Frederick-Town Savings Institution v. Michael

Citations

• 81 Md. 487
• 32 A. 189
• 1895 Md. LEXIS 61

Syllabus

<p>Insolvency — Discharge of Surety on Note by Acceptance of Mortgage and New Note — Preferences—Liability of Married Woman Signing Point Note with her Husband.</p> <p>The plaintiff bank was the holder of promissory notes for money loaned to W. upon which the defendant was liable as surety. In response to plaintiff’s demand for the renewal, with additional security, of the notes, some of which, including the one sued on in this case, were overdue, W. gave to the plaintiff bank the joint note of himself and wife for the principal sum of his entire indebtedness, and executed a mortgage to the bank of his real estate to secure the payment thereof, in which his wife united; and thereupon the former notes were delivered by the plaintiff to W. The bank knew at the time that W. had failed to pay his debts at maturity. Within four months after this transaction W. applied for the benefit of the insolvent law, and upon a bill filed by his trustee in insolvency, the mortgage from W. and wife to the plaintiff was vacated and annulled, as being a preference under the insolvent law, and it was decreed that the original promissory notes should ’be returned to the plaintiff bank. This action was instituted on one of them against W. and the defendant, and the latter pleaded payment and satisfaction. Held,</p> <p>i st. That since the plaintiff had voluntarily accepted the note and mortgage of W. and his wife in lieu of the note sued on, and with knowledge of W’s. precarious financial condition, the liability of the defendant as surety was extinguished.</p> <p>2nd. That although the mortgage was vacated as a fraudulent preference under the insolvent law, yet the note secured by it remained valid, and the liability of W’s. wife as joint maker thereof was unaffected.</p> <p>A married woman may become surety on a note executed by her jointly with her husband, and in such case it is not necessary, in order to hold her liable, that the consideration of the contract should enure to her bene