Merrimack County Bank v. Brown

Parker, C. J. It is settled, in this state, that a payment of interest in advance, is, in general, evidence of a contract to forbear and give day of payment for the period for which the interest is thus paid; and a contract of that character, made between the creditor and the principal, without the assent of the surety, discharges the surety. Crosby vs. Wyatt, (10 N. H. Rep. 318.) In 1837, the defendants made several written requests for delay, and thus far they continued liable, notwithstanding the contracts for delay ; but these requests have no tendency, standing alone, to show an assent to subsequent delays in 1838. Caleb P. Brown, therefore, shows a good defence. The next question which arises, is, whether the subsequent promise of Jonathan Brown can have any operation to bind him. Upon this subject no direct authorities are found. A promise, by an indorser of a note, who is discharged by neglect of the indorsee to make a demand and give notice, is not binding, unless there is a new consideration, or it appear that he had knowledge of the fact. 7 N. H. Rep. 271, Farrington vs. Brown; 9 N. H. Rep. 572, Carter vs. Burley; Woodman vs. Eastman, (10 N. H. Rep. 366.) But no enquiry is ever made, where a debt is barred by the statute of limitations, and there is a subsequent new promise, whether the party knew that six years had elapsed or not, or whether he was aware that the statute interposed a bar. [326] After some, hesitation, we hare come to the conclusion that this case belongs to the first class. The obligation of a surety, although not like that of an indorser in some particulars, is analagous to it so far as a discharge is concerned. When the statute of limitations interposes a bar, the party knows, or should know, the time which has elapsed since he entered into the contract: but he is not chargeable with knowledge of a contract for delay, anymore than an indorser is chargeable with a knowledge of a neglect to make a demand, or the drawer of a bill with knowledge of a contract to gire time to the acceptor. 2 Camp. R. 333, Stevens vs. Lynch. This promise, however, might perhaps be left to the jury, in connection with the requests and delays before adverted to, as evidence on which they might find that the delay had been with his assent. Time had been given in several instances, upon requests in which he united; and the interest, in those instances, was to be paid in advance. When he made the subsequent promise, after further delay, he had some reason to suppose that the further delay might have been upon a like payment of the interest. But it is not material to consider this further, for another reason. The bank had no right to apply the proceeds of the sale of the farm which belonged to John Brown, in payment of the joint note of Brown and Smart, to the prejudice of the sureties on the other note. It is, in effect, an application of the property of Brown to the payment of the debt of Smart, he being solvent; the bank, at the same time, holding a debt against Brown, and attempting to enforce the collection of it from his sureties. Perhaps the bank might have made the application to Brown’s half of that note ; but the proceeds of the sale were sufficient to pay that, in addition to the note now in suit. The bank evidently had no interest which required the application which was attempted, having the same sureties on the one note as on the other ■ and the law, under such circumstances, will apply the mort [327] gaged property in the first place to the payment of the debt of the mortgager, and the exoneration of his sureties, and not to the payment of that portion of the indebtedness on which he was in truth a surety for Smart. 8 Pick. 503, Sargent vs. McFarland. This is not a payment within the principle authorizing the creditor to make an application. 10 Pick. R. 133, Blackstone Bank vs. Hill. If it were so, the cases in which the law controls his right to apply a payment, in favor of the equitable rights of others, go much farther than this. 4 Johns. Ch. R. 132, Hayes vs. Ward; 5 Johns. Ch. R. 235, Clowes vs. Dickinson; Hopkins' Ch. R. 469, York & Jersey Co. vs. Jersey Co.; 1 Paige's Ch. R. 228, James vs. Hubbard; 19 Johns. R. 492, Evertson vs. Booth. The principles of equity respecting the application of payments are recognized in proceedings at law, as far as the nature of the proceedings will admit. 18 Wend. R. 591, Reynolds vs. Tooker; 9 Cowen 403, 405, Clowes vs. Dickinson, on appeal; 3 Stark. Ev. 1093, note 1. In the view we have taken of the case, it is not necessary to place any stress upon the fact, that this attempt to apply the mortgaged property, in the first instance, to the payment of a debt, one half of which was in fact the debt of Smart, was made at the request of Smart, and upon his giving an indemnity, and this after he had agreed with Jonathan Brown that if the latter would pay the note which was signed by Clough, he would settle the rest of the debts after the proceeds of the farm had been applied in payment. The principle of Watts vs. Wellman, 2 N. H. Rep. 458, might perhaps serve to show that he was afterwards, as between Jonathan Brown and himself, to be regarded as the principal debtor upon the other notes, and that no action could be maintained, for his benefit, to recover of Jonathan Brown a debt which he, himself, had contracted to discharge. Verdict set aside, and judgment for the defendants.