Court Opinion

ID: 6950317
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:30:48.681421+00
Date Added: 2024-06-11T16:08:03.500359
License: Public Domain

Breese, J. The rule seems to be well settled, if there be any agreement founded upon a valuable consideration, and operative in point of law, between the maker of a note and the holder, whereby the holder agrees to give credit to the maker, after the note is due, or whereby the payment is postponed to a future day, and this agreement is made without the consent of the indorsers, they will be thereby absolved from all obligation to pay. And it makes no difference whether the agreement was made before the maturity of the note, or after its dishonor, or after the indorsers have been fixed by one presentment and due notice or dishonor. The reason of the rule is, that the holder by such an agreement undertakes, that he will give credit to the maker during the period of the delay, and thereby tacitly agrees, that the indorsers shall not be called upon to pay the note in the meantime ; since if they are called upon, and do so pay, they will instantaneously have a right of action over against the maker for their reimbursement, and thus the object of the agreement for delay would be frustrated. Story on Promissory Notes, Secs. 413, 414; Philpot v. Briant, 15 Eng. Common Law E. 127, opinion of Ch. J. Best. This court has applied this doctrine to the case of sureties. Davis et al. v. The People, 1 Gilm. 410. In Waters et al. v. Simpson et al., 2 ib. 574, this court held, that the contract of a surety must be construed strictly, and he cannot be held responsible beyond the precise terms of his undertaking. A binding agreement between the creditor and the principal debtor, materially changing the terms of the original, and to which the surety has not expressly or tacitly consented, has the effect to discharge the surety, both at law and in equity, and when this has been done, courts will not stop to inquire whether the surety has been damnified or not. In all such cases, the agreement must be founded on a good consideration, and binding in law, on the parties to it. This case fulfills those conditions. The note was overdue, and the acceptance of interest upon it, in advance of the time when such interest was due, and that, too, greatly above the rate of interest allowed by law, is a sufficient consideration for an agreement to extend the time, and constitutes of itself such an agreement. The sureties, this agreement having been made without their consent, are, necessarily, absolved from their liability. The agreement, for which value was paid, restrained the holder from suing on the note; it suspended his right to enforce payment, and at the same time, suspended the right of the sureties to make payment, and then resort to their principal for indemnity. The notice to the counsel of plaintiff, to produce Gould’s letter to him, was in time, for it was a paper the plaintiff knew the defendants would want on the trial, and the law will presume it was in the possession of the plaintiff’s counsel for such purpose, whereat should have been. Notice to the counsel to produce it, served two days before the trial, was amply sufficient. The letter not being produced, a duplicate from the letter book of Gould, sworn to by him, as being a correct copy, was then offered, as the next best evidence. We think this was the best possible kind of secondary evidence, for it was the original duplicated by the same impression which made the original. It should have been received. These being the views we entertain, it follows, on the first point made, that the defendants’ first instruction should have been given. The Circuit Court having entertained different views, their judgment must be reversed, and the cause remanded for further proceedings consistent with this opinion. Judgment reversed.