279 N.W. 323 | Neb. | 1938
This is an appeal from a judgment of the district court
The defendants further allege that, had the said plaintiff not entered into' said agreement to extend the time of payment on the note, he would have received from the estate of Charles Nelson the sum of $2,500. The defendants
The appellants complain that the court erred in overruling their motion- for a new trial, the essential error alleged being that the court erred in sustaining the several demurrers to each and all of the paragraphs of their amended answers, except paragraph 1.
Section 62-408, Comp. St. 1929, provides as follows: “In the hands of any holder other than a holder in due course, a negotiable instrument is subject to the same defenses as if it were nonnegotiable.”
The plaintiff in this case was the original payee of the note, and the note in question had not been transferred. Therefore, the defendant Swan Hult, although he appeared to be a maker of said original note for which the note in question was given in renewal, was entitled to show that he in fact signed the note as surety only and was secondarily liable thereon, and that said Charles Nelson was in fact the principal and primarily liable, and that said Charles Nordeen took said note with knowledge of such facts. In support of this proposition of law this court has already said, in the case of Hardin Trust Co. v. Wollard, 119 Neb. 307, 228 N. W. 866: “A payee, taking a negotiable instrument, which is not negotiated, with knowledge that certain of the apparent makers thereof are in fact sureties who signed under an agreement with such payee that certain moneys were to be applied, when received and as received, to the payment of the instrument, is not as to such sureties
“Section 4801, Comp. St. 1922 (section 62-1702, Comp. St. 1929), is called to our attention as precluding the Hevners from proving that each signed as sureties and not as makers. The section, considered as a part of an independent act, as it is, does not warrant such conclusion. It provides: ‘The person “primarily” liable on an instrument is the person who by the terms of the instrument is absolutely required to pay the same. All other parties are “secondarily” liable.’ This does no,t prevent one appearing as a maker of a promissory note from alleging and proving that he signed as a surety, in a proceeding between the original parties on a note not negotiated. The section is dealing solely with the promissory note or instrument as it appears in its legal relation to the parties as by it disclosed, and does not necessarily prevent one who appears to be a maker or payor from showing by proof in a proper case his. actual status. The different provisions of this act must be considered together, and if possible each of its nearly 200 sections be permitted to function in its own sphere in furtherance of the purpose and intent of the act.
“The following cases will be found instructive: Bank of Commerce & Savings v. Randell, 107 Neb. 332; Farmers State Bank v. Lydick, 112 Neb. 586.
“The instant case, as we have seen, is one between the original parties to the note, each acting with full knowledge of the facts, and in a transaction wherein the payee bank was the inspiring cause of the execution and delivery of the note, hence it is not, and could not be, a holder of the note in due course. While the note is negotiable in form, it has not been ‘negotiated’ within the meaning of the negotiable instruments statutes. Hence, as we conclude, these parties are governed as to their rights and relationship to each other, by that part of section 4669, Comp. St. 1922, which reads as follows: ‘In the hand of any holder other than a holder in due course, a negotiable instrument is subject to the same defenses as if it were nonnegotiable.’
Therefore, it is to be seen that negotiability is not the essential element to the validity of a note, and that it is negotiable in form does not, as between the maker and payee, deprive the maker of any defense .thereto he would otherwise have, and, hence, the signer of a note can show by parol in an action thereon by the payee that he was a surety only. From the cases above cited it is to be seen that the law is that, as between the parties in a suit on a promissory note, it being shown that the payee took the note with knowledge .thereof, the relation of principal and surety of the makers may be shown and the established rules of law operating to discharge a surety may be pleaded and proved as a defense.
The allegation that defendants were released from liability by extension of time of payment of said note without the consent of Swan Hult- is negatived by the terms of his original obligation, set out as exhibit A in each of the amended answers, the terms of which agreement read as follows: “The makers, indorsers, sureties, guarantors and assignors of this note severally waive demand, presentment for payment, protest and notice of protest and of nonpayment, and agree and consent that, after maturity, the time for its payment may be extended from time to time by agreement between the holder and any of them, without notice,- and that after .such extension or extensions the liability of all .parties shall remain as if no extension had been had.” The provisions of the original obligation of Swan Hult, whereby he consented to extensions of time of payment, cannot be overcome simply by alleging the conclu
The respective answers of the defendant Swan Hult and his codefendants allege in substance that the plaintiff, Charles Nordeen, filed his claim in the estate of Charles Nelson, deceased, in the county court of Knox county, Nebraska, on the original note in question, which was allowed, in the sum of $4,500, and that thereafter, had he done nothing further, he would' have received, by operation of law, in payment upon said claim,' a sum of $2,500 or more, and that by an affirmative agreement on his part he volun
The defendant Swan Suit and his codefendants further allege in their respective answers that they were induced to sign the note by representations made by the plaintiff to the effect that Swan Hult was then and there indebted to the plaintiff in the sum of $5,562.52, and that the said plaintiff knew the same to be false and untrue. We think that this allegation is a defense, and that the trial court erred in sustaining the demurrer thereto. “When a, fraudulent transaction is sought to be enforced in the courts, the defendant may set up the fraud either as a complete or partial defense, as the case may be, or else in mitigation of
The defendant Swan Hult alleges, by his amended answer, that the note sued on was wholly without consideration, this plea being based upon the proposition that Swan Hult was released as surety upon the original $5,000 note by reason of the extension of time of payment of said note. We, however, find that the defendant Swan Hult, by an affirmative agreement embodied in the terms of the original instrument, had agreed to an extension of time. Therefore, he cannot claim a complete absence of consideration, and the partial absence of consideration is only a defense pro tanto as to him, by reason of the' plaintiff having affirmatively released the estate of the principal maker of the note, Charles Nelson, to the extent of $2,500 or more.
This being an action between the original parties to the note, the law is, in that regard: “Absence or failure of consideration is matter of defense as against any person not a holder in due course and partial failure of consideration is a defense pro tanto, whether the failure is an ascertained and liquidated amount or otherwise.” Comp. St. 1929, sec. 62-205. See Elmcreek Ditch Co. v. St. John, 127 Neb. 253, 255 N. W. 16; Spangenberg v. Losey, 116 Neb. 112, 216 N. W. 191.
We therefore are of the opinion that the district court erred in sustaining the demurrers to the answers of the defendant Swan Hult and his codefendants, with the exception of that portion of the answers alleging a complete release by reason of the extension of time without the consent, of. the surety, and it is the order of this court that the order sustaining the demurrer of the plaintiff to the. answers of the. defendant Swan Hult and his codefendants, with the exception above noted, be and is hereby vacated and. set aside, and that a new trial is hereby granted the defendants.. ■
Reversed.