75 Ind. 125 | Ind. | 1881
The facts in this case are as follows : August 1st, 1871, Boyd borrowed money of Bailey, and executed to him his principal note for five thousand dollars, payable at five years from date, and ten interest notes, for $250 each, being for interest at ten per cent, per annum, falling due at intervals of six months. The debt was secured by mortgage upon certain real estate, the title to which, as it afterward appeared, was not in the mortgagors, Boyd and wife. Boyd became desirous of repaying the loan before it should mature, and Bailey desiring other security, a composition bond was executed by Boyd, as principal, and Craighead as surety, to Bailey, providing for the payment of a less sum than the principal, at an earlier date, with the interest on the principal to date of payment, or the perfection of the title to the property mortgaged. This bond was executed October 13th, 1871, a little over two months after the debt was contracted. The sum provided to be paid as a satisfaction and discharge
This suit was brought upon the bond, the complaint substantially setting out the foregoing facts. There was a demurrer overruled to the complaint, and a demurrer sustained to the sixth paragraph of Craighead’s answer, exceptions reserved, trial by court, finding for plaintiff, motion for a new trial overruled, and judgment rendered for $3,871.17. The case was appealed to the general term of the supeiior court, and the judgment at special term was reversed, and cause then appealed to this court.
The errors assigned in the general term of the superior court by Craighead were :
1st. The overruling of his demurrer to the complaint.
2d. The sustaining of appellant’s demurrer to the sixth paragraph of Craighead’s answer.
3d. The overruling of Craighead’s motion fora new trial.
4th. The overruling of Craighead’s motion as to the amount of. the judgment.
The bond is a composition bond. A composition agreement is one between a debtor and creditor, whereby the debtor agrees to give, and the creditor to take, a less sum at a time fixed, instead of the original debt, according to its terms. Where the debtor gives or furnishes a new liability, or rather the liability of a new party, as security for the performance of the composition agreement, it becomes a binding contract. Addison Contracts, 3d Am. ed., sec. 380 ; Steinman v. Magnus, 11 East, 390. If the debtor performs his part of the agreement, no action will lie for the original debt. Pontious v. Durflinger, 59 Ind. 27. But if he fails in good faith to perform his part of the agreement, the creditor has his action upon the original debt. Kahn v. Gumberts, 9 Ind. 430; McFarland v. Garber, 10 Ind. 151.
And he might also have an action upon the composition agreement, for any damages that he may have sustained on account of any breaches of the same. While the creditor might rely upon the composition agreement alone, yet if it was not complied- with by the debtor, he would have the right to elect to enforce the payment of the original debt.
In this case the real controversy arises over the subsequent arrangement. The taking of the new mortgage to secure the payment of the old notes, and the making of them all •payable whenever there was a failure to pay either of the interest notes when due, was certainly changing the terms of
As the foregoing is decisive of the ease, it is unnecessary to extend this opinion by presenting and deciding the. other errors assigned in the general term of the superior court.
It is therefore ordered, upon the foregoing opinion, that the judgment of the superior court in general term be, and it is hereby, in all things affirmed, with costs.