Nalitzky v. Williams

McPHERSON, Circuit Judge. This suit, brought on November 9, 1914, by Christopher L. Williams, receiver of the First National Bank of Bayonne, is against Tudres Nalitzky, the maker, and David I. Nalitt, the indorser, of a promissory note in the usual commercial form for $2,100, dated November 24, 1913, and payable in two months^ Protest was waived at maturity, two payments were afterwards made by Nalitzky—one of $50 on January 26, 1914, and the other of $500 on February 26—and the receiver sues to recover the balance. The trial judge directed a verdict for the plaintiff, and this writ of error complains of his instruction, and .also of certain rulings during the trial. The facts are few, and are not now in dispute: On May 19, 1913, Nalitzky was in debt to the bank on several single-name notes, and on that date united all his obligations in one note for $2,300, upon which Nalitt became the accommodation indorser. Several renewals followed, $200 was paid on account, and the note now before us is the last of the series. [ 1 ] The first defense is that the indorsement was an accommodation, not to the maker, but solely to the bank, which was obeying an' official notice from a bank examiner that the single-name paper could no longer be permitted, and that Nalitzky must furnish an indorser. This defense has no merit, either in fact or in law. The accommodation was to Nalitzky, and not to the bank; and, although the bank knew that Nalitt received no consideration for his indorsement, this is a matter of no importance.- New Jersey Negotiable Instruments Act (3 Comp. Stat. N. J. 1910, p. 3732) §§ 24, 25, 29; Israel v. Gale, 174 U. S. 395, 19 Sup. Ct. 768, 43 L. Ed. 1019. [804] [2] The second defense asserts that when the note was made the bank agreed that the debt might be paid off by small installments, $50 or $75—an agreement that would be violated if recovery were now permitted. Evidence to this effect was offered, but was correctly rejected-; no authority need be cited for the proposition that tire unqualifiedx terms of the note cannot be thus varied by parol testimony. [3] The remaining defense deserves a somewhat fuller consideration. Nalitzky testified that on February 26, 1914, the note being then overdue, he offered to pay, and did pay, $500 on account, but on the condition (which was agreed to, and was afterwards fulfilled, by the bank) that tire time of payment should be extended for six months from the date of maturity. The argument is that the indorser was only a surety, and was discharged because he did not agree to the extension. The trial judge struck out the evidence, and tire indorser complains of this ruling'as erroneous. In our opinion the objection is not well founded. Precisely what position an accommodation indorser may occupy under the Negotiable Instruments Act, when the holder knows that he has received no consideration, we do not find it necessaiy to decide. But one thing is certain; he is either primarily liable, or secondarily liable (sections 60-69); and, whichever may be his true character, the methods by which he can be discharged are pointed out in sections 119 and 120. The most favorable aspect in which to regard him is as a person secondarily liable, and therefore entitled to be discharged under section 120: “By any agreement binding upon the holder, to extend the time of payment, or to postpone the holder’s right to enforce the instrument, * * * unless the right of recourse against such party is expressly reserved.” Assuming, as we must, that the jury might have found the facts to be as Nalitzky testified, and assuming further—but solely for the purposes of this case—that Nalitt was only secondarily liable on the note, and was entitled to the protection of the clause quoted from section 120, the narrow question is presented: Did the bank make a binding agreement to extend the time? The fatal defect in the evidence is that no consideration for such a contract is shown, and therefore, although the agreement may have been formally entered into, it was a nudum pactum and tied the hands neither of the bank nor of the indorser. Nalitzky gave the bank no new consideration of any kind, pecuniary or other; he merely paid part of a debt that had matured, and, as all of it was then payable, he was doing no more, but, on the contrary, was doing less, than he was already bound to do. He neither undertook nor discharged any new obligation, and the bank gained no new legal advantage by accepting part of the debt when the whole of it was lawfully demandable. As the indorser could have paid what was due, either when the note matured or on any day thereafter, and could then have immediately pursued his own remedy against the maker, he suffered no injury and was not discharged. The general subject is considered in the notes,and cases to be found in 8 Corp. Jur. 278, § 434; Crawford, Neg. Inst. (3d Ed.) 138; Cellers v. Lyons, 49 Or. 186, 89 Pac. 426, 10 L. R. A. (N. S.) 133, 13 Ann. Cas. 997; Rogers v, Detroit Savings Bank, 146 Mich. 639, 110 N. W. 74, 18 L. R. [805] A. (N. S.) 534; Richards v. Market Exchange Bank Co., 81 Ohio St. 348, 90 N. E. 1000, 26 L. R. A. (N. S.) 99; Northern State Bank of Grand Forks v. Bellamy, 19 N. D. 509, 125 N. W. 888, 31 L. R. A. (N. S.) 149; 3 Rul. Case Law, 1273, §§ 503-508. The judgment is affirmed.