Court Opinion

ID: 6407768
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:50:17.748864+00
Date Added: 2024-06-11T15:51:16.182365
License: Public Domain

Dewey, J.
The two notes, upon which the defendant is now sued as indorser, were originally made and indorsed for the purpose of being passed into the hands of Ralph C. Huse, as collateral security for the payment of the money due for certain wool purchased of him by James and Edmund G. Hibbert. The form of the transaction between the parties was, that the purchasers gave, in payment for the wool, four notes payable at different periods of time, James Hibbert signing the same as maker, and E. G. Hibbert as indorser ; and these notes were delivered to Ralph C. Huse, he also taking the two notes in*161dorsed by the defendant, under an agreement that he was to hold them as collateral security for payment for the wool. The four notes soon after passed into the hands of the plaintiffs, and at the same time the two notes originally made and delivered to Ralph C. Huse, as collateral security, were also transferred to the plaintiffs, for the like purpose. The only question in the case is, whether the defendant has been discharged from his liability upon the notes, given as collateral security, by the subsequent acts of the parties.
The liability of the defendant was only coextensive with the object and purpose for which it was mutually understood and agreed that he was to become surety. This purpose, the case finds, was to give collateral security for payment for the wool. The amount due for the wool was adjusted between the parties, and four negotiable notes given therefor; and while any of these notes remained unpaid, the liability of the defendant continued ; but beyond this, it was not to be extended, without his consent, and made to embrace within its scope a series of new arrangements, changing the notes, postponing the time of payment, introducing new parties, &c., unless the new arrangements were so peculiarly guarded in their form and mode, as not to operate as payment or discharge of the original notes given for the wool.
Of the four notes, two which fell due the earliest have long since been given up to the maker, having been paid wholly by the maker, except the sum of $ 150, which was eventually paid by the plaintiffs as second indorsers, in a new note given as a substitute, in part of one of those notes.
The two remaining notes, it appears, were discharged by the payment of $ 450 in money, and the giving of three new notes for the balance, the same being negotiable notes, made by James Hibbert, indorsed by E. G. Hibbert, and also indorsed by one J. E. Tibbets, and payable in sixty, ninety, and one hundred and twenty days. The two original notes last referred to were produced in court by the plaintiffs, cancelled ; the maker’s name having been torn therefrom.
These transactions between the parties have, as it seems to us, discharged the defendant from his liability as surety for the *162payment of the debt for the wool, under the original agreement. The giving of a negotiable note for a debt due on simple contract raises a legal presumption that the note was received in payment, and will operate as a discharge of the simple contract, unless the presumption be controlled by evidence of a contrary intent. Thacher v. Dinsmore, 5 Mass. 299. Maneely v. McGee, 6 Mass. 143. If so, it would seem very clear that the taking of new negotiable notes in a new form, payable at periods postponed beyond the time of the maturity of the previous notes, and, especially, taking them secured by the introduction of a new indorser, whose name was not on any of the original notes, accompanied with the further fact of the cancelling of the original notes, would fully authorize the presumption that the three new notes were received in payment and discharge of the balance due on the former notes, unless the presumption be rebutted by other evidence. Such being the state of the case, the legal consequence must be, that the defendant is discharged from his liability as indorser of the notes given as collateral security.

Plaintiffs nonsuit.