Reynolds v. Ward

| N.Y. Sup. Ct. | Oct 15, 1830

By the Court,

Marcy, J.

It appears not only by the plea, but on the face of the note, that the defendant was surety for Plumb. The same rule is to be applied to a surety on a note as on a bond. The doctrine of the case of Rees v. Berrington, 2 Vesey, jun. 540, has been repeatedly recognized and sanctioned by this court, and is asked by the defendant to be applied to this case. Where one is surety for the debt of another, payable at a given day, if the obligee defeats the condition he discharges the surety. Extending the period for payment produces this result. If the beneficial holder of a note agrees on receiving a premium for delay to wait a stipulated time without suing the maker, he thereby discharges the endorser. Hubbly v. Brown & Nichols, 16 Johns. R. 70. In this case the court say they regard the endorser in the nature of a surety, and the maker of the note as the principal debtor. It was said by Kent, C. J. in giving his opinion in the case of Ludlow v. Simond, 2 Caines’ Cas. in Er. 57, to be a well established principle both at law and in equity, that a surety is not to be held beyond the precise terms of his contract. The creditor has no right to increase his risk without his consent, and cannot therefore vary the original contract, for that might vary the risk.

The case of Fulton v. Matthews & Wedge, 15 Johns. R. 433, has a nearer resemblance to the one before us than any to be found in our reports, and it may be useful to consider it somewhat minutely. There xvas added to Matthew’s name, who had signed the note with Wedge, the word “security” The defence he made was like that contained in the pleas in this case. The note was dated in October, 1815, and was payable the 1st January following. It was proved that Wedge, the principal debtor, before the note became due, (the judge in his opinion says it was after it became due,) called on the payee and offered to make a payment on the note in depreciated bills; the payee refused to accept the bills, but promised to wait till the next spring for payment. This, it will be observed, was a promise before the note became due to the principal debtor, without the knowledge of the surety, to extend the time for payment from January to the next spring; there had also been a suit on the note, which was discontinued. Spencer, J. said that the plaintiff had done no act to preclude himself from suing Wedge at any time ; and on the ground that the plaintiff had never been required to prosecute Wedge, and that he had made no contract with him that disabled him from suing at any time, the court gave judgment for the plaintiff.

The principle to be extracted from the cases is, that the creditor cannot vary the terms of the contract so as to increase the risk of the surety without discharging him ; but the terms are not varied by mere indulgence. To discharge the surety, it would seem to be necessary that there should be some agreement by which the plaintiff’s right to prosecute and enforce the fulfilment of the contract is suspended. The important question therefore in this case is whether the contract stated in the pleas for extending the time of payment tied up the hands of the plaintiff so that he could not sue Plumb on the note after it became due and before he began to erect his building mentioned in the agreement.

The case of Fulton v. Matthews & Wedge shows that a bare promise to delay made by the creditor to the debtor is not a valid contract for forbearance or giving time. Forbearance, in the legal sense of the word, is an engagement which ties up the hands of the creditor; it is an act of the creditor, depriving himself, by something obligatory, of the power to sue. 1 Holt, 84. It was said on the argument that there was an obligatory act in this case by which the plaintiff was bound to delay; that there was a consideration for the promise to forbear. What was that consideration ? The promise by Plumb to pay interest on the debt so long as the plaintiff should delay. This was a promise to do precisely what he was bound to do without a promise. If the debt- or’s promise to pay interest creates no additional obligation, it is no consideration for a contract to delay. This case is not to be distinguished from Pabodie v. King, 12 Johns. Rep. 426, or Fulton v. Matthews & Wedge, in which the promise to delay was adjudged to be nudum pactum.

The drawer of a bill of exchange is as much a surety as the endorser of a promissory note. His liability is conditional ; it only attaches on the default of the acceptor to pay, and due notice of that default. Arundle Bank v. Goble, Chitty on Bills, 298, note, was an action by the endorsee against the drawer of a bill. The defence was, that when the bill became due the acceptor applied to the holder for time, and this was granted on condition that interest should be allowed to him. The plaintiff had a verdict, and a motion for a new trial was denied. The court said that as no fresh security was taken from the acceptor, the agreement to*wait without consideration did not discharge the drawer, because the acceptor might, notwithstanding such agreement, be sued at any moment, and the understanding that interest should be paid by the acceptor made no difference. Ch. J. Best, in the case of Philpot v. Briant, 4 Bing. 717, vouches for the correctness of the case of Arundle Bank v. Goble, and most distinctly reiterates the same principle. Philpot, as holder of a bill, brought his action against the drawer, who defended on the ground that time had been given to the acceptor’s executrix without the knowledge or consent of the drawer. The holder promised the representative of the acceptor to delay a reasonable time, provided the interest was paid; and pursuant to this agreement, the interest was paid out of the private income of the acceptors executrix. Still, it was held in that case that the drawer, who was declared to have the character of surety, was not discharged by the delay. The giv= ing time for payment must be done by a contract binding up. on ^ bolder 0f ibe bill or note, and a contract which has n o other consideration to support it than a promise to pay the accruing interest on the demand, without fresh security give n . ° . . is not one of that description.

In this case, the promise of Plumb to delay was not sustained by an adequate consideration ; the plaintiff’s light to sue was not suspended by it for a single moment.

Judgment on demurrer for the plaintiff