Lyon v. Robbins.

estate of said Matilda, upon the death of said Ezra descended to and vested in the said George F. Lyon, John M. Lyon, James A. Lyon, Mary W. Judd, and Sarah Lyon, children and heirs-at-law of the said Ezra, in equal proportions as tenants in common, and has never been distributed." The estate of the petitioner was created by the act of the parties, and not by operation of law, (Town of Hamden v. Rice, 24 Conn., 356,) and whether the petitioner might or might not commit waste depends upon the terms of the will. She might have been authorized by the devise to do acts which otherwise would be waste by the statute. Rev. Statutes, p. 490, sec. 9; Town of Hamden v. Rice, supra. The will is not before us for construction, and we know nothing of its provisions except what appears from the above finding of the committee, and we cannot say that the petitioner was liable for waste. And it does not appear what was the nature of the repairs made. They might have been, and probably were, of such a character as to increase the value of the property and be of essential benefit to the reversioners; and this we think it is fair to presume was the reason why three of them joined with the petitioner in executing the note and mortgage.

None of the claims made by the respondents under their demurrer can be sustained by any principle of law or equity. The bill of the petitioner is sufficient, and there is manifest error in the judgment of the Superior Court.

In this opinion the other judges concurred.

PARK, C. J., CARPENTER, PARDEE, Loomis, AND GRANGER, JS.

BARNABAS ALLEN AND ANOTHER vs. SAMUEL H. RUNDLE

AND OTHERS.

The plaintiffs had a claim for $7,000, for money lent, against a joint stock corporation. A new corporation was formed, which took its business and assumed its liabilities, but the subscriptions to its stock were not to be binding unless $250,000 was subscribed within a certain time. The time being about to expire and the subscriptions falling $30,000 short, B, who was already a subscriber, agreed, upon the solicitation of the other subscribers, to take the remaining $30,000 on their signing a bond of indemnity, which bond was signed by twenty-one of the stockholders and the subscription thereupon made by him. Afterwards the plaintiffs demanded of the new company payment of the $7,000, and were about to sue, when it was arranged that B should give them his own note for $7,000, with a guarantee on the back of it signed by the defendants, who were seven of the twenty-one signers of the bond of indemnity; which arrangement was carried out. Held that general assumpsit for money had and received would not lie in favor of the plaintiffs against the guarantors of B's note.

The ground on which a promissory note is evidence under the general counts is that it is presumed that money has been received by the maker. But the guarantee of the defendants created no such presumption.

And held that it could not be shown by parol that the defendants, though in form guarantors, in fact undertook thereby to obligate themselves to pay the note. Nor that they made at the time a verbal promise to pay the debt.

And that any promise made by the defendants at any time to pay the debt would be without consideration.

And held that the doctrine of novation did not apply, inasmuch as the defend. ants did not owe the corporation, and were not therefore applying their own debt to the payment of the indebtedness of the corporation.

A novation does not create a new indebtedness, but simply applies an existing indebtedness in payment of a debt of the creditor; and it is a necessary incident of the transaction that the original indebtedness to the intermediate creditor, and his indebtedness to his own creditor, should be discharged.

Allen v. Rundle.

In this case the $7,000 for which B gave his note to the plaintiffs, with the guarantee of the defendants, had been credited on B's subscription of $30,000 to the stock of the new company; but this was done by the financial agent of the company of his own accord and with no authority from B. Held not to bring the case within the law of novation.

ASSUMPSIT on a guarantee of a note by the defendants, with the common counts; brought to the Superior Court in Fairfield County, and tried to the court on the general issue.

On the trial the plaintiffs withdrew the special count in their declaration, and under the common counts claimed to recover the sum of $7,000, and interest thereon from the 25th day of May, 1872, with the taxes thereon that had since accrued, and offered in evidence in support of their claim the following promissory note:

"$7,000.

Danbury, November 25th, 1871. On demand I promise to pay Barnabas Allen and William F. Taylor seven thousand dollars, with interest semi-annually, and the taxes that may accrue on the same, for value received. CHARLES BENEDICT.”

Signed,

On the back of the note there was an endorsement as follows:

"For value received we jointly and severally guarantee the within note good and collectible until paid. (Signed). S. H. Rundle, William P. Seeley, Andrew Hull, Isaac W. Ives, Charles Hull, Charles C. White and W. F. Lacey."

The signers of the guarantee are the defendants in the present suit.

The plaintiffs claimed that the facts and circumstances under which the note was given were such that the defendants, who were ostensibly guarantors, were not in fact such merely, but were really makers of the note; and that as such they were liable to the plaintiffs in the present action, under the count for money had and received. The defendants claimed that they were liable as guarantors only, and as such could not be holden on the common counts; that parol evidence was inadmissible to vary their liability as expressed in the contract of guaranty, or to show that they were liable in any way on the note except as guarantors, or to show VOL. XLV.-67

Allen v. Rundle.

that Benedict signed the note under a promise from them that he should never have it to pay, or that he was not liable thereon as maker. They also denied that any consideration had ever moved from the plaintiffs to them on which to base an action on the common counts; and there was in fact no evidence of such consideration except as hereinafter appears.

The main controversy between the parties was whether the defendants were in this action liable as makers of the note in suit; or in any way primarily liable to the plaintiffs in this action for the money specified in the note, or in their bill of particulars, which was for money lent and for money had and received.

The note in suit came into existence as follows: Prior to 1871 a joint stock corporation had done business in Danbury under the name of the Bartram & Fanton Sewing Machine Company. This company was not prosperous. The plaintiffs loaned it $8,000, and took the note of the company guaranteed till paid by certain persons, one of whom was Andrew Hull, one of the defendants. A payment of $1,000 was made on it by the company. A new joint stock corporation was projected, of much larger stock than the old one.

The object of the new company was to assume the liabilities and prosecute the business of the old company. Most of the stockholders of the old company became subscribers to the stock of the new. Charles Benedict subscribed for $5,000 of this stock, and paid for the same in cash at its par value. The defendants were also subscribers. The subscriptions were not to be binding unless $250,000 was subscribed within certain time. This limitation had nearly expired, and $30,000 of the stock remained unsubscribed for. Benedict had taken no active part in getting up the new company, except to take $5,000 of its stock. The defendants, and others of the prominent subscribers, applied to him under these circumstances to take the $30,000 of the stock. He was in no condition to do so, either pecuniarily or in business capacity, and declined to make any further subscription. To induce him to do it the defendants and others of the subscribers promised to give him, and in fact did give him, a

Allen v. Rundle.

bond indemnifying him against all liability by reason of his subscribing for the $30,000 of the stock of the new company. This bond was signed by the defendants and fourteen other stockholders. Under these circumstances Benedict subscribed the $30,000, with the understanding and agreement between him and the obligors that he was no more than trustee of the stock for the obligors, and that, if money was called for to pay for the same or any part thereof, the obligors were to meet the call and pay the money, and that he should be saved. from doing so, and in all respects held harmless.

The plaintiffs afterwards desired payment of the $7,000 remaining due on the note of the old company, and were about to proceed to collect the same, when the following arrangement was made regarding it, Benedict in no way moving in the matter except at the solicitation of the defendants, acting for the most part through the defendants Seeley and Hull. Seeley called on Benedict and informed him that the note was being pressed for payment, and that it could be arranged by substituting his note for it, which the defendants would guarantee, and that he should have no trouble with it; that he would be safe under the bond; that this would give the defendants time to sell the $30,000 of the stock subscribed for by him, and an opportunity to pay the note from the sale. Benedict did not however consent to sign the note at this time. Seeley thereupon drew the note in suit, and put it into the hands of the defendant Hull for the purpose of having him procure Benedict to execute it. Hull called on Benedict at his residence and introduced the subject of his executing the same. Benedict was averse to doing anything about it, and informed Hull that he thought he ought not to sign the note; Hull assured him that he would be indemnified in so doing by the bond; that he himself and all the other defendants would sign their names on the back of the note for his protection, and that the note should not go out of his hands till all the defendants had so signed their names upon it; that if he would sign the note he should never be called on to pay it, and that the defendants would pay it. Benedict thereupon signed the note, and Hull took it and immediately procured