Case ID: ohio-st_26/html/0033-01.html
Source: Caselaw Access Project
Author: {"author": "Welch, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John G. Holzworth and Frederick L. Sebastian v. Koch, Mayer & Goldsmith, and John G. Doering.
    1. An agreement to forbear suit on a pre-existing debt is a sufficient consideration for a note given therefor; and an agreement so to forbear until the maturity of the note will be presumed, in the absence of proof to the contrary.
    2. Partial failure of consideration is no bar to an action on a promissory note, but merely entitles the maker to recoupment for damages, or abatement of the plaintiffs demand, to the extent the maker has suffered loss by the failure.
    3. Parol evidence is admissible to show the consideration of a note, and to show that the consideration in whole or in part has failed; but it can not be received to contradict the terms of the note, or to attach to it conditions.
    Motion for leave to file a petition in error to reverse the judgment of the District Court of Lucas county.
    This was an action, brought by Koch, Mayer & Goldsmith against Holzworth, Sebastian, and Doering, upon a promissory note for $368.60, payable six months after its date, made by Holzworth, Sebastian, and Doering to Koch, Mayer & Goldsmith.
    The defendants filed a joint answer, setting up as a defense that Holzworth and Sebastian signed the note as sureties for Doering; that Doering was a merchant tailor, and Koch, Mayer & Goldsmith dry-goods merchants; that the note in question was given for a balance of account due to them for goods furnished Doering for carrying on his business ; that Doering was, at the date of the note, insolvent, and in order to enable him to pay his debts and continue his business, Koch, Mayer & Goldsmith promised, if the defendants would execute said note, to hold the same merely as collateral security, and would furnish Doering goods on credit, to an amount not exceeding $500, and continue such credit so long as Doering should pay on account, and thus keep the credit within the limit of $500, and make “some small payments, from time to time,” upon the note. And the defendants allege that this promise of the plaintiffs was the sole consideration of the note; that the promise was fraudulently made, with the intention never to fulfill it, and that the plaintiffs had not kept the same, but, on the ■contrary, had failed, and refused to furnish the goods or to give the credit so agreed upon.
    The plaintiffs replied denying the matter set up in the answer.
    On trial of the cause there was testimony tending to prove the promise of the plaintiffs set up in the answer, and that the plaintiffs have not fully complied with the same; ■but there was no evidence tending to prove the alleged fraud in obtaining the note. The evidence showed that the promise had been partly fulfilled, by furnishing Doering ■goods, but to an amount less than $500.
    The defendants’ counsel asked the court to instruct the jury, that if they found that the note in suit was given for an antecedent debt of Doering, upon an agreement between the parties that it should be held solely as collateral security for the payment by Doering of the antecedent debt for which it was given, and that Doering should continue to make payments thereon as fast as he could, without refer■ence to the time of the maturity of the note, then, as to Holzworth and Sebastian, there was no considei’ation for •the note, and the verdict should be in their favor. They ■also asked the court to instruct the jury, that if Holzworth .and Sebastian were induced to sign the note upon the plaintiffs’ promise and agreement, as set forth in the answer, and that the plaintiffs failed to comply therewith, “and thereby Doering was prevented from carrying on his business as fully as he otherwise-would have done,” then Holzworth and Sebastian are not liable on the note.
    This instruction the court refused to give, and instructed the jury that, in order to entitle Holzworth and Sebastian to a verdict, they must either show fraud in obtaining the note, or a total failure of consideration; that if the plaintiffs’ promise, as set up in the answer, was the sole consideration of the note, and the plaintiffs had wholly failed to comply with or execute the promise, then the sureties were entitled to a verdict; but that if an agreement of the plaintiffs to forbear suit on the debt for which the note was given, formed a part of the consideration, or if the promise set up in the answer was the sole consideration, and that promise had been partially executed, then under -the pleadings as made up, the sureties would not be entitled to a verdict. And the court also told the jury that, in the absence of proof to the contrary, they should presume that such an agreement to forbear did form part of the consideration of the note.
    To which instruction, and refusal to instruct, the counsel excepted; and the jury having returned a verdict for the plaintiffs, judgment was entered thereon in their favor. To reverse this judgment Holzworth and Sebastian prosecuted a petition in error in the District Court, where the judgment was affirmed; and they now ask leave to file a petition in error here to reverse the judgment of affirmance.
    
      Scribner § Hurd, and L. H. Pike, for the motion:
    As the debt of Doering was antecedent to the giving of the note, there was, as to Holzworth and Sebastian, no consideration for the note, unless there was an agreement, on the part of the creditors, to forbear the collection for some fixed and definite period. 2 Amer. L. C. 200, 254-256; Crofts v. Beale, 5 Eng. L. & Eq. 408; 8 Cush. 85; Bingham v. Campbell, 17 Ind. 396.
    
      As we understand the law, the sureties may say to the-creditors : We were not bound to pay the antecedent debts of Doering to you. We undertook with you that it should be paid by a certain period, in consideration of your promise and agreement that you would keep him supplied with goods; that you would continue him in his business, thereby enabling him to make gains, from which to pay the debt. This consideration, constituting a condition subsequent,, which you were bound to perform, was, in its nature, an entirety. In order to hold us liable you were bound to its reasonable, full performance. Your contract has not been kept; the condition is unperformed; therefore we are not liable. Burge on Suretyship, 115, sec. 2; 5 B. & C. 269; 1 Stark. 192; Campbell v. Gates, 17 Ind. 126; De Col-yer on Suretyship, 30; Portage County Bank v. Lane, 8 Ohio St. 405.
    
      Kent, Newton § Pugsley, contra:
    A parol contract can not be set up to vary a written one— that is, in this case, the note—by changing its terms of payment.
    If a promise was made to furnish Doering more goods, it would amount to no more than a part ®f the consideration of the note; that is, the whole promise, made by plaintiffs below, was the consideration of the note, so far as the sureties were concerned. This promise was performed by extending time and by furnishing goods.
   Welch, J.

We see ho error in these instructions of the' court, or in its refusal to instruct as requested. In the absence of proof to the contrary, the presumption was that the payees of the note agreed to forbear suit on the debt until the note should mature. There is no such proof in the case, nor is it even alleged in the answer that there was no such agreement to forbear. This agreement, as well as the partial performance of the promise to furnish goods, formed a sufficient consideration to support an action on the note. The failure to furnish goods to the full amount agreed upon constituted only a partial failure, which, was no bar to the action, and merely entitled the defendants to recoupment for damages, or to an abatement of the plaintiff’s claim, to the extent the defendants may have suffered loss by the failure.

But counsel for plaintiffs in error say, in effect, that the promise to furnish goods, and not to enforce payment of the note faster than Doering should be able to pay, was a condition attached to the note, and that it is only upon full performance of that condition that payment of the note ■can be enforced. It is only necessary to say, in answer to this claim of counsel, that although parol evidence is admissible to show the consideration of a note, and to show a total or partial failure of that consideration, it can not be received for the purpose of contradicting the note, or attaching to it parol conditions. The note contains an absolute .and unconditional promise to pay its full amount at the end of six months, and the defendants sought, by parol proof, to change this into a'promise to pay on condition > the plaintiffs would furnish goods to Doering, and to pay at ■such time or times as he might be able to pay. This they could not be allowed to do, without violation of one of the first and plainest principles of evidence.

Motion overruled.

McIlvaine, C. J., White, Rex, and Gilmore, JJ., concurred.