20th 1855 is, that it created a “ debt absolutely due ” from him at the time of the first publication of the notice of issuing the warrant against his estate, “ although not payable until after-
The terms of the agreement in the present case are unambiguous. The language is precise and definite, and the intention of the parties to the contract is clear and intelligible. The contract by Tufts was to “ guaranty the payment ” to the plaintiff of the thirty thousand dollars of special stock issued by the corporation. The word “ guaranty ” naturally imports that another person is primarily liable to perform an engagement. In its legal and technical sense, a contract of guaranty is a collateral undertaking to answer for the debt or stipulations of another person, as distinguished from an original, direct, and absolute engagement for the party’s own act. It is of the essence of the contract that there should be some one liable directly to perform some act or duty, and by performance to extinguish all obligation of the guarantor. Therefore a guaranty of the debt of another is an agreement to pay it in case he does not. Dole v. Young, 24 Pick. 252. The liability of a guarantor is not fixed and absolute until the party primarily liable on the contract has failed to perform it. Until such failure, the obligation of the guarantor is strictly collateral and contingent, and this constitutes the chief distinction between a contract of guaranty simply and that of principal and surety. In the latter case, the surety is directly liable on the contract, and may be sued as promisor", in the former case, the guarantor is not liable until the failure of the person primarily responsible to perform his contract, and can be held only on his special promise to pay if the other party does not. Oxford Bank v. Haynes, 8 Pick. 428. Fell on Guar. 1.
The intention of the parties in the present case conformed to the language of their written contract. It was not their purpose that Tufts should be liable in the first instance and at all events
But it was urged in behalf of the plaintiff that although, in its inception, the contract or agreement of Tufts might have been collateral and contingent, it had become absolute at the time of the first publication of the notice of the insolvency, because the corporation had then surrendered their property under the insolvent laws, and had thereby made the performance of their contract by themselves impossible. But it would be going quite too far to say that the nature of the contract was changed by the mere insolvency of the party primarily liable, and that
Nor are we able to see that the character of the contract of Tufts was materially changed by the supposed illegality of the agreement of the corporation with the plaintiff to redeem a portion of the special stock issued to him in three years. It is very questionable whether, on the facts proved, the plaintiff can be permitted to set up this illegality, and avail himself of it as the foundation of his claim to charge the estate of Tufts with a debt absolutely due, which he had agreed to take only as a collateral and contingent engagement. Having taken the shares of special stock under the agreement, and received divi*
Under the English bankrupt acts, enacted prior to St. 6 G. 4, c. 16, the provisions of which resemble in many particulars those of our own insolvent laws, a contract of guaranty similar in legal effect to the one under consideration in the present case was held not to be provable before the maturity of the contract against the estate of the guarantor. This was early settled in Ex parte Adney, Cowp. 460, and has not since been controverted in the English courts. In that case a person, for a valuable consideration, undertook in writing to guaranty the payment of a promissory note to the holder. Before the note became due, the guarantor became himself bankrupt. It was held that this undertaking of guaranty was intended as a collateral engagement only, and could not be proved by the holder against the estate of the guarantor, as. it rested in contingency.
It is true that under the insolvent acts of 12 G. 3, c. 23, § 27, and 41 G. 3, c. 70, § 34, it has been held that the liability of an indorser on a promissory note or bill of exchange was, in the language of those acts, “a debt growing due.” There is no such phrase in our insolvent act, descriptive of debts provable.
Upon the ground that the plaintiff’s claim under the agreement of November 1855 cannot be regarded as a debt absolutely due from the estate of Tufts at the time of the commencement of the insolvent proceedings, we are of opinion that proof of it must be disallowed, and the plaintiff admitted to' Drove only the two notes on which Tufts was the indorser.
Judgment accordingly.
Hoar, J. did not sit in these cases.