Shepard v. Phears

Walker, J. It is somewhat difficult to ascertain the legal relation of the parties to each other and the instruments sued on in this case. Suit is brought on a promissory note. The original appears to have been lost, but a copy of the note, as well as of the guarantee written on the back of it, is proven by the affidavit of J. M. Onins. The indorsement is in these words: “I guarantee the collection of the within note: C. B. — 770 — Shepard.” It does not appear whether this guaranty was made at the time the note was executed by Chris-man, or not. There is no date to the guaranty, nor is any time averred in the petition when it was made, nor is there any consideration for the guaranty acknowledged or proven. The note was made on the first of October, 1861, and fell due one year from date. This suit was brought on the seventh of March, 1867, nearly five years after the maturity of the note ; the maker is still living, and is sued in this action with the guarantor. There is no averment of the insolvency of the maker of the note ; and the note never was protested, nor is there any averment of notice to the guarantor of its non-payment. One who guarantees the collection of a note under takes that the note should be collected from the maker, within a reasonable time after its maturity. It is said by Judge Parsons, in his work on Mercantile Law, page 69, that a creditor may give his debtor some accommodation or indulgence, without thereby discharging his guarantor. (Huffman v. Hurlburt, 13 Wend., 377; Davis v. Huggins, 3 N. H., 231; Bellows v. Lovell, 5 Pick., 307; Erie Bank v. Gibson, 1 Watts, 143; Cope v. Smith, 8 S. & R., 110.) It would seem just, however, that he should not be permitted to give him any indulgence which would materially prejudice the guarantor. (Rowe v. Pulver, 1 Cowen, 246; Herrick v. Borst, 4 Hill, 650; Miller v. Burkey, 27 Penn., State, 317.) Treating Shepard, then, as a guarantor, there should be some consideration shown for his undertaking, or he is not liable, nor would he be liable, after so long a delay as four or five years, during which time it does not apirear that any effort whatever was made on the part -of Phears to collect the money from Chrisman. — 771 — If Shepard is to be treated as an indorser, then the plaintiff should have brought his suit to the first term of the court after maturity of the note, or to the second term, explaining the delay. Regarding Shepard, then, either as a guarantor or an indorser, he is not liable for the payment of the note, and the judgment of the district court, as to him, is erroneous, and will be reversed and the cause dismissed. The judgment, as to Chrisman, is affirmed. Walker, J. This case comes again before us on a motion for rehearing. As we said in our opinion hereinbefore delivered, the only difficulty which we have in the case is in the proper determination of the relation of the parties. But we think it settled upon authority that C. B. Shepard must be treated as a guarantor, from the express language of his undertaking, and he must be treated as a guarantor, not of the payment of the note, but of the collection or collectibility of the note; for he who guarantees the collection of a note, guarantees no more than that the note can be collected, with proper diligence, at its maturity, or within a reasonable time thereafter; and if, when the note matures, the payee or holder does not use ordinary diligence in the collection, the guarantor will be discharged. This is the principle of our decision, and it is too well supported by authorities to require their recapitulation here. We can but think that counsel, in their very vigorous and learned argument for rehearing, have mistaken the principle involved in the case, and decided. And it does appear to us that they have also mistaken the doctrine of Cook v. Southwick, 9 Texas, 617, and Carr v. Roland, 14 Texas, 275. In the latter case, the court say : “A guarantor or — 772 — surety on a promissory note, as distinguished from an indorser, is not entitled to require that suit should be brought against the maker to the first term of the court after the maturity of the note. Mere forbearance to sue the principal, or mere delay, without fraud or agreement with the principal, does not discharge the surety (who is not the indorser of a note, or drawer of an accepted bill).” In this case the court appears to have been in some doubt whether Myers and Carr were to be treated as guarantors or as indorsers. Their indorsement was simply in blank; its nature was not stated, qualified of limited; all Of which is done in the case now before us. In the case of Cook v. Southwick, 9 Texas, 615, Hubbell indorsed the note of Cook in blank, and there was not the least difficulty in determining the legal relation of the parties; and the court say, “Where a person, not the payee, signs his name upon the back of a promissory note, at the time of its inception, without any words to express the nature of his undertaking, he is liable as an original promissor, or as a surety; but it is competent for the person so signing to show by oral or ' other evidence the real obligation intended to be assumed at the time of signing.” These cases are • so essentially different from the one at bar, that no authority whatever can be drawn from the former, to apply to the decision of the latter; for in the latter case the undertaking is specific, and is brought clearly within the rule of guaranty by legal definitions. But we say again, suppose we treat Shepard merely as an indorser (and we should be stultifying ourselves to treat him as a maker of the note, in the face of the expressed terms of his guaranty). Then, in the case of Cook v. Southwick, the court say, “Where the indorsee of a note has complied with the statute by bringing suit — 773 — against the principal at the first term of the court, the statute is fulfilled.” Less than this, we take it, would not fulfill the statute, unless suit were brought at the second term, and good reason given for not bringing it at the first. But counsel assume that any application of this law, during the time suit should have been brought to fix the liability of Shepard, if he were an indorser of the note, would be in violation of the forty-third section of the twelfth article of the Constitution, and of the interpretation we have given to this section in Crawford v. Bender. We think a proper understanding of the nature of the statute requiring suit to be brought at the first term, or at the second with a showing of cause, would exonerate us from the necessity of an examination of such sophistry, if, indeed, it be less than an attempt at travesty upon the former opinion of this court. The law in question is not a law of limitation. It is a change of the rule of the common law, or rather of the law merchant, under which the liability of indorsers of negotiable instruments is to be fixed. It would be just as reasonable to say, that the rule requiring notice of non-payment and protest, or the rule giving three days grace for the maturity of a note, must be regarded as statutes of limitation, as to hold that the statute of the State of Texas, which provides another mode of fixing a liability upon certain parties to negotiable paper, should be held to be a statute of limitations, passed by the Legislature of Texas, when the rule itself is a rule of the law merchant, and was in force in the commercial world before the State of Texas was thought of, as an independent commonwealth. In the law requiring suits to be brought at the first or second term of the court, there is no limitation as to — 774 — time. The limitation is only as to the terms of the court, and they may be held three times in one year, or one time in three years; and this brings us to consider so much of the argument, in support of the motion, as relates to diligence in bringing this suit, for herein is history violated, and the well known fact, which must be officially noticed by this court, is contradicted. It is well understood that the courts of the State were open to litigants and suitors since the Summer of 1865, and two terms of the district court were holden annually. This suit was not brought until the seventh of March, 1867. A laborious re-examination of this case, on the motion for rehearing, has indubitably confirmed us in the correctness of our former opinion. The motion is denied. Reversed and dismissed as to the guarantor.