Case Name: The State Bank vs. Stoddard, Miller, & Co.
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1841-02
Citations: 1 McMul. 141
Docket Number: 
Parties: The State Bank vs. Stoddard, Miller, & Co.
Judges: Evans, EaRDE, and ButleR, JJ., concurred.
Reporter: South Carolina Law Reports
Volume: 26
Pages: 93–96

Head Matter:
The State Bank vs. Stoddard, Miller, & Co.
This was an action brought by the State Bank against II. Stoddard, Miller & Co. as the endorsers of a promissory note made J. C. Kerr, for $150, dated the 21th day of March, 1840, and payable eighteen days after date. The note was not paid at maturity by the drawer, and was duly protested *for non-payment. The handwriting of the parties was admitted, and the defence was that the conduct of the plaintiff had discharged the endorsers. John C. Kerr, the drawer of this note, having become unable to pay his creditors the amount due to them, executed to James Rose, President of the South Western Railroad Bank, a conveyance of his property mentioned in the said deed, upon certain conditions and for certain purposes expressed in the said deed. Such portions of the said deed as were particularly commented on, and furnished a clear understanding of the positions contended for, I have extracted ; they are as follows : after specifying that Iverr is unable to pay, that he desires to secure his creditors, and has for that purpose transferred his property to the said James Rose, it proceeds to declare that “in consideration of the premises, the said James Rose hath agreed to certain conditions, covenant and agreement, as well on the part of the said party of the second part, as on the part of all others who are creditors of the said John Cess-ford Kerr, to be observed, kept and performed, which said covenant and agreement are hereinafter more particularly set forth and expressed, and for the faithful preserving, performing and keeping of which, the said party of the second part, and all other person or persons, party or parties, as are described in the schedule, creditors of the said John Cessford Kerr, are and shall be, previous to the full effect and efficacy of these presents, respectively, unto the said John Cessford Kerr, by these presents, firmly held and bound.” The following clauses of the deed were also brought to the view of the Court. “ Subject to, nevertheless, the following trusts, conditions, covenants and agreements, of and concerning the same, &c., that is to say, that the said John Cessford Kerr shall be allowed by the said party of the second part, and by all other person or persons, party or parties, creditors of the said John Cessford Kerr, set forth in the said schedule, to substitute for the promissory notes of the said John Cessford Kerr, now by them held respectively, upon which they or any of them may be responsible, other new notes of the said John Cessford Kerr, endorsed in the same manner as the original notes for which they have been substituted; and that the said new notes shall be made payable in five equal annual instalments, commencing from the day of the date of these presents.” And the following trust is also : extracted from the *deed. “ In trust to pay, discharge and satisfy, in equal portions and rateably, the sum and sums of money respectively due and owing to the several parties who are or may become parties to these presents, according to the time of payment hereinbefore expressed and agreed upon. And it is also well understood, covenanted and agreed upon by and between the said John Cessford Kerr and the said party of the second part, and also all other party or parties to these presents, that no part or portion of the property hereinbefore conveyed, shall be sold, conveyed or disposed of before the expiration of five years, commencing from the date of these presents, unless with the consent of the said John Cessford Kerr, thereto by him given and subscribed in writing.” The State Bank became a party to this deed.
For the defendant, it was contended, that the State Bank being a party to the deed, consenting to and bound by all the covenants and conditions of the deed, without the consent of the endorsers had discharged them from their liability; that here was not only indulgence given to the drawer, by agreeing that his property should be kept secure from sale for five years, but that the bank had moreover set apart a certain portion of the property of the drawer for certain purposes ; that here there was a new contract, new security taken, which, as it prejudiced the remedies of the endorsers, discharged them from all their liability. It was contended on the other side, that there ivas no indulgence, and that the endorsers were not prejudiced by the conditions of the deed. I was decidedly of opinion, that indulgence by the deed was given to the drawer; that the bank had, by its becoming a party to the deed, agreed that Kerr might pay the debt in five equal annual instalments; that for five years it was agreed Ills property should be protected : that this protection of the property was a prejudice to the endorsers, without their consent, and of course discharged them. I told the jury that if the holder entered into a new contract with the drawer, gave him indulgence, or so acted as to impair the right of the endorser against the drawer, that such acts were at the risk of the holler, and would discharge the endorser; and that in this case there was no doubt that the conduct of the holders of the note had in law discharged the endorsers. The jury, however, found a verdict for the plaintiff, for the whole amount of the note with interest, and the defendant appeals, on the annexed grounds :
1st. Because the deed produced on the part of the defendant, clearly established an indulgence, in giving time to the drawer, without the consent of the endorsers; which was sufficient to discharge the endorsers.
2d. That the said deed established that the plaintiffs, without the consent of defendants, who were endorsers, became parties to the same, and by the terms of the said deed, agreed that the property of the drawer should be protected from all sale for five years, unless with the consent of the drawer.
3d. That the case made was one where indulgence, in an extension of the time of payment, by preserving the property of the defendant from sale for five years, was given to the drawer, without the consent of the endorser, and this is sufficient to discharge the endorser.
4th. That the case was one where the holder takes new security to the prejudice of the endorser, which discharges him from his responsibility.
5th. That the jury were charged most distinctly by his Honor, the presiding Judge, that the defendants were discharged, and this charge of his Honor on a point of law, was binding on the jury, and should have been observed.
Gth. That the verdict was clearly contrary to all the evidence and the law of the case.
Magruth, for the motion,
said, that where time was given, on indulgence, it would discharge the endorsers. Cited 1 Bay, 466; 1 Mills’ Cons. Rep. 371; 1 N. & McC. 117; 6 Peters, 257.
II. A. DeSaussure, contra,
contended that no time or indulgence had been given; that the very day the eighteen days expired, the defendant refused or failed to pay, the bank instantly brought suit, lie also contended that the deed was hut a limited one, and not general, as to all Korr’s creditors, assigning only a certain specific portion of his property, leaving the balance unincumbered and liable for his debts. He further said that the conditions of the deed were not complied with by Kerr ; and that the defence was founded upon a misconstruction *of the deed. It was a condition precedent. Cited 1 H. Black. Rep. 270; 1 Bacon, 261; 3 Comyn’s Dig. 90 and 91, note F; Chitty on Bills, 292.
Magrath, in reply,
contended that the intention of the bank was not to be considered, but the acts of the bank. The releasing of Kerr by the bank, whether they intended to release the endorsers or not, operated as a release to them.

Opinion:
Curia, per
O'Neall, J.
After a note has been protested for nonpayment, and notice legally given to the endorser, he becomes, like any other unconditional security, bound for the payment of the debt. A mere giving day to the principal, or forbearing to enforce the collection of the debt, would not generally discharge the security, Picket vs. Land, (2 Bail. 608.) In Weyman vs. Kirby, 2 Bail. 551, 553,) the rule extracted from King vs. Baldwin, (2 J. C. B. 559, 560,) "that the surety is bound by the terms of his contract, and if the creditor by agreement with the principal debtor, without the concurrence of the surety, varies these terms, by enlarging the time of performance, the surety is discharged, for he is injured and his risk increased," met the approbation of the Appeal Court. This rule must decide these cases ; for if the Bank has varied the terms of Kerr's contract, by enlarging the time of performance, then Stoddard, Miller & Co., the endorsers fixed by notice are discharged. We shall be at once able to decide the cases by enquiring, had the Bank, by the contract in proof, so varied the terms of Kerr's note, and so enlarged the time of payment, that he could not be sued ? if so, he, as well as Stoddard, Miller & Co., is protected, but if not, then all are liable. The provision in the deed to give to Kerr the opportunity of paying this debt, as well as his other debts to the State Bank, in five equal, annual instalments, depended upon his substituting for the note now in suit, another note with the same endorsers; this was not done, and of course there is nothing in this provision of the deed which varies the terms of the defendant's note. The only provision which looks like an enlargement of the time of performance is that which declares that no part of the property conveyed shall be sold in five years But that does not vary the terms of Kerr's note. He was still liable to pay it presently. He might be sued upon it at any moment. This being so, the endorsers, Stoddard, Miller & Co., cannot complain. *Eor every thing remains as before, so far as their contract is concerned. Under the judgment recovered in this case, any property which Kerr may possess, and which is not under some legal incumbrance, may be sold in satisfaction. The deed before us, which exempts his property from sale for five years, is nothing more than giving a preference to such creditors as come in and give their assent to it within the time limited. That opportunity was offered to these defendants, and that they did not avail themselves of it, is perhaps more their misfortune than their fault. Still they cannot complain of the Bank for holding them liable presently, when their own neglect compelled the present course. It may be, that if their failure to sign the deed was accidental, that they may, in another Court, be still allowed to come in and have the benefit of its provisions. On looking through the deed, I think all its provisions are greatly for the benefit of Kerr's endorsers, and that the delay of sale for five years of the property contained in the deed, may be the means of paying his debts, without resorting to them. If so, this provision would not increase the risk of, and would be no injury to, the endorsers, and in that point of view would not come within the rule for their discharge.-
The motion is dismissed.
Evans, EaRDE, and ButleR, JJ., concurred.
Sup. 84. An.