Watkins v Flanagan
| Jurisdiction | England & Wales |
| Judgment Date | 29 January 1824 |
| Date | 29 January 1824 |
| Court | Exchequer |
English Reports Citation: 130 E.R. 166
IN THE EXCHEQUER CHAMBER.
S. C. 8 Moore, 480; 13 Price, 24: below, 3 B. & Ald. 186.
[413] (!n the exchequer chamber.) watkins v. flanagan. Jan. 29, 1824. [S. C. 8 Moore, 480; 13 Price, 24 : below, 3 B. & Aid. 186.] A surety under an annuity-deed, who has redeemed the annuity subsequently to the bankruptcy and certificate of the grantor, may maintain an action against the grantor for the sum paid on account of redemption, although the grantee may have proved the value of the annuity under 49 G-. 3, c. 121, s. 17. Error from the Court of King's Bench. The declaration was in debt on an annuity bond, to which there were several pleas and demurrers. The question arose upon the effect of the eighth and seventeenth sections of the statute 49 G. 3, c. 121, and the facts upon which it turned may be thus collected from the pleadings. On the 5th March, 1811, the Plaintiff below, as surety for the Defendant below, joined with him in the execution of an indenture, whereby the Defendant below granted an annuity of 3001. per annum to James Martin, and also a warrant of attorney to confess a judgment for securing the payment of the annuity. By this indenture the annuity was made redeemable by the Defendant below and Plaintiff below, or either of them, if they, or either of them, should deem it expedient, on payment of the sum of 21751. with such arrears as might happen to be due. The Defendant below executed a bond to Plaintiff below of the same date, wherein the indenture was recited, and of which the condition was, that the Defendant below should keep the Plaintiff below harmless and indemnified from the payment of the annuity, and all loss, damages, and expences, and from all the covenants, conditions, provisoes, declarations, and agreements, in the indenture and warrant of attorney contained, and from the payment of all sums of money to grow due thereon, or become payable in respect 1 BITO. 414. WATKINS V. FLANAGAN 167 or by virtue thereof, and from all actions, &c. The Defendant below became bankrupt in November, 1812, and obtained his certificate in January, 1813. Martin [414] proved, under the commission, the arrears then due, and also proved, in virtue of the seventeenth section of the said statute, the value of the annuity ascertained as therein directed, and tfee value so proved exceeded the sum of 21751. This proof was made without communication with the Plaintiff below. After this proof, and after the Defendant below bad obtained his certificate, but before a final dividend had been made of big effects, the Plaintiff below, for his own sake, redeemed the annuity according to the terms of the deed; and now brought this action to recover from the Defendant below the sums paid for the redemption and arrears. Various breaches of the condition of the bond were assigned ; the first, for non-payment of a sura advanced to cover arrears due before the bankruptcy ; the others, for non-payment of arrears accruing subsequently, and of a sum advanced by the Plaintiff below to redeem the annuity. The Defendant below pleaded bis bankruptcy and certificate generally and specially. To these pleas there was a demurrer and joinder in demurrer, upon which the Court below gave judgment for the Defendant below as to the first breach of the condition of the bond, and for the Plaintiff below upon the other breaches. Platt, for the Plaintiff in error. Demands proveable under a commission of bankrupt being barred by the bankrupt's certificate, if the Plaintiff below could have proved under the commission of the Defendant below the demand made under the various breaches of condition subsequent to the first, the certificate of the Defendant belovr is a bar to that demand. Whether or no the Plaintiff below could have so proved, must depend on the construction to be put on the 49 G. 3, c. 121. By the eighth section of that statute, any person who shall be surety for, or be liable for any debt of the bankrupt, and who shall have paid the debt [415] (even after the commission shall have issued,) may, if the creditor shall have proved his debt under the commission stand in the place of the creditor, as to the dividends upon such proof; and if the creditor shall not have proved, such surety may prove his demand in respect of such payment, ae a debt under the commission. Now the Court below, in holding that the plaintiff below, by redeeming as a surety the annuity granted by the bankrupt, did not pay any debt of the bankrupt, arid therefore could not prove such payment under the bankrupt's commission, have put too narrow and technical a construction upon the word debt, which, with a view to the beneficial operation of the statute in favour of the bankrupt, must be taken to mean any charge or incumbrance to which he was subject. That the annuity with which the bankrupt was charged was equivalent to a debt, and that the redeeming it, had the same effect as paying off a debt, is manifest from the circumstance that, after the surety had redeemed the annuity, the grantee could no longer have any claim against, or receive any dividend out of the bankrupt's estate: but the surety who had so far relieved the bankrupt's estate of a claim against it, ought in justice to be entitled to prove a debt to the same amount; and taking the whole clause of the act of parliament together, this appears to have been the intention of the legislature. Admitting, however, that the Plaintiff below could not prove under the commission the sum ha had paid for redeeming the annuity, still, if the grantee of the annuity, by electing to prove under the commission, has discharged the bankrupt from all future demands in respect of the annuity, his accessory demand against the Plaintiff betaw, aa surety, follows the event of the principal demand, and like that falls to the ground ; whatever, therefore, the surety after this pays the grantee in respect of the annuity, he pays in his own wrong, and cannot claim it again at the hands of the bankrupt. [416] Now the grantee, by electing to prove under the commission the value of his annuity pursuant to the seventeenth section of 49 Gr. 3, c. 121, does, under the express words of that section, thereby discharge the bankrupt, if he obtains his certificate, from all demands whatever in respect of such annuity; and the fourteenth section contains an enactment which precludes a party from proceeding in an action where he has elected to prove under a commission. If it should be argued, that the discharge of the bankrupt and of the principal demand does not necessarily, and in all eases, discharge the surety and the accessory demand, at least it may be contended, that it has this effect under the circumstances of the present case. 168 WATK1NS ^.FLANAGAN 1BING.417. First, because the bankrupt's estate being burthened with the demand arising out of the grantees proving the value of his annuity under the commission, and the surplus of the bankrupt's estate, if any, being diminished to that extent, the benefit which the grantee may derive from the proof ought not to exceed the burthen imposed ; with the advantage of proof, whatever it may be, he must take the disadvantage of foregoing all further claim against the bankrupt, and must be satisfied with obtaining the same proportion of his claims as the other creditors. But if after such proof the grantee has any further claim in respect of the annuity, and the surety is justified in paying it off, the surety may afterwards recover from the bankrupt the amount paid,...
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