Irvine v. Adams

Oole, J. On the face of the note,'the defendant W. Thomp [474] son Adams appears to be a joint maker. But parol testimony was offered on the part of the defense, and received against the plaintiff’s objection, to show that he really signed the note as surety. The first error assigned here for a reversal of the judgment, is the admission of this testimony. It is insisted by the learned counsel for the plaintiff', that, to permit a party who appears to have signed a note as principal, to show by parol that he signed as surety, is a violation of the well settled rule of evidence, that a written contract cannot be contradicted or varied by parol testimony. But where the creditor knows, when the note is executed, that a party signs as surety, then, as we understand, the great weight of authority admits parol testimony to show that fact. It was so decided by this court in Riley v. Gregg, 16 Wis., 676, where the question was directly presented. Dixon, O. J., in that case, says that the admission of such testimony does not vary the effect of the undertaking, but is admissible to show that the creditor, who knows the real relation of the contracting parties, violates his faith impliedly given to the surety, not to interfere with those relations so as to impair his legal rights or diminish his remedies, when he extends the time of. payment to the principal. It is not necessary that it should appear from the contract itself that one signed as surety and not as principal. Surety-ship, being a collateral fact, may be shown by evidence aliunde. Carpenter v. King, 9 Met., 511. To the same effect is the recent decision of the court of appeals of New York in Hubbard v. Gurney, 64 N. Y., 457. In this case Ohuech, C. J., examines the question at great length upon the authorities, and states, in substance, in the words of the head note, that “ such evidence does not alter or vary the written contract, as the fact proved simply operates, when knowledge of it is brought home to the creditor, to prevent him from changing the contract or making a different one with the principal debtor without the consent of the surety, or from impairing the rights of the latter by releasing any [475] security or omitting to enforce the contract when requested.” It is true, in Harris v. Newell, 42 Wis., 687, the chief justice stated that the court entertained a very grave doubt whether one who appeared to have executed a promissory note as principal could show by parol that he signed it as surety; but this intimation was thrown out rather to invite further discussion of the question than with the purpose of shaking or overthrowing the decision in Riley v. Gregg. The intimation has answered its purpose, and we are all now fully satisfied that the latter case lays down the true rule upon the subject, and is in strict accord with the weight of modern authority. It is deemed unnecessary, therefore, further to consider the question. In this case it was claimed that W. Thompson Adams was discharged by an extension of time of payment given the firm of Maynard & Adams, who were the principal debtors; and the learned circuit judge so decided. ¥e think, however, that the findings of fact fail to show that the surety was discharged by a valid agreement to extend the time of payment of the note. In the second finding the circuit court in effect finds that, about the time the note matured, in May, 1871, the plaintiff and the defendants Maynard & Adams made a contract, by the terms of which the plaintiff agreed to extend the time of payment of the note for one year, in consideration of being paid for such extension the further sum of five per cent., in addition to the ten per cent, interest which the note drew; that sometime after the termination of such extended period the firm paid $12.50 of the sum agreed to be paid for the extension, the plaintiff releasing them from the payment of the remaining $12.50 of the consideration for the extension; also, that the payment of the note was further extended from year to year by like agreement, the firm paying for such extension each year the sum of $12.50, the amount agreed to be received therefor by the plaintiff, until the failure of the firm in 1875; and that the surety had no knowledge of these various extensions. [476] Now, according to onr understanding of tbis finding, it shows an executory usurious agreement to extend the time of payment, which, under the decisions of this court, does not constitute a “ basis or consideration upon or out of which any binding promise for that purpose could arise or be created.” Riley v. Gregg, supra; Meiswinkle v. Jung, 30 Wis., 361; St. Maries v. Polleys, 47 Wis., 67. It is plain that each agreement to extend the time of payment was executory in its character, and was therefore void. The plaintiff did not place it out of his power at any time to enforce a collection of the note by action. Under such circumstances the surety was not released. 1 But, if there were auy doubt upon this point, the facts stated in the third finding show that W. Thompson Adams is estopped from insisting upon the defense. That finding is, that the firm of Maynard & Adams compromised with their creditors in 1875, paying forty per cent, of their claims; that this note was put in as a liability of the firm on such compromise, by W. Thompson Adams, or with his consent; that the firm paid forty per cent, of the note, but neither the plaintiff, who was not a -party to the compromise, nor the defendant W. T. Adams, received any part of such payment, the sum being taken by J. L. Adams, upon a promise to pay the same to the plaintiff, which he never did. Now, if W. T. Adams treated this note at this time as an existing liability to him, and caused it to be included in the compromise, he should be estopped- from saying he was not bound to pay the note in consequence of the extension. There could be no doubt of the correctness of this view, if W. T. Adams had actually received the forty per cent, upon it. But, that he did not receive it was owing to his own laches or default. He could have demanded it of the firm, and had the full benefit of the composition. It is true, W. T. Adams denies that this note was included in the claim which he presented against the firm on the compromise, and his testimony in that respect is corroborated by that of his brother, J. L. Adams. On the [477] other hand, Maynard testified that it was so included. We shall not stop to discuss the testimony as to whether it was or not, hut accept the finding of the court as correct; for certainly there is no such clear preponderance of testimony against the second and third findings of the circuit court as would warrant us in disregarding them. The issue on the affidavit of the plaintiff for a writ of attachment was tided with the main issue, and fell with it. It follows, from the views which we have taken of the case, that the judgment of the circuit court upon both issues must be reversed, and the cause be remanded to give judgment for the plaintiff upon them. JBy the Court. — So ordered.