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13. If execution be levied on property, due diligence must be used to obtain the value of that property.
In Kentucky, if it appear by the return of the sheriff that property was levied on and taken out of his possession by a writ of replevin sued out by a third person, it must then be shewn what has become of this property. The assignee has no right to abandon it; he must defend the replevin and subject it if he can. Unless it be shewn that it was not liable, he cannot, upon a return afterwards of nulla bona, sustain an action against the assignor. Levi v. Evans, 7 B. Monroe
If the debtor give a replevy bond with sureties, and upon executions issued at the end of three months, it appears that none of the obligors have any property, there is a presumption that the sheriff took insufficient sureties, and has, by his failure in duty, become liable for the debt; and in such case the assignee must proceed against the sheriff before he resorts to the assignor. Wright v. Strange, 5 B. Monroe 252.
In Virginia, generally, the assignee is not required to proceed against a sheriff in order to take the chance of fixing upon him a malfeasance which may charge him with the debt. If the sheriff be guilty of a malfeasance for which the assignee is not bound to pursue him, the wrong done by the sheriff is a wrong to the assignor, who may have his action on the case. Smith &c. v. Triplett &c. 4 Leigh 590.
14. If there be a return of nulla bona, that generally au thorizes assignee to sue assignor.
If on a fieri facias directed to the sheriff of the county in which the obligor resides there be a return of nulla bona, that is generally sufficient. Roane, J. in Barksdale v. Fenwick, 4 Call 503. Notwithstanding the obligor may in fact have had property which was capable of being levied on, but was not levied on, the assignor is, on such return, generally, bound to pay the money, unless it be proved that the assignee knew of there being such property. Goodall v. Stuart, 2 H. & M. 205; Smith &c. v. Triplett &c. 4 Leigh 601; McFadden v. Finnell &c. 3 B. Monroe 122; Larman v. Neete, Id. 165. If he did know of it, he should pursue it before proceeding against the assignor. Robertson, C. J. 3 B. Monroe 165; Levi v. Evans, 7 Id. 116.
If the return upon the fieri facias, instead of being a return of nulla bona, shew that only a certain sum could be made, it may yet be shewn that between the date of that
execution and its return, the judgment debtor took, in another case, the oath of insolvency, and when this is shewn, it is immaterial for the assignor to shew that the debtor had other property, unless he prove that the assignee knew of it. Smith &c. v. Triplett &c. 4 Leigh 601, 2.
15. Effect of taking the debtor under a ca. sa.
After a return of nulla bona, it is not incumbent on the assignee to sue out a ca. sa. in order to entitle himself to an action against the assignor, yet if he does take out such execution, and under it the debtor is taken in custody, it would be premature to sue the assignor when, for aught that appears, the debtor is still in custody, or may have paid the debt. Johnson v. Hackley, 6 Munf. 448. If it appear that the officer has wilfully and negligently suffered the debtor to escape, and the officer be liable for the whole amount of the execution, then the creditor should prosecute his legal remedy against the officer before resorting to the assignor. Johnson v. Lewis, 1 Dana 182.
16. An assignee who has a lien on the debtor's property, by deed or otherwise, should pursue it before he proceeds against the assignor.
The note may purport to have been given in consideration of the purchase of land. The mere fact of such being the consideration, will not affect the liability of an assignor when there is no lien on the land. Whaley v. Van Hook, 3 B. Monroe 271. But when there is a lien, and the assignee knows of it, he should pursue that lien to exhaustion before he pursues the assignor on his personal liability. Morrison v. Glass, 4 Id. 240.
If it appear that while the assignor held the note, the debtor executed to him a mortgage on property apparently sufficient to satisfy the debt, and that the assignee was apprised of it before he brought suit on the note, and was informed by the mortgagor that he would make no defence against a suit to foreclose the mortgage, the assignee should pursue the mortgaged property and test its insufficiency to pay the debt. Miles v. Gray, 4 B. Monroe 417.
18. Rule in Pennsylvania and New York as to right of action on assignor's contract of guaranty.
The rule adopted in Virginia on the implied undertaking in
Mackie's ex'or v. Davis, 2 Wash. 226, and Barksdale v. Fenwick, 2 H. & M. 113, note, cited ante, p. 271 and 280, was in Pennsylvania considered in point on an express agreement in the assignment of a bond that the assignor would stand security to the assignee for the payment of it, Rudy v. Wolf &c. 16 S. & R. 79; or would guarantee the payment of it, Johnston v. Chapman, 3 Penrose & Watts 18; Joett v. Hoge, 2 Watts 128. The assignor was considered not as a principal debtor, liable in the first instance to the assignee, but as undertaking to him for the payment of the money if due dili gence was used to recover it from the obligor. It matters not whether the assignment be made before or after the time fixed for payment. In either case the assignor is liable on the assignment only when the obligor is insolvent and due diligence has been used by the assignee to enforce payment. Demand on the obligor and refusal by him to pay, though coupled with the fact of his non-residence, are not enough, when there has been given as collateral security a mortgage to which the assignee might have resorted. 3 Penrose & Watts 18. But there is a right of action on the assignment if nothing was due on the instrument assigned, Ayres v. Findley, 1 Barr 501; or if it had become due at the time of its being warranted to be collectable, and the maker was then insolvent, McDoal v. Yeomans, 8 Watts 361; or though it had not become due at the time the guaranty of its payment was made, if the maker was insolvent at its maturity. Campbell v. Knapp, 3 Harris 27. It has been so held, although the guaranty was not inserted in the instrument of assignment; but merely proved by parol. Overton v. Tracey, 14 S. & R. 327.
In New York, an undertaking to guaranty the collection of the money specified in a note, or to warrant its collection, or a warranty that the note is good, is equivalent to a guaranty that the note is collectable by due course of law. Taylor &c. v. Bullen, 6 Cow. 624; Cumpston v. McNair, 1 Wend. 460; Lamourieux v. Hewit, 5 Id. 307; Curtis v. Smallman, 14 Id. 231. On such a guaranty the parties to the note must be prosecuted with due legal diligence before resort is had to the guarantor. Moakley v. Riggs, 19 Johns. 69; Kies v. Tifft, 1 Cow. 98; Thomas v. Wood, 4 Id. 173; 1 Wend. 461.
19. Whether assignor or guarantor is liable to any other than the party with whom he contracted. Rule in equity. Ef fect of statute of Virginia.
Generally the liability of a guarantor is not as an endorser
of negotiable paper but as a party to a special contract, and the action on the contract is in the party with whom the contract was made. A promissory note, payable to S. B. or bearer, being sold to one T previous to its becoming due, the vendor endorsed thereon, and signed, a writing warranting the collection of the note. T sold the note to C who transferred it to I, who sold it to the person in whose name the action was brought on the guaranty. It was held in New York that the action could not be maintained on the guaranty in that name. Lamourieux v. Hewit, 5 Wend. 307. This decision was followed in Pennsylvania. McDoal v. Yeomans, 8 Watts 361.
The right of action in Virginia and Kentucky, on the implied contract of the assignor, rested on similar ground; the privity between him and his immediate assignee. It was considered that the law raised a promise between them; but no privity existed between an assignor and a remote assignee; and there was no promise implied on which an action could be maintained by the latter against the former. Mandeville &c. v. Riddle & Co. 1 Cranch 290; appendix, note A, p. 367-461; Dunlop v. Harris, 5 Call 55, 6; Hooe v. Wilson, Id. 75; Mardis v. Tyler, 10 B. Monroe 378.
Equity, however, would entertain a bill by the last assignee against all the assignors, when the legal remedy was obstructed, and would decree payment to be immediately made by the person ultimately responsible to the person actually entitled to receive the money. Riddle & Co. v. Mandeville &c. 5 Cranch 322; Bank of U. S. v. Weisiger, 2 Peters 332; McFadden v. Finnell &c. 3 B. Monroe 121; Turneys v. Hunt &c. 8 Id. 408.
The right of the last assignee to reach, in equity, a remote assignor, did not rest on the ground that he had acquired the right of recourse of every intermediate assignor. For, if that proposition were true, he might recover in equity from the first assignor a much larger sum than he was entitled to recover from his immediate assignor. The assignee sought relief in equity because his remedy at large against his assignor was unavailing on account of his insolvency; and he was substituted to the rights of his assignor against a prior assignor. Turneys v. Hunt &c. 8 B. Monroe 410.
Such being the nature of the right in equity, the Virginia statute, giving a remedy at law against a remote assignor, proceeds on the same principle. 1806, 7, p. 16, ch. 28, §3; 1 R. C. 1819, p. 484, $6. In chapter 144 of the Code of 1849, p. 583, next after § 14, cited ante, p. 262, is the following:
§15. Any such assignee may recover from any assignor of such writing; but only joint assignors shall be joined as defendants in one action, and a remote assignor shall have the benefit of the same defence as if the suit had been instituted by his immediate assignce.
ACTION ON A PROMISE TO GUARANTY.
1. Between whom the contract of guaranty is.
Letters of credit usually contain a request that some one will advance money or sell goods to a third person, and an undertaking on the part of the writer that the debt which may be contracted by the third person in pursuance of the request shall be duly paid. These letters have been divided into two classes, general and special. They are general when addressed to any and all persons, without naming any one in particular. They are special when addressed to a particular individual or firm by name. When the letter is addressed to
all persons, it is, in effect, a request made to each and every one of them, and any individual may accept and act upon the proposition contained in it; and on his doing so, that which was before indefinite and at large becomes definite and fixed: a contract immediately springs up between the person making the advance and the writer of the letter, and it is thenceforward the same thing in legal effect as though the name of the former had been inserted in the letter at the beginning. Bronson, J. in Birckhead v. Brown, 5 Hill 642, 3; Laurason v. Mason, 3 Cranch 492; Watson's ex'ors v. McLaren, 19 Wend. 565; S. C. 26 Wend. 425.
When the letter is special, or in other words addressed to a particular individual, he alone has the right to act upon and acquire rights under it. If any one else attempts to accept and act upon the proposition contained in the letter, he comes in as a mere volunteer; and he cannot, by thus thrusting himself forward, create any legal obligation on the part of the writer. Robbins v. Bingham, 4 Johns. 476; Walsh &c. v. Bailie, 10 Id. 180; Birckhead v. Brown, 2 Hill 643; Taylor &c. v. Wilmore &c. 10 Ohio 490.