Case Name: Joseph Russell v. Samuel Buck
Court: Vermont Supreme Court
Jurisdiction: Vermont
Decision Date: 1839-01
Citations: 11 Vt. 166
Docket Number: 
Parties: Joseph Russell v. Samuel Buck.
Judges: 
Reporter: Vermont Reports
Volume: 11
Pages: 166–189

Head Matter:
Joseph Russell v. Samuel Buck.
A promise by one already legally liable for a debt, in consideration of such liability, to pay, if waited on a certain time, creates no new liability.
A promise to pay the debt of another,, if waited on a certain time, leaving the debt to be enforced, during that time, against the debtor, is nudumpactum.
A promise, by an indorser to an indorsee, in these words, “ I hereby guaranty to said R. the collection and payment of the above described note, and agree to pay the same on condition that said R. does not call on me for payment till the 1st of May 1831,” is not an absolute promise to pay. It is, in legal effect, a promise that the indorsee shall use reasonable diligence to collect the note of the maker; and, if he fails in such collection, then the promissor will pay the same on demand, after 1st May 1831.
This was an action of assumpsit. The declaration contained two counts. The instrument declared upon was without date, and is recited in the second count. The first count was as follows;
For that whereas, heretofore, to wit, on the 26th day of June 1828, Amasa Gibson and Reuben C. Gibson made, executed and delivered to Buck & Bailey and Eland & Kenyon their joint and several promissory note for $1915,13, payable in one year from the date aforesaid, with interest, at the Farmers’ Bank, and expressed to be for value received, which said note, on the day and year last aforesaid, was indorsed and delivered by the said payees, Buck & Bailey and Eland & Kenyon, to the plaintiff, for value received; by reason of which said indorsement, the said defendant was, as one of the said indorsers, liable on said note; and in consideration thereof, and in consideration that plaintiff would not call on defendant for the payment of said note, until the 1st ■ day of May 1831, the defendant faithfully promised plaintiff to pay him the contents of said note, provided plaintiff did not call on defendant till the 1st day of May 1831 ; and the plaintiff avers that he did not call on defendant until long after the lstday of May 1831, to wit, until the 1st day of June 1831. Yet the defendant, notwithstanding said note, on the 1st day of May 1831, remained wholly unpaid, not regarding his said promise and undertaking aforesaid, has ever neglected and refused to pay said note or any part thereof, and still Beglects and refuses, to the damage of the plaintiff four thousand dollars.
Second count.
And for that whereas, the said Joseph Russell, on the 1st day of June 1829, held one other note of $1915,13, and signed by said Amos B. Gibson and Reuben C. Gibson, for value received, and delivered the same to the said Buck & Bailey and Hand & Kenyon, to whom, or to whose order, the said note was payable in one year from date, which said note was indorsed by said Buck &. Bailey and Hand & Kenyon to plaintiff, to wit, on the day and year last aforesaid, at Bridport, whereby the said defendant was liable, as one of the indorsers of said paper ; and the said Buck, being thus liable, to wit, on the day and year last aforesaid, made, signed, and delivered to plaintiff, a writing of the following ten- or : “ Whereas, Buck & Bailey indorsed a note made by Am-B. Gibson and Reuben C. Gibson for $1915,13, i£ dated June 26, 1828, and payable one year from ££ date, with interest, which note is now the property of “ Joseph Russell; now,' therefore, I hereby guaranty to said “Russell the collection and payment of the above described “ note, and engage, to pay the same, on’condition that said “ Russell does not call on me for pdyment till the first day “of May 1831.” And the plaintiff avers, that neither the said Amasa B. Gibson, nor Reuben C. Gibson, nor any other person, has ever paid said note, or any part thereof; and the plaintiff says that he did not call c;n said defendant till the 1st day of May 1831, agreeably to the above condition Yet the defendant, not regarding, &c.
The defendant pleaded the general issue, and the statute of limitations.
The note, mentioned in the declaration wás offered in evidence by the plaintiff, and was as follows :
“ $1915,13. One year from date we jointly and severally promise to pay to the order of Buck & Bailey and Hand & Kenyon, at the Farmers’ Bank, nineteen hundred and fifteen dollars thirteen cents, value received, with interest. Troy, 26th June, 1828.
(Signed) Amasa B. Gibson.
Reuben C. Gibson.”
Which note was indorsed on the back,
“ Buck & Bailey.”
“ Hand & Kenyon.”
To prove the execution of the endorsement of Buck & Bailey, on the back of said note, the plaintiff introduced and proved the instrument declared upon, and gave the same in evidence, it being admitted to have been executed by the defendant. The plaintiff insisted that the said contract was sufficient evidence to entitle him to recover, and thereupon rested his case.
The defendant moved for a nonsuit, on the ground,
1. That the proof did not support the declaration, both as it respected the contract and the consideration alleged.
2. That no presentment and notice of non-payment had been shown, and the instrument produced was not a waiver of these so as to hold an indorser, unless plaintiff showed that he had made the waiver with a knowledge that there had been no presentment and notice.
3. That, admitting these points were not tenable, the statute of limitations had run, as the instrument shown in evidence was void, for want of consideration, as an independent contract, and therefore was only an admission from the time it was made, and the plaintiff must show it made six years before suit commenced.
The court decided that the evidence was sufficient to support the declaration, and would maintain the action on the part of the plaintiff, and denied the motion for a nonsuit.
The defendant then proved, that on the 29th day of Jan. A.D. 1828, Amasa B. Gibson, who was a merchant in Crown Point, in the state of New York, sent his clerk to the store of Buck & Bailey, in the same town, with a blank piece of paper to Bailey to indorse for his accommodation, which Bailey refused to do ; that about two hours after, Gibson himself came to the store of Buck & Bailey, and urged Bailey to indorse the company name of Buck & Bailey on a blank piece of paper, tp enable Gibson to draw 800 or 900 dollars from one of the banks-;,''that Bailey objected to doing business in that way; that Gibson pressed him and finally drew up and gave him a memorandum as follows : “ Re- “ ceived of Buck & Bailey their indorsement on a blank to “ be filled up with a note, not to exceed $ 1000, at one of the “ banks. Crown Point, 29th Jan. 1828. (Signed) Amasa “ B. Gibson.” Upon which Bailey put the name of “ Buck and Bailey” to the blank piece of paper ; that the note in
question was filled up upon that paper; that Russell and Hall were then merchants in Troy ; that Buck lived in Bridport, Vermont, and was in partnership with Bailey in mercantile and lumbering business, which was carried on at Crown Point, where Bailey, who was the acting partner, resided ; that Buck was not present when the indorsement was made, and it did not appear that he had knowledge thereof; that Bailey had no authority to make the indorsement of the company name in that manner, never having done so before, except in the business of the company, and that the company received no consideration whatever for the indorsement.
The defendant insisted that the note having been made fraudulently as to the defendant, and indorsed without consideration, the plaintiff must show that he paid value for it and was a bona fide holder, before he could recover on the special contract declared on ; that the writing given by the defendant did not bind him ; at least, unless the plaintiff showed it was given by defendant' with a knowledge' of the facts in relation to the note.
The court decided that the facts shown by the defendant constituted no defence, and that plaintiff had a right to recover, whereupon a verdict was taken by consent for the plaintiff, for the amount of the note, subject to the opinion of the supreme court.
A. C. Hand and S. S. Phelps, for defendant.
The transaction in question may be viewed in two aspects:
1. The note and indorsement may be considered the principal ground of the claim, and the subsequent paper a mere recognition or confirmation of the act of the copartner in making the indorsement.
In this view the action should be upon the indorsement, and the other instrument should be used as evidence mérely to rebut the defence.
This course was not taken by the plaintiffs, because, in this view of the case, the action is barred by the statute of limitations.
2. The subsequent paper may be regarded as a substantive contract, founded on the original indebtedness, as its con sideration, and declared on as the principal ground of recovery.
This is the course taken in the present case.
. This distinction is radically important and ought not to be lost sight of.
I. The first objection to the plaintiffs proof is on the ground of variance, for,
1. The undertaking is not to pay absolutely, but to pay if the parties, primarily liable, did not.
2. The consideration proved, if any be proved, varies from that alleged.
The consideration proved must correspond with that alleged.
If it be more or less, the variance is fatal.
II. The plaintiff cannot recover, without proving demand and notice to the other indorsers, and also due diligence in collecting of the other parties.'
This point depends upon the .construction given to the writing.
III. The contract declared on is without consideration, ánd- cannot be enforced.
Two considerations are relied on :
First. The giving of time.
Second. The original indebtedness.
1. As t° the first.
The paper does not. prove it. On the face of the paper the delay is a mere condition or qualification of the promise.
An agreement, on the part of the plaintiff, to give time, would constitute a good consideration; but there was no evidence that the plaintiff was bound directly or indirectly.
The promise, if binding at all, must be binding when made; and must afford a mutual remedy.
After all, the delay constitutes no consideration, if there be no debt to be forborne.
Further, the indebtedness is alleged in the declaration as constituting a part of the consideration in the first count and the entire consideration in the second ; and must, therefore, be shown, to sustain-either count.
2. As to the original indebtedness :
It is evident that the defendant was not originally liable, by reason of the indorsement; for,
1. It was obtained by Gibson by fraud.
2. Bailey had no authority to make it in behalf of the partnership.
The plaintiff could not recover upon it, except under special circumstances to be shown by him ; that is to say, without showing a valuable consideration originally advanced upon the credit of the indorsement.
By the law of New York, it would not be enough to have received the note either as collateral security or even in payment of a precedent debt.
Upon the authority of Heath v. Sansom et al. 22 Com. Law Rep. 78, the defendant showed enough to defeat an action on the note, unless the plaintiff showed special grounds to entitle him to recover.
If, then, he showed enough to defeat a recovery upon the indorsement, unless for special reasons not shown by the plaintiff, has he not prima facie disproved the consideration ?
There can be no difference between-sustaining the right of recovery on the indorsement and sustaining the consideration in this case. They are identically the same.
The proof of consideration derives no aid from the promise itself.
To argue from the fact that the promise was made to prove a consideration, and then to urge the consideration as sustaining the promise, is reasoning in a circle.
The idea that the defendant stands on less advantageous footing, than if the suit had been upon the indorsement, arises from confounding the different views of the subject suggested in the outset.
It requires something more to give effect to this after promise, as a perfect and valid contract, than to give it effect as evidence merely of a previous indebtedness, and that something consists in a distinct substantive consideration to support it.
By adopting this course, the plaintiff has assumed the burthen of establishing his original debt, and that debt may be proved on the one hand, or disproved on the other, by
precisely the same evidence as would be required if the same thing had been put in issue by a different form of declaring.
If, then, the evidence, offered by the defendant, would entitle him to a verdict in a suit on the indorsement, it entitles him to a decision here that there was no indebtedness and no consideration for the promise.
Further, there is certainly nothing conclusive in this after promise, which should preclude the defendant from inquiring into the consideration upon which it was founded.
The utmost which can be claimed is, that the after promise affords evidence, so far as it goes, to countérvail the defence. In this point of view its effect depends altogether upon the assumption, that the promise was made with full knowledge, on the part of the defendant, of the facts here relied on. Rouse v. Redwood, 1 Esp. Rep. 155. Middle-bury College v. Williamson, 1 Yt. Rep. 212.
In this view of it, it was proper for the consideration of the jury, and should have been left to them, with instructions to give it effect, as they should find the facts as to the defendant’s knowledge of the circumstances and his motives in making the promise.
There is in the case, as stated, sufficient to satisfy a jury that the promise was made in ignorance of the facts, especially if the plaintiff fail to give proof of a consideration paid for the note.
The suggestion that the after promise changed the burthen of proof is fallacious. The onus probandi is on the defendant, whether the suit is on the indorsement or the after promise.
In either case the defendant gives the same proof on his part, and the plaintiff either gives it in.evidence in reply or relies on it as already in evidence. It is obvious that, whichever course is taken, the intrinsic effect of the evidence is the same. But the county court treated it as conclusive in this case, both as to the original indebtedness and the consideration necessary to sustain the action.
The burthen of proof, as to defendant’s knowledge, is on the plaintiff, because, the promise or acknowledgment derives all its force from that source.
IV. With regard to the construction of the contract ;—
1. What was the intent of parties ?
There was no surrender of the note, nor discharge of the other parties, nor any remedy to the defendant.
2. The promise was collateral, if the indorsement remained in force. It does not extinguish the note, and may be given in evidence in an action on the indorsement.
3. The words, “guaranty the collection,” show the understanding of the parties to have been that the note was to remain in force, and be pursued.
4. The effect of the contract cannot be varied by the form of the action.
There is no waiver of the rights of'defendant as indorser.
By the very terms of the guaranty plaintiff was bound to use due diligence.
5. If we suppose the paper to have been dated before the note became due, it was a mere affirmance of the act of defendant’s partner. There would be no waiver, in that case, of any future right, but it would be presumed that diligence was to be used.
If we suppose it to have been subsequently dated, there is still no waiver of diligence, nor any admission of notice to the other indorsers.
6. The general rule as to waiver is not applicable here, because the question arises upon a special contract, and depends upon the intent.
If the defendant remains as indorser, he retains the rights of an indorser, so far as not intentionally relinquished.
A subsequent and collateral contract varies the original one, only so far as is expressed or may be fairly inferred.
C. Linsley, for plaintiff.
I. The contract offered in evidence, if made after the note was due, is sufficient evidence of a demand, protest and notice, if these be requisite in this case; and if made before the note fell due, it would dispense with notice, &c. The acknowledgment of liability on a bill or note, and promise to pay after it has fallen due, or a part payment, dispenses with the necessity of proof of demand, protest, &c. Gibbon v. Coggon, 2 Camp. R. 188. Taylor v. Jones, 2. do. 105. 7 Conn. R. 543. Luhdie v. Robertson, 7 East’s R. 231. Hopes v. Alder, 6 do. 16, note. Rogers v. Stephens, 2 Term R. 713. Stark. Ev. 272. 3 Johns. R. 68, 71. Allen v. Rightmere, 20, Johns. R. 365.
II. The subsequent promise is also an admission that the bill was rightly drawn and signed with the partnership name. The time to make the objection was when called upon for payment. . Besides, the conüact states that the note was in- ■ dorsed by Buck & Bailey. Lundie v. Robertson, 7 East’s R. 231.
III. But suppose the promise to have been made before the bill fell due, then it is a waiver of demand and notice to defendant. The contract was, if the plaintiff would wait, the defendant would pay. The reason for a notice is dispensed with. When time is asked, demand and notice are unnecessary. 2 Stark.Ev. 262, note. Leffingioell v. White, 1 Johns.Cases, 99.
IV. The facts shown by defendant, with regard to the bill being an accommodation bill, and indorsed in blank, would have constituted no defence in a suit on the bill, and cannot be available here. Chitty on Bills, 28.
V. It is difficult to see on what ground it can be argued that thd proof does not support the declaration. The first count, after setting forth the note, alleges that in consideration of Back’s liability on the note, and of the extension of the time,he promised to pay, &c. That both these entered into the consideration is obvious. But it is said it is not an absolute promise to pay, but is a guaranty. A guaranty, as understood in the law, is an undertaking for another, when, independently of the guaranty, the guarantor would not be liable.— Here the defendant was originally liable, and was bound to pay the money presently. When, therefore, he makes an arrangement for time with regard to himself, how can it be considered a guaranty ? But the word “guaranty” is not used in its technical sense, and is controlled and its meaning ascertained by the following words, which amount to an absolute promise to pay, if time is given. The true meaning of the contract is that Buck will pay the note, if Russell will give time.
Again, the second count sets forth the contract in terms, and if the legal inference should not be properly drawn, it is no ground of variance. The contract, offered in evidence» is like the one declared on, and it is no objection to the evidence that the legal inference is not correctly drawn from it. But that the proper legal inference is drawn is clearly true, if the contract amounts to a promise to pay.
VI. The writing declared on is evidence that Russell is a bona fide holder, for value. When Buck says “which note is now the property of Joseph Russell,” it is an admission that Russell is a bona fide holder. Why call it his property, if he has no interest in it and is a mere stake-holder ? At all events, it is enough to put the burthen of proof upon Buck, to show that Russell is a mere man of straw, if it be so.— Potter v. Bartlett, 6 Vt. R. 248.
VII. But it is enough to maintain this suit, that Russell has waited the time stipulated in the contract. It is argued that this is nudum, pactum. But it is to be observed, that the question is not whether it could be enforced while executory, but whether, after condition fulfilled by Russell, Buck can have the advantage of the delay, and now urge that the contract was not binding. The promise is conditional, and is to be absolute on the performance of the condition. Russell has performed the condition, and the obligation is thereby perfected against Buck.

Opinion:
Collamer, J.
The defendant, with his partner, was an indorser of a note of which the plaintiff was indorsee, and; as the declaration alleges, was liable for the debt; and at some period, either before or after the note became due, the defendant executed to the plaintiff the paper now in question. And the inquiry is, what is the legal effect of that paper ?
It is to be borne in mind that this is not an action against the defendant as indorser. Had it been so, there probably would have been little difficulty with the case. This writing would have been evidence in confirmation of the defendant's liability. If given before the note was due, and viewed as an absolute promise, it would have waived all evidence of notice of non-payment. If given after the note was due, and considered as- an absolute promise to pay, on time, it would have waived all objection on account of the want of notice. Such has been repeatedly decided to be the legal effect of such a promise. The whole scope of the authorities, cited by the plaintiff, merely shows what is the effect of such a promise made by an indorser, when he is sued as indorser. This tends strongly to show that such a promise has no legal effect but as ancillary, and in confirmation of his existing liability, and does not extinguish that liability and create any new and substantive ground of action. The plaintiff has permitted the statute of limitations to run on any claim he has on the defendant, as indorser, and now claims to recover of the defendant on this writing as a substantive, independent, legal and perfect ground of action. Can this be sustained ?
To sustain an action on this writing, as. a contract, it must have a legal consideration. If the consideration is, that the defendant was then liable, as indorser, and in consideration thereof, promised to pay, if waited on, then it is like any case where a man owes a note now due, or to become due in six months, and, in consideration thereof, promises to pay the same, if waited upon one year. This new promise creates no new legal liability. It leaves the note, the debt and the parties as they were before. Such a promise might, indeed, if seasonably made, affect the claim as to the statute of limitation, but would be no ground of action in itself. If the defendant was not liable as indorser, then he is to be treated like any other third person. Here it is to be observed, that the writing does not.stipulate or imply, nor is it pretended that it was ever understood by the parties, that the plaintiff was to delay the collection of his debt from the maker of the note. In this category, treating the defendant as a third person, not liable until this promise, it is simply a promise to pay if he is himself waited on. Most clearly, a promise to pay the debt of another in a certain time, if so long waited on, leaving the debt to be enforced during all that time against the debtor, is nudum pactum. It is, therefore, extremely difficult, if not impossible, to view this writing as having any consideration as a substantive contract. It seems nothing more than a writing recognizing the plaintiffs liability, as indorser, and promising, as such indorser, to pay, if waited on, if the plaintiff did not collect of the makers. It therefore created no new liability but left the defendant still to be pursued, as indorser, and in that way only.
But even if we were satisfied as to the matter of consideration, we'do not consider this an absolute promise of payment. It is generally true, that where one undertakes for something to be done by himself or another, it is considered as absolute and unconditional. He must see it is done. But when he undertakes to do. provided the promisee shall do something, then his undertaking is always conditional, implying that the promisee shall use diligence and give notice of the result before action. In construing a contract, regard must be had to the subject matter, and the circumstances under which it was made, and all parts of the contract should have effect, This writing was made by an indorser to an indorsee, in relation to a note left in the hands of the indorsee in full effect. If the plaintiff could collect of the makers, that would be satisfactory to all, and was one thing he desired to effect. If he should not be able to collect of the maker, then he wanted pay of the indorsers. Now, under these circumstances, and for these purposes, was this writing made. After stating how the parties stood connected with the transaction, the promise is in these words : " Now, therefore, I hereby guaranty to said Russell the collection and payment of the above described note"--- " and agree to pay the same, on condition that said Russell does not call on me for payment till the 1 st day of May, 1831." All that part which guaranties the collection of the debt is clearly a separate clause, and relates to procuring pay of the makers. That clause which promises to pay it himself, amounts to this, that in case it is not collected of the makers, he would pay it himself, on demand, after May, 1831. To hold this an absolute promise of payment by the defendant, on being waited on, makes the former clause of the promise nugatory and unmeaning. That former partis, in effect, a promise that the plaintiff, with proper and reasonable diligence, will be able to collect of the makers. It amounts to a guaranty that the note is collectable with reasonable diligence. Foster v. Barney, 3 Vt. R. 60. Sage v. Wilcox, 6 Conn, R. 81, And for this purpose the note was left in force, and in the plaintiff's hands. The remainder of the promise is, if the plaintiff fails to collect of the makers, after reasonable diligence, then the defendant will pay, after May 1,1831. Such we consider the clear intent for which this writing was given and received, such is its meaning, and such, even if if has good consideration, is its legal effect, but it is not so declared on.
Judgment reversed.