Smith v. Bibber

Libbey, J. At the time the note sued on was made, it was the settled law of this state, as decided by this court, that a promissory note indorsed and transferred by the payee, before due, as collateral security for a pre-existing debt, with no new consideration between the parties therefor, was subject to any defense that might be made as between the ' original parties. Bramhall v. Beckett, 31 Maine, 205 ; Nutter v. Stover, 48 Maine, 169. The defendant set up in defense payment of the note to the payee before it was indorsed to the plaintiff. As between the payor and payee this is a good defense. The contention between the parties at the trial was whether this defense could be set up against the plaintiff to whom the note was indorsed before due [38] as collateral security for a pre-existing debt, as the defendant claimed, without any new consideration. On this point the court below instructed the jury as follows: “Now, in order for the plaintiff to recover he must satisfy you, in the first place, that the note in suit was placed with the plaintiff to secure the whole indebtedness. Second, either that there was a valid consideration for the note, and that it was still unpaid at the time the plaintiff received the note, or that the plaintiff, when he received the note from Phinney & Jackson, extended some forbearance to them. If he has proved the first point, that the note was left to secure the whole indebtedness, and either of the latter points, — either that it was a valid note, or that he extended some forbearance to Phinney, if it was an accommodation note, — then he is entitled to recover.” * * * “Now on the matter of forbearance, it is not necessary that any specific time should be agreed upon between Phinney and Smith during which Smith should forbear to sue; if he went to him and said ‘unless you give me collateral security for this note I shall sue and attach your property,’ and in consequence of that statement this collateral was given, and he did forbear to sue, that is a sufficient consideration for the taking of this collateral, and Smith under these circumstances, in tailing the note, -would be considered a bona fide holder for value.” Under this instruction the jury were authorized to find a valid contract on the part of Smith to forbear a suit against Phinney and Jackson, without any promise on his part to do so, but that the delay to bring an action was sufficient. We think this was error. Without a promise to forbear, Smith deprived himself of no right or remedy, against Phinney & Jackson. To constitute a legal contract to forbear there must be a valid promise to do so, so that for some time, the holder of the debt has no right to maintain an action on it. It is not sufficient to shojw that he did forbear. Mecorney v. Stanley, 8 Cush. 85 ; Robinson v. Gould, 11 Cush. 55; Manter v. Churchill, 127 Mass. 31; Berry v. Pullen, 69 Maine, 101; Turner v. Williams, 73 Maine, 466; Lambert v. Clewley, 80 Maine, 480. The rule which requires some new consideration to protect the [39] indorsee who take.s the note as collateral for a pre-existing debt, against such a defense as is net up here, is admitted as the settled law of this state when the note in suit was made. Smith v. Hiscock. 14 Maine, 449 ; Nutter v. Stover, 48 Maine, 169. But it is claimed by the counsel for the plaintiff that it is in conflict with the rule established by the Federal courts, the court of Massachusetts and many of the other states, which is well shown by tlie many authorities -cited in tlieir brief; and they urge tlie court to overrule the cases in this state, and establish here the rule held by them which requires no new consideration, and thereby bring this state in accord, upon tbis question of commercial law, witb what is claimed to be tlie rule established by the greater weight of authority. If the question was an open one here we should be inclined to adopt tlie federal rule as the one best sustained by principle and authority. But it has been so long settled the otlier way and acted upon in this state, we do not feel that we should be justified in reversing it. Mxcep ti ons sustained. Peters, C. J., Dan forth, Virgin, Emery and Haskell, JJ., concurred. '