Court Opinion

ID: 3605605
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:51:10.578095+00
Date Added: 2024-06-11T13:39:26.921918
License: Public Domain

The Supreme Court made the order, granting a new trial, on the ground that the defendant, Smith, was discharged, as indorser of the note, by reason of Hungerford subsequently signing the same as maker, without his knowledge or consent.
It is laid down in Chitty on Bills (Spring. ed., 1854, p. 215), that, "after a promissory note has been made by one person, the name of another cannot be added thereto as surety, unless by indorsement, because his becoming a joint maker would be making anew contract." The only authority cited to sustain this doctrine is the case of Clerk v. Blackstock, which was decided in 1816, and reported in 1 Holt N.P. Rep., 474. The note in that case was originally signed by Jackson, to whom the money, mentioned in it, was lent; and Clerk afterwards required some new security from Jackson, in consequence of which Blackstock's name was added to it as a surety. BAYLEY, J., said: "I think this note may be considered as a joint and several note. The letter I
applies to each severally. Lord KENYON has ruled so. With respect to the other objection, if it were part of the bargain between Clerk and Jackson, that Blackstock should sign the note as principal, he might sign it at any time subsequent to Jackson's signature. But if it was no part of the original bargain, and Blackstock came in, upon an afterthought, as surety merely, the note will not be binding without an additional stamp."
In Byles on Bills of Exchange (published in 1829) the rule is stated as follows: "If a promissory note be signed by A, and subsequently by B, as surety for A, whilst the note is in the hands of the payee, it will be void, unless the signature of B is in pursuance of a previous agreement, at the time of making the note." (Byles on Bills, Law Library, 4th series, *Page 43 
vol. 36, p. 247.) The case of Clerk v. Blackstock (supra), is cited by Byles, and also ex parte White (2 Dear.  Chitt., 334), as authority for this rule.
The case of Catton v. Simpson (8 Adol.  Ellis, 136) was decided in 1838, wherein Lord DENMAN, Ch. J., held that a third person signing his name, as surety, to a note, after it had been negotiated, without any understanding or arrangement with the makers, was not an alteration of the note, but merely an addition, which did not annul the original liability of the makers. But that case was overruled by the Court of Queen's Bench, in 1855, in the case of Gardner v. Walsh (32 Eng. L. 
E., 162), wherein it was expressly adjudged that the maker of a note is discharged from all liability to pay it, if the holder, without his knowledge or consent, procures another person to sign it as a joint maker. The court said: "We conceive that he (the original maker) is discharged from his liability if the altered instrument, supposing it to be genuine, would operate differently from the original instrument, whether the alteration be or be not to his prejudice." The same rule was laid down by the Court of Appeals of Kentucky (Bank of Limestone v. Penrick, 5 Monroe, 25), as early as 1827, and it was reiterated by that court in 1839, in Pulliam v. Withers (8 Dana, 98). It was adopted by the Supreme Court of this State, in the seventh district, in 1857, in Chappell v. Spencer (23 Barb., 584), and sustained by a very able opinion delivered by Justice SMITH.
The same doctrine is stated in Story on Promissory Notes (section 408, a), in these words: "The rule is that the maker of a note is discharged by any subsequent alteration, wherever the altered instrument would operate differently from the original, whether the alteration be or be not to the maker's prejudice. Thus, where A signed a note as the sole surety for B, and afterwards the payee procured C to sign, as additional surety, without A's knowledge or consent, this was held to discharge A from all liability on the note." Edwards, in his late Treatise on Bills and Promissory Notes, asserts the same doctrine. (Edw. on Bills, 681.)
The Supreme Court of Alabama held adversely to this rule, *Page 44 
in 1846, in the case of The Montgomery Railroad Company v.Hurst (9 Ala., 513). But that case cannot be followed. There is too much authority against the rule therein laid down to warrant its adoption in this State, whatever we might think of it as an original question.
It follows that this court must hold, that if the holder of a note, without the knowledge or consent of the maker, procures a third person to sign it as maker or surety, he thereby discharges the original maker from all liability thereon. And the rule is undisputed, that when the holder of a note discharges the maker from liability, without the knowledge or consent of the indorser, he thereby discharges the latter from all liability on the note.
The foregoing views show that the Supreme Court rightfully held in this case that the plaintiffs, by procuring Hungerford to sign the note, as additional surety, or maker, without the knowledge or consent of the defendant, Smith, who had indorsed it, discharged the latter from all liability thereon.
The order of the Supreme Court granting a new trial must, therefore, be affirmed, and final judgment rendered against the plaintiffs with costs.
MARVIN and ROSEKRANS, Js., also dissented.
Order reversed, and judgment at special term affirmed. *Page 45