Wagman v. Hoag

By the Court, Hand, J. The defendant insists that the plaintiffs should have declared upon the special agreement and not upon the notes. That is necessary sometimes, where the liability of the defendant is solely upon an agreement collateral in terms. (1 Saund. 211, a. b. Northrup v. Jackson, 13 Wend. 85.) But in this case, the suit is directly upon the notes, which [238] import consideration; and the questions in the case arise upon the defense. Many actions have been sustained upon notes, held as collateral security. (See Chitty on Bills, 845.) The defendant further insists, that, as a presumption of law, the notes are not collateral security for any liability accruing after they became due. That it appearing that Losee paid all demands for which the plaintiffs were liable during that time, these notes cannot be held as a continuing guaranty for what the plaintiffs might become liable for after that period. Such, indeed, seems to have been the opinion of Lord Tenterden, in the case of Blocksome v. Neal, cited by Mr. Chitty in his work on bills, (p. 245, n.) If this is so, I very much doubt whether the evidence of the defendant’s admissions, said to have been made on the 20th or 21st of March, 1849, is sufficient to rebut that presumption. Particularly, as one of two witnesses to that conversation, did not hear the important part of the admission; and the evidence of the widow and daughter of Losee tends to show that there was a writing between the parties, specifying for what demands these notes were indemnity; and that the Knickerbacker notes were among them. Woodroffe v. Hayne, (1 C. & P. 600,) is not opposed to Bloxsome v. Neale ; for the same debt continued. The agreement* must be explicit, to charge one with the debt of another, and particularly by a continuing guaranty. (Russell v. Clark’s Ex’rs, 7 Cranch, 69. Haywood v. Watson, 4 Bing. 496. Webb v. Dickinson, 11 Wend. 62. Whitney v. Groot, 24 Id. 82. Kay v. Groves, 6 Bing. 276. 3 B. & Ald. 593. 5 C. & P. 795. 2 Chit. R. 205.) In this case, it appears that Losee had paid several thousand dollars, for which the plaintiffs were liable, after the date of this note and before the liabilities in question existed. Perhaps, however, the question, as to what demands they were applicable to, was in a degree one of fact for the referee. But the objection that the plaintiffs gave time to Losee, it seems to me, is conclusive against them. The contract made on the 7th March, 1849, between the plaintiffs and Losee, was a suspension of all right of action, if any then existed, upon these notes, for at least 15 days. And no consent of the defendant, [239] express or implied, is shown or pretended. If this was so, hy well settled principles, the defendant was released. (Fellows v. Prentiss, 3 Denio, 572. Bangs v. Strong, 10 Paige, 11. S. C. 7 Hill, 250. S. C. 4 Comst. 315. Combe v. Wolf, 8 Bing. 156. Miller v. McCan, 7 Paige, 451. Vilas v. Jones, 10 Id. 76.) Taking new security from the principal debtor, does not discharge the surety, unless time is given. (Elwood v. Deifendorf, 5 Barb. 398. U. S, v. Hodge, 6 How. 279. Gahn v. Neimcewicz' Ex’rs, 11 Wend. 312. Twopenny & Roys v. Young, 3 B. & C. 208. Com’rs of Berks Co. v. Ross, 3 Binn. 520. Theo. Pr. and Sur. 86, No. 164. Melville v. Glendenning, 7 Taunt. 126. Bell v. Bank, 3 M. & G. 258.) And the agreement, of course, must be valid and binding. (Gahn v. Neimcewicz, supra. Philpot v. Briant, 4 Bing. 717. Brickwood v. Anniss, 5 Taunt. 614. Burge, 204. Davy v. Prendergrass, 5 Barn. & Ald. 187. Sprigg v. Bank of Mount Pleasant, 14 Peters, 201.) And it seems, that the surety will not he discharged, if the contract reserves all the rights of the creditor against the surety. For in that case, the surety may pay immediately, and forthwith proceed against the principal; even though the creditor accept a composition. (Ex parte Glendinning, 1 Buck, 517. Smith v. Winter, 4 M. & W. 454. Boultbee v. Stubbs, 18 Ves. 20. Burge, 210. Kearsley v. Cole, 16 M. & W. 128. Owen v. Homan, 3 Eng. L. And. Eq. R. 125. Gifford, ex parte, 6 Ves. 808. And see Maltby v. Carstairs, 1 B. & C. 735; S. C., 1 My. & K. 562, note; Hoveden's note to Rees v. Berrington, 2 Ves. Jun. 540; Hall v. Hutchins, 3 My. & 426; Reporter's note to Dunn v. Slee, 1 Holt's N. P. C. 399.) And it is said the creditor may, in some cases, retain securities in his hands, without such reservation. (Theo. Pr. and Sur. 145, No. 219. Thomas v. Courtnay 1 Barn, & Ald. 1. Note to Lewis v. Jones, 4 B. & C. 576. But see Hubbell v. Carpenter, 5 Barb. 523; S. C., 2 Id. 484; Owen v. Homan, supra.) And a conditional agreement to take effect upon the act of the debtor, which he neglects to perform, will not discharge the surety. (Burge, 205.) Burge cites Vernon v. Turley, (1 M. [240] & W. 316,) and Badnal v. Samuel, (8 Price, 321;) but those were rather unaccepted propositions, than a binding stay to give time to fulfill. One was the case of bail, and the other of indorsee. Proposals for security bind no one, unless they can be made use of to impute laches. (Eyre, Ch. J. in Walwyn v. St. Quintin, 1 B. & P. 652. Theo. Pr. and Sur. 130, No. 209.) But a valid agreement with the pricipal debtor to execute a release, it seems, in equity will discharge the surety. (Hawkshaw v. Perkins, 2 Sioanst. 539.) And so will a contract, which, in its consequences, may have the effect to give time. (Burge, 204.) In this case, a deed was executed and delivered as an escrow; and the parties entered into an agreement under seal, one to sell, and the other to purchase, a large amount of real estate; to be paid for by taking up a note of $1000, still outstanding against the parties ; and also, $19,000 in judgments against the parties; in all of which, probably, the plaintiffs were sureties for Losee; and he was to cancel all other liabilities and incumbrances against the parties and against this property. And, on so doing, these notes were to be given up; fifteen days being given to Losee to fulfill the contract. It is said, giving time for payment, must operate upon the instrument on which the surety is liable. (U. S. v. Hodge, 6 How. 282.) I think that is this case. Had the plaintiffs sued the note for $1000, and the judgments to the amount of $19,000, and then prosecuted Losee for those sums during the fifteen days, they would have violated their agreement. And I think they could not have prosecuted him, or the defendant, on these notes, within that time, in consequence of such payment. The defense here presents a stronger case than that in Bangs v. Strong, (supra.) There was a judgment against the surety; only one of the plaintiffs executed the agreement; no, time was fixed for the fulfillment of the contract, and the judgment was to remain as security for the balance. Here the notes were to be cancelled. Both contracts were wholly executory. Here the deed was executed and delivered to a third person, and indeed recorded. In that case, not a day was given to make the conveyances, and yet, from the [241] nature of the case, the appraisal and conveyance of the land must necessarily take time. The principles of law that exonerated the surety there, and which were recognized and enforced by the chancellor, and the court for the correction of errors, and lastly, by the court of appeals, unquestionably apply to the case now under consideration. The fact that the plaintiffs were the sureties for, instead of the creditors of Losee, makes no difference in principle. (Burge, 159.) Nor can the plaintiff make the objection that the defendant may possibly be liable in equity to these creditors of Losee and the plaintiffs. [Fulton General Term, September 6, 1852. Willard, Hand, Cady and C. L. Allen, Justices.] It has been said, that a subsequent consent will revive the liability. (Smith v. Winter, 4 Mees, & Welsb. 454. Mayhew v. Cricket, 2 Swanst. 85. Tysons. Cox, Tur. & R. 395. Burge, 209.) Admitting this to be so, and taking the language of the defendant at the interview with Green and Dennis, in the most favorable view for the plaintiffs, there is no proof that he then had any knowledge of this transaction. (West v. Ashdown, 1 Bing. 164.) The fifteen days had not then expired; the defendant lived in another county, and perhaps neither Green or Dennis knew of the transaction. It was formerly supposed this defense could not be made at law. (Davy v. Prendergrass, 5 Barn, & Ald. 187. Burge, 211. Sed vide Id. 212, and cases there cited.) But that objection, if it would ever avail in an action on a note, will not now, under our present system. Whether there may not be cases in which the surety must seek relief as plaintiff, it is not necessary now to inquire. The judgment must be reversed, and the cause sent back to the referee, with costs to abide the event of the suit.