Okie v. Spencer

The opinion of the Court was delivered by Kennedy, J. The defendant here having endorsed the note in question, for the accommodation of the drawer, and therefore being regarded as a surety merely, it is admitted that if further time was given, when it fell due, by the holder to the drawer, for the payment thereof, the defendant is thereby discharged. And the only- question to be decided is, whether from the facts set forth by the defendant in his special plea, to which the_plaintiff has demurred, the law will imply an agreement made on the third of May, the day the note became payable, by the holder of it, to give further time until the sixth of the same month, to the drawer for the payment thereof. Had the defendant pleaded the general issue only, and under it, as he certainly might, given evidence of the facts set forth in his special plea, and the truth of them had been clearly established by the evidence or the admission of the' plaintiff, without more having been shown to the jury, it would undoubtedly have been the duty of the Court, to have instructed the jury, that the facts thus established, implied an agreement, on the part of the holder of the note, for an adequate consideration received by him, to give time to — 257 — the drawer for the payment of it, without having the consent of the defendant; and that the latter was thereby discharged from his liability as endorser. In the absence of all proof to the contrary, it cannot be supposed here, that the drawer, when the note had become payable, could .have had any other motive for giving the check of himself and his partner, securing the payment of it at the expiration of six days, than that of procuring indulgence for that space of time upon his note from the holder of it. That such, too, must have been the understanding of them both at the time, seems to be the necessary inference from the facts stated, if our judgments are to be guided in this respect by what we know to be the common and ordinary motives which generally influence and produce such arrangements. Marshall, the partner of the drawer of the note, does not appear to have been bound for the payment of it in any way before it fell due, which tends generally to strengthen, and in truth to make the inference that the check was given to procure further time for the payment of the note; irresistible. And although the check cannot be considered as having been taken in satisfaction of the note; nor as having extinguished it; yet the right of the holder to proceed against the drawer to enforce the payment of it, by suit, was thereby suspended until after the expiration of the six days. It was in effect changing, without the consent of the defendant, the terms upon which he had agreed as endorser to become liable for the payment of the note, and depriving him of the right to pay the note at maturity, if the drawer failed to do so, and then to sue him immediately for it, and therefore amounted to a release of him from his liability. He had guaranteed by his endorsement, the payment of the note on the 3d of May, 1833; and it was not competent for the holder and the drawer without his concurrence, to extend his guaranty to the' 9th of that month, which would clearly have been the effect of their agreement and the giving of the check, if the defendant were still to be held liable for the payment of the note. That the holder, by accepting the check, put it out of his power to proceed on the note, by suit against the drawer, until after the six days, cannot, as it appears to me, be controverted upon any ground that would seem to' be consistent with the nature of the transaction, and what must have been the intent of the parties. Had.the drawer given his own check merely, for the payment of the note at the expiration of the six days, there might have been some colour for saying that he had not thereby precluded himself from bringing .suit on it during that period; because it might then have been argued with great plausibility, if no't correctly, that he had obtained by it no additional security, and consequently no adequate consideration to make a promise of indulgence binding: that by the check he acquired nothing except the personal responsibility of the drawer, which he had before by virtue of the note; and therefore had he even made an express promise of indulgence for the six days, it might have been alleged, that — 258 — he would not have been bound by it for want of a sufficient consideration; but as the case is presented by the special plea and demurrer, no such argument can be advanced or pretended: for by the check, the holder of the note received the additional responsibility of Marshall, as a security for the payment of it: and it would therefore seem almost impossible to imagine any other reason for giving such additional security, than that of procuring an extension of payment for the six days. It is true, that it may seem to have been but a short indulgence; but being a suspension of the right of the holder of the note, to sue the drawer upon it during that period, it operated as effectually to discharge the defendant from his liability, as -if it had been six years: for in either case, to hold the defendant to be still bound by his endorsement, would be making him liable upon terms, and in short, for the fulfilment of a contract, different from what he had agreed to. The time of payment mentioned in a note, is always a very material part of it; and if it may be enlarged without the consent of the endorser, and he notwithstanding, be held liable upon his'endorsement, there is no reason why the amount may not also be enlarged: but it is obvious, that nothing of the kind can be done, without operating great injustice towards him; and therefore it is, if it be done, it shall release him from his liability. Every man, as long as he is a free agent, must be permitted to declare the terms upen which he is willing to incur an obligation; and having done so, it cannot be altered in any material point whatever, without his consent;-nor yet any thing be done which may affect his rights in relation thereto. The counsel for the plaintiffhas cited in opposition to this, the case of Pring v. Clarkson, (1 Barn. & Cres. 14; S. C. 8 Eng. Com. L. 10,) where a bill of exchange having been dishonoured, the acceptor transmitted a new bill for a larger amount to the payee, without having had any communication with him respecting the first: the -payee discounted the second bill with the holder of the first, which he received back as part of the amount, and afterwards for a valuble consideration, endorsed it to the plaintiff. It' was held that the second bill was merely a collateral security, and that the receipt of it by the payee, did not amount to giving time to the acceptor of the first bill, so as to exonerate the drawer. Mr. Chief Justice Abbott, in pronouncing the opinion of the Court, says, “ in no case has it been Said, that taking a collateral security from the acceptor, shall have that effect;” that is, of discharging the .other parties to the bill: and concludes by saying, “ here the second bill was nothing more than a collateral security.” Now it is not easy to perceive why a collateral security should not have such an effect; for surely there is nothing in the nature of it, which renders the giving or the taking of it, inconsistent with the holder’s agreeing to give time to the acceptor of a bill, or the drawer of a note. On the contrary, such indulgence may be, and doubtless is in most cases, the very consid — 259 — eration upon which the collateral security is given and obtained: and as I have endeavopred to show, makes the case, in the absence of proof of an express agreement to give time, still stronger in favour of an implied agreement to that effect, than where there is nothing more given than a bare renewal of the promise b.y the acceptor of the original bill, or the drawer of the former note, to pay the amount at a future date. But Chief Justice Abbott was mistaken, when he said, “in no case had it been said, that taking a collateral security from the' acceptor shall have that effectfor in Gould v. Robson, (8 East, 576,) decided some fifteen years before, it was not only said, but the case itself turned, upon the very point. There the holder of the bill of exchange, who when it fell due; after' taking part payment of the acceptor, agreed to take a new acceptance from him for the remainder, payable at a future day, but in the mean time, the holder to keep the original bill in his hands as security; and it was held that it amounted to a giving of time, and a new credit to the acceptor, and therefore discharged the endorser. Besides, the authority of Bring and Clarkson has been doubted i by the profession. Mr. Chitty in his treatise on Bids, 442, (8th Eng. ed.) after repeating the principle laid down in it, adds, “ but it is submitted that the mere receiving further security, payable at a future day, would in general imply an engagement to wait till it becomes due.” See also Bayley on Bills, (5th ed.) 345, note 31; and Chitty, Jr. on Bills, (ed. of 1834,) 100 w. a. note 1; and in Kendrick v. Lomax, (2 C. & J. 405,) it would seem to be overruled; for ,it was decided there, that the holder, by taking a renewed bill, impliedly agrees to give time until it becomes due, and cannot sue in the interim, on the original bill. But it has been further objected by the plaintiff’s counsel, supposing it to be held that an agreement by .the holder to give time to the drawer of the note, may be fairly implied from the facts set foj’th in the special plea, that still the court cannot make the implication, because this is making the facts therein stated, but evidence of such agreement, and therefore they ought either to have been referred to - the jury under the general issue ; or otherwise, the defendant, instead of setting out the facts merely in his plea, which, at most, are only evidence of the agreement to give time, ought to have set out the agreement itself, quasi an agreement, which is the gist of the defence. This objection, perhaps, would not be without weight, if the rules of special pleading were to be strictly regarded here; and might possibly be sustained by the force of authority. And as we are not much in the habit of special pleading, it would certainly, therefore, be well to avoid attempting'to plead such matters specially, whenever, according to our practice, it may be dispensed with but more especially in such an action as the present, wherein it is rarely, if ever done, in England; not even when special pleading was required, generally, in all cases, and attended to with the; — 260 — utmost strictness. To sustain this objection, it has been argued that the rule, which requires things to be pleaded according to their legal effect, applies here; and as the defendant claims that the facts set forth in his plea, amount to an agreement in law to give further time for payment, he ought, therefore, to have stated the agreement simply; because this is the aspect in which he wishes the matter to be considered by the court, and, therefore, he ought to have so presented it, and not in the indirect and circuitous mode of allegation which he has adopted. Under this view of the rule, it was laid down in Stroud v. Lady Gerrard, (1 Salk. 8,) which was debt on a bail-bond, that if the defendant has put in special bail, he cannot plead in terms, that he has put in such bail, but must plead comperuit' ad diem; because, as is^ there said, he must plead according to the operation things have "in law. This rule, however, as I apprehend, has not been regarded in this, and some of the other states, with the same strictness as in England.' In Herrick v. Bennett, (8 Johns. 374,) it was held, upon demurrer to the plaintiff’s declaration on a promissory note, to be sufficient that it was set out according to its terms. The note, as stated in the declaration, was without any time being mentioned therein for payment, and the court say, “ it is to be presumed that the plaintiff has stated the note in his declara-tion, according to the terms of it, and that is sufficient. The conclusion of law is, that when no time is specified in a note, it is payable immediately.” It appeared the note was not declared on according to its legal effect; but the court having the terms of the note, or, in other words, the facts therein contained, presented by the plaintiff’s declaration, and admitted by the defendant’s demurrer to be true, conceived the only matter then in issue between the parties was thus reduced to a mere question of law, which they, according to the maxim, ad questionem legis non respondent juradores sed judices, were bound to answer, and accordingly rendered a judgment in favour of the plaintiff. This decision of the Supreme Court of New York was followed by this court in a case decided by it at Pittsburgh, some eight of ten years ago, which I believe has not been reported. It was preferred to the decision given in the case of Bacon v. Page, (1 Conn. Rep. 404,) which was cited and shown on the agreement; wherein the same point arose, and received a directly contrary decision, by the Supreme Court of Connecticut. This1 latter court say that the plaintiff should declare on a contract, according to its legal effect, and not on the evidence of the contract: that it did not appear from the declaration that the note had become payable; and accordingly reversed the judgment which had been rendered against the defendant below, by the default. In the case before us, from the facts set forth in the special plea, the conclusion of law, that the holder of the note, when it fell due, for an adequate consideration, agreed to give time to the drawer to — 261 — pay it, is quite as strong and as certain, .as that the law, when a note is given for the payment of money, without any time being specified therein for that purpose, makes it payable, by implication, immediately. The plaintiff was , bound to know the conclusion which the law would draw from the .facts stated in the plea, if true ; and if not true, he knew them not. to be so, and therefore ought, and no doubt would, have taken issue upon them, and put the defendant on proving them before a jury. Seeing, however, that he has only denied their sufficiency in law to defeat his claim against the defendant, we' must take it that they are true, as stated in the plea. No question of fact, therefore, remains to require the intervention of a jury; the matter in issue is reduced to a mere question of law, which the court is bound to decide. Considering, then, the facts as being sufficient to raise, by implication of law, a binding promise on the part of the holder of the note, at the time it became due, to give the drawer further time- for the payment of it-, which discharged the defendant from his liability as endorser, we affirm the judgment. Judgment affirmed.