Fay v. Tower

LyoN, J. Such of the facts-above stated as are omitted from the findings of the circuit court are established by clear and satisfactory evidence — really they are scarcely controverted. Among these are the facts relating to the extension granted by plaintiff to Burger on the note in suit. That such extension was given upon a valid consideration, and was binding upon the plaintiff, notwithstanding the consideration therefor was the usurious note of Burger, was settled by the judgment of this court in Moulton v. Posten, 52 Wis., 169. In that case, as in this, the consideration for the alleged extension was the usurious note of the principal debtor. It was held a valid extension, binding the holder of the note, and the surety was discharged. It is there said that the holder of the extended note could not be heard to allege that the note taken for the extension was usurious and that there was no consideration for his agreement to extend. The same rule must control this case. ' The fact that the note given for the extension in this case was paid long since, while in Moulton v. Posten the note given for the extension had not been paid, is not important. If it has any' significance it makes [290] this a stronger case against the plaintiff, for he, long' Since, received the agreed consideration, whereas in the other case the note given in consideration of the extension remained liable to be defeated by the defense of usury, See, also, Hamilton v. Prouty, 50 Wis,, 592. The defendant having no knowledge of the extension,-— (and, of course, not consenting thereto),^- and the plaintiff knowing, when he granted the extension and accepted the consideration therefor, that the defendant was a mere surety for Burger, it follows that the defendant was thereby released from liability on the note, unless he has done some act which in the law operates to continue his liability, notwithstanding such extension. It is claimed that by recognising his liability on the note in his letters to the plaintiff, written after the extension was granted, his liability was continued. If so, it is on the ground of estoppel. But when he wrote those letters he-was ignorant of the extension. It is a familiar rule that no estoppel results from an admission, or other act in pais, unless the party making the admission or doing the act has knowledge of all-the material- facts. The extension was a material fact, and the defendant had no knowledge of it when he wrote the letters. He is not estopped, therefore, by his admissions to assert his release because of the extension. It is further argued that the taking of the mortgage executed by Burger to indemnify him against'the note in suit, continues his liability on the note, notwithstanding the extension. It is undoubtedly true that had the mortgage fully indemnified him against loss on account of the note, his liability thereon would continue. It was so held in Moore v. Paine, 12 Wend., 123; Chilton v. Robbins, 4 Ala., 223; and Bradford v. Hubbard, 8 Pick., 155. But the defendant did not obtain full indemnity by the mortgage. It is quite clear from the testimony that the mortgage is [291] worthless, and that he obtained no indemnity at all. Eor this reason his liability on the note is not thereby continued. If it should turn out that the mortgage is of any value, probably the plaintiff would be entitled in equity to be subro-gated to the rights of the defendant thereto, and doubtless the defendant would voluntarily transfer the same without suit, if requested to do so. See Hampton v. Phipps, 108 U. S. No other ground for avoiding the effect of the extension, has been suggested. The above views are conclusive of the case, and it is unnecessary to consider the question of usury. The judgment must be reversed, and the cause will be remanded with directions to give judgment for the defendant.. By the Court.— It is so ordered.