Low v. Underhill

POPE, District Judge. The defence is, that the plaintiff, having obtained judgment against the makers of the notes sued on. and caused execution to be issued and placed in the hands of the sheriff for collection, agreed, that if the defendants would pay one hundred dollars each on the judgments, he would cause the executions to be returned without being levied, and would wait before further action for a certain length of time then agreed upon. The money was paid, the executions returned without being levied, and the delay granted. The plaintiff contends that the promise was void, because not upon a valuable consideration, the payment being no more than their duty, and what they had previously promised to do. The authorities all establish the position, that the promise to extend the time of payment must be on a valuable consideration to discharge the endorser. The eases adjudged are so various and numerous, and so is the application of the principle to many cases, where the shades of difference are very slight, that each case seems at last to have been more influenced by its own intrinsic merits, than by rigidly adhering to the rule. The position of the plaintiff is, that no one can create a binding obligation to another by discharging a duty. Is this universally true in its application to society? It is man’s duty to feed the hungry and clothe the naked; and it will not be denied that he might demand remuneration. These, it will be said, are not perfect obligations. This is true: still the moral obligation is the same as in the case of perfect obligations, which I define to be those enforced by law. The contract in this case is of the latter class, and involves the moral obligation to fulfil his promise, together with the prudential one as affecting his character for punctuality in the performance of his engagements — very iin1012 portant to him as a man of business, particularly as a merchant. But there is still another — the legal obligation to which the parties look in the last resort. The debtor is morally bound to make reasonable exertions to pay his debts, but not at a ruinous sacrifice. He is not bound to sacrifice property at one tenth or twentieth of its value, to raise the money; and as both parties, at the time of contracting, looked to the courts as open to the creditor for the application of coercive action, the conscience of the debtor is quieted, when he has made every effort which a reasonable man could ask. The contract is violated, the promise not kept. The creditor has taken the matter in hand, and is pursuing the property of the debtor through the courts of law. How stands the moral obligation now? Will it be matter of reproach to the debtor, that he relaxes, and leaves the creditor to pursue his remedy? Judgment is obtained, and execution in the hands of the officer. The creditor, at this stage of the proceedings, says to the debtor, “if you will pay me now a part, I will not levy on your property, will stop the execution, and give further time for the payment of the remainder.” The money is paid, no levy is made, execution returned, and delay granted. Can it be said that this contract was not obligatory? Various reasons might be suggested as benefits to the creditor in this arrangement, as that he might expect great gain from the immediate use of the money stipulated to be paid. It may be imagined that he might have a valuable property subject to forfeiture for want of that sum, before the money could be made on the executions; or he might be unwilling to trust it in the hands of the sheriff. The arrangement itself implies that he expected to profit by it. Again, the defendant might deem it for his interest to sacrifice a portion of his property to obtain the indulgence. Gain to one party, or loss to the other, is a sufficient consideration. The contract was an executed contract, when the money was paid, and the execution was returned. In such cases, the consideration is good, hut not where the contract is executory: as, if A agrees to accept a part of the debt in full payment. This agreement is not binding, for want of consideration. But if the money he paid and accepted in pursuance of the agreement, it is binding. Lynn v. Bruce, 2 H. Bl. 317; 2 Term R. 24. Again, in Story, Bills, p. 512, § 436, and in Chit. Bills, 418, it is laid down, that the receiving of part payment from one of the parties, after liability of all is fixed, does not discharge the other parties, unless it be accompanied by some other act impairing the rights of the holder against them — -such as giving time, &c. This is the present case. If the plaintiff had promised to give time, upon the promise of the defendant to pay a part, he would not be bound by the agreement for want of consideration, as he had in the new promise no moré than the defendant had already promised. It is well settled, that the endorsee may sue both the drawer and endorser, or either, at his option. If he sues the drawer alone, it implies that he deems him solvent; for if he did not think so, why did he select him in preference to the endorser? This has a tendency to lull the endorser into a false security; therefore the plaintiff should in good faith prosecute his suit, and do no act to the injury of the endorser. But the suit is prosecuted to judgment; the liability of the drawer on the note is merged in the judgment, and the note, as to him, is extinguished, and no longer under the control of either party. Suppose the endorser had offered to pay the money to the endorsee, the latter was bound to surrender the note. This he could not do, (at least without the leave of court,) which might be attended with delay, or the endorsee would be entitled to the control of the judgment. This he could not have without the warrant of the plaintiff; this he could not give without a gross violation of faith and confidence between man and man. Lord Eldon, in the case of English v. Darley, 2 Bos. & P. 61, says: “If a holder enter into an agreement with a prior endorser, in the morning, not to sue him for a certain period of time, and then obliges a subsequent endorser in the evening to pay the debt, the latter must immediately resort to the very person for payment to whom the holder has pledged his faith that he shall not be sued.” Suppose there had been no third party in this case, what would be said of the plaintiff, if he had immediately gone on with the executions, and made a levy and sale of the property of the defendants. What would be the judgment of mankind upon it? Most unqualified condemnation for violated faith. I know of no system of morality or ethics, that would screen him from the contempt of mankind; nor can I think that a judge can be required by law to spread a mantle over such treachery. This case has so far been considered on the concession, that the liability and responsibility of ■ the maker and endorser are identical. But .this is not so. Of late years a ease arose in England, where the court of common pleas decided one way, and the court of king’s bench the reverse. It was this A gave his note for the payment of money at a particular place. The question was, whether the plaintiff was bound to allege in his declaration, and prove on the trial a demand at the place. The same question came before the supreme court of the United States, whose decision was, that if the suit were against the maker, no demand at the place was necessary, but if against tne endorser. it was necessary, upon the ground that the endorser had not promised to place the money himself, but that the maker would. This decision to some extent has thrown overboard many dicta that every 1013 endorser is a new drawer. See Bank of U. S. v. Smith, 11 Wheat. [24 U. S.] 171. NOTE. By the laws of Illinois, the endorser of a note can only be made liable on his endorsement, by the institution and prosecution of a suit against the maker, at the first term of court after the note becomes due — unless the maker had left the state, or that the institution and prosecution of a suit would have been wholly unavailing. In the foregoing ease, although the notes sued on were made in Illinois, the makers, payee, and the endorser residing there, yet they were endorsed by the defendant in New York; and the endorsement being a new and substantive contract, had to be governed by the law of the place of endorsement. This principle of the law seems to be so well settled, that it was not made a point in the case. Vide Storv, Confl. Haw, 260. 2G2; 12 Johns. 142; 12 Wend. 439; 2 Scam. 465: 6 Cranch, 221. The declaration averred that the notes were endorsed in New York, and a demand and notice, and that by the laws of New York endorsers are liable as by the law merchant, so that the case was governed solely by the lex mercatoria. In the present case, inasmuch as the liability of the endorser as well as the maker was fixed, and the holder had the right to sue either or both, his suing the maker alone, ..and afterwards giving time after judgment, it is fair to presume that he was solvent, (independent of the testimony on that point,) and the endorser had a right to expect that the money would be made of the maker. He could not expect that the plaintiff would have granted time, if he had doubts of the ability of the defendants to pay. The holder may be passive if he pleases, without risk of discharging the endorser. He may decline to issue an execution, but he must do no positive act to stop the collection. The order to the sheriff not to levy, and to return the execution, is such an act as will discharge the endorser. This is a motion for a new trial, which is always addressed to the discretion of the court. In this case it seems that one of two innocent parties must suffer. If the plaintiff, after suing the makers, had done no act to obstruct or postpone the recovery of the money, the defendant could have had no pretence to exemption from liability. But, as the plaintiff did interfere to stop the execution, he ought to take the consequences. The defendant owed it to himself to know, that the execution was issued; but when issued by the plaintiff, and under his control, a disposition was thereby manifested to pursue the legal remedies against the makers; and he was satisfied with it, or he would have sued the endorser simultaneously with the makers. In this state of the case, the endorser could not have expected that the plaintiff would stop the execution, but the reverse, and therefore might not deem it important to inquire, or provide for such a step. And it was fully established by the evidence, that the makers, at the time of the agreement made to return the execution, had personal property sufficient to satisfy the debt, and on which the executions were a lien. I am therefore clearly of opinion, that the law and the justice of the case are with the defendant, and the motion for a new trial must be refused. Motion for new trial refused.