Case Name: James Ward & Co. v. Wick Brothers & Co. et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1867-12
Citations: 17 Ohio St. 159
Docket Number: 
Parties: James Ward & Co. v. Wick Brothers & Co. et al.
Judges: Day, C. J., and White, Welch, and Brinkerhoee, JJ., concurred.
Reporter: Ohio State Reports, New Service
Volume: 17
Pages: 148–154

Head Matter:
James Ward & Co. v. Wick Brothers & Co. et al.
In a suit brought on negotiable promissory notes by the indorsee and holder,, against the maker and indorsor (the latter being the payee), the maker answered averring that the notes were made for the sole accommodation of the payee, and that the plaintiff, having transferred the notes by indorsement to another party, afterward, and before their maturity, with a knowledge of the character of the paper, agreed with the payee, for a valuable consideration, and without the knowledge or consent of the maker, that the plaintiff would protect and take up the notes, and give the payee time for • their payment “ beyond the day of their maturity.” He also averred that the plaintiff paid and took up said notes shortly after their maturity, though, he was not legally charged as indorser by due notice of dishonor or otherwise
Held, that the facts so averred do not constitute a defense to the plaintiff’s action against the maker; because — 1. The terms of the contract setup as a defense do not import a direct agreement to discharge the makers
2. The stipulation for an extension of time is void for uncertainty, and could not therefore discharge the maker, even if he be regarded as a surety;
3. The plaintiff might waive the laches of the holder in failing to give him due notice of dishonor; the maker was not prejudiced by such waiver, and so is not thereby discharged.
Error to the court of common pleas of Trumbull county. Ee.served in the district court.
The original action was brought, in the court below, by the defendants in error, Wick Brothers & Co., as the indorsees *and holders of two negotiable promissory notes, to recover of the plaintiffs in error as the makers, and of W. & C. E. Porter as the indorsers thereof. These notes were for $1,000 each; were dated June 18, 1859, and were payable to the order of W. & C. E. Porter, three months after date, at the Iron City Bank, Pitts-burg, Pa.
The petition contained all the necessary averments to fix the liability of the defendants.
The indorsers, W. & C. E. Porter, made no defense. But the plaintiffs in error, Ward & Co., answered in bar of the action, and, prior to a second trial of the cause, filed, by leave of the court, a second amended answer, upon which the questions made in this case arise. This answer was substantially as follows:
That the notes in suit were made and executed by Ward & Co. for the sole accommodation of the payees, W.' & C. F. Porter, who agreed with and promised the makers, to provide for and pay them at maturity. That after said notes were indorsed to Wick Brothers & Co., they indorsed and delivered them to the Bank of Beaver County; and afterward, before the maturity of the notes, the plaintiffs below, then having knowledge of the accommodation character of the notes, on the 29th day of August, 1859, made an agreement with W. & C. F. Porter, by the terms of which Wick Brothers &" Co. were to “ protect and take up said notes, and to give W. & C. F. Porter time for the payment of the amount due on them, beyond the day of their maturity;” Porters agreeing, on their part, to pay the amount of the notes to Wick Brothers & Co., and to cause a mortgage on certain real estate to be made and delivered to the plaintiffs, conditioned for the payment of six thousand dollars, as a security for the payment of said amount, and of other sums owing by said W. & C. F. Porter to the plaintiffs. That the agreement was made without the knowledge or consent of respondents, and that, in pursuance thereof, such mortgage was thereupon executed and delivered by William Porter to the plaintiffs, who paid and took up the notes shortly after their maturity, though they had not received notice of non-payment and protest in due time to charge them as indorsers, nor been otherwise duly charged as such. *This answer was traversed by a reply, denying nearly all its averments.
The issues thus made were submitted to a jury, and, from a bill of exceptions, it appears that, upon the trial, the plaintiffs in error offered evidence tending to prove all the averments of their amended answer; and the plaintiffs below gave evidence tending to rebut that evidence; and the parties having severally rested, Ward & Co.,, by counsel, asked the court to charge the jury that if they found the several averments in the answer to be true, they should find the issues for the defendants, Ward & Co., and, as to them, against the plaintiffs. But the court refused to charge the jury as requested, and did charge them that, upon the averments of the pleadings,, the plaintiffs were entitled to recover against Ward & Co., as well as against W. & C. F. Porter; to which Ward & Co., by counsel,, excepted.
And the jury having, thereupon, returned a verdict against all the defendants, Ward & Co., before judgment, moved the court for' a new trial, on the ground of error in the charge of the court, and in the refusal to charge as requested.
This motion was overruled, and judgment entered upon the verdict.
To reverse this judgment, for supposed error in the charge of the court, and in overruling the motion for a new trial, Ward & Co.. filed their petition in error, in the district court of Trumbull county, and the cause was therein reserved for the decision of this court.
Geo. M. Tuttle, for plaintiffs in error:
1. The agreement set up in the answer was, in legal effect, that Wick Brothers & Co. should cause James Ward & Co. to be discharged from their liability on the notes in question. Bouv. Law Lie., tit. Dishonor; Story on Prom. Notes, sec. 453; Edwards on Bills and Notes, 536, 537, 564, 565; Story on Contr. 435; Broom’s Maxims, 198; 2 N. L.; Parsons (2 ed.), 45, 46.
2. The benefit of it inured to James Ward & Co., just as fully as if the promise to discharge the notes had been made, upon adequate consideration, directly to James Ward & Co. *Parsons on Contr. 390 ; Thompson v. Thompson, 4 Ohio St. 333; Crumbaugh v. Kugler, 3 Ohio St. 549.
3. Wick Brothers & Co. having paid the notes to the holders, shortly after their maturity, the agreement is a defense to the suit upon the notes, against James Ward & Co. Story on Prom. Notes, secs. 400, 401, 408; Edwards on Bills and Notes, 564, 565.
4. If these propositions are not well taken, then the payment by the Wicks to the Beaver County Bank was officious, and extinguished the notes. The Wicks, as indorsers, were only conditionally liable. There was no waiver of the condition, and it was not complied with, so as to charge them as indorsers. No stranger to the notes could obtain any right to sue Ward & Co.; much less to sue them on the notes, by payment of them. Edwards on Bills and Notes, 536.
F. F. Hutchins, for defendants in error :
1. When an indorser takes up a note, whether legally bound to do so or not, it is clear that he does it as indorser, and that it is not a payment and discharge of the note. At all events, there is no presumption of payment or discharge arising from the transaction; and the same rules do not apply in such case as in case of a mere stranger. The Wicks were not strangers, but parties to the notes.
Though the holder of the notes had been guilty of laches, as to them, and of which they might have taken advantage, yet it was competent for them to waive the laches.
The proper construction of the answer is, that the Wicks received from the Porters adequate security for the payment of the notes. That being so, notice to the Wicks was not necessary. Story on Prom. Notes, secs. 257, 281, 283, and notes.
2. The agreement of the' Wicks to protect and take up the notes, was nothing more than what the law implied from their contract of indorsement, and did not change the rights or liabilities of themselves or Ward & Co. It was not meant to release them, or for their benefit.
3. The agreement to give the Porters further time, did not discharge Ward & Co.
At the time of this alleged agreement the notes were not due, *were not owned or held by the "Wicks, nor were they the creditors. The notes were then owned and held by the Bank of Beaver County,"and the bank was not at all bound or affected by the agreement.
There was no particular length of time specified.
But in case of a note for the accommodation of the payee, who becohtes also indorser, such agreement for time, made by the holder with the accommodation indorser, does not discharge the maker.
See Story on Prom. Notes, secs. 418, 424, and notes and authorities cited; Story on Bills, secs. 430, 432, 434; Chitty on Bills, 418-420; Edwards on Bills, 295, 575 ; 33 E. L. & E. 291; 6 Cowen, 484, 492; 2 Blackf. 137, 140, and note; 12 S. & R. 382; 3 Watts & Serg. 99.

Opinion:
Scott, J.
The question in 'this case is: Do the facts stated in the second amended answer constitute a defense to the action of the plaintiffs below ? The answer does not allege that the agreement relied on as a defense, expressly provided for the discharge of Ward & Co. from their liability as makers of the notes in suit. Nor do we understand the pleader as intending to charge that the parties to that agreement contemplated or designed to provide thereby for such discharge. Had such been the ground of defense, it is.at least strange that we find in this third answer no allegation to that effect, especially as the record shows that' in the first trial of the cause, under the second answer, the defense failed by reason of a charge from the court precisely similar to the one now complained of. To make such an agreement a good defense, it would have-been wholly unnecessary to aver (as this answer does) that it was made " without the knowledge or consent of Ward & Co." For an agreement, intended to provide for their discharge, would not be less effective in their favor because they were parties consenting to it. It is claimed, however, in argument, that the agreement of Wick Brothers & Co. to "protect and take up the notes," imports an obligation to pay the debt which was evidenced by them, so as to discharge all the parties to the paper from further liability thereon. Such might be a fair ^construction of the agreement had it been made by a stranger to the notes. But it was made by Wick Brothers & Co., who were the immediate indorsees of the paper to the parties then holding it; and the agreement was that this indorser should take up the notes and give to prior indorsers further time for their payment. It is clear, therefore, that these prior indorsers (the Porters) were not to be discharged from liability; and wo see no ground for the inference that the parties intended by their agreement to affect, in any respect, the rights or obligations of the makers, who were not parties to the agreement, and as to whom nothing was said. As we understand the statements of the .answer, Wick Brothers & Co., having all the rights, and being under all the obligations of indorsers, agreed, as such, to satisfy the claim of the holder, and re-obtain the possession and control of the notes for the purpose of enabling them to give further time for their payment to antecedent parties. And this is quite different from an agreement to discharge antecedent parties.
But the theory of the defense, as disclosed by the answer, seems to be this: That the legal effect of the alleged agreement, and the subsequent acts of the parties pursuant thereto, was to discharge Ward & Co. from their liability as makers of the notes. This effect is supposed to result from the character of the agreement, from the fact that Ward & Co. were known to be accommodation makers, and that the agreement was entered into without their knowledge or consent. It is said the agreement was that Wick Brothers & Co. should take up the notes " and give W. & C. F. Porter time for the payment of the amount due on them beyond the day of their maturity." Now, if it be conceded that the accommodation character of this paper gave to the Porters, in equity, the position of principals, and to Ward & Co. that' of sureties, yet, is any valid contract shown to have been made for the extension of the time of payment by the principal so as to discharge the surety ? To have that effect, it must not only be founded on a good consideration, but it must also be definite in its terms; " such a one as the principal debtor could enforce, and which would tic up the hands of the surety; prevent him from paying his principal's debt, stepping *into the shoes of his creditor, and prosecuting the principal debtor himself." Jenkins v. Clarkson, 7 Ohio (pt. 1), 72. The agreement here was to give time for payment beyond the day of maturity of the notes. Without such agreements, no action could have been brought on them till after maturity. By its terms, how much longer was the creditor bound to wait ? Such a stipulation is void for uncertainty; it amounts to nothing more than a general promise of indulgence, and can tie up the hands of no one.
It is further said, by way of defense, that Wick Brothers & Co. paid these notes shortly after their maturity, without having had their liability as indorsers fixed by notice of dishonor in duo season. But that laches of the holder they might waive, if they thought proper. It was a question between them and the holder, and which did not concern the antecedent parties. As their liabilities could not, by such payment, be revived if previously extinguished, so neither could they be thereby discharged if previously fixed.
And that the defendants in error took a mortgage from William Porter as a security in part for the payment of these notes, can furnish no reasonable ground of complaint to plaintiffs in error. On the contrary, if compelled to pay the notes, this security will inure to their benefit when seeking reimbursement from the Porters.
We see no error in the charge of the common pleas, and therefore affirm its judgment.
Day, C. J., and White, Welch, and Brinkerhoee, JJ., concurred.