Crossman v. Wohlleben

Mr. Justice Dickey delivered the opinion of the Court: It is well settled that where the payee of a promissory note, executed by a principal and a surety, makes a binding agreement with the principal debtor, without the consent of the surety, to extend the time of payment of the note, the surety is thereby discharged from his liability. The question presented here is, whether the record shows that such an agreement was made in this case, between the payee of the note and the principal debtor. It is said by Reed, Justice, (in McComb v. Kitteridge, 14 Ohio, 351,) “It is just as competent for the principal to a note to extend the time of payment for a specified period, as it was to fix the time of the payment originally. If the lender of money secured by a note, after the same becomes due, contracts with a borrower that the time of paying the same shall be extended either one'year or any other period, upon considera^tion that the borrower shall pay the legal or less rate of interest, why should not the contract be binding? The lender, by this contract, secures for himself the interest on his money for the year, and the borrower precludes himself from getting rid of the payment of interest by discharging the principal. It is a valuable right to have money placed on interest. It is a valuable right to have the privilege, at any time, of getting rid of the payment of interest by discharging the principal. By this contract the rate of interest is secured for a given period, and the right to pay off the principal and get rid of the interest is also relinquished for such period. Here, then, are all the elements for a binding contract; but it is said, there is no consideration for the extension of time, because the law gives six per cent after the debt is due. But the law does not secure the payment of this interest for any given period, or prevent the discharge of the principal at any moment. There is precisely the same consideration for the extension of the time as there was for the original note.” Even if this view be conceded, it is essential, however, that both parties shall be- bound by the contract of extension, otherwise, there is no consideration for the agreement of the creditor to extend the time. In Woolford v. Dow, 34 Ill. 428, (a case not unlike the present) this court said: “ The note was due six mouths from its date with ten per cent interest. The answer sets up, that after the note became due, defendant in error (the creditor) agreed with them (the principal debtors) to extend the .time of payment, if they wanted, and pay ten per cent interest and $100 each month in liquidation of the note until it should be paid. It will be perceived that they state no new consideration to sustain the agreement. * * * The note, by its terms, drew ten per cent interest, and this agreement made no change in its terms as to the rate of interest. A credit is indorsed upon the note of $100, for interest to the 9th day of February, 1862, but it does not appear to have been paid in advance. For aught that appeal’s, it was paid on that day, and if so, it was then due. Had this interest been paid in advance it would have constituted a consideration for the agreement, but so far as this record discloses, the agreement to extend the time of payment * * * was a mere nudum pactum.” In the case at bar there is no consideration shown, either by a promise on the part of the debtor to keep the money for any given time, and pay interest for that time, or by paying the interest in advance for any given time. The payment of interest already accrued is not a consideration. A mere promise of indulgence on payment of interest at the rate named in the note, or at any other rate, is not binding without something to bind the debtor to pay interest for a given time. A payment of interest in advance would answer, and by the Ohio case, a promise by the principal debtor to keep the money a given time at a given rate of interest, would be such a consideration as would support and make binding the promise by the creditor to extend the payment for a given time. It is essential, in all such cases, that both parties should be bound by the agreement, or that it should have mutuality. The record in this case fails to show specifically that the principal debtor at any time bound himself to keep the money and pay the interest upon it for any specified time, or that he ever paid interest in advance. The indorsements upon the note are presumed to have been made by the creditor, and may have been consented to by the principal debtor. These indorsements of the payment of interest fail to show any payment of interest in advance. Hone of these indorsements show a contract on the part of the debtor to keep the money for any given time. The affidavit on this subject fails to show unequivocally that there was any consideration for the agreement of the creditor to extend the time of payment. The affidavit states that Rolle agreed with the defendant to extend the time, from time to time, but it does not state that Rolle paid interest in advance for the extension or that he agreed to keep the money until the end of the respective extensions, or until the end of either of them, or for any given time. In applications to set aside judgments entered by default or entered in ex parte proceedings, affidavits in support of such applications are to be construed most strongly against the party making the application. ' It is not sufficient to state facts from which, if proved on a trial, a defense, might be inferred. We think the affidavit in this case fails to make out a case for the plaintiff in error in this—that it fails to show unequivocally that Rolle bound himself, so that he could not, if he chose, have paid off the principal, and accrued interest at any given time, and have thus discharged the debt, even before the period of extension had expired. A mere promise made by a creditor to indulge the debtor for a given length of time, upon the payment of interest, does not bind him to such extension, because the payment of interest is already secured by the terms of the original note for any delay that may occur from any indulgence that might be given; and unless the debtor is also bound by the contract to retain the money for a given length of time, and to pay the interest for that period whether he retains the money that length of time or not, such promise by the creditor lacks consideration, and is not binding upon either party. For aught that appears in this case the creditor might, notwithstanding the extensions which he had agreed to, have brought suit at any time upon this note; and the principal debtor, or the surety, might have, at any time, discharged the debt and canceled his obligation by the payment or tender to the creditor of the principal of the note and the unpaid interest accrued up to the date of such payment or tender; and this at any time before the expiration of the time of the so-called extensions. The judgment must be affirmed. Judgment affirmed.