Court Opinion

ID: 6695832
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:50:19.342871+00
Date Added: 2024-06-11T16:01:14.294077
License: Public Domain

Clark, C. J.,
dissenting: Revisal, 371, provides: “No acknowledgment or promise shall be received as evidence of a" new or continuing contract from which tbe statutes of limitations shall run unless tbe same be contained in some writing signed by tbe party to be charged thereby; but this section shall not alter tbe effect of any payment of principal or interest.” It is evident from this that such payment shall be made under circumstances which shall be equivalent to a new promise in writing, i. e., it must be a. voluntary payment by a party who at tbe time is free to make bis election and who by tbe payment intends to expressly recognize tbe debt as existing. A sale under a previous authorization to an agent or trustee to sell collaterals and apply tbe proceeds on tbe debt can no more have tbe effect of a voluntary new promise than tbe agreement itself in tbe face of tbe note or bond to pay it. Tbe payment must not only be made in recognition of debt, but there must be an agreement to pay tbe balance. Battle v. Battle, 116 N. C., 161; Supply Co. v. Dowd, 146 N. C., 196.
In this case tbe sale of tbe collaterals by tbe trustee and tbe payment were made after tbe debt was barred. A payment is a renewal of tbe debt as to tbe principal (Garrett v. Reeves, 125 N. C., 529), but not as to partners after partnership dissolved (Wood v. Barbour, 90 N. C., 79); nor as to indorsers (Garrett v. Reeves, supra). It follows, therefore, that it cannot be construed as a voluntary payment constituting a new promise by tbe debtor where tbe trustee makes tbe sale under authority given seven years prior thereto to sell tbe collaterals. *308When such authority was conferred, the debtor was bound for any deficiency, because he was not yet protected by the statute. When the sale was made, and the proceeds were applied, this was valid as a sale and a payment, but no inference of a new promise could be drawn therefrom, the debt having become barred.
In Battle v. Battle, 116 N. C., 164, it is said: • “Partial payment is allowed this effect only when it is made under such circumstances as will warrant a clear inference that the debtor recognizes the debt then existing and his willingness, or at least his obligation, to pay the balance,” citing Hewlett v. Schenck, 82 N. C., 234. This is reaffirmed and amplified by Mr. Justice Walher in Supply Co. v. Dowd, 146 N. C., 196. A new promise cannot be implied except when the payment is made with the consent of the debtor — not theretofore authorized merely, but' given at the time. “The principle is that by the part payment the party paying intended thereby to acknowledge and admit the greater debt to be due, and upon this the inference may be drawn of a promise to pay the balance, or the payment by its own vigor revives the debt.” 25 Cyc., 1369; 19 A. and E., 326-328.
The doctrine is best and most clearly stated by Rapadlo, J., in Harper v. Fairley, 53 N. Y., 422, in a ease almost identical with that now before the Court. He said: “That a part payment, whether made before or after the debt was barred by the statute, does not revive the contract, unless made by the debtor himself, or by some one having authority to malie a new promise on his behalf, for the residueThe bank, as trustee here for itself, did not have the authority to make to itself a new promise for the debtor to pay the debt. The authority given it was no more than to sell the stock and apply the proceeds.
There must be a conscious, voluntary, intentional act upon the part of the debtor, contemporaneous with the payment, before the implication of a new promise will arise. Not every payment, if made even by the debtor himself, will have the effect of reviving the debt, because such payment may be made as a compromise and settlement, as in Supply Co. v. Dowd, 146 N. C., *309193. Tbe intention to pay tbe balance in sucb case would be lacking, and no new promise could be implied. U. S. v. Wilder, 13 Wall., 254. In tbis ease tbe authority given seven years before to sell tbe collaterals and apply tbe proceeds cannot be .construed as equivalent to a new promise in 1913 to pay tbe balance of tbe debt wben tbe sale did not take place till tbat time.
“Where a debtor owes two notes to tbe same creditor, one of which is barred and tbe other is not, and a payment is made without any direction as to which note it shall be applied, the creditor may apply it upon tbe barred debt, but sucb application does not revive tbe debt nor imply a new promise. No inference of sucb intention to pay tbe balance can be drawn from tbe act and no new promise will arise.” McBride v. Noble, 40 Col., 372; Ramsey v. Warner, 97 Mass., 8, and cases cited in notes to U. S. v. Wilder, 20 U. S. (Law Ed.), 681.
. No ex parte action on tbe part of tbe creditor is sufficient, but the payment must be made either by tbe creditor voluntarily or by some one clothed with authority, not only to make tbe payment, but to make it as a new promise in bis behalf. Tbe creditor cannot credit upon tbe note a debt owing by him to tbe debtor and-thus revive tbe debt. Bank v. Harris, 90 N. C., 118.
Tbis Court has held tbat tbe payment by a trastee, who is selected as a disinterested party, at tbe time tbe debt is contracted, to bold tbe legal title, will not operate to revive tbe debt or toll tbe statute. Battle v. Battle, supra. In Cone v. Hyatt, 132 N. C., 810, tbe true rule is laid down: “Tbe reason why a part payment is allowed to prevent tbe bar of tbe statute is tbat it is deemed an admission of a subsisting liability from which a promise, as of tbe date of tbe payment, to pay tbe balance of tbe debt will be implied. But in order to raise tbis implication there must be a voluntary payment by tbe debtor or by some one authorized to make tbe payment for him.” Tbe sale of collaterals and application of proceeds under authority given seven years prior thereto cannot be considered a voluntary payment tbat will raise the implication of a new promise. .
Tbis debt, became barred on 24 April, 1910. Tbe authority to sell tbe collaterals upon default was given wben tbe note was *310executed' and tbe collaterals deposited 18 July, 1906. Tbe sale of tbe collaterals was not made till February, 1913. Whether sucb sale and application would be valid after tbe debt was barred is a matter about wbieb tbe decisions differ, but none go so far as to say tbat sucb act will revive tbe debt. 25 Cyc., 1379.
In 1 Wood Statute of Limitations (2 Ed.), 282, it is said tbat a part payment derived from collateral security and its application to tbe debt without tbe debtor’s assent at tbe time does not remove tbe bar, citing Harper v. Fairley, 53 N. Y., 442; Brown v. Latham, 58 N. H., 30, and other cases.
In Jones v. Langhorne, 19 Col., 206, it is held: “A new promise to pay a debt barred by tbe statute of limitations will not be implied from part payment where tbe circumstances of tbe payment rebut tbe inference of sucb promise; and where tbe part payment is money realized from assets transferred by tbe debtor 'to tbe creditor, tbe new promise is not to be implied as of a later date than tbe transfer.” This date in this case was July, 1906.
Again in Good v. Ehrlich, 72 Pacific, 544, it is held tbat “to revive a debt there must be a voluntary payment, and collection from collaterals cannot have this effect, but sucb collection must be referred back to tbe date of tbe deposit of -the collaterals.”
Tbe strongest case probably is Ferris v. Curtis, 127 Pacific, 236 (decided 7 October, 1912), where it is said (p, 238) : “It. has also been repeatedly held in this Court tbat tbe efficiency of tbe payment to avert tbe effect of tbe statute as a bar rests in tbe conscious and voluntary act of tbe defendant when explainable only as a recognition and confession of tbe existing liability. To raise sucb implied promise it must be voluntarily made by tbe debtor to tbe creditor. It must be shown to be a payment of a portion of an admitted debt paid to and accepted by tbe creditor as sucb, accompanied by circumstances amounting to an absolute, unqualified acknowledgment of more being due, from which a promise must be inferred to pay tbe remainder.” Tbe Court then held tbat, in this aspect, tbe sale of col-*311laterals under a prior authority, to be applied to the debt, while an authorized, is not a voluntary, but an involuntary sale, from which no new promise can be implied.
In Bank v. Barnaby, 197 N. Y., 210, the paper and authority were identical with those in this case, and the Court, reviewing all the authorities, held: “Few lawyers will have the courage to argue that under a general authority to sell securities and apply the proceeds a pledgee will have power to revive a debt against his pledgor already barred by the statute.”
A part payment to bar the statute and revive the debt must be made with the intention of making a new promise and acknowledging the debt. The above authorities hold that such intention cannot be implied from the sale of collaterals and their application under authority given prior thereto, and most especially this could not be the effect when the debt in the meantime has become barred. There was no express evidence offered in this case of such intention, and if there had been, it should have, been submitted to the jury. 25 Cyc., 1369, and notes.
Hoke, J., concurs in this dissent.