Case Name: William Sanders vs. D. A. Gillespie
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1873-04-01
Citations: 64 Barb. 628
Docket Number: 
Parties: William Sanders vs. D. A. Gillespie.
Judges: Mullin, Talcott and E B. D. Smith, Justices.]
Reporter: Barbour's Supreme Court Reports
Volume: 64
Pages: 620–627

Head Matter:
William Sanders vs. D. A. Gillespie.
G. and the plaintiff were indebted to W, upon a judgment for $461.13, recovered upon a promissory note of which G. was the maker and the plaintiff an accommodation endorser. The judgment had been entered up against the maker alone, upon the promise of the plaintiff that he would see that an execution issued upon it was collected. The plaintiff and defendant thereupon, on the 12th of September, 1870, entered into an agreement that the former should pay said debt in full, and the latter would pay the plaintiff the amount advanced by him, in groceries out of his (the defendant’s) store, as the plaintiff might want the same. Pursuant to said agreement, the plaintiff paid $61.13, on the judgment, and a note for the balance, $400, was made by G. and endorsed by the plaintiff and the defendant, which the plaintiff subsequently paid. The defendant paid him, in groceries, towards such advance, the sum of $300.67, leaving still due to the plaintiff $187.71. Held that the plaintiff was entitled to recover that sum of the defendant.
Held, also, that the plaintiff and defendant being both endorsers on the $400 note, the agreement was one between them in respect to their relative liabilities on such note; and was an original and independent agreement between them, entirely outside of the statute of frauds. .
That the promise of the defendant was not collateral to the original indebtedness of G., and did not propose to pay his debt, upon his default, to his creditor; but the agreement was that if the plaintiff would pay the note endorsed by both the plaintiff and defendant, the defendant would repay him the amount so advanced.
Held, further, that the plaintiff’s agreement absolutely to take up the $400 note, at maturity was, under the circumstances, a sufficient consideration for the defendant’s promise to reimburse him for such payment.
THIS is an appeal Horn a judgment rendered upon the report of a referee appointed by the Onondaga county court, and affirmed by that court. The referee finds, that on the 12th of September, 1870, one William W. Grillespie and the plaintiff were indebted to one Wilkinson, upon a judgment for $461.13, recovered upon a promissory note, of which the said Gillespie was the maker and the plaintiff an accommodation endorser ; that said judgment had been entered up against the maker alone, upon the promise of the plaintiff to see that an execution upon it was duly collected. That after entry of said judgment, the plaintiff and defendant entered into the agreement following: That “said Sanders should pay said debt, in full, and the said Anthony Grillespie would pay said Sanders the amount advanced by him, in groceries out of Ms, (said Anthony Gillespie’s,) store, as he said Sanders might want the same that pursuant to said agreement the plaintiff paid said debt in full, and the defendant had paid Mm, in groceries from Ms store, toward such advance, the sum of $300.57, leaving unpaid, including interest to date of the referee’s report, the sum of $187.71, which he refused to pay, and for which this action was brought.
The referee found, as matter of law, that the plaintiff was entitled to recover of the defendant the said sum of $187.71 damages, and directed judgment accordingly.
Ruger, Wallace & Jenney, for the appellant.
I. The agreement of the defendant was one to pay the debt of W. W. Grillespie, and not being in writing, was void by the statute of frauds. The defendant agrees with the plaintiff that if the plaintiff will pay a note of W. W. Grillespie he (the defendant) will pay the amount thereof to the plaintiff. The” plaintiff, as endorser, had the right to pay the note, and after payment to call on W. W. Grillespie for re-payment. The agreement between the plaintiff and the defendant, did not affect the liability of W. W. Gillespie to the plaintiff, bnt it remained precisely as before. The new agreement was therefore clearly a collateral and not an original undertaking. (Simpson v. Patten, 4 John. 422. Jackson v. Rayner, 12 id. 291. Mallory v. Gillett, 21 N. Y. 412. Van Slyck v. Pulner, Lalor, 47. Watson v. Randall, 20 Wend. 201.)
II. The agreement between the parties was without consideration. The only consideration for the promise of the defendant, was the promise of the plaintiff that •he would pay a demand which, at the time of promising, he was legally obligated to pay. The performance of that which the person who agrees to perform was under a previous valid obligation to do, is not a sufficient consideration to . support an agreement. (Smith v. Bartholomew, 1 Metc. 276. Crowhurst v. Laverack, 8 Exch. 208.) The precise question is decided in L' Amoreux v. Gould, (7 N. Y. 349, 351.) In that case the endorser had agreed to pay, and did pay, $1,000, on certain notes, some of which were not then due. The court held that if he had been charged as endorser, his agreement to pay, and his payment made pursuant to such agreement, would not have been a sufficient consideration for the agreement on which the action was brought. The test of a good consideration is a benefit to the promissor, or an injury to the promissee, arising from the act agreed to be done. What benefit could the defendant derive, or what injury could arise to the plaintiff by Ms promise to pay, and his payment of that which he was bound to pay without Ms promise to the defendant ?
W. Sanders, for the respondent.
I. If a writing was necessary under the statute, the writing in this case, delivered to and accepted by the defendant, and by him produced on the trial, was sufficient. It has been held that, under the provisions of the statute, the agreement must be signed by the party to be charged therewith. It is not necessary, that both parties, should actually sign the instrument. If the agreement be signed by one and delivered to and accepted by the other, it is valid ; and the rule is the same at law and in equity. (Gale v. Nixon, 6 Cowen, 445. Fenly v. Stewart, 5 Sandf. 101. Webster v. Zielly, 53 Barb. 482. Worrall v. Munn, 5 N. Y. 246.) The same has been held substantially in regard to contracts for the sale of land. (14 John. 486. 2 Kent, 510. 2 Caines' Cas. 120. 1 Seld. 229. 3 John. Cas. 6.)
II. The judgment against William W. Gillespie was paid by a note in which both Gillespies joined as makers or endorsers. This note, by the agreement then made by the parties, the plaintiff was obliged to pay at maturity and receive his pay in goods. The former debt being paid, nothing remains but this note, and this was a sufficient contract, and brings the case within the rule as to the several parties to a note; when although aH the parties are equally liable to the holder, yet as between themselves it may be shown, irrespective of the character in which they sign, who was in fact the principal, and whose duty it was to pay the note, and the source from which he was to be indemnified.
III. The making of the note that paid the judgment, and the writing held by the defendant, were simultaneous acts and parts of the same transaction, and should be so construed ; in which case there was a signing by all the parties.
IY. But a more perfect answer to the defence of the defendant is, that this transaction is entirely clear of the statute of frauds, and does not come at all within its provisions. It was conceded on the trial, and the referee finds in his report, that the judgment against William W. Gillespie was paid by the plaintiff’s check, and the note in question, which was in fact the plaintiff’s note, although the Wilkinsons required that all should join in some capacity. Now when the judgment against William W. Gillespie was paid, there was no debt left t'o which the defendant’s promise could be collateral. The defendant does not claim that the advancement of the money was not a sufficient consideration, but that the agreement jbetween the plaintiff and the defendant should have been in writing and was not. And we submit : 1. That the writings made at the timé of the transaction were sufficient. 2. That, as between these parties, it was an original undertaking on the part of the defendant, in which William W. Gillespie made no promises, and did not in any way become obligated. But the promise of the defendant was, that if the plaintiff would advance money for a certain purpose he would pay in a certain way. The plaintiff advanced the money in pursuance of that agreement, and by this transaction the debt of William W. Gillespie was paid, and there was nothing left to which this promise could be collateral, and that the case, for that reason, would not come within the statute of frauds, has been well decided in many cases, and we understand the rule to be well settled, that where, by the transaction under which the party claims, the former debt or obligation is cancelled, or where the party enters into an independent obligation of his own, not dependent upon any contingencies, the case is not within the statute of frauds. (Stoddard v. Graham, 33 How. 532. Brown v. Weber, 38 N. Y. 187.) Also the rule established and cases cited in Mallory v. Gillett, (21 id. 412.)

Opinion:
By the Court, E. Darwin Smith, J.
The question presented upon this appeal is, whether the agreement of the defendant found by the referee, to pay the plaintiff the advances made by him in payment and satisfaction of the promissory note of W. W. Gillespie, is or is not a valid agreement. The whole agreement is contained in the instrument in writing, signed by the plaintiff, and delivered to the defendant at the time, as follows:
"Whereas D. A. Gillespie has this day endorsed a note of $400, payable to my order, the object of which is to pay a note of W. W. Gillespie, endorsed by me. How, therefore, in consideration of the premises, I agree to pay the said note when dne, and to receive my pay thereon in groceries at the store of the said D. A. Gillespie, at his cash price, as I may want them, for family use.
September 13, 1870. W. Sawders."
At the time when this agreement was made, it appears in the evidence, and from the referee's report, that the promissory note referred to in said agreement, and which the said promissory note then made and endorsed was made to take np, had previously fallen due, was protested for non-payment as against the plaintiff, was sued and put in judgment against the said W. W. Gillespie, and that the judgment creditor' had agreed to receive $61.43 in cash, and the said note of $400 at two months, and discharge such judgment.- The plaintiff paid this $61.43, and the note of $400 was at the same time delivered to Wilkinson, the judgment creditor. Wilkinson had thus received $61.43 of his debt, and a new note from the original parties, with the additional name of the defendant as endorser on the new note for $400. In consideration that the plaintiff would pay this debt at maturity, the defendant agreed to repay him such amount in groceries, out of his store, as he might want them for family use.
The first point made by the defendant's counsel is, that this agreement was one to pay the debt of W. W. Gillespie, and not being in writing was void by the statute of frauds. This position, I think, is not sustainable. The agreement was not with the original creditor, nor for his benefit; nor did any consideration move from Mm or the debtor for the defendant's promise. The plaintiff and defendant were both endorsers on this $400 note, and this agreement was between them in respect to their relative liabilities on such note. And I tMnk it is an original and independent agreement between them, and entirely outside of the statute of frauds.
This promise of the defendant is not collateral to the original indebtedness of his brother—does not propose to pay his debt, upon his default, to his creditor. The agreement is, if the plaintiff will pay the note, endorsed by both the plaintiff and the defendant, the defendant will pay him the amount soadvanced.
The case, so far as relates to the statute of frauds, would come within the third classification made by Judge Comstock, in Mallory v. Gillett, (21 N. Y. 417,) ' where the promise to pay the debt of another arises out of some new and original consideration of benefit or harm moving between the contracting parties." And this brings me to the next more important question— whether there was any adequate consideration for this promise.
It appears from the referee's report, and the evidence, that at the time of the making and endorsing the original note therein referred to, the maker of such 'note, W. W. Gillespie, was a merchant and trader, and that after the making and endorsement of such note his store and business passed from his hands into the hands of the defendant.
The plaintiff, in his testimony, states that on the 12th of September, the day of the date of said note, he went to the defendant's store and inquired if the said judgment was going to be paid, and the defendant then asked him if he, the plaintiff, would not pay the judgment and take it in trade. The plaintiff in reply said he had not money enough; if he could get an extension of two months he would do so; and that thereupon he and the maker, W. W. Gillespie, went and saw the Wilkinsons, and made an arrangement with them to take the $61.43 cash, and the new note for $400.
[Fourth Department, General Term, at Rochester,
April 1, 1873.
Mullin, Talcott and E B. D. Smith, Justices.]
These facts, with the endorsement of said note and the making of the agreement to pay the plaintiff, in goods, the amount of his advance, if he would pay said note, seems to imply that at the time of the making of such note and promise, the defendant recognized some moral or equitable obligation or duty on his part to relieve the plaintiff from the payment and ultimate loss of the amount of such note so endorsed by him for his brother. Something of this kind was doubtless the inducement to the promise on his part to pay the amount of such advance, in goods, out of Ms store. This promise, on the part of .the defendant, was the consideration for and doubtless induced the plaintiff to undertake and assume, in the first instance, to pay and discharge the said $400 note, and take up the same with his own funds, thus making Mmself, in effect, the principal debtor on such note, as between him and the defendant, and before he was charged as endorser thereon, and also to accept payment of the amount so to be advanced, in goods from the defendant's store, as he should need them for family use.
.The plaintiff's agreement absolutely to take up the said note at maturity is, I think, under the circumstances, a sufficient consideration for the defendant's promise to reimburse Mm for such payment.
In L' Amoreux v. Gould, (3 SeId. 349,) it was held that an agreement, by an endorser, to take up notes before they were due, and before he was charged as an endorser, was a sufficient consideration to support a promise to pay for the money so advanced.
I think that the judgment in tiffs case was right, and should be affirmed.