33 Ind. 36 | Ind. | 1870
Lead Opinion
The court below sustained a demurrer to the second paragraph of the reply, and this ruling we are called upon to review.-
“Bearcreek, Tp., Ind., Feb. 28th, 1865.
“ This is to .show that the note given by me this day to •John S. Antisdale for §75 is all right and will be paid when it comes .due. (Signed) • J. C. Montgomery.”
The appellant argues that the defenses pleaded were insufficient, inasmuch as he took the note before its maturity without notice, and cites cases applicable to commercial paper. They are not applicable to this case, the note sued on not being of that class of obligations.
It is further insisted that the fact alleged in the reply constituted an estoppel. It is familiar doctrine, that where the maker of a note represents to one who he knows is about negotiating for the paper, that he has no defense to it, and upon the faith of such assurance the paper is purchased, he will be estopped from making defense. But that is not quite the case before us. The making of a promissory note imports in law a sufficient consideration, and it is a fair inference from its mere existence that the maker
But the reply was nevertheless good enough for a bad answer, and hence there was error in sustaining a demurrer to it, if the answer was bad.
One paragraph of the complaint, as we have seen, counted upon a promise, made after the maturity of the note, to pay at a subsequent day in consideration of forbearance, and alleged such forbearance. If this new promise was valid and supported by a sufficient consideration, it constituted a new contract, binding in law and capable of enforcement. It was not a contract forbidden by law or public policy. Had it then a sufficient consideration to support it? Either a benefit to the promisor or an inconvenience to the promisee constitutes a valuable consideration. Upon the maturity of the note, if there was a valid defense to it, the plaintiff, an assignee, had the undoubted right to go, at once, upon the assignor. This was a valuable right, and its surrender or waiver would be a sufficient consideration for the new promise of the defendant. There would be plain injustice in allowing the defendant to attack the validity of the note at the end of the period of additional credit given in consequence of his new promise, and after he had, upon the faith of that promise, led the plaintiff to forego his remedy against the assignor. If he might thus disregard the new promise, he would, without incuring liability, have inflicted upon the plaintiff’ the injury of delay, to which might also be added ultimate loss, if loss should occur by such delay in pursuing his remedy against the assignor. The majority of the court, Gregory, C. J., dissenting, concur in the opinion that the first and second paragraphs of the answer were not good defenses to the second paragraph of the complaint, and that the demurrer to the second paragraph of the reply should have been sustained to those paragraphs of the answer.
Concurrence Opinion
The first and second paragraphs of the an■swer are pleaded to the whole complaint, and I fully concur in the opinion by Frazer, J., that neither of said paragraphs amounts to a good defense to the second paragraph of the complaint. The note was a valid cause of action in the hands of the plaintiff as assignee; it was regular on its face, and imported, prima facie, a sufficient consideration to support it. It was not void, though liable to be impeached for fraud or for the want or failure of consideration; and, if, upon its maturity, the defendant had refused to pay it, because of the matters of defense set up in the first and second paragraphs of the answer, the defense, if true, would have been available, under the statute, against the assignee.
But it is alleged in the second paragraph of the complaint, that after the maturity of the note, the defendant, in consideration that the plaintiff would forbear to sue upon it until the first day of September, 1866, promised to pay it to the plaintiff at that time. If the defendant had refused to pay the note at its maturity, and had notified the plaintiff of his defense, the latter would have been at liberty to prosecute an action, immediately, against the defendant and controvert the alleged defense, or he might have proceeded at once against the assignor, and taken upon himself the burden of showing that a suit against the defendant would have been unavailing. By the defendant’s promise to pay the note on the 1st of September, 1866, and the agreement of forbearance in consideration of that promise, the plaintiff' was delayed in bringing suit, either against the defendant or the assignor, until the expiration of that time. This delay was, of itself, a detriment to the plaintiffj but in addition thereto, he was subject to the risk that the assignor, as well as the maker, might in the meantime become insolvent ; and this detriment, inconvenience, and risk, constitu
In argument, much stress is laid on the statute, which, in reference to notes of this class, declares that whatever defense or set-off the maker had, before notice of the assignment, against an assignor, or against the original payee, he shall also have against their assignees; but it must be remembered that here tbe second paragraph of tbe complaint is based on a promise made by tbe maker to tbe assignee, wbicb is supported by a sufficient consideration, and to this promise tbe matters set up in tbe first and second paragraphs of tbe answer present no defense.
JBut I cannot concur with my brother judges in tbe conclusion reached by them, that the matters alleged in tbe second paragraph of tbe reply do not constitute a valid estoppel. It is alleged in that paragraph, that tbe defendant at tbe time of tbe execution of tbe note, and for tbe purpose of assisting tbe payee in tbe negotiation or sale thereof, and to induce its purchase, executed and delivered to the payee the following statement in writing:
“ Bearcreek Tp., Ind. Eeb. 28th, 1865.
“ This is to show that tbe note given by me this day to James S. Antisdale for $75 is all right and will be paid when it comes due. (Signed) J. C. Montgomery.”
It is further averred that said statement accompanied said note at the time tbe plaintiff purchased it of tbe payee, and that, relying on said statement, tbe plaintiff was induced to make tbe purchase in tbe belief that tbe note was given for a valuable consideration, that tbe defendant bad no de-, fense thereto, and would pay it at maturity. It is conceded to be a familiar doctrine, that where tbe maker of a note represents to any one who be knows is about negotiating for it, that be has no defense to it, and upon tbe faith of such assurance tbe paper is purchased, be will be estopped from making defense. It is, to my mind, extremely difficult to draw any well founded distinction, in principle, between such a case and tbe one under consideration.
Here, it is averred that the writing set forth in the reply was given to the payee of the note to enable him to negotiate it, by inducing some one to become the purchaser. True, it was not addx’essed to the plaintiff by name, but that fact, it seems to me, does not affect the case.
It was not addressed by name to any other person, by which its application might be limited. It was general in its terms, and should be considered, as it was evidently intended, as being addressed to any one who was willing to purchase the note. It is like a general letter of credit addressed to any one who might deal with the person to whom the credit is given. It was given to ixxduce some one to buy the note, and upon the faith of it the plaintiff became the purchaser. It accomplished the purpose for which it was given, and it would be a fraud upon the plaintiff to permit the defendant now to deny its truth.
It is claimed, howevex-, that as the statement was executed at the same time as the note, which, prima facie, imported a valuable consideration, they must be taken together as one instrument, and, in that view, that the written statement amounts to nothing more than the note alone impox’ts. This position does not seem to rest on any solid foundation. No ixnportance can be attached to the fact that the instrument set up in the reply and the note were given at the same time. Suppose the plaintiff had been present at the execution of the note, and had then informed the defendant that he was about to purchase it, axxd had asked if there was any defense to it, and the defendant in xuply thereto had made the statement contained in the writing^
Nor can it be maintained that the writing contains nothing more than the note imports. The note contains a promise to pay the sum named at the time stipulated, and, prima fade, it imports in law, that it was given upon a sufficient consideration to support the promise. In other words, under the law, the plaintiff* was not required to allege in the complaint, and prove on the trial, the consideration for which the note was given, because, in the absence of a showing to the contrary, the law infers a consideration; but still the defendant would be at liberty to show that it was given without consideration, or set up any other valid defense he might have to it, as to which nothing is implied by the note. But the writing goes much further; in legal effect, it not only admits a valuable consideration, but asserts that the defendant had no defense, whatever, to the note..
It seems to me clear that the reply shows a valid estoppel against the defense set up in the first and second paragraphs of the answer.
Concurrence Opinion
As stated in the opinion of the majority, I do not concur in the proposition, that the agreement of forbearance charged in the second paragraph of the complaint, renders the answer impeaching the consideration of the note bad on demurrer. If the note was nudum pactum, then the agreement of forbearance was without any consideration to support it. This proposition as between the maker and payee will hardly be disputed. A new promise made in consideration of a previous obligation entered into
But it is claimed that this rule is not applicable as between the assignee and maker of the promisory note in suit. This note is governed by the statute, which provides that “whatever defense or set-off the maker of any such instrument had, before notice of assignment, against an assignor, or against the original payee, he shall have also against their assignees.” 1 G. & H. 448, sec. 3. In relation to this kind of paper, the assignee stands in the place of the payee as to every defense existing at the time of notice of the assignment. It is said that this promise to pay the note at the expiration of the time stipulated is binding on the maker for the reason that the assignee surrendered his right of action against his assignor and thereby suffered detriment. Can this proposition be maintained? 1 think clearly it cannot. The indorser of a note, under our statute, warrants two things: first, that the note is valid and the maker liable to pay it; secondly, that the maker of the note is solvent and able to pay it. Howell v. Wilson, 2 Blackf. 418.
The indorsee of a note, obtained from the maker without consideration, has a right, as soon as he discovers the imposition, to sue the indorser for having assigned him a note which the maker is not liable to pay. Id. The warranty as to the validity of the note is broken at the time it is made. The note is not valid.
Now all that can be claimed for the appellant is, that he relied upon the promise of the appellee and did not (as he might have done) sue the indorser. But the appellant was not legally bound to wait, and his doing so was voluntary on his part, without the consent of the appellee. Indeed, for aught that appears in the pleadings, the appellant may have successfully pursued his remedy against his indorser. There is no averment in the complaint on the subject, and certainly there can be no legal presumption that the appel
Mr. Chitty states the rule thus:'“The general rule as to the sufficiency of the consideration seems to be, that it may arise either, first, by reason of a benefit resulting to the party promising, or to a third person, by the act of the promisee; or, secondly, by reason of the latter sustaining any loss or inconvenience, or subjecting himself to any charge or obligation, however small the benefit, charge, or inconvenience may be; provided such act be performed, or inconvenience or oharge incurred, with the consent, express or implied, of the promiser, or, in the language of pleading, at his request.” Chit. Con. 28.
This court, in Mathews v. Ritenour, 31 Ind. 31, recognizes the rule as stated by Judge Bouvier.
It is true, that in Pierce v. Goldsberry, 31 Ind. 52, this court held, Elliott, J., dissenting, that an oral agreement of the principal debtor to pay merely the same interest. that the note would have borne if the indulgence had been given voluntarily, is a sufficient consideration for a promise of forbearance for a definite time; but that was a valid note, based Upon a valid consideration.
In the case now before us, there was no new con
It is clear to my mind, that if the appellant suffered any detriment in not pursuing his legal remedy against his indorser, it was his own act,'and not suffered at the instance of the appellee, and that therefore the promise of the latter to pay the note at the expiration of the time fixed was a nudum pactum.
I think the majority are very clearly right on the question of estoppel.
The instrument signed at the time the note was executed has not the first element of an estoppel. It is no more than what the note itself imported on its face. It was obtained by the same fraudulent act that procured the execution of the note. It was a part of the same contract and was as much a part of the note as if it had been incorporated in it. It was a statement upon which the appellant had no right to rely. Indeed, I think that such a paper accompanying an ordinary promissory note should have thé effect of exciting suspicion that all was not right. It looks too much like the act of the thief in attempting to cover up his crime.
I think the judgment ought to be affirmed.
