65 Mo. 562 | Mo. | 1877
When time is given to the principal debtor . by a valid agreement which ties up the hands of the creditor, though it be for a single day, the surety ° ° ° is discharged. Edwards on Bills and Notes ¿55. lhe rule and the reason lor the rule are much better stated by Rogers, J., in Clippinger v. Cress, 2 Watts 45. “If a creditor, by any contract which can be enforced againt him, at law or in equity, gives time to his debtor, he discharges the surety, for if, notwithstanding such contract, it were competent to sue the surety, the latter would immediately have his remedy over against the debtor. This would be in fraud of the contract of forbearance which the creditor would thereby immediately defeat.” See, also, Kincaid v. Yates, 63 Mo. 47. There is a conflict between the cases as to what facts, in the absence of an express stipulation, will authorize a jury to find that there was such an agreement. In Massachusetts and Maine it is held that the payment of interest in advance is not of itself evidence of an agreement to delay. In Crosby v. Wyatt, 10 N. H. 322, Parker, Ch. J., held that “ payment of interest in advance is not of itself a contract to delay, but is evidence of such contract. The evidence derived from it may be rebutted, but, unless rebutted, such evidence is conclusive.”
In the case of Hosea v. Rowley, 57 Mo. 357, this court followed the Massachusetts cases. In some of the States ^ that the taking of a bill or note from the debtor, payable on a future day, suspends the creditor’s right of action for the original debt, and operates as an extension of credit by which a surety is discharged. Hart v. Hudson, 6 Duer 305, in which are cited, as authority for the doctrine: Putnam v. Lewis, 8 John. 389; McLean v. Lafayette Bank, 3 McLean 589; 5 Hill 465; 1 Denio 116; 1 John. 34; 15 Id. 243; Id. 349; 16 John. 273; 3 Denio 512. The doctrine is probably too broadly stated in Hart v. Hudson, and requires the qualification that the note or bill was received in payment. Certainly if there were an express agreement to the contrary, or that the bill or note were received as a collateral, its acceptance by the creditor would not discharge the surety.
In Fellows v. Brantiss, 3 Denio 512, the creditor gave the debtor a receipt for the check, which expressly stated that the check was taken in payment of the original indebtedness, and, in several of the cases cited, it appears that the security was taken expressly as payment of the prior indebtedness. If, after the maturity of a .note, the creditor received a note or bill from the principal debtor in absolute payment thereof, a surety in the first note would be discharged. We think it equally clear that the fact of taking such noté and receiving interest upon it, from its date to its maturity, would be evidence of a contract to receive it in payment, and for delay on the original, until the maturity of the renewal note; and, unless rebutted, such evidence would be-conclusive.
In addition to these two important facts, the receipt of the principal’s note and of interest in advance thereon for four months, we have the fact of an entry on the bills-receivable book of' the plaintiffs, that the original note was paid conditionally, and this entry was made by the officers of the bank about the time or soon after the renewal note was given. There were four renewals, and
What is a conditional payment? and what obligation does that agreement impose upon the bank. The substance of the agreement is that if the new note be paid at maturity the original indebtedness shall be satisfied, and the obligation upon the bank is to wait with the makers of the original until the maturity of the renewal note.
There is a distinction recognized, as to the effect of the taking of a new note by the creditor from the principal debtor in payment of a prior indebtedness, between the obligation of the principal on the original indebtedness, and that of his surety. In Hart v. Hudson, supra, it was thus stated by Duer, J. “The cases which he (a referee), has cited only prove what as a general rule is undoubtedly true, that the taking from the debtor of his promissory note for an existing debt is not, as between the parties an absolute satisfaction of the debt; but they do not prove that in such cases the creditor’s right of action is not suspended until the note he has taken becomes due, nor consequently that the note is not conclusive proof of an extension of credit by which the surety or endorser is discharged. There is in truth no conflict in the decisions, and those to which I have referred conclusively show that a negotiable note taken from a debtor even as between the original parties is a conditional satisfaction of the debt which formed its consideration, and that, in respect of a surety, whether a guarantor or indorser, whose assent to the transaction is not proved, the satisfaction which it works and of which it is evidence is absolute.” Appleton v. Kennon, 19 Mo. 637, was a suit against an original debtor, the creditor having taken the notes of one Skillman, who had assumed the original debt- or’s liabilities. The Skillman notes were not paid, and the creditor sued the original debtor, and the court held, Ryland, J., that the receipt of the Skillman notes, in the absence of other proof, was a conditional payment only.
In the case at bar, the execution of the first renewal note and the payment of the interest, and the entry on the bills-receivable book of the bank that it was taken as a conditional payment, was, as to Robberson, the surety on the original note, an absolute payment of the note. At all events, these facts were not only evidence of but constituted an agreement to extend the time of payment of the original, until the maturity of the renewal note. For sixteen months after maturity of the note on which defendant was liable as a surety, these renewals were occurring without notice to defendant, and each renewal note was taken by plaintiff as a conditional payment of the one which preceded it, and between the maturity of the original note,, and the last renewal note, the principal debtor became insolvent, and upon the principle announced in the case of Grube v. Stille, 61 Mo. 475, plaintiff, by its conduct, had discharged defendant from his liability. These views are not in conflict with those expressed by this court in Hosea.v. Rowley. There was, in that case, nothing upon which to predicate an agreement for an extension of credit on the original note, except the acceptance of interest on the note for the four months immediately succeeding the maturity of the note. No new note was given, and no agreement made, that, in consideration of the payment of interest for four months, the time for payment of the note should be extended. It simply followed the doctrine of the Massachusetts cases, that such an acceptance of interest was not evidence of an agreement for delay. We see no particular objection to the 1st and 2nd instructions given by the court for the plaintiff, except that the facts that plaintiff had never surrendered the note, and that defendant, Robberson, had done no act to entitle him to the possession of the note, which are mentioned in the 2nd
The third instruction was erroneous. If the evidence had been submitted to the jury upon the issue whether the plaintiff accepted the renewal note, in payment of the original note, and that is as favorable a view as could have been taken for plaintiff', the court would have erred in declaring to the jury that the renewal note was not accepted as payment of the note sued on. On the evidence the jury must have found that issue for the defendant; but we hold that where there was evidence tending to prove that a new note had been taken from the principal debtor, and interest in advance on that note accepted by the plaintiff' and on plaintiff’s bills-reeeivable books there was an entry that it had been conditionally paid, the jury should have been told that if they so found the facts, they constituted, as to the surety, a payment of the original note, and their verdict should be for the defendant.
Reversed.