Perry v. Armstrong

Bellows, J. The first question that arises in the case is this: Was the nóte originally good in the hands of the plaintiffs, and binding upon the defendant ? The case of Cross v. Rowe, 22 N. H. 77, is decisive upon, this point. There the note was given to the plaintiff, and signed by the defendant as surety, to pay for a horse sold by the plaintiff to the principal. It was made payable to a bank, with the purpose of having it discounted there; but the bank having declined to discount it, the plaintiff kept it, and obtained the transfer of it by the endorsement of the bank, though after the surety had notified the bank not to discount or endorse it. It was held that the plaintiff might récover. In the case before us, the note was endorsed by the defendant, with the view of raising money for the'principals to use in their business, but failing to do it at Walpole, he sent it to the principals, with his endorsement remaining, and it appears that the principals retained the note until after they suspended payment, on the 20th of December, 1854, and about January 1,1855, according to the plaintiffs’ evidence, and about February 1, 1855, according to that of the defendants, the principals sold the note to. the plaintiffs in part payment of their debt to them. This might well be considei’ed as in accordance with the purpose of the defendant, to enable the principals to raise means to use in their business; and whether it was by raising the money and paying it to their creditors, or by passing it directly to some of the creditors, could make no difference with the defendant. So the return of the note to them with his endorsement implies an authority to use it; and the fact that the plaintiffs knew the defendant to be an accommo [591] dation endorser could not affect The question, neither could the suspension of the principals affect the transfer. Elliott v. Abbot, 12 N. H. 549; Bank of Chenango v. Hyde, 4 Cow. 567; Powell v. Waters, 17 Johns. 176; Bank of Newbury v. Rand, 38 N. H. 166. What, then, was the effect of the composition deed ? It was an agreement under seal, and upon sufficient consideration, to receive of Armstrong & Co. forty per cent of all the debts due from them, one half in one and the other half in two years, or thirty per cent in six months, in full satisfaction and discharge of the debts. The instrument bears date January 23, 1855, and the note in question would be due March 12, 1855; so that the time of payment of the amount stipulated in the deed was beyond the maturity of the note. The deed in its terms embraced all the debts of Armstrong & Co. to the plaintiffs, whether then due or not, and the note in question was included by the terms of the deed; and it was not competent to prove a parol agreement, which we understand is meant by the case, that the note should not be included; for that would be to contradict the deed. Beside, such an agreement, whether verbal or written, being a secret stipulation by which it was sought to place the plaintiffs .in a better situation than the other creditors, would be a fraud upon them, and void. The case of Trumbull v. Tilton, 21 N. H. 129, is decisive on this point, and the general principle has, in fact, been for a long time established. The endorser of a bill or note is regarded in the light of a surety, and if the holder, by a valid agreement, gives time to the maker or acceptor, the endorser will be discharged. Chitty on Bills 408-412; Clark’s Exrs. v. Moles, 3 B. & P. 363. The contract of the endorser, like that of a surety or guarantor, is to answer for the default of the one who, as principal, is bound to pay, or perform the duty; and in whatsoever form his undertaking may be, he will be discharged by a change of [592] the contract to his prejudice, and without his consent. Wheat v. Kendall, 6 N. H. 504; Bank v. Brown, 12 N. H. 320; Savings Bank v. Colcord, 15 N. H. 119; Watriss v. Pierce, 32 N. H. 574; Rees v. Berrington, 2 Ves. Jr. 540. The only remaining question is, whether this contract had the effect to extend the time of payment of the note. By the terms of the deed, the plaintiffs were bound to discharge the whole claim on receiving a certain per cent of the amount within a period beyond the time the note, by its terms, became due ; and we think that it must necessarily operate as a binding contract to extend the time of payment, otherwise it would avail nothing, and the creditors could at once collect their whole debts. Ch. Bills 408, 414; English v. Darley, 2 B. & P. 61; Gould v. Robeson, 8 East 376; Rhode v. Proctor, 4 B. & C. 517. The verdict must, therefore, be set aside and a New trial granted.