Court Opinion

ID: 3598674
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:45:42.946679+00
Date Added: 2024-06-11T13:57:56.128167
License: Public Domain

I dissent from the opinion which is to prevail in this case.
This action is brought to recover the balance unpaid on a certain note made by the Eureka Chemical Company and held by the respondent, and for which balance it is claimed that the appellant Nettleton and the appellant Dewey's testator, one Addice E. Dewey, became liable as two amongst several indorsers, and judgment has been rendered against them.
Various reasons are urged why the judgment should be reversed, but in my opinion none of these permit discussion in view of the decision of this court on a former appeal (Jefferson Co. Nat.Bank v. Dewey, 181 N.Y. 98), except the one that this action was barred by the Statute of Limitations. I disagree with the disposition made of this defense as to the appellant Nettleton, and whereby it was held as a matter of law that the same was not established, and the discussion *Page 21 
of the question thus arising will involve a statement somewhat at length of the facts presented on this appeal.
After the respondent had discounted the note above mentioned the maker thereof, the Chemical Company, became embarrassed financially, and a judgment was recovered against it by a Mrs. Townley on a claim assigned to her by her husband, who was secretary of the company, and under the execution issued on this judgment a levy was made on the company's property. Subsequently the plaintiff recovered judgment on its note against the company and on said judgment brought a creditor's action to set aside the Townley judgment and all proceedings thereunder. It was successful in this suit in the beginning, and with the result that upwards of $2,000, proceeds of the sale of the debtor's property, was taken away from Mrs. Townley and paid to the respondent to apply on its note. Thereafter the balance remaining unpaid on the note was apportioned amongst the six indorsers and Messrs Dewey and Nettleton each paid as his respective share of the entire balance claimed to be unpaid on December 18, 1895, the sum of $126.88. It transpired, however, that some of the indorsers were not responsible and did not pay their respective shares of this balance, and on account of these defaults there still remained unpaid on March 7, 1898, a balance of $430.70, and on said date Messrs. Dewey and Nettleton paid this balance, share and share alike. The first payments were made in accordance with a statement furnished by the bank which showed explicitly that the balance remaining unpaid on the note would be satisfied in full by the proposed payment by Dewey and Nettleton, subject, possibly, to a default by other indorsers in payment of their shares. At the time the last payments were made the respondent indorsed on the note "Received of A.E. Dewey and A.E. Nettleton $430.70, the balance due on within note," and the note was delivered up to Mr. Dewey. In addition the appellant Nettleton, when making his first payment, wrote a letter inclosing the check to the respondent's cashier and which in part read as follows: "Enclosed please find check for *Page 22 
$126.88, my proportion of the note of December 25, 1891, which kindly send me a receipt for and advise me when the note is due just what amount has been paid on the same." To this letter he received an answer written by the respondent's president stating, "Yours of the 16th is at hand enclosing check. * * * My impression is that some of the indorsers cannot respond, and you may be assessed for an additional sum."
Mr. Nettleton made his second payment above mentioned by a check which read as follows:
"SYRACUSE, N.Y., March 1, 1898.
"The Bank of Syracuse pay to Smith Woolworth, cashier, or order, two hundred and fifteen and thirty-five-hundredths dollars ($215.35).
"A general release from all liability in indorsement of note of Eureka Chemical Co. of December 25, 1891, for $2,800.
"A.E. NETTLETON, Personal."
He inclosed this check to respondent in a letter addressed to the cashier, which read as follows:
"DEAR SIR. — Enclosed please find check for $215.35 to cover the amount of my liability on the indorsement of the note given by the Eureka Chemical Co. in 1891. Will you kindly send me a general release from all liability as indorser on this note in acknowledging the check?"
In answer to this he received a letter written by respondent's cashier stating, "Yours * * * received * * * enclosing check which you state is to cover amount of your liability as indorser. * * * Now this is just about one-half of the amount unpaid on the note, and we shall be glad to deliver the note to you or to Mr. A.E. Dewey, or some one entitled to receive it when the whole amount is paid," and as already stated, when Mr. Dewey paid his share the note was delivered up to him.
In the meantime an appeal had been taken by Mrs. Townley from the judgment obtained by respondent setting aside her judgment and levy, and subsequently to the payments *Page 23 
above mentioned respondent's judgment was reversed and it was compelled to refund to or for the benefit of Mrs. Townley the moneys which it had originally received in its action and applied to the partial payment of this note, and then still later this action was brought to recover of Dewey and Nettleton the amount which was left unpaid on the note after such refunding.
It is or must be conceded that this action when brought was barred by the Statute of Limitations unless this result had been prevented by the payments which have been referred to. I think it is clear that such payments were not of such a nature as to operate as an acknowledgment of the remaining balance of indebtedness now sought to be recovered, and, therefore, to prevent the operation of the statute unless, as is claimed by the respondent, Dewey and Nettleton, at the time of making the same, were to be charged with knowledge of the nature, condition and possibilities of the Townley litigation and appeal; that the note had been partly paid with proceeds of that litigation under a judgment which might be reversed and an additional amount of indebtedness on the note revived, and that, therefore, their payments, although expressed to be in full, were still subject to the condition and understanding that they might be called on to make further payments in such contingency. I shall consider first this claim of the respondent that they were chargeable with such knowledge and assumed such contingency, and then, if such claim seems to be unfounded, the other proposition that the payments did not operate to prevent the statute from running.
It is unnecessary now to consider the question whether Dewey and Nettleton, although knowing of the Townley litigation and its past results and future possibilities, might not so make their payments in full satisfaction of their liability as to exclude any recognition or acknowledgment of any further indebtedness, and, therefore, render them ineffectual to stay the running of the statute. Of course, it is not suggested that part payment would satisfy an indebtedness. The query simply is whether a payment, even though it *Page 24 
proves to be partial, may not be so made as to exclude any acknowledgment of further liability whereby the force of the statute will be suspended.
The disposition of this appeal may be based on evidence showing lack of such knowledge and understanding. While there was some testimony which might have permitted a jury to say that Mr. Dewey understood the situation so far as the Townley litigation was concerned, and, therefore, must have understood when he made his payments that the satisfaction by him through them of all of his liability on the note was dependent on the bank's maintaining its judgment against the Townleys, there is much force in the claim that there was sufficient evidence leading to a different conclusion, so that the appellant Dewey was entitled to have the jury pass on this question of his knowledge and understanding. I feel compelled to conclude, however, that this court on the former appeal on a record substantially the same as the present one so far as it relates to Mr. Dewey did decide that he had such information, knowledge and understanding as placed his payments in the category of ordinary partial payments on an indebtedness and prevented the operation of the statute in his favor, and that, therefore, we are foreclosed on this question so far as his representative is concerned.
The situation, however, is entirely different so far as the appellant Nettleton is concerned. On the former trial he was not called as a witness as he was on the last trial. On the record as it now stands, in my opinion, there is not only no evidence to show that Mr. Nettleton so knew about the Townley litigation that he must be assumed to have made his payments subject to the condition and with the understanding that that Townley litigation might eventually go against the bank and he be compelled to make up a further deficiency and balance, but, on the other hand, the undisputed evidence is that he did not have any such knowledge or understanding. Mr. Nettleton was a director of the Chemical Company on an insignificant holding of twenty shares of stock, and he lived in Syracuse while the note was held and *Page 25 
the seat of the litigation with reference to it was in Watertown. In the most positive terms and without contradiction he testified that he knew absolutely nothing of the suit brought by the respondent against the Chemical Company or of the suit brought against Mrs. Townley, or that any proceeds of that litigation had been applied in reduction of the note when he made his payments, and that he understood that his first payment of $126.88 was the balance of his liability on the note as indorser, and that again when he made the second payment necessitated by the default of the other indorsers he understood that it was in full discharge of his indebtedness and that he would be relieved from further liability. Stress is laid on the statement in his evidence that "Mr. Dewey was managing this matter for me and the other indorsers and I trusted him." The other testimony, however, makes it perfectly clear what this means and that it did not mean that he made his payments through Mr. Dewey as a general agent and that, therefore, he was to be charged with any knowledge which Mr. Dewey might have had about the Townley litigation. It appears that Mr. Dewey, who lived in Watertown, looked after the balance claimed to be due on the note and that Mr. Nettleton conferred with him about apportioning to the different indorsers their respective amounts of this indebtedness and about cleaning the matter up. There is not the slightest evidence that Mr. Dewey acted as agent for Mr. Nettleton in respect to the Townley litigation or that, if he knew, he ever informed the latter that the payments he was making were of a balance based on the application of the proceeds of that litigation. Neither of Mr. Nettleton's payments was made through Mr. Dewey but each one was made by him directly to the respondent. It is possible that when Mr. Nettleton made his first payment he was to be charged with knowledge that such payment was on the basis of an apportionment amongst six indorsers and that if any one failed to pay his share he would be compelled, as he subsequently did, to pay his share of any deficiency caused by such default. But, subject to this, it is *Page 26 
perfectly evident that he made his payments with no other idea, understanding or expectation than that each one at the time it was made was in full payment and settlement of any liability on the note in question.
This being so, it seems apparent that they were not partial payments whereby was acknowledged a remaining indebtedness, and wherefrom could be inferred such a new promise to pay such remaining indebtedness as canceled up to that date the running of the statute.
The fundamental principle underlying the theory that a payment operates against the statute is that it is a partial payment and that it acknowledges the existence of a balance of indebtedness still to be paid, and no case has been cited, or as I believe can be cited, holding that where a debtor has made a payment in full of his indebtedness it operates to prevent the running of the statute as against some balance, which through some contingency not known or understood by him, may still exist or thereafter be brought into existence. It is of no materiality that the appellant might or even should have learned about the Townley litigation, and that in case of the reversal of the respondent's judgment there would be an unpaid balance on the note. No consideration of duty or negligence or even of blindness to the facts is involved. The simple question is whether he made his payments with the understanding and intent that thereby his liability should be paid in full and extinguished. If he did this, then certainly the payments did not amount to an acknowledgment of further indebtedness and prevent the running of the statute. That he did so do is established beyond controversy.
The principles which govern this subject are too fundamental and well settled to be obscure or doubtful. There is no need to make extensive citations of authorities which have declared them. It will be sufficient to quote what was written by Judge EARL inCrow v. Gleason (141 N.Y. 489, 493). He said: "In order to make a money payment a part payment within the statute, the burden is upon the creditor to show that it was a payment of a portion of the admitted debt, and *Page 27 
that it was paid to and accepted by him as such, accompanied by circumstances amounting to an absolute and unqualified acknowledgment by the debtor of more being due, from which a promise may be inferred to pay the remainder. Part payment of a debt is not of itself conclusive to take the case out of the statute. In order to have that effect it must not only appear that the payment was made on account of a debt, but also on account of the debt for which action is brought, and that the payment was made as a part of a larger indebtedness, and under such circumstances as warrant a jury in finding an implied promise to pay the balance. If it be doubtful whether the payment was a part payment of an existing debt, more being admitted to be due, or whether the payment was intended by the party to satisfy the whole of the demand against him, the payment cannot operate as an admission of a debt so as to extend the period of limitation. If there be a mere naked payment of money without anything to show on what account, or for what reason the money was paid, the payment will be of no avail under the statute. The payment must be made under such circumstances as to show a recognition of a larger debt remaining unpaid."
The judgment should be reversed as to the appellant Nettleton and a new trial granted, with costs to abide event.
CULLEN, Ch. J., EDWARD T. BARTLETT, WILLARD BARTLETT and CHASE, JJ., concur with HAIGHT, J.; VANN, J., concurs with HISCOCK, J.
Judgment affirmed.