State National Bank v. Harris

Smith, C. J., (after stating the facts). The sole question to be determined, is as to the effect of the agreement that the indebtedness incurred by Gatling to his surety upon the latter’s discharge of the execution, should be applied to that in possession of the Bank, and the amount entered thereon as a credit, in removing the statutory defence arising from the lapse of time. Was it equivalent to an actual payment within the meaning of §172 of The Code, which leaves in force the previous law as to the effect of a part payment of a debt? Grenn v. The College, 83 N. C., 449. The present controversy assumes a very singular aspect. The creditor is not refusing to give effect to the agreement to consider his debt paid pro tanto, but declares that result' to have been brought about, as if what is termed an execu-tory, had become an executed contract, accomplished by the entry of the credit. The debtor seeks to repudiate his own action, and deprive himself of what it is admitted he is entitled to. Undoubtedly, if the relations of the parties were reversed, and the statutory obstruction was not in the way of the debt to be reduced, while it did take away from the surety debtor his remedy by action on the promise of his principal, 'whether implied or express, there would be no hesitancy in treating the case a direct reducing of the plaintiffs’ demand, so that no detriment should come to him from delay. Why should the result be different for the benefit of a debtor repudiating his contract and against *121 the creditor willing and ready to comply with his own? No reason occurs to us for a change in applying the rule in each case. It is not the mere endorsement of a credit upon the note, even when supported by a counter-claim by the holder, which will have the effect of reviving the liability. Woodhouse v. Simonons, 73 N. C., 30; but an actual payment made and received as such, of which the entry is evidence, as the fact may also be otherwise shown. “ A partial payment,” to repeat the words used in the opinion in Hewlett v. Schenck, 82 N. C., 234; “though the evidence need not be in writing, being an act, and not a mere declaration, revives the liability, because it is deemed a recognition of it and an assumption anew of the balance.” To the same effect in Riggs v. Roberts, 85 N. C., 151. This recognition under former adjudications, and by force of the qualifying words of the statute, which requires a new promise or acknowledgment to be in writing, is equally efficacious in preserving or restoring the remedy when lost by lapse of time. Why should not like consequences flow from an agreement to apply one existing debt to another, even in case of a neglect to make the promised entry on the .security? Is it not as clear and positive an admission of responsibility for the residue, as if the money due from Gatling had been handed to Bridgers in extinguishment of his •claim for money paid as surety, and immediately thereupon it had been handed back to the former in part’ payment of his bond? Is not the same result reached in either case, and the payment équally effectual? The proposition in general terms is this: A has a bond against B, and becomes indebted to B in a smaller sum. They meet and agree that the claim of B shall be discharged by appropriating what is due from him to A to what he owes A. It is not a contract for something to be done in the future, but a present self-executing mutual contract, which at once, for all practical legal purposes, as between *122 them, extinguishes the one and reduces the other debt. Tt operates, eo instanti, and so would the transaction be interpreted, should either undertake to enforce his satisfied demand. Had Bridgers been a principal and not a surety, so that his liability would continue for ten years, while his counter-demand would be obstructed after three years, Gatling would not be allowed to recover his unreduced debt, but would be entitled to what remains only. The transaction between them would only be deemed a partial payment of the larger demand, and if so, why not for the benefit of the other party ? In our opinion, it is a payment, and in the meaning of the statute such a recognition of the debt as removes the bar. There is no error, and the judgment must be affirmed. No error. Affirmed.