14 Utah 190 | Utah | 1896
This is a suit upon a promissory note, dated April 1, 1891, and signed by John W. Taylor and the appellámt herein. The defendant, having set up an affirmative defense, offered to prove that, although the appellant signed the note as principal, he was in fact only a surety ; that he received no part of the money for which the note was given, or any consideration for its execution or delivery; that at or shortly after its maturity the plaintiff, without the knowledge or consent of the appellant, extended the time of payment for a valuable consideration; and that the plaintiff, at the time he accepted the note;, knew that this appellant was only a surety. This offer was rejected, and the proof of defendant limited to an express agreement between the payee and makers, or either of them, that the payee had accepted Thomas E. Taylor as a surety. The note was drawn up in the singular form, and there is no word of description attached to either signature. It appears that, after the note became due, John W. Taylor, the real principal, asked the plaintiff for further time, which was granted, and a new note accepted for the loan, without the knowledge of the appellant. It is also shown that the appellants signature did not appear on the new note. The court instructed the jury that the only question in the case was whether or not there was an express agreement between the plaintiff and John W. Taylor that the new note, introduced in evidence, was accepted by the plaintiff in payment of the old note. The burden was thus upon the appellant to show, not that he' was a surety within the knowledge of the payee when he accepted the note, but that there was an.
Counsel for the appellant insist this was contrary to law, and the first question which, we will consider is whether, upon suit brought on a promissory note, it is-competent for one of two makers to aver affirmatively in his answer, and prove by parol, that’he signed the note as surety, and that he was discharged by an extension of time given to the principal debtor by the payee with knowledge of the suretyship. The great importance of this question must be conceded, because of its bearingis on business relations;.and that there has been some confusion in the authorities regarding such a defense must be admitted. This doubtless arose from the fact that some of both the English and American courts entertained dioubits whether such a defense could avail in a court of law. In Pooley v. Harradine, 7 El. & Bl. 431, Mr. Justice Coleridge, holding such a defense good in equity, sai-d: “In the moire recent cases at law, however, the rule in question has apparently been treated as arising out of the original contract with the creditor; and, if this was a plea of a legal defense, we would probably have felt bound by those authorities, and have left it to a court of error to consider the whole question, taking into their consideration whether the same rule in such matters ought not to exist in courts of law and equity, and to decide, if there be a difference, what the rule should be. As we are, however, called upon to deal with this case as if we were sitting in a court of equity, we think we ought to decide it according to what we believe to be the doctrine in courts of equity.” In Rees v. Berrington, 2 Yes. Jr. 540, Lord Loughborough said that the form of the security forced these cases into equity, because, when they were bound.
The main objection urged against such a defense at law appears to be thiat it is an attempt to vary the terms of a written instrument; but, if this objection be sound, it will obtain equally in equity, because at law and in equity the same general ruleis of evidence are applied. It is true that, in an action at law, the terms of a written instrument cannot be varied by parol evidence; but this is equally true in an action in equity, except in caises where an action or defense is maintained under some recognized head of equity jurisdiction. It seems difficult to ascertain a good reason why, in a case of the character under discussion, a court of law should reject evidence which would be admissible in a court of equity. Whatever distinction may, under the old system, have obtained respecting the admission of evidence at law and in equity, it cannot be maintained in courts of both legal and equitable jurisdiction, as constituted under the Code. Without, however, invoking the rules of equity, it seems clear
Tbis view of tbe law, herein expressed, we think, is supported by tbe weight of authority, both in England and in this country. In Bailey v. Edwards, 4 Best & S. 761, Mr. Justice Blackburn, speaking of this doctrine, said: “The principle has been imported from the courts of equity into those of law.” And Mr. Justice Coleridge, in Pooley v. Harradine, supra, speaking of the right of the surety to pay the debt when due, and to be subrogated to the right of the creditor to sue the principal, said: “Now, does this right of placing himself, as it is said, in the shoes of the creditor, depend on a prior contract between tbe creditor and surety, or on an implied duty of tbe creditor not to injure the surety’s rights when he knows the relation subsisting between bim and bis principal? We do not see tbat, by the doctrine asserted in courts of equity, the primary liability is at all altered. In truth, tbe defense, either at law or in equity, does not arise by any alteration of the original contract, which, indeed, it assumes and relies on in its original terms, but that the creditor cannot fairly or equitably sue the surety where, knowing of the existence of the relation of suretyship, he •has voluntarily tied up his hands from proceeding against the principal.” In Guild v. Butler, 127 Mass. 386, Mr. Chief Justice Gray said: “The fact that one debtor is surety for tbe other is no part of the contract with the creditor, but is a collateral fact, showing the relation
In the case at bar the defense averred, and offered to show by proof, that, while the appellant had signed the note in question as maker, he was in fact only a surety; that he received no part of the money, the loan having been made for the benefit of his co-maker; and that the plaintiff, knowing the true relation which existed between him and his co-maker, for a valuable consideration extended the time of payment to the principal without the appellant’s knowledge or consent. It is obvious that the evidence offered is admissible, because, if the facts indicated were established, they would show that the payee had undertaken to continue the liability of the appellant beyond the terms of his contract, and this would be a complete defense to the action; so, if it were shown that the plaintiff, with the knowledge of the sure-
There are various errors assigned, but, as the cause must be reversed, a further discussion is not deemed necessary. The case is reversed, and remanded, with directions to grant a new trial and proceed in accordance with this opinion.
