Case ID: scl_29/html/0436-01.html
Source: Caselaw Access Project
Author: {"author": "O’Neall, J. Evans, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James Judge and R. Dennis ads. H. Fiske and W. Eager.
    
    1. Rent being due on a written lease, under seal, payable quarterly, the landlord accepted the notes of his tenant for the several quarters’ rent due, to be paid at future stated periods, and gave a receipt for them, as in full of rent when paid, but before any of the notes were due, destrained.
    2. The acceptance of the notes by the land lord operated as an agreement to suspend the right of distress until there was a default in payment, and this agreement was supported by a sufficient consideration.
    3. The mere making of a promissory note or bill is no satisfaction of a precedent debt. It operates to suspend the party’s right to sue on the old debt until there is a right of action on the new. And the reason of the rule makes it applicable to all classes of debts.
    4 The cases from 1 Nott & McCord, 187; 3 McCord, 484, and 4 ib. 544, held not to conflict with this decision.
    
      Before Evans, J. Charleston, April Term, 1843.
    This was an action of replevin. Fiske leased of Judge a tenement in the city, for the term of three years. It was a written lease, under seal, whereby a rent of $500 was reserved, payable quarterly. On the 1st May, three quarters rent were due, and on the 7th, Fiske gave Judge three notes, one for each quarter, payable at six, seven and eight months, with interest added from the time each quarter’s rent was due. On the 1st August, another quarter’s rent was due, for which the note of Fiske and Eager was given, payable at five months, with interest added. Judge gave a receipt for the notes, as in full of rent when paid. In October, before any of the notes were due, Judge issued a distress warrant; the goods were replevied, and the case came on to be tried at this Term, on the question whether the rent was due at the time of the distress. The case turned on whether the landlord, by taking the notes, had entered into a binding contract to wait for the rent until the notes were due. If he had, then no rent was due. The court was of opinion, and so charged, that the lease, being a higher security, was in no way impaired by the simple contract. 2. That construing the notes into an agreement to extend the time of payment of the rent, yet it was nudum pactum, and void, for want of a consideration. The notes were tendered back at the time of the distress, and were produced in court, to be delivered up. The jury, however, found a verdict for the plaintiffs, for three hundred dollars.
    P. S. After the goods were levied on, the store was locked up for a day, and until the plaintiffs could find security for.the replevin.
    Defendants appealed, on the following grounds :
    1. Because the taking of the notes by the avowant was neither a payment of the rent, nor a suspension of his right to distrain, and he was entitled to recover the whole amount, with interest, for which the distress was made.
    2. Because the avowant was stopped by the court from shewing, in the previous case tried of James Judge and JV. Dennis ads. Samuel A. JVelson, that the plaintiff was in insolvent circumstances, and consequently did not offer the evidence in this case.
    3. Because the verdict was erroneous, in finding damages for the plaintiffs, when it was not proved that any injury had been sustained from the distress.
    4. Because the verdict was contrary to law and evidence.
    Phillips, for the motion. Rice, contra.
   Curia, per

O’Neall, J.

Two questions arise in this case. 1st. Did the notes accepted by the defendant, Judge, operate as an agreement to suspend his right of distress until there was a default in payment ? 2d. Was there a sufficient consideration to make the agreement to suspend enforcible as a legal contract 1

1st. The receipts given for the notes are, that they, when paid, shall be in full of the respective quarters of rent for which they are given. The plain import of this is, on the part of the landlord, I accept this in lieu of rent, until the security is due, then, if it be not paid, my remedy by distress will be resorted to. It is very true, that making of a promissory note, or bill, is not, of itself, sati faction of an antecedent debt. But yet it is equally if it be accepted as payment, it would have that effe the mere making of a promissory note or bill be faction of a precedent debt, what legal effect does it have1? It unquestionably operates to suspend the party’s right to sue on the old debt until a right of action would be given on the new. In the language of some of the cases, it is prima facie satisfaction, and this prima facie conclusion must be removed before the party can recover on the old debt. This cannot be denied in cases of simple contract, for the books are full of such cases, as Burdick vs. Green, 15 Johns. 247; Pintard vs. Tackington, 10 Johns. 103 ; Angel vs. Tilton, 8 Johns. 149; and Holmes & Drake vs. Decamp, 1 Johns. 34. The difficulty is in saying what is the effect of a bill or note on a higher security. Generally speaking, there is no doubt about the rule, that it would not deprive the party of the benefit of such higher security by extinguishing it. But I do not perceive why it may not be considered as a contract to wait on the higher security until the note or bill is due, and then, if not paid, to resort to it. Mr. Chitty, in his treatise on Contracts, 593, after stating generally the rule which I have stated, and which is extracted from cases of simple contracts, says: “ The reason that the instrument, during its currency, is a bar to an action for the debt, is, that the entering into a new engagement and security, by becoming a party to an instrument which subjects the debtor to peculiar liabilities, or affords the creditor fresh and peculiar rights, constitutes a new and good consideration for giving credit. During the currency of the security, the original remedy is therefore suspended, or in abeyance.” The reason thus given for the rule makes it applicable to all classes of debts, and in all it would have equal effect: for if it be good as a contract, to give time on a contract of equal degree, it must be so of one of superior degree. In Chitty on Bills, 123, the rule is stated, “ a person, by taking a bill of exchange or promissory note, in satisfaction of a former debt, or of a debt created at the time, is precluded from afterwards waiving it, and suing the person who gave it to him for the original ebt, before the bill is due; for the taking of the bill mounts to an agreement to give the person delivering it lit for the length of time it has to run.” The general terms rule cover all debts, but it is true the cases referred to -re the original contracts were simple contracts. Bat the Judges do not make any thing of that circumstance. Indeed, in all the cases, (as in Steedman vs. Gooch, 1 Esp. 3,) the language is used as was by Lord Kenyon, in that case, who said that “the law was clear, that if in payment of a debt, the creditor is content to take a bill or note, payable at a future day, he cannot legally commence an action on his original debt, until such bill or note becomes payable, or default is made in payment.” In Putnam vs. Lewis, Adm'r. of Lewis, 8 Johns. R. 304, where a note was given by the defendant, for an account against his intestate, it was held that the note was no payment of the book debt; it could only suspend the right of action during the time allowed for the payment of'the note. Looking at the note or bill taken in satisfaction as a contract to give time, if it be founded on a sufficient consideration, there can be no difficulty in holding it to be binding upon the creditor by a contract of superior as well as one of equal degree. The cases from 1 N. & McC. 187; 3 McC. 484, and 4 McC. 544, do not militate against this view. For in the case from 1 N. & McC. an order was drawn on a person not in funds, and hence its non-payment cast the landlord back on his original rights. In the case from 3 McC., the single bill expressed upon its face that it was given for rent, and there was no attempt to enforce payment until it was due. In 4 McC., the case was on a penal bond, conditioned to pay ■in instalments, one of which was due before the distress was resorted to. This was enough ; for the debtor had not kept his contract, and hence the creditor could not be compelled to do it. There is, therefore, I think, no difficulty in concluding that the notes accepted by the landlord were an agreement on his part to extend the time of payment. It is, then, necessary to enquire whether this agreement is supported by a sufficient consideration.

2d. Any thing which confers benefit on the party promising, or is loss or inconvenience to the party to whom the promise is made, is a sufficient consideration. Chitty on Con. 25. Here the enquiry will be, was the making of the notes a benefit to the landlord, ora loss to the tenants? It gave to the landlord an additional security, and that a commercial one, upon which he could raise money, and which, if not paid, would then give place to the former security, the right to distrain.

This, it seems to me, was a plain benefit. So, too, the debtor, the tenant, placed himself in this position: if he failed to pay, he was liable to be protested, and thus lose his credit, which, to a man in trade, would be a great loss. And everywhere, the fact of making a promissory Negotiable note, subjects a party to a new liability ; for if it be negotiated before due, all the maker’s defences against the original creditor are gone.

In the extract already made from Chitty on Contracts, 593, the making of such a note or bill is stated to be “ a new and good consideration for giving credit.” In Leigh’s N. P. 1, 29, the same principle is affirmed, and the case of Ikin vs. Brook, 1 B. & A. s. 124, (20 Eng. C. L. 357,) is referred to. That case was brought on a contract of indemnity, which, with the consideration, was set out as follows, in the 1st count, viz : the defendant and one West, as assignees of John Ikin, a bankrupt, preferred certain claims against the plaintiff, and that in consideration of the plaintiff having delivered to them two promissory notes of him, the plaintiff, for £100, and £400, payable to them, as such assignees, as a composition for and in satisfaction of all claims which they, as assignees, had against the plaintiff, they promised to indemnify him against all and every other liability which he was under on account of John Ikin. The 2d count stated the consideration the same as to the notes, and added, uand also a cognovit,” and laid the promise to be in consideration of the money so secured to be paid to them, it was held by the court that the consideration thus stated was sufficient, and that the plaintiff might recover on the indemnity without the payment of the money thus secured to be paid. This, it will be seen, is the very case before the court; for there, as well as here, the security for an existing debt was the consideration. Being hence satisfied that the consideration is enough to sustain the contract to give time on the contract for rent until the notes were due, it follows that that contract bound Judge, and that he had no right to distrain for rent arrear; and that he is liable for damages for the trespass committed in levying his distress warrant. The jury were therefore right, and their verdict cannot be disturbed.

The motion is dismissed.

Richardson, Butler, Wardlaw and Frost, JJ. concurred.

Evans, J.

dissenting. I do not concur in the opinion of my brethren, and shall state as concisely as I can, the grounds of my dissent. On the 1st May, 1842, there was due to Judge, by Fiske, three quarters rent, for which, on the 7th of May, Fiske gave to Judge his promissory notes, payable at six, seven and eight months. Judge gave a receipt for the notes, expressing that they were to be in full for the rent when paid. It is not pretended that the rights of Judge, as a landlord, are extinguished by these notes, but that the acceptance of them was an agreement to suspend his right of distress for the rent until the time the notes became due. There is no question a landlord may take a note, or other security, in satisfaction of rent, or that he may stipulate, by contract, to suspend the payment of his rent to a future time. But such a contract, to be binding, must have some sufficient consideration to support it; so that the sole question in this case is, whether the promise of Judge, implied from his taking the notes, has a consideration to support it. To me it seems clear there is no consideration ; and therefore the contract was nudum pactum, and not binding on him.

' According to Chitty, and the elem'entary writers, the sufficiency of the consideration must arise either from some benefit resulting to the promissor, or some damage, trouble or prejudice to the promisee.

I suppose it will hardly be contended that the promise of Judge to give Fiske six, seven and eight months to pay a debt already due, and for which he had a right of immediate distress, was any damage, prejudice or inconvenience to Fiske. It was a contract greatly for his benefit, as abundantly appears by his now seeking to enforce it; so that, if there be a sufficient consideration to sustain this contract, it must arise from some benefit resulting to Judge from the notes, which put him in a better condition than he was at the time the notes were given.

This, it seems to me, is resolved by enquiring what were his rights when the notes were received, and what were his rights afterwards. On the 7th May, Judge, as landlord, had the right to issue a distress warrant, under which the bailiff could levy on all the goods on the premises, and, in the course of a very few days, sell the same, and thus realize his rent in money. The right of distress is one of the highest security known to the law. It is even more speedy than an execution, because a sale may be made in less time. The distress might be replevied, but the same might be done if he had levied after the notes were dueand even if replevied, the landlord would have the double security of the goods levied on, and the security to the replevin bond.

Was his condition bettered in any way by the notes % for if it was, I concede he was bound by the contract. He got a negociable security, on which, by endorsement, perhaps, he could raise money at the bank, provided both of them had credit there; but if they were of that class whose notes are not discountable at the bank, he would fail to raise the money in that way. The rule must operate in-all cases, and apply as well to those whose notes may be discounted, as to those who have no bank credit, and to-those who live remote from banks, as to those who are near to them. If the bank would not discount the note,, then he would fail to convert his note into money, except, on such terms as the conscience of a usurer might dictate.. But even if the situation of the parties was such as to enable the landlord to discount the note, he would be liable,, by his indorsement, to the indorsee, to pay in case that the maker did not. I suppose, of course, as the notes were payable at a future time, the accruing interest was added ; but rent due on a written lease, will bear interest as well as a note ; and in this particular the note was no benefit to Judge. The landlord had the double security of the right of immediate distress, and the personal liability of the tenant, which he has agreed to exchange for the personal liability of the maker of the note, with a postponement of his right of distress until the end of the time the note has to run ; and from this agreement it is said the landlord has derived a benefit. I can perceive in it nothing more than a mere gratuitous agreement, which the party making it may at any time retract. It in no legal point of view differs from any other voluntary promise of a creditor to give his debtor a future day of payment, which, I suppose, no one will contend is a contract binding in law. Unless, therefore, there be something in a negotiable or bankable note which elevates it above all other securities for debt, I do not perceive any ground upon which it can be said this contract of Judge, to suspend his rights as a landlord, to a future day, is a binding contract. The notes were produced and tendered back at the time of the distress, andFiske thus placed without detriment in the same condition he was when the notes were signed. He was disappointed, no doubt, in being called on for the rent sooner than he expected to pay it. But this can hardly be a sufficient consideration. If a landlord, in mere kindness, had promised to wait six months for his rent, and had afterwards discovered that his tenant was removing his goods, and arranging his affairs so as to defraud him of his rent, would he not have a right, both in law and conscience, to revoke his promise, and collect his rent 1 And yet, in such case, the tenant might be disappointed in his expectations.

I have thus far considered this casein reference to general principles. I will now consider it in reference to the authorities. No case has been quoted at the bar, nor have I been able to find one, exactly like the present. The cases quoted by the counsel for the appellees, relate to a different subject. The case of Holmes & Drake vs. Decamp, 1 Johns. 33, merely decides what I suppose no lawyer will deny, that if a negotiable note be given for a simple contract debt, the party cannot recover on the original contract before the note is due, and not then unless he shews the note was lost, or produces and cancels it at the trial. The cases of Pintard vs. Tackington, and Burdick vs. Green, 15 Johns. 247, are but an affirmation of the same principle ; and so are all the cases, both English and American, quoted in Chitty on Contracts, 593, ’4 and ’5. All these cases go on a clear and obvious principle, that a note is a better security than an open account. That it is better is obvious. It is negociable ; it bears interest; and as it imports a consideration, the plaintiff is not bound to prove the original contract, and therefore comes within the rule that the taking of a higher and better security, if not an entire extinguishment of the debt, is an extinguishment sub modo, as is said in some of the cases. The right to sue on the original contract is suspended until the note becomes due, and the action will not then lie, unless the note is produced, or accounted for on the trial. But these decisions do not touch the question involved in this case, unless it can be shewn that a promissory note is a higher security than a distress for rent. The case of Price vs. Limehouse, 4 McC. 544, is more like the present than any of the cases which have been cited. In that case a bond had been given for the payment of the rent by instalments. After one instalment was due, but long before the other, a distress was levied for all that was then due by the lease. The amount levied included the whole first instalment, and a part of the second, which, by the condition of the bond, was not due until a year and more afterwards. It does not appear from the report that the question involved in this case was made, but I should infer from that, that it was not supposed to be an available defence, or it would have been noticed either by the counsel or the court. The action in that case was not on the bond ; it was offered as evidence, as the notes were in this case, of the time when the rent was to be paid by the contract of the parties. Nor is it any answer to this to say that the condition of the bond being broken by default in paying up the first instalment, the whole bond was forfeited. But this argument goes too far, as it would justify the levy for the rent not yet due, which, by the condition of the bond, was to be paid at the same time as some which was due, and which w7as levied by the distress.

For the reasons before stated, I was of opinion, and still adhere to it, that the landlord’s taking notes for rent already dpe on a lease, with the right of immediate distress, did not create any legal obligation to wait until the notes became due; and upon the return or tender of the notes, he might, at any time, proceed to collect his rent according to his original rights.