40 N.C. 91 | N.C. | 1847
William McNider was indebted to the defendant in the sum (92) of $932.80, and to secure it he gave a bond and procured the plaintiff Pipkin to join in it as his surety. After the bond had been some time due, Pipkin, understanding that McNider was somewhat embarrassed, informed the defendant of it, and requested him to put the bond in suit and collect the debt. The defendant accordingly brought a suit against McNider and Pipkin in the county court of Chowan, where McNider lived; and after the suit had been put at issue and stood for trial at the next succeeding term, the defendant, at the instance of McNider, agreed to dismiss it, and at the next term he did dismiss it at the costs of the defendants in the action. About eighteen months afterwards the defendant brought another action of debt on the bond, and recovered judgment; and, McNider having become insolvent, the present bill was brought by Pipkin to restrain the creditor from raising the money from him.
The bill states that at the time the first suit was brought, McNider, though embarrassed, had considerable property, and that if the suit had been duly prosecuted and judgment obtained according to the course of the court, the money could have been raised out of McNider's property.
It further states that the suit was dismissed (as he, the plaintiff, afterwards learned from McNider) upon an agreement between the defendant and McNider for further indulgence on the debt for a year, or some other specified time, in consideration of the sum of $100 paid by McNider to Bond, or secured by a note of McNider to Bond; and that this agreement for indulgence and dismissing the suit was entered into by Bond and McNider without the plaintiff's consent or knowledge; and that he supposed, from hearing nothing to the contrary, that the judgment had been duly taken and the debt collected from McNider, and that he had no suspicion that such was not the case until the writ was served on him in the second action.
The bill insists that the defendant discharged the plaintiff as surety by entering into the new arrangement with the principal debtor; and it prays for a discovery of the several facts stated and a perpetual (93) injunction.
The defendant demurred to so much of the bill "as seeks a discovery in relation to the alleged consideration of $100 having been paid by *64 W. McNider to the defendant to dismiss the suit at law, which, etc., and to grant indulgence to said McNider," etc., and for cause assigned that the bill does not waive the penalties and forfeitures, etc.
To the residue of the bill the defendant answered that in the latter part of April, 1841, McNider, who lived in Edenton, applied to the defendant at his residence, about 25 miles from Edenton, to withdraw the suit he had brought against him, the plaintiff, at the same time delivering to the defendant an open letter addressed to him from the sheriff of Chowan and dated 24 April, 1841, in which he mentioned that he "had been called on by McNider to state his situation in regard to matters in his hands, and that he said with pleasure that he had not an execution against him nor a writ, and that he had discharged at the last court all the claims that were against him, in executions; and expressed the hope that the defendant would withdraw the suit, as he thought McNider deserved indulgence and was a managing, persevering, and excellent man." The answer further states that McNider informed the defendant that he had called at his house the day before, and, not finding him at home, had gone to see the plaintiff, who lived in Gates, and had stayed with the plaintiff all night, and shown him the sheriff's letter to the defendant; and that the plaintiff was satisfied by it, and consented that the defendant might extend to him any indulgence he might see proper. The answer also states that the defendant is convinced McNider showed the letter to Pipkin, as it was open, and the object of his visit was to procure the plaintiff's assent to the indulgence which (94) McNider solicited from the defendant; and that he did not hear that the plaintiff intended to resist the payment of the debt until about eighteen months afterwards, when he brought the second suit. The answer then states that the defendant has heard and can establish, that after the suit was dismissed the plaintiff expressed his approbation of the indulgence granted to McNider; and that without the perfect conviction that the plaintiff fully approved of the application for indulgence, the defendant would not have granted it. The answer further states that the defendant "never entered into any contract or agreement with McNider whereby he was under any legal obligation to forbear proceeding on said bond by suit, or otherwise, for one moment." The defendant denies that he concealed the fact that he had granted indulgence to McNider, and he says that he frequently spoke of it to those to whom he was in the habit of speaking upon his affairs, but he admits that he does not recollect making it known to the plaintiff — for the reason that he had no doubt the plaintiff knew it from McNider.
Upon his answer the defendant moved for and obtained a dissolution of the injunction that had been granted on the bill, and, on execution from the court of equity on the injunction bond, the money was collected *65 from the plaintiff Pipkin, and paid to the defendant. There was then replication to the answer, and after proofs taken, the cause was set for hearing, and transferred to this Court.
The letter from the sheriff to the defendant is exhibited and is of the tenor set forth in the answer.
McNider being released by the plaintiff, was examined, and deposed that if the defendant had not dismissed the suit against him and the plaintiff, the debt would have been made out of his property, and that he has now become insolvent and unable to pay any part of it. He states that upon delivering the letter from the sheriff he requested the defendant to withdraw the suit and grant him indulgence; that the defendant stated that he required a certain sum to pay a (95) debt he owed another person, and that he agreed, if the witness would pay that much in a short time, or, in case of failing to do so, would give a further sum for the indulgence, he would dismiss the suit and grant him the indulgence for a particular time, which was named; that he then informed the defendant that he thought to collect the sum the defendant needed from a person in Northampton, who owed him, and it was agreed that he should go and try to collect it; and that he did so, but was disappointed in his expectations, and returned to the defendant and informed him of it; that he then inquired of the defendant what amount would satisfy him for the indulgence, and he required the witness to give his note for $100 therefor, which he did, and then took an order to Bond's attorney to dismiss the suit, and it was done. Being asked what was the time of indulgence agreed on, he answers that he cannot recollect the time precisely, though there was a certain time named. And being further asked whether he did not inform the plaintiff of the agreement, he states positively that he never mentioned it to him, and, as far as he, the witness, knows, he was entirely ignorant of any agreement and of the dismissing of the suit.
Three witnesses on the part of the defendant depose that they saw McNider on the day he went to the defendant's, and were told by him, that he had understood that evil disposed persons had alarmed the plaintiff and the defendant about his circumstances, and induced the defendant to bring suit, at Pipkin's request; and that for that reason he had obtained a letter from the sheriff stating his real situation, upon which he wished to get some indulgence; that he had been disappointed the day before of seeing the defendant, and had gone on to Pipkin's and shown him the letter (which also he did to the witnesses), and satisfied him perfectly, so that the plaintiff had authorized him to say that he was then quite willing the defendant should dismiss the suit and grant further indulgence; and that he was then going to see Bond to give him that information, and deliver the letter, and (96) *66 obtain forbearance, if he could. He further stated that he was anxious and able to pay the debt, and although he then needed indulgence, that he would pay it in a short time, and without the assistance of Pipkin; and that he was more anxious to pay it because Bond had shown him a kindness in lending him the money without usury. Two other witnesses state that upon subsequent occasions he (McNider) sent a message to the defendant, or mentioned that he understood that some persons were endeavoring to discover something on which they might bring an action against the defendant for usury in his dealings with him; but that the defendant need not make himself uneasy, for he never received anything from him for the forbearance of this debt, and that he would so swear; and that he further said Pipkin was perfectly willing to the indulgence given by Bond, and that if Bond would give a little more indulgence he (McNider) would pay the whole debt.
Two witnesses were examined to the character of McNider, and they both say that they have resided in the same village with him for twelve or fifteen years, and that his character is good — or very fair, to use the language of one of them; and that from their knowledge of his general character, they would believe him on oath. The law affecting this controversy has been so often discussed in modern times that it has come to be well understood, we believe. A creditor is not bound to a surety for active diligence against the principal; for it is the contract of the surety that the principal shall pay the debt, and it is his business to see that he does. Therefore, (97) forbearance merely, the omission to sue, or, after suit, to take judgment, or to sue out execution, although it may be from the wish not to distress the principal, and the consequence of communications from him, and although the creditor may not inform the surety of the principal's want of punctuality, will not discharge the surety. The reason is, as was just mentioned, that it is the duty of the surety to himself, and to the creditor, to look to those things himself — the ability and punctuality of his principal; and if there be reason to doubt them, it is his own folly not to ascertain the fact and request the creditor to press for payment, or, if the creditor does not choose (as he is not bound) to incur the trouble and expense of suing, then to pay the debt himself, and prosecute the claim in his own name or in that of a trustee for him. But if the creditor parts from a security held by him, either for favor to the principal or from any other motive of bad faith to the surety, or, without the privity of the surety, makes a contract with *67 the debtor for forbearance, so that he cannot rightfully sue him, and thus disables himself to receive payment from the surety, and transfer to him his securities at any moment the surety may require it of him: in such cases he discharges the surety. For, while the creditor is not bound to diligence, he is bound not to increase the risk of the surety by any act of his; and if he does anything that has that effect, he can no longer look to the surety. Nisbet v. Smith, 2 Bro. C. C., 579; Reesv. Barrington, 2 Ves., Jr., 539; Samuel v. Howarth, 3 Meriv., 272; Bank v. Beresford, 6 Dow. P. C., 233. To these might be added many American cases to the same purpose. Lord Eldon, in the cases, lays down the rule almost in so many words as it has been just stated. And in Nisbet v. Smith, where the creditor had, at the request of the surety, brought a suit against the principal, and dismissed it, and took a warrant to attorney to confess judgment with a stay of execution for three years, if the interest should be paid, Lord Thurlow said that it was contrary to the faith of the action which had been brought to (98) give credit to the principal beyond the term stipulated in the bond; and that, as the creditor had thought fit to compromise the action, under an idea that the surety would comply, the case was brought to the mere question whether the surety should be obliged to remain bound for the prolonged term; and he held that he should not.
It is to be considered, then, whether there was here an indulgence to the principal, without the privity and assent of the plaintiff; and whether that was done upon an agreement for forbearance which legally or equitably put it out of the power of the creditor to enforce payment from the principal for some period.
As to the first part of the inquiry, there can be no dispute. The answer admits over and over that the defendant agreed to give up the action he had brought and to indulge the principal — how much longer it does not say. But, in point of fact, the indulgence was extended for eighteen months longer or more. Now, although that suit has been brought at the instance of the surety, as in Nisbet v. Smith, yet the defendant had no communication with the surety on the subject. He says that his reason was a conviction that the plaintiff already knew that McNider intended to apply for indulgence, and that he had given his consent that it should be granted; and but for that belief, that he would not have agreed to indulge at all. But the plaintiff denies, in general terms, all knowledge upon the subject, and McNider fully confirms the denial, as far as he had any information, and states positively that he did not show the plaintiff the sheriff's letter, nor communicate to him his purpose to apply for indulgence, nor his success in the application he made. There is, therefore, no evidence to charge the plaintiff with a concurrence, express or implied, in the new arrangement, *68 (99) whatever it was. It is probably true, according to the answer, that McNider informed the defendant that the plaintiff knew all about what was going on, and approved of it entirely. He, no doubt, on that day, told the several gentlemen who have been examined for the defendant that such were the facts. But though his declarations then may go to his credit as a witness in this cause, they cannot establish affirmatively that he did impart to the plaintiff the information, which he now swears he did not. It was a blind credulity in the defendant to trust to the representations of a distressed debtor, begging for delay, almost upon any terms, as to the wishes of his surety, that a suit, brought upon his motion, should be withdrawn and a protracted indulgence extended. It was the creditor's duty to obtain the surety's express concurrence; and it can hardly be believed that but for some extraordinary advantage expected from McNider's proposal, the defendant would not have asked why he did not bring a letter from Pipkin, and tell him, then, to go back and get one.
Then, as to the other point, whether there was a binding contract for forbearance — one founded upon a consideration and disabling the creditor for a time to sue. The statement in the bill is that in consideration of $100 paid, or secured to be paid by McNider's note (over and above the legal interest accruing on the original bond), the defendant undertook to McNider to forbear for a year or some other certain period. If that be true, the case is clearly within the principle we have before laid down, as extracted from the cases. That it is substantially true, the testimony of McNider fully establishes, if it be credible. He says that he did not pay the defendant any sum for the indulgence, but that he gave a note for $100 as the consideration for his agreement to dismiss the suit and forbear another suit for a further certain time then named, though he was unable in his deposition to designate the precise period. The defendant offers no evidence to contradict the witness as to the facts stated by him; and even the answer itself, as will be more distinctly pointed out hereafter, does not unequivocally oppose any part of (100) this testimony, and does not at all oppose a most material part of it. The defense rests upon an attempt to discredit the witness by proving that, in relation to the concurrence of the plaintiff in the arrangement, he made different representations at the time from those contained in his deposition, and that such is likewise the case as to what he said upon the subject of usury.
With respect to the last, it may be remarked at once that there is nothing in this cause to show that he is self-contradicted. He said the loan of $932.80 was made without usury. He does not now say otherwise. When he heard that some persons were trying to discover a case of usury, on which they might sue this defendant for the penalty, he *69 said that the defendant need not be afraid, for he would swear that he never paid him money; and he does not say the contrary now, nor is it proved. He says he gave the defendant a bond for $100, of usurious interest; but it is not pretended that he ever paid it, and consequently neither the original bond (for $932.80) was thereby avoided nor the penalty incurred. All that was in it was that if sued on the small bond for $100, and he chose to plead the statute of usury, that bond would be avoided; but, upon that point, it does not appear that he ever spoke.
The false representations of the witness respecting his pecuniary condition, and the plaintiff's knowledge of it, and willingness that he should be further indulged, certainly affect his credit materially; and by themselves — their effect not repelled by other circumstances in support of his credit and tending to show that, in substance, his evidence is true — they might impeach his credibility, so far that the court could not safely decree on his evidence. But we think that, taking everything together, the confidence ordinarily due to statements on oath cannot be denied to those of this witness. It is to be feared that many men receiving and entitled to full credit as witnesses, when they find (101) their pecuniary credit suspected and ruin impending over them, resort to very unjustifiable shifts to conceal their condition, and are even betrayed into representations positively untrue in order to put off the evil day of an explosion and open bankruptcy. Few things are better calculated to prop sinking credit than to get it to be believed that sheriffs, sureties, and money lenders — all of whom are usually supposed to look narrowly into people's affairs — have investigated one's condition and are satisfied it is sound. Motives of this kind might, and probably did, influence the witness upon the occasions under consideration; and this, and cases like it, go far to prove the wisdom of the rule of evidence in Queen Caroline's case, that evidence of the declarations of a witness shall not be heard to affect his credit until he has been asked whether he made those declarations, so that he may be enabled to explain them, and his motives, in the first instance. For, although such falsehoods are very unjustifiable upon whatever motive they may be uttered, they cannot condemn a person so far as to render him altogether unworthy of belief, when it appears that they were made upon such motives as have been mentioned, and that, in all other respects, he has acted uprightly and is deemed by the public at large a man of good character and credible on oath. This man is so proved to be; and the defendant acquiesces in the proof, and offers none of a bad character. Then there are the circumstances of the case, which tend strongly to corroborate his statement. The facts, that the suit was dismissed and that no other suit was brought for a long time afterwards, cannot be questioned, and are difficult to be accounted for, unless upon some such ground as *70 those stated by the witness. But, above all, the credibility of this statement is placed almost beyond doubt, because, although the bill makes the charge directly that the defendant took the bond for $100 as the (102) consideration of forbearance, the answer does not deny it. It is to be noted that the bill says the sum of $100 was either paid or secured. The defendant, as rightfully he might, demurred to that part of the bill which seeks a discovery of the alleged consideration of $100paid by McNider; but the demurrer takes no notice of the alternative allegation, that if not paid, it was secured to be paid by note — which latter happens to be the fact here, according to this witness. It is somewhat surprising that the plaintiff did not insist on an answer to that allegation, as the defendant did not object in a legal way, by demurrer, to answering it. But he did not; and consequently the plaintiff could not have safely set the cause down for legal hearing on bill and answer, as the affirmative allegation of the bill is not established by the omission in the answer of a denial, and the plaintiff must prove his case. But when such proof is offered by the plaintiff by calling a witness, who and the defendant are the only persons cognizant of the fact, it is a powerful confirmation of the credit to which the witness's character entitles him, that the defendant, with full knowledge of the truth, does not venture to state the contrary on his oath. The answer neither admits nor denies that the defendant took such a note. If it had plainly and positively denied it, the established rule of the court would have refused a decree upon the evidence of a single witness in opposition to it. But, although the defendant submitted to answer the whole bill, except a particular part, not including this point, yet he is not able to deny the essential fact on which the cause turns, and to which the witness positively deposes, and the defendant had every reason to suppose he would depose. What stronger support to the credit of the witness on that point could be asked?
Then the Court must declare it to be established that the defendant, as charged in the bill, took a bond from McNider for $100 as the price of giving him indulgence on the debt for which the plaintiff was (103) surety. That was a sufficient consideration to make the contract for time binding, if any particular time was agreed on, so as to constitute a definite agreement. Upon that point also the witness is positive that there was a precise time named, though he was then unable to state it. On this the answer is not silent, as it was on the other. The answer, however, is far from being direct, candid, and satisfactory on it. It denies that the defendant "entered into contract or agreement with McNider whereby he was under any legal obligation to forbear proceeding on said bond by suit, for one moment." Now, this involves matter of law as well as fact; and it may be that the salvo in the defendant's mind for stating the matter thus is that, though he entered *71 into an agreement, he thinks it is not legally obligatory. He ought to have set forth what the agreement was, and left it to the court to judge of its legality and obligation. He admits he granted indulgence. For what time, on what consideration, he should have said. There is not, therefore, such a conflict between the answer and the witness as precludes the court from decreeing on the testimony of a single witness. But if there were, the evidence of the witness is so supported by corroborating circumstances as to give to it the preponderance. For when it is once found by the court that the defendant took the bond of the debtor for $100, the question immediately occurs, for what reason, on what account was it taken? To such a question there can be but one answer, when it is admitted that at the same time the defendant "agreed to indulge" the debtor, and agreed further, that at the next court he would dismiss a suit he had brought on this debt; and that is, that the indulgence agreed for must have been, at least, until the next court. Without proof to the contrary, it must be the construction of an agreement, for a price, to withdraw a suit at a certain future time, that the party shall not be at liberty to evade the agreement by bringing another suit immediately or before the time when the pending action was (104) to be withdrawn. The witness cannot specify the time fixed by the agreement, though there is every probability that the forbearance agreed for, like that actually granted, was much longer. However that may be, as men of common sense, with even a very slight acquaintance with the common course of dealing, we are obliged to perceive that the parties must have perfectly understood that no suit should, at all events, be brought before the next term of the court. For the purposes of the relief here, that is the same as a longer forbearance, because, as LordEldon said in Bank v. Beresford, supra, the defendant thereby put it out of his power to make good his engagement to enforceimmediate payment from the principal, whenever the surety should have a right to require him to do so. And in Rees v. Barrington, after remarking that the creditor had disabled himself to do that equity to the surety which he has a right to demand, he proceeded to say that it is the most evident equity that the creditor should not carry on any transaction without the privity of him who must necessarily have a concern in every transaction with the principal debtor. He adds, also, that he could not try the cause by inquiring what mischief the forbearance might have done to the surety, for that would go into a vast variety of speculations, upon which no sound principle could be built. It may be, indeed, beneficial to the surety that a creditor, for example, should accept a composition from the debtor; yet it is not for the creditor to decide that for the surety, and, therefore, if he does accept composition without consulting the surety, he undoubtedly discharges him. Bowmaker *72 v. Moore, 7 Price, 231. Ex parte Gifford, 6 Ves., 807. But the prejudice to the surety of such dealings between the creditor and principal is here clearly seen, as the evidence is that the principal would have been able to pay the whole debt had the suit gone on, whereas he could pay nothing when subsequently sued, and the surety had to pay the whole.
(105) The Court is perfectly satisfied that there was a distinct and definite agreement by the defendant to forbear on this debt, certainly until the succeeding court, and, probably, much longer; and that the defendant's promise of forbearance was founded on an agreement of McNider to pay him $100 therefor, secured by his promissory note. Consequently, the plaintiff was discharged, and has now a right to recover back all that he has paid to the defendant for principal, interest, or costs at law, or in equity, with interest on the whole from the time of payment; and there must be a reference to ascertain the sum due on that footing. The defendant must also pay the costs of the cause.
PER CURIAM. Decree accordingly.
Cited: Carter v. Jones, post, 199; Edwards v. Sullivan,
(106)
