Court Opinion

ID: 4930253
Source: CourtListenerOpinion
Date Created: 2021-09-24 01:06:31.230276+00
Date Added: 2024-06-11T08:14:26.821822
License: Public Domain

Tenney, C. J.
The decision of the questions presented to the Court, when this case was before it upon exceptions, at a previous time, is conclusive upon the point, that the time of payment was enlarged by the receipt of the interest in advance, as a valuable consideration, and the word “renewed” written upon the note. This was the construction put upon *356what appeared upon the note itself, and evidence is not admissible to control or vary its legal import.
The defence on the last, as on the former tidal, was, that the defendant was surety only upon the note, one McIntosh being the principal, and that the same was well known to the bank at the time the note was discounted; and that, by an agreement with McIntosh, it extended the time of payment, beyond that stipulated in the note, without the knowledge or consent of the defendant.
The attempt to prove, that the defendant was surety only upon the note, was resisted by the plaintiffs, but was allowed. This ruling was in conformity with what may now be regarded as a settled principle, which is recognized in this case, reported between these parties referred to.
The doctrine in law is too well established to require the citation of authorities, that if the holder of a promissory note, knowing that one of the makers is a surety for another on the same note, enters into a valid contract with the principal, without the knowledge of the surety, to enlarge the time of payment, the surety’s liability to the holder is terminated. This is affirmed in this case before cited. The reasons for the doctrine, as given by Chancellor Kent, in King v. Baldwin, 2 Johns. Ch. 560, are entirely satisfactory.
The jury found, under the instructions, the facts relied upon to sustain the defence.
But the plaintiffs invoked a rule of the bank, and an usage corresponding therewith, before the date of the note, “to take no accommodation note so written; but to require all notes to be joint and several, and all the promisors, so far as the bank was concerned, were dealt with and treated as principals and they introduced evidence tending to prove such rule and usage, and also that the defendant was a customer of the bank, having notes there.
Upon this branch of the case, the jury were instructed, that the usage and practice of the bank, to take notes, signed by the promisors, without any distinction thereon indicating who *357was principal and who was surety, would not alone be sufficient to enable it to hold the surety, known by it to be such, after it had extended the time of payment beyond that specified in the note, by an agreement with the principal, without the knowledge and consent of the surety, even if the surety had knowledge of such usage and practice.
This instruction, as an abstract principle of law, is entirely in accordance with well settled legal rules; for the relation of surety in one maker to another, on the same note, which is not necessary to appear upon the note, but as we have seen may be proved aliunde, the instruction was a simple application of the rule, that a surety will be discharged, by the enlargement of the time of credit, as supposed in the instruction.
If the instructions were not sufficiently full and specific, in the opinion of the plaintiffs’ counsel, to meet the particular aspects of their case, he could have requested such instructions as he thought appropriate. Not having done this, they cannot be treated as aggrieved for want of further instructions, unless, from the evidence of the case, those given, it is apparent, must have been understood by the jury, as having a meaning different from that imparted, simply by the terms used. And it is insisted, that the rule and usage of the bank authorized the enlargement of the time of payment, under an agreement between the principal and holder, the surety having no knowledge thereof, without impairing the liability of the latter; and that the instruction was regarded by the jury as a denial of this construction of the rule. Upon the hypothesis, that the presiding Judge was so understood by the jury, which is not admitted, we propose to consider the rule and its meaning.
The rule is in one part a prohibition; and in another a requirement. The former is, that no accommodation note, so written, can be taken; the latter, that all notes shall be joint and several. So far, it has reference to the form of the notes, and the character of the contract made by those whose names may be upon them. And where the whole is considered together, it is manifest, that the design was, that the notes *358should be so made and executed, that one person taking a liability thereon, should not be holden as a maker, and another as indorser or guarantor, but all should be original promisors. This mode would effectually relieve the bank from the trouble and expense of the steps necessary to be taken to fix the liability of indorsers, and prevent an exposure to loss by the omission of any of those steps, or the want of proof thereof, by making those who were signers on the notes absolutely, instead of some of them being conditionally holden. This was obviously one design at least of the rule. And, in this respect,’the note in question conformed thereto.
The rule does not forbid the designation of one as principal, and another as surety, on the notes, but provides, in the notes to be taken, so far as the bank was to be concerned, that all the promisors shall be dealt with and treated as principals.
The general rule of law allows the holder of a promissory note to treat the maker as principal, who signs it as surety, and to deal with him, as such. He is not required to give him any notice of non-payment by the maker, who holds the relation of principal to him, or to make demand of payment of the former, to hold the latter. As long as the holder is passive, all his remedies remain. English v. Darley, 2 B. & P. 62. Under the contract in the note, Ms rights against the surety are as ample against him as the principal. But as this rule of law gives no power to the holder to alter the note, by putting off the time of its maturity, thereby making it a new and a different contract, the rule of the bank has precisely the same meaning in this respect, and can confer no greater power upon the bank. It is simply an affirmance of the common law principle as applicable to such notes as the bank, under it, designed to discount.
The plaintiffs’ construction will make the words, “ so far as the bank is concerned,” purely redundant. This cannot be admitted. This language implies a restriction, that so far as others than the bank should be concerned, the rule should not apply to the prejudice of the latter. The law regards it *359for the benefit of a surety, that he may pay the note at maturity, and immediately look to his principal for reimbursement. He consents, that he may be treated by the holder of a note signed by him as surety, as a joint promisor, and a principal in that contract; but he is concerned, that the contract shall not be changed, so that he shall be precluded from this mode of seeking indemnity, and the rule, by the terms themselves, excludes the interpretation contended for. Allowing the bank to deal with sureties on the note, as principals, and to treat them accordingly, confers the power to do so in that contract to the fullest extent; but gives no right to make them parties to another contract, which increases their liability. Such construction would admit the bank to hold sureties perpetually liable, and at the same time deprive them of the right to pay the debt, and resort to their principal.
Was the defendant’s liability revived by the indorsement upon the note, “1847, Sept. — Received $10,37, and interest till August 28th last, by J. L. Mallett?” Under the instruction, that if the indorsement was for money furnished by McIntosh, the defendant was not made liable by the payment thereof, and the general verdict for the defendant, the jury found that this money was furnished by the principal on the note.
The bank was not injured by this payment through the agency of the defendant, when no longer holden on the note. The bank received this sum from its debtor, as a portion of the amount due from him; it was beneficial to the creditors, and effected no change in their rights to call for the balance. If the defendant omitted to inform the officer of the bank, at the time of its payment, that he acted therein as the servant of the principal, this could not operate to. the prejudice of the plaintiffs so as to confer additional rights.
The evidence, that the indorsement made in September, 1847, was on account of a payment made by the principal, was properly allowed, as tending to prevent the jury from inferring that if the defendant paid his own money upon the note upon which he was once holden, he admitted that the *360previous payments and renewals might have been made by his consent. Exceptions overruled.
Rice, Appleton and May, J. J., concurred.