Bank of Newbury v. Richards

| Vt. | Mar 15, 1862

Barrett, J.

Under several successive decisions in this state* beginning with the Bank of Burlington v. Beach, 1 Aik. 62" court="Vt." date_filed="1825-12-15" href="https://app.midpage.ai/document/bank-of-burlington-v-beach-6570143?utm_source=webapp" opinion_id="6570143">1 Aik. 62, and ending with the Bank of Middlebury v. Bingham et al., 33 Vt. 621" court="Vt." date_filed="1861-01-15" href="https://app.midpage.ai/document/bank-of-middlebury-v-bingham-6577111?utm_source=webapp" opinion_id="6577111">33 Vt. 621, in which the decisions of the courts of other states, on the same subject, have been fully considered, it must now be regarded as settled, that Morse could advance the money upon this note, and receive and hold it as a valid instrument against the makers thereof, enforceable by suit in the name of the bank* unless precluded by some act or default on his part, as the holder.

As he did advance the money and take the note therefor, the question is, whether the liability of the sureties has been discharged, by reason of his acts or omissions in respect to the note.

The decision of the county court seems to have been made on the ground, that he did not have the note at the bank at the time it fell due, or in a reasonable time thereafter; nor notify the sureties that he was the owner and holder of the note, so that they might be able to know where it could be found, seasonably to take measures to secure themselves- for their liability upon it,-

As the case does not show any want of good faith towards the sureties, in the course taken by Morse with the note, the mate-* rial point rests in the question, whether he has violated, or neglected, any duty which the law imposed on him towards the sureties, whereby they have suffered prejudice.

As to the alleged duty, (as one branch of the alternative above stated,) to have the note in the bank at or soon after the time it became payable : — The note does not specify any place of pay-' ment in terms. The ground on which it is claimed that the note should have been in the bank, at or near its maturity, is* that it being payable to the bank, and not made negotiable, the law will hold the place of payment to be at the bank, the same as if it had been so specifically made payable there.

As a general rule, when no place of payment is named, a .note* payable to an individual person, whether negotiable or not, is payable wherever it may be in lawful custody. We know of no principle or decision that would make the rule different in case of a note payable to a bards,, or any other corporation. If this note had been payable to John Doe, or any other individual, there would be no question, that Mr. Morse might have received the note upon a lawful transacton, and held it in the manner that he held this note, and it would have been payable, not at the house or office, or the personal locus in quo, of John Doe, but at any place where Morse might be with it, at any time after it fell due. As Morse was, in the case before us, equally in the lawful custody of the note payable to the bank of Newbury, we think it stands upon the same ground, as to place of payment, and therefore, so far as place of payment is concerned, there was no legal, necessity for him to have the note at the bank, at the time, and in the manner claimed.

As to the duty to give notice that Morse owned or held the note : — The point in this respect must stand, if at all, upon the ground of a legal duty, as before remarked. In reference to parties sustaining certain relations to bills and notes, as drawer, or endorser, or guarantor, the law, for good reasons, has established certain rules, that must be observed, in order to fix liabilities upon such parties. But in reference to sureties, we do not understand that those rules are applicable. A surety is an original maker, and becomes primarily and absolutely liable, as much so as the principal, to any party lawfully holding the paper. With a very obscure logic, and an obvious departure from the analogies in the common application of established principles in the law, it may be, that, in regard to sureties, there has been established an arbitrary and technical rule, viz.: that if the holder contracts with the principal for delay in enforcing payment, for a definite period, on sufficient consideration, he thereby will discharge the surety from liability, without enquiry whether the surety has been in fact put to any peril of detriment thereby.

But beyond this, we understand that the only rule of law, prescribing duties to the holder of the note, in reference to sureties, is the general one of good faith and fair dealing.

And when the facts and circumstances of the given case do not charge him with any want of these, the sureties stand on no ground of advantage over the principal, in respect to immunity from liability. The court below have not reported any finding of a want in this respect; nor do the facts, which are found, constituting the history of the note and of the parties, in their relation to it, betoken any want of such good faith and fair dealing.

Indeed, it seems clearly to be a case, in which both Morse and the sureties had, and had reason to have, entire confidence in Richards, both as to. honesty, and as to ability to pay this, and all his other debts. In the absence of any thing found, or indicating that Morse suspected, or had any reason to suspect, any design on the part of Richards to play false with his sureties, or that they were iu any peril as such sureties, there is no ground for predicating any want of good faith and fair dealing on the part of Morse towards them.

This being so, we know of no rule or reason, why he might not let the note lie, without notifying, or calling upon, the sureties, for such time as he saw fit. It being settled law that this note might go into the hands of any body else, as1 well as the bank, as a means of raising money, and be held as a valid and enforceable instrument against the makers thereof, it must be supposed that the sureties signed it in view of the legal consequences, both to the holder and themselves. They signed it reposing full confidence in -the principal, as before remarked, both for honesty and ability to pay. Because that confidence was misplaced, and they were misled by the falsehood of Richards, as to having paid and taken up the note, the results thereof can not be visited upon Morse, who was holding the note in lawful right, and neglecting no duty towards them, which either the law or good morals imposed.

The judgment is reversed ; and, as is the practice in eases in which all the facts are found and reported, we proceed in this court to render such judgment as the law requires, judgment is rendered here for- the plaintiff to recover the amount due on the note, with costs.