11 Vt. 166 | Vt. | 1839
Lead Opinion
The defendant, with his partner, was an indorser of a note of which the plaintiff was indorsee, and; as the declaration alleges, was liable for the debt; and at some period, either before or after the note became due, the defendant executed to the plaintiff the paper now in question. And the inquiry is, what is the legal effect of that paper ?
It is to be borne in mind that this is not an action against the defendant as indorser. Had it been so, there probably would have been little difficulty with the case. This writing would have been evidence in confirmation of the defendant’s liability. If given before the note was due, and viewed as an absolute promise, it would have waived all evidence of notice of non-payment. If given after the note was due, and considered as- an absolute promise to pay, on time, it would have waived all objection on account of the want of notice. Such has been repeatedly decided to be the legal effect of such a promise. The whole scope of the authorities, cited by the plaintiff, merely shows what is the effect of such a promise made by an indorser, when he is sued as indorser. This
To sustain an action on this writing, as. a contract, it must have a legal consideration. If the consideration is, that the defendant was then liable, as indorser, and in consideration thereof, promised to pay, if waited on, then it is like any case where a man owes a note now due, or to become due in six months, and, in consideration thereof, promises to pay the same, if waited upon one year. This new promise creates no new legal liability. It leaves the note, the debt and the parties as they were before. Such a promise might, indeed, if seasonably made, affect the claim as to the statute of limitation, but would be no ground of action in itself. If the defendant was not liable as indorser, then he is to be treated like any other third person. Here it is to be observed, that the writing does not.stipulate or imply, nor is it pretended that it was ever understood by the parties, that the plaintiff was to delay the collection of his debt from the maker of the note. In this category, treating the defendant as a third person, not liable until this promise, it is simply a promise to pay if he is himself waited on. Most clearly, a promise to pay the debt of another in a certain time, if so long waited on, leaving the debt to be enforced during all that time against the debtor, is nudum pactum. It is, therefore, extremely difficult, if not impossible, to view this writing as having any consideration as a substantive contract. It seems nothing more than a writing recognizing the plaintiffs liability, as indorser, and promising, as such indorser, to pay, if waited on, if the plaintiff did not collect of the makers. It therefore created no new liability but left the defendant still to be pursued, as indorser, and in that way only.
But even if we were satisfied as to the matter of consideration, we'do not consider this an absolute promise of payment. It is generally true, that where one undertakes for something to be done by himself or another, it is considered as absolute
Judgment reversed.
Dissenting Opinion
dissenting.
The principles of this case, as well as the case itself, being somewhat important, and as I cannot concur in the opinion expressed by my brethren, I deem it proper to state the grounds of my dissent.
The declaration is upon the special contract set forth in the bill of exceptions.
The questions arising upon this bill of exceptions have been fully and ably discussed by the counsel, and some of them are not without considerable difficulty. The leading proposition sought to be established by the defendant’s counsel is, that, from the facts detailed in the bill of exceptions, no action can be maintained on this contract, on the ground of its being without consideration. If this objection is well founded, it must be fatal to the action ; and whether it be well or ill founded, must dépénd upon the question whether the evidence detailed shows a legal claim in the plaintiff against the defendant as one of the indorsers of the note. If the defendant was legally liable, at the time of making this special promise, as one of the indorsers of the note, it would seem that there can be no good reason to question the validity of this contract as a new, independent and substantive agreement. It has long been settled, that where there has been a pre-existing obligation, which has become inoperative by some positive law, (as in the case of debts barred by the statute of limitation, debts contracted by infants and debts discharged by insolvent laws,) this forms a sufficient basis for an express and effective promise.
It is believed to be the law, that in all such cases, where there is air express promise, it may be declared upon as the substantive cause of action. The new promise springs out of, and is supported by the original consideration, and the moral obligation uniting itself with the new promise, makes •what Lord Mansfield calls, in the case of Trueman v. Fenton, 2 Cowp. R. 544, “a new undertaking and agreement.” In cases where the new promise is conditional, and where the promise is to an executor to pay a debt due his testator, in }iis life time, it may well be inquired whether the declaration
In Moar v. Wright, 1 Vt. R. 58, in which the distinctions are marked with great accuracy, it was held that a promise
In the case under consideration, however, it seems that the promise of the defendant was induced by a new and an additional consideration, to wit, that he should not be called upon till 1st May, 1831. An agreement to forbear for a certain or reasonable time the collection of a well founded legal or equitable claim, is a sufficient consideration for the promise of the debtor, to pay the debt, as well as for that of a third person. No doubt, to render an agreement to forbear, and the forbearance of a claim, a sufficient consideration, it is essential that there should have been a well founded claim, or, as it is said in Longridge v. Dorville, 5 B. & A. Rep. 117, there must have been, at least, a doubtful right of action. It is admitted in the argument for the defendant, that if there is an agreement on the part of the plaintiff to give to the defendant time, there is a good consideration, provided there be a debt to be forborne. It is, however, said that there is no evidence of an agreement on the part of the plaintiff to give time, and we have been referred to the case of Lees v. Whitcomb, 5 Bingham’s Rep. 34, to sustain the position. The evidence in that case, to support the declaration, was a written extract, as follows ; “ I hereby agree to remain with Mrs. Lees two years from the date hereof, for the purpose of learning the business of a dressmaker.” Best, C. J. says, “ there is no obligation by the terms of the contract upon the defendant to serve the plaintiff; her engagement is merely to remain with her for two years and there is no agreement on the part of the plaintiff to insure to the defendant instruction in the business.” This certainly cannot sustain the position that there was no agreement in the case before us, on the part of the plaintiff, to give time. If the defendant in the case in Bingham did not agree to serve the plaintiff, but simply remain with her for two years, it would indeed be preposterous to infer,- from the
Forbearance of the collection of a debt by the plaintiff, at ¿he request of the defendant, is a good consideration for a promise. 2 Chitty Pl. 83. 1 Saunders’ R. 211, a.n. 2. It is not necessary in this case that time should have been given to the makers of the note. If the defendant, Buck, was liable as indorser, the plaintiff, by the forbearance, has been delayed in his remedy, not only as to Buck, but also as to the other indorsers, and, it is to be presumed that Buck has been benefitted; so that both the ordinary grounds, upon which a sufficient consideration rests, concur. In Lent et al. v. Padelford, 10 Mass. Rep. 237, it is expressly determined that a declaration alleging, that in consideration that the plaintiffs would delay the service of their execution, the defendants promised, &c. is sufficient, it being averred that they did delay.
In the case of Breed v. Hillhouse, 7 Conn. Rep. 523, the declaration states that in consideration that the plaintiff would delay the collection of a certain note for a given time, and of the promise of the plaintiff to forbear the same for that time, the defendant promised, &c. The promise or guaranty was in these words: “ I hereby guaranty the payment of this note within four years from this date.” The declaration averred the delay to collect the note of the maker for the time specified. The court say, “ the acceptance of the guaranty by the plaintiff, and his consequent forbearance, prove the agreement to forbear, and are incompatible with any other supposition.” Suppose a lease is executed by A. to B. in which it is provided that B. shall pay A. certain quarterly rents. The lease is not executed on the part of B., but he accepts of it, and goes into possession. Would not this furnish evidence against B. of an agreement to pay the rent as stipulated in the lease ?
If the facts detailed in the bill of exceptions do not show
The written contract of the defendant being without date, and no evidence in the bill of exceptions of the time when, in fact, it was executed, whether before or after the note became payable, the time when it was executed must be a matter of inference; and, perhaps, it will make no essential difference in the defendant’s liability. If the indorser of a note, before it becomes payable, agree with the holder, that, in consideration of time being given, he will pay the note, this, no doubt, would be a waiver of a demand and notice, and the indorser, on this evidence, becomes absolutely liable on the new contract; or, if declared against as indorser in common form, he would be chargeable on the ground of waiver of demand and notice. Norton v. Lewis, 2 Conn. Rep. 478. Leffingwell v. White, 1. Johns. Cases, 99.
It has been frequently adjudged, that if, after a bill has become due, the indorsee calls upon the indorser for payment, and the latter promises to pay it, this evidence is sufficient to warrant the jury in finding a demand of payment, and notice to the indorser of the dishonor of the bill. Horford v. Wilson, 1 Taunton’s Rep. 12. Gibbon v. Coggon, 2 Camp. Rep. 188. Pierson v. Hooker, 3 Johns. Rep. 67. Lundie v. Robertson, 7 East’s Rep. 231. Potter v. Rayworth, 13 East’s Rep. 417. Breed v. Hillhouse, 7 Conn. Rep. 528. Bayley on Bills, 479. No doubt the effect of this evidence may be neutralized, by the indorser’s showing that in point of fact there was no demand and notice ; but if the promise is made by the indorser, after being discharged by want of notice with a full knowledge of all the material facts, it may be well inquired whether this is not a waiver of such want of notice, and whether the party is not estopped from setting it up as a defence ?
It is said, that though the evidence furnished against Buck by this new promise, might, in ordinary cases, be sufficient, per se, to charge him as indorser, yet, in this case, the indorsement was obtained by the fraud of Gibson ; and that, therefore, the plaintiff can have no action against the indorsers without proof that he became possessed of the paper in the due course of business, and for. a valuable consideration. It is undoubtedly true, that where a suspicion is cast upon the title of the holder of commercial paper, by evidence, showing it had got into circulation by fraud, it is incumbent upon the holder to show that he became possessed of it in the due course of business and for a valuable consideration ; otherwise he is not protected against the effect of the fraud. The question, however, may well be asked, whether in this case the rule, that the onus is cast upon the plaintiff, is not satisfied from the special facts in evidence ? The agreement of Buck recognizes in direct terms the indorsement by Buck & Bailey, and admits the note to be the property of the plaintiff-, and shall Buck, after having induced a delay by his promise of payment to the plaintiff, be permitted to urge that the latter has not even, prima facie, a right to recover on this paper, without showing how he came by it ? No doubt, for the purpose of testing the question whether there is a debt to be forborne, so as to form ' the basis of a new promise, the rule should be the same as if the declaration was against Buck as indorser. If this.suit had been on the indorsement, as against Buck, would the plaintiff, after the admissions in this writing, be compelled to go further, and show he paid value for it in the due course of business ? Is it not the effect of the admissions of Buck to dispense with this requisition ? If the evidence, in this particular, would, per se, be sufficient to sustain an action on the indorsement,
It was also urged on the trial that there was no liability on the defendant on his indorsement, on the ground that Bailey had no authority to make it in behalf of the partnership; but is this objection well founded ?
It is a general rule, that one partner may bind his co-partner by accepting drawing, or indorsing a bill of exchange, or by making or indorsing a promissory note in the name and behalf of the firm. The bill of exceptions does not furnish any evidence of notice to the plaintiff that it was not indorsed on the partnership account, and for their use.
Third persons are not bound to inquire whether the partner indorsing a note was acting on the partnership account. The presumption is, that he was, and this is sufficient, unless the contrary be shown, or unless it be shown that the person taking the paper had notice or reason to believe that the partner, signing the paper in behalf of the firm, was acting on his own account. Besides, Buck, by his new promise, recognizes the indorsement made in behalf of the firm by the other- partner.
Some other objections of minor importance were urged at the trial, in regard to the invalidity of this promise, but as the court have determined to grant a new trial on a single point, that is, on the ground of variance, leaving all other questions undecided, I might have well saved myself the labor of throwing out any suggestions on the principal question, though very fully argued at the bar, and necessarily connected with the final merits of the case. In the consideration of the question whether the promise given in evidence was an absolute one, or conditional, I shall, of course, assume the ground that it is a valid and effectivé promise, as it would seem to me to be idle to be debating'the question whether this is in law an absolute or a conditional undertaking, and be, at the same time, of the opinion that it is nudum pactum. If it is an agree
In giving a construction to a contract, where the intention of the parties can be regarded as doubtful, it is proper, not only that we should have recourse to the whole contract, but also to the subject matter, and the circumstances, under which it was made, and the situation of the parties at the time. The defendant stands as indorser of the note; and if he has due'notice of its presentment and dishonor, he becomes absolutely fixed with the payment by means of his indorsement. No further diligence js required of the indorsee, tó attempt ifs collection of the makers. It would, indeed, be strange for the indorsee to give further time, and agree with this indorser to forbear to take the necessary steps to charge him, and thereby discharge the other indorsers, for the sake of obtaining from him a conditional promise to pay the note, in case the indorsee could not collect it of the makers. If the indorsers had become absolutely fixed by presentment and notice, it is equally improbable that the indorsee would have given time upon a conditional undertaking of this defendant, less beneficial to himself than the one he already had. Our experience of mankind shows us that men do not so act.
It is much more rational to suppose that the makers and, perhaps, the other indorsers, had become bankrupt or had absconded ; and that this defendant was compelled to take the payment of this note upon himself; and that in this situation, as matter of fayor, this indorsee should give him time, upon his agreeing to make payment at a given day. Such a supposition comports with our experience in business, whilst the idea of substituting a conditional liability, for one that was absolute, is in my view absurd, and contrary to the whole course of our experience. If there is any consideration for this new promise, and, for the purposes of this question, I assume that there is, it is a new and distinct consideration, independent of the liability of the ma= kers of the note, and.moving between the immediate parties to the new promise. It is the giving of time to the defendant upon his.own liability, upon his agreeing tp see such liability discharged upon a given day. Such agreements have always' been considered in the light pf original and absolute under
In Williams v. Granger, 4 Day’s R. 444. the defendant, after guarantying to the plaintiff that one Phelps, the maker of the note, then was and would continue to be, until the day of payment mentioned therein,, of sufficient responsibility to pay the same, proceeds, “and I further engage with said Williams, the promisee, that if the moneys mentioned in said note are not paid by the 5th of September, 1807, I will, on that day, advance the same to him, taking and holding the note as my own, at my sole risk.” The suit on this contract was defended on the ground that Phelps was, and continued to be, up to the commencement of the suit, a man of abundant property, that Williams had commenced no suit against him, and had made no demand of him for payment, or given the defendant notice of non-payment. The court say this is a new, separate, and independent contract between Granger and Williams, relative to the note, though it begins with a warranty of the responsibility of Phelps, and that no act was required on the part of Williams for obtaining the money of Phelps. He was merely bound to receive it, if offered, and, on failure of payment, Granger’s contract became absolute on that day, and no notice was necessary to render Granger liable.” If this contract is but a conditional undertaking to pay the debt of the Gibsons, in case of their failure, then it is true there is a variance between the declaration and the evidence. The plaintiff, in such case, to charge the defendant, must show reasonable diligence to collect the note of the Gibsons, or special facts that would excuse the use of such diligence. I cannot, however, concede that this is the construction of the contract. The note became due in June, 1829, and it is rather to be presumed that this agreement of the defendant was made after there was a failure to pay the note, at maturity. Must the plaintiff
The case of Sage v. Wilcox, 6 Conn. R. 81, seems to be somewhat opposed to the current of authorities. In that case the guaranty is in these words, “I hereby guaranty the payment of the within note, one year from this date, whether a suit is brought against the signer or not.” It was held that this was not an absolute promise to pay the note at the end of the year, but was a conditional engagement, requiring, on the part of the holder, demand and notice. This case, it may be remarked, is entitled to very little weight as an authority. It was decided by four judges, two in favor of the decision, while .the other two were opposed to it; and the judge, who gives the opinion of the court, says, “had the indorsement stipulated, as the one in Williams v. Granger, 4 Day, did, not for the ability of the maker only, but the advancement of the money on a day certain, the contract would have been absolute.” This case is evidently opposed to the case of Breed v. Hillhouse, which is decided by the unanimous opinion of the court, and, I think, to the whole current of authority. • The conclusion, then, to which I come, is, that the contract of the defendant is an absolute engagement on his part to pay the note on the 1st of May, 1831, provided he is not called on for payment before that time; and that it is declared on, according to its legal effect, and that no new trial should be granted on the ground of variance between the evidence and the declaration.