Case Name: Bank of Utica vs. Ives
Court: New York Supreme Court of Judicature
Jurisdiction: New York
Decision Date: 1837-10
Citations: 17 Wend. 501
Docket Number: 
Parties: Bank of Utica vs. Ives.
Judges: 
Reporter: Wendell's Reports
Volume: 17
Pages: 282–284

Head Matter:
Bank of Utica vs. Ives.
Indulgence to the maker of a note on receiving securities from him, does not discharge the endorser, where there is no valid agreement for giving time of payment for a definite period,
Where a verdict is set aside as unsupported by the evidence, a new trial is granted only on payment of costs.
This was an action of assumpsit, tried at the Oneida circuit, in October, 1835, before the Hon. James Vandeupoel, one of the circuit judges.
The suit was against the defendant as the endorser of a promissory note, made by Charles Morris & Co., for $500, dated 24th November, 1828, payable in ninety days. The defence set up was, that the defendant was discharged by indulgence given to the makers of the note. Charles Morris, one of the makers, testified that on the 20th July, 1829, finding himself embarrassed with his debts, and having many demands outstanding and considerable real estate, he confessed a judgment in favor of Nathan Davis, his partner, for the sum of $14'000, to secure his creditors; that he was responsible at the bank of Utica on Iiis own account and as endorser for others, to the full amount of the judgment, which was assigned by Davis to the bank; that he, the witness, also assigned to the bank obligations to the amount of several thousand dollars; that he told the cashier he wanted indulgence, who assented to the request, but no definite time was ashed for or agreed upon. After the lapse of three or four years the bank sold the property of Morris, [502] and the note in question remaining unpaid, this suit was commenced. The judge charged the jury that the only question for them to determine was, whether the plaintiffs had discharged the defendant by giving time to the makers of the note, and instructed them that mere indulgence by the plaintiffs to the makers would not have the effect to discharge the endorser; that to produce such an effect, the agreement must have been upon a valuable consideration, and of such a character that had the defendant paid the note, as endorser, and sued the makers before the expiration of the time to which the indulgence was to extend, it might be set up in bar of a recovery. The counsel for the plaintiffs excepted to so much of the charge as applied the doctrine of giving time to the makers to a case of this character, but did not object to the question of the existence of the agreement being submitted to the jury. The jury found a verdict for the defendant. The plaintiffs applied to the circuit judge for a new trial, who made an order granting a new trial, with costs to abide the event. From which order the defendant appealed to this court. The cause was argued here by
W. C. Noyes, for the plaintiffs,
who insisted that the plaintiffs were entitled to recover, unless the defendant showed an agreement to give time to the makers, founded upon good consideration (Chitty on Bills, 370, 371, 397, note b.), and that the assignment of securities to the plaintiffs, even if the time of payment thereby was extended, did not discharge the endorser (3 Barn. & Cress. 208; 4 Carr. & Payne, 151).
J. A. Spencer, contra.
An agreement for a valid consideration, extending to a principal the time of payment of a debt, discharges the surely, although the principal, at the time of such agreement, is actually insolvent. Huffman v. Hulbert, 13 Wend. 375. In that case the defence was, that the pluintiil had, for a valuable consideration, agreed with the principal to extend the time of payment; and had, in pursuance of such agreement, actually extended it; and the fact of such agreement appears to have been established by pretty clear and direct testimony. This fact, if satisfactorily proved, discharged the surety, and was per se a perfect defence to the action. Pain u. Packard, 13 Johns. It. 174; King v. Baldwin, 17 id. 384, in error; 15 id. 483; 16 id. 72; 9 Cowen, 206; 7 Wendell, 289 ; 2 Johns. Ch. R. 560 ; 2 Bos. & Pul. 62. It was varying the contract to his prejudice, as it deprived the surety of the power of paying the debt, and immediately calling upon his principal. It is unnecessary for him to show that lie has been actually damnified. It was perfectly immaterial, therefore, whether the principal was or was not insolvent when the new agreement was made.
Mere indulgence or delay will not discharge the surety, hut a valid agreement between the creditor and principal debtor, whereby the surety may he deprived of or delayed in his remedy against the principal will release him. Bangs v. Strong, 7 Hill, 250 ; S. C. 10 Paige, 11. Even an agreement to delay, does not discharge the surety, unless founded on a sufficient consideration ; Reynolds v. Ward, 5 Wend. 501; Brown v. Curtis, 2 Comst 225.

Opinion:
By the Court,
Nelson, Ch. J.
The defence to the action in this case is, that the plaintiffs gave time to the principal debtor, Morris; the jury have found in favor of it, upon the facts, under correct instructions from the court. The only question, therefore, presented is, whether the evidence warranted the verdict. Mere indulgence at the will of the creditor, [503] extended to the debtor, in no way impairs the obligation of the surety; if it did, it would be a most inconvenient and oppressive rule, as then, suits must immediately follow the maturity of the paper. It is well settled, there must be a valid common law agreement to give time, founded of course upon a good consideration, to have this effect. Was such an agreement proved here?
Morris, the maker, called by the defendant, is the only witness; and if there was an agreement, he was a party to it, and in a situation to place the fact beyond controversy. His interest was balanced, and for aught that appears, he is a man of respectable character. The witness was called by the defendant because he held the affirmative and must establish the agreement giving time, with reasonable certainty in the first instance. I have looked through the case, and do not find that this witness undertakes to prove any such contract; not even that it was his purpose to procure one, in the several interviews with the cashier of the bank; and if he is not able to assert the fact, so far as he himself was concerned, it can not be expected that he could prove one on the part of the bank. The utmost that he testifies to is, that he soliciled indulgence to arrange his affairs, and try to relieve his endorsers; and that he was given to understand this would be extended to him. No time, terms or conditions upon which it would be granted, were mentioned, asked for, or agreed upon. It is not pretended by the witness, that the indulgence was assented to in consideration of the giving of the judgment, or the turning out of the notes and obligations. These are the considerations urged and the only ones that can be relied on. If it was thus understood and intended by the parties, the witness could not well have forgotten the facts; at all events, they are not to be presumed when one of the parties is not willing to assert them under oath; it would be presuming against the recollection of a party to the transaction, the most deeply interested in it at the time, and therefore the most likely to remember it. To infer a contract under such circumstances would be not only substituting conjecture [504] for, but against evidence; as the inability of a witness to testify to the existence of a contract to which he is alleged to have been a party, is something more than mere negative testimony. As the charge, however, was correct, assuming the point to be put to the jury, and there is no exception to the instructions in this respect, the new trial should have been granted by the circuit judge on payment of costs. There was an exception to the application of the doctrine giving time to the case, for reasons given by the counsel; but none respecting the submission of the question of fact to the juiy.
New trial granted on payment of costs.