The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1889-06-14
SUPREME COURT DECISION
hs to Rights of Holders of Collateral
Security.

The following is the opinion of the Su-
preme.Judicial Court of Maine in the case of
Smith against Bibber, which has just been
announced. AS it relates to an important
question of commercial law. we publish it in
full:
Libbey J.-At the time the note sued on was
made, it was the settled law of this State, as de-
cided by this court, that promissory note en-
dorsed and transferred by the payee before due,
as collateral security for pre-existing debt, with
consideration between the parties therefor, was
subject to any defense that might be made, as be-
81 Ne. 20 2oS Nutter Slower IS Me- 1es ee0Ae''
The defendant sets up in defense payment of
the note as to the payee before it was endorsed to
the plaintiff as between the payor and the payee
this is a good defense. The contention between
the parties at the trial was whether this defense
could be set up against the plaintiff to whom the
note was endorsed before due as collateral Sc
curity for pre-exsting debt, as the defendant
claimed without any new consideration.
jury as follows "Now, in order for the plaintiff
TO recover he must satisfy you in the first place
that the note in suit was placed with the plaintiff
that there was valid consideration for the note,
and that 1t was still unpaid at the time the plain
TN received the note, or that the plaintiff, when
tended some forbearance to them; if he has prov
ed the first point that the note was left to secure
the whole indebtedness, and either of the latter
points, either that it was valid note, or that he
extended some forbearance to Phinney, if it was
an accommodation note, then he is entitled to re-
cover" Nov on the matter of forbearance, it is
not necessary that any specific time should be
agreed upon between Phtnney and Smith, during
which Smith should forbear to sue; if he went to
him and said, unless you give me collateral Sc
curity for this note shall sue and attach your
property and in consequence of that statement
sue, that is sufficient consideration for the TAX
ing OF this collateral, and Smith under these cir
cumstances, In taking the note.would be consider
ed bona ide holder for value.'
TTadpr thasa truetinnq tho iurv yvara a,1thor.
lied to find valid contract on the part of Smith
to forbear a suit against Phinney & Jackson
without any promise on his part to do So but that
the delay to bring an action was sufficient.
We think this was error. Without promise to
iorbear Smith deprived himself of no right or
a legal contract to forbear there must be valid
promise to do so, so that for some time the holder
OF the debt has no right to maintain an action on
bear.
Mecorney " Stanley, 8 Cush, So. ats
Robinson v. Gould, s Cush, 55.
Manter v. Churchill, 127 Mass. 81.
Berry v. Pullen, SO Me-. 101.
Turner v. Williams 70 Maine, 466.
Lambert V, Clewley, so Me-. 4S0.
sSmith v. Hiscock IA Me-, 449.
shutter v. StOrer, AS Me-, 169.
The rule which requires some new cOnsidera-
ton to protect the endorsee who takes the note
as collateral for pre-existng debt, against such
defence as is set up here, is admitted as the set
tied law OF this State when the note in suit was
made : but 1t is claimed by the counsel for the
plaintiff that it is in conflict with the rule estab-
lished by the Federal Courts, the Courts of Mas
sachusetts and many of the other States, which
is well shown by the authorities cited in their
brief, and they urge the court to over-rue the
cases In this State, and establish h re the rule
held by them which requires no new considera-
tion and thereby bring this State in accord, upon
this question of commercial law, with what is
claimed to be the rule established by the greater
one, here, we should be inclined to adopt the fed
eral rule as the one best sustained by principal
and authority.
But it has been so long settled the other vay
and acted upon in this State we do not feel that
we should be justifedn reversing it. Exceptions
sustained.
Filed June 6, 1889.