Court Opinion

ID: 8504311
Source: CourtListenerOpinion
Date Created: 2022-11-23 01:25:37.246149+00
Date Added: 2024-06-11T16:50:49.170639
License: Public Domain

Upham, J.
It is a .general rule that when a note has once been paid by the parties to it, it ceases to be negotiable, and a suit cannot be founded upon it. It was so holden in the ease of Bryant vs. Ritterbush, 2 N. H. Rep. 212. There are exceptions, however, to this rale, where a note is taken up by an individual who is merely collaterally interested. Thus, where a note is taken up by an endorser who is not directly liable on the note, it may again be put in market. The promiser is not, in such case, prejudiced by such a transfer, and the note remains good as against him. 7 N. H. Rep. 202, Cochran vs. Wheeler; 17 Mass. R. 615, Guild vs. Eager.
Where a note is taken up under such circumstances, it is not in fact paid. An individual discharges his liability as guarantee merely, but the general promise of the note remains unextinguished. But such is not this case. Here, if payment is made at all, it is made by a co-signer.
But where one of two joint promisers, who is liable directly upon the note for its whole amount, pays such note, the note is necessarily extinguished. Whenever he discharges himself from the note by such payment, the payment goes to the whole promise of the note ; and when the entire promise of the note is met and extinguished, it cannot afterwards be revived as a subsisting contract against a co-signer. New rights and liabilities arise betwixt the co-signers, but the original contract is at an end.
It is contended here, however, that the note never has been paid — that the money advanced by the co-signer was not designed as payment of the note, and was not received as payment, but was a mere collateral arrangement, by which the promisee, on being made secure from any loss, engaged to enforce the note against the co-signer. If such were the arrangement it would clearly be no payment.
It could not be payment, because whenever such an arrangement exists the promiser making it is still liable upon the note.
*189It is clear, however, from this case, as drawn, that no suit can be maintained against Samuel D. Stevens, the other pro-miser. The case finds that it was agreed betwixt him and the promisee, that said Samuel should pay the whole amount of the note, but that it should be kept secret from the other signer, and only half the face of the note should be endorsed, and the balance the promisee was to collect, not as his money, or for his debt, but should collect it, and pay it over to said Samuel.
At the same time the promisee gave Samuel D. Stevens a receipt against this note, in full of all demands.
It was not, therefore, a deposit of security merely for any loss which might arise from proceeding against the other signer, and therefore a collateral agreement, but was an actual payment and discharge of the note.
The co-signer has his appropriate remedy for contribution, but no suit can be sustained on the original contract. There must, therefore, be

Judgment on the verdict for the defendant.