Case ID: ad_13/html/0450-01.html
Source: Caselaw Access Project
Author: {"author": "Follett, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

German-American Bank of Buffalo, Respondent, v. Niagara Cycle Fittings Company, Appellant.
    
      Bills and notes — status of an indoi'ser after protest and notice — extending. the maker’s time to answer does not discharge an indorser.
    
    The indorser of a note, when his liability is fixed by protest and notice, becomes an independent and principal debtor, and does not stand, to an indorsee for. value, in the position of a mere surety for the maker of the note.
    An extension of time to- answer given to the defendant, the maker of a note, in an action brought thereon against him and the indorser, does not amount to an extension of the time of payment of the note or release the indorser.'
    Appeal by the defendant, the Niagara Cycle Fittings Company,, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Erie on the 30th day of March, 1896, upon the decision of the court rendered after a trial before the court without a jury at a Trial Term of the Supreme Court held in and for the county of Erie.
    This action was- begun- December 17, -1895, to recover of an indorser the remainder due on a promissory note..
    
      January 17, 1895, the Hitchcock Manufacturing Company executed its promissory note, whereby it promised to pay to the order of the'Niagara Cycle Fittings Company $400 four months after date, at the Second National Bank at Cortland, N. Y.; and, .on January 18, 1895, the Hitchcock Manufacturing'Company executed its promissory note, whereby' it promised to pay to the order of the Niagara Cycle Fittings Company $200 four months after date, at the Second National Bank at Cortland, N. Y. The Niagara Cycle Fittings Company indorsed these notes and, for value received, transferred them to the plaintiff. When the notes fell due they were dishonored, and notice thereof given to the indorser. June 12, 1895, the plaintiff brought two actions against the maker and indorser to recover the amount due on the notes, but the Hitchcock Manufacturing Company only was served. On the 3d of July, 1895, the Hitchcock Manufacturing. Company paid $300 on the notes, and thereupon the plaintiff’s attorney, by a written stipulation, extended the time to answer or demur thirty days. Before the time given expired, and on or about July 13,1895, the Hitchcock Manufacturing Company became insolvent and its property passed into the hands- of a receiver. By this payment of $300, the $200 note was fully paid and the remainder applied upon the $400 note; and subsequently, in the action xipon that note, a judgment was entered against the Hitchcock Manufacturing Company for the balance due, and an execution issued.
    
      Andrew J. Robertson, for the appellant.
    
      Simon Fleischmann, for the respondent.
   Follett, J.:

' The sole defense interposed is that the plaintiff, by extending the time to answer of the Hitchcock Manufacturing Company, the maker of the note, discharged the indorser, the defendant herein.

' This defendant indorsed and transferred the note to the plaintiff :for value, and when its liability became fixed by protest and notice, ¡it became an independent and principal debtor, and did not stand in ■the position of a mere surety for the maker of the note. (First National Bank v. Wood, 71 N. Y. 405, 411; Edw. Bills [3d ed.], § 765.) The holder of a promissory note owes the indorser no active duty to secure or protect his interests. (Smith v. Erwin, 77 N. Y. 466.) When the note was dishonored it became the duty of the defendant to take it up, and to take such proceedings against the maker for its collection as should be deemed expedient. This the indorser failed to do, but threw the burden of enforcing the maker’s liability on the plaintiff, which it proceeded to do by an action, during the pendency of which the time to answer was extended thirty days. This did not amount to an extension of time of the payment of the note.. The indorser could at any time have paid the note and brought an action, and, notwithstanding the stipulation, the plaintiff., in the action could have withdrawn his action and begun a new one. In no sense can a mere extension of time to answer in an action be deemed an extension of time for the payment of an obligation upon which. the action is founded. This question seems to have been settled in this State. In Ducker v. Rapp (67 N. Y. 464)it was said: “An ordinary stipulation during a litigation to extend the time to answer would not affect a surety, nor would any agreement "for indulgence to pay, or otherwise, unless it was founded upon a good consideration, and operated to prevent the collection of the demand in any form.” The same was said in Ross v. Ferris (18 Hun, 210) and in Steinbock v. Evans (122 N. Y. 551).

Under the rule contended for, a plaintiff in an action against a. maker of a. note, would discharge the indorser by giving or receiving an extension of time to take any step in the action which would delay, for a single day, the recovery of the final judgment. The holder of a promissory note owes no such duty to the indorser.

The judgment should be affirmed, with costs.

All concurred.

Judgment affirmed, with costs.