Austin v. Dorwin

[42] The opinion of the court was delivered by Hall, J. The first objection made to the ruling of the county court is, that Warner, the principal on the note, was an incompetent witness for the defendant, his surety, by reason of interest in the event of the suit; and that he was, therefore, improperly admitted to testify. The defendant has released the witness from all liability to him for the costs and expenses of this suit; and the only question is, how the witness is to be affected by the result in regard to the damages. The witness is liable to the plaintiff for the amount of the debt. If the note is paid to the plaintiff by the defendant, his surety, the effect of such payment will be to transfer the liability of the witness from the plaintiff to the defendant. The extent of his liability will be the same, whichever of the parties is his creditor. A judgment in this suit in favor of the defendant will be no bar to an action against the witness on the note; and a judgment here in favor of the plaintiff will impose no new liability on the witness. The judgment will, at most, be but a step in the process of transferring his liability from the creditor to the surety. The result of this case would therefore seem, in a pecuniary point of view, to be a matter of perfect indifference to the witness. It is said, however, that the witness is incompetent, because a verdict against the defendant would be evidence for him against the witness, in an action for money paid as his surety. If the verdict, when used as evidence against the witness, would tend to prove upon him some new liability, orto fix against him the amount of a liability, the extent of which would be otherwise uncertain, it may be conceded, that it would render him incompetent. But could the verdict in this case be used for any such purpose? The only facts to be shown by the surety, in his action for money paid, would be his liability as surety and the payment of the debt by him. Neither of them could be shown by the record. The recovery against the surety would be no evidence against the principal of the surety’s liability, or of payment by him. The principal, if liable at all, would be liable by virtue of the original contract, which must be proved; and he would be liable to the same extent, (costs being out of the question,) whether a judgment had been recovered against the surety, or not. The record might be used to show the mere [43] fact of the recovery of the judgment, in order to identify the payment as having been made on the original contract," but for no other purpose. And for such a purpose the record of a recovery is always evidence against all persons in- all suits where such fact becomes material. The only effect of a judgment in this suit, upon an action by the surety against the principal, would be to impose upon .the surety the necessity of showing the fact of the recovery of the judgment, in addition to the evidence which would be otherwise sufficient to entitle him to recover. It would therefore tend to embarrass, rather than to facilitate, .the remedy of the surety against the principal. It is insisted, that the witness was interested to reduce the damages in this suit, because it would lessen the amount of his liability to the defendant; and that, as his testimony tended to show a payment of thirty dollars on the note, he was incompetent on that account. This is but the original objection in another form. If the verdict in this case operated to discharge the witness from the payment of the thirty dollars, he would doubtless be interested. But it could have no such effect. If the thirty dollars should he deducted from the note in the judgment here, and the defendant should .pay the judgment, the witness would indeed get rid of paying that sum to the defendant. But he would still be liable to pay it to the plaintiff, if it were really due to him; for this judgment would not in any manner affect his right to recover it of the witness. The payment by the defendant of such a judgment would transfer but a part of the principal’s original liability from the .creditor to the surety; the part not transferred would be unaffected by the judgment. The liability of the witness being the same, whichever way the judgment in this case may be, and for .whatever amount it may be rendered, we think he was competent to testify, and that his deposition was properly admitted. York v. Blott, 5 M. & S. 71. Greeley v. Dow, 2 Metc. 176. The facts testified to by the witness being taken to true, we have no doubt, upon the authorities, that the defendant is discharged from his liability on the note. •It appears to-be well settled, that if the creditor,-without the assent of the surety, make a binding contract with the principal to extend the time of payment of the debt, the surety is thereby dis [44] charged. It is not necessary, that th'e contract should be such as would prevent the creditor from sustaining an action at law on the debt until the enlarged time of payment. It is said, that a covenant not to sue for a limited time does not suspend the right of action on the debt, but merely gives the covenantee a remedy for the breach of it. 2 Saund. R. 48 a, note. But such a covenant with the principal would discharge a surety. It is sufficient, if the contract between the creditor and the principal for the extension of the time be such, as to give the principal a legal remedy upon it. The doctrine, which is derived from chancery, is founded on the obligation, which the contract for delay imposes upon the conscience of the creditor to-per form it. It is urged in behalf of the plaintiff, that the contract between him and the principal was not a binding one, because the consideration for it was the payment by the principal of usurious interest. In Wheat v. Kendall, 6 N. H. 504, Miller v. McCan, 7 Paige 451, and Vilas v. Jones, 10 Paige 76, contracts giving farther time, founded on the payment of sums of money exceeding the legal rate of interest, were held to discharge the surety. In the latter case, Chancellor Walworth says; “ The statute prohibits the talcing of usury and subjects the party receiving it to indictment and punishment. But there is no law forbidding the borrower, or debtor, from giving what he pleases for the loan or forbearance of money; and there is no reason, why he should be deprived of the benefit of an agreement extending the time of payment of his debt, when the contract is executed on his part by the actual payment of the consideration for such extension, in advance.” But if the payment in this case had been expressly made to apply upon the note, it would seem there would have been a sufficient consideration for the contract of delay. ^The payment was made before the note became due ; and it is held, that a payment before the day, being a benefit to the creditor, is a good consideration for a promise. | Pynnel’s Case, 5 Co. 117. Co. Lit. 212 b. Chit, on Cont. 748. In Bailey v. Adams, 10 N. H. 162, and Crosby v. Wyatt, 10 N. H. 318, it was held, that the-payment of the simple interest upon a note, after it had become-due, was a sufficient consideration for a promise of the creditor to delay payment for the period, for which the interest was paidand that such a contract [45] between the creditor and principal discharged the surety. The ground of holding such payment to be a sufficient consideration is, that, after a debt becomes due, the creditor is obliged to receive payment at any time, — which he may not desire to do; and that the receiving of the interest in advance for a farther time is presumed to be a benefit to him. It is unnecessary for us to go the length of these cases in New Hampshire. We have no doubt, however, that there was a sufficient legal consideration for the promise to delay the payment in this case ; and the judgment of the county court is therefore affirmed.