41 N.Y.S. 328 | N.Y. App. Div. | 1896
Lead Opinion
In the year 1894, the plaintiffs, who were co-partners, were engaged in business in the city of Buffalo in this State as wholesale dealers in coal, and the firm of Harwood- & Irish was engaged in selling the same commodity at retail "at the village of Skaneateles.
In order that the last-mentioned firm might obtain credit of the plaintiffs for such coal as it might purchase of them, the defendant-, on the 25th of January, 1894, executed and delivered to the plaintiffs his certain instrument in writing óf which the following is a copy :
“ Skaneateles, N. Y., Jan. 25, 1894.
“For a valuable consideration, I hereby guarantee to C. N. Shipman & Co. the payment for all bills for coal shipped to said Harwood & Irish,, at Skaneateles, N. Y., by 0. N. Shipman & Co., to the amount of fifteen hundred dollars per month.
*318 “ The understanding between all the parties is that ■ at no time shall there be standing more than three months’ shipments of coal.
“ T. KELLEY.
“ Witness, Miles S. Irish.”
Thereafter, and at different times between the date of such instrument and May 15, 1894, the plaintiffs sold coal to the firm, o'f Harwood & Irish upon credit, and in reliance upon the security furnished by the defendant’s guaranty of payment. Upon' the last-mentioned date there appears to have been due the plaintiffs upon account of coal so sold the- sum of $970.74, for which sum the firm of Harwood & Irish gave its notes, payable at different dates, and upon the notes thus given payments Were made from time to . time which were, sufficient in amount to reduce the notes to $760.43 ; and upon the 21st day of September, 1894, a note for this last-mentioned sum was given, which became due upon the eighth of November following. •
This note was accepted by the plaintiffs, and at its maturity a payment ivas made thereon which reduced the indebtedness to $500, for which- ¡balance two new notes of $250 .each, one of which was made payable in twenty days and -the other in one month, were given by the firm and accepted by the plaintiffs. Upon the 3d of. December, 1894, $100 was paid upon the first note and a new note for $150, payable in fifteen days, was given and received, which last-mentioned note was subsequently paid in full. Upon the maturity of the second note of $250,'a payment of $50 was made and a new note given and accepted for $200, which matured January 14, 1895, when it was taken up and another note for a like amount was given and received in the place of the same.
This last-mentioned note was made payable to the order of the plaintiffs in one month from the date thereof, with interest, but has never been paid, and it is to recover the amount -due thereon that this action is brought. When this note fell due the. plaintiffs drew upon the makers, Harwood & Irish, for the amount thereof, at three days’ sight, through the bank of Skaneateles, which draft was accepted, but never paid by the drawees.
Upon the trial of the action the foregoing, together with certain other facts, were stipulated by the parties, the additional facts, so far as they are material to the questions presented, being that tlie
It is now insisted, as it was successfully contended at the trial, that these facts constitute a perfect defense to the claim in suit. And the grounds upon which this contention is based are: (1) That this guaranty is limited in express terms to $1,500 per month for three months; and (2) that in the giving of the notes and draft above mentioned, by Harwood & Irish, without the consent of the defendant, the time of ¡payment of the debt evidenced thereby was so extended and postponed as to release the defendant from any liability or accountability under his contract of guaranty.
So far as-tlie first of these two propositions is concerned, there is but little, if any, necessity, in our opinion, for extended discussion. The language of the contract under which the plaintiffs seek to establish the defendant’s liability is neither vague nor ambiguous, for, after expressing his agreement to stand sponsor for the firm, in plain and comprehensive terms, an explanatory clause is added which expressly provides that at no time shall there be standing more than three months’ shipments of coal. Now, while the agreed facts do not show precisely upon what terms of payment the coal in question was sold to Harwood & Irish, they do tend unmistakably to prove that each month’s delivery was to be paid for at the expiration of the month, and, this being so, it becomes perfectly clear that the “ understanding ” referred to was that the defendant’s contract of guaranty was, by express limitation, not to extend, at any one time, beyond the amount due for three months’ delivery of coal, or $4,500 in the aggregate.
Given this construction, we fail to see any force in the defendant’s contention that the contract had been violated, for the amount claimed in this action is but a fraction of the balance due for coal .delivered in the months of April and May, 1894, thé total amount of sales for those months falling far short of the maximum sum of the defendant’s liability, viz., $1,500.
In considering this question, it is important to determine, if possible, what term of credit was within the contemplation of the defendant when he undertook to become responsible for the coal purchased by Harwood & Irish, and then to what extent, if at all, that term has been extended, without' the defendant’s knowledge or consent; and in this connection it may be noted as a somewhat curious fact that, in. his answer to. the plaintiffs’ complaint the. defendant undertakes to set forth, an exact copy of his agreement, ■which is there made to read as follows:
“ January 25, 1894.
“ Mess. C. N. Shipman & Co., Buffalo, N. Y.:
“ This is to certify that I will guarantee the payment of all coal sold to Harwood & Irish by you, to the amount of fifteen hundred dollars per month, and what notes it may be necessary for them to make for monthly balances.
“(Signed.) T. KELLEY.”
This contract, it will be observed, varies quite materially from the one which appears in the facts stiprilated, in that the defendant guarantees not only the payment by Harwood & Irish for coal sold to them to the extent of '$1,500 per month, but also, “ what notes it may be necessary for them to make for monthly balances.”
Had the defendant elected to stand upon the contract as thus expressed, the case would have been relieved of any embarrassment, as it would then have come directly within the principle laid down by the Court of Appeals in D., L. & W. R. R. Co. v. Burkard (114 N. Y. 197). But, inasmuch as the parties thereafter agreed that the contract did not contain the words last quoted, it becomes necessary to' dispose of the question from a somewhat different point of view.
In our endeavor, therefore, to determine the term of credit which was within the' contemplation of the parties when the contract was signed, it maybe assumed, we think, that the defendant
As has already been stated, one of the conceded facts in this case is that, at the expiration of the term of credit which was given upon the original purchase, the indebtedness of Harwood & Irish was provided for by .their notes, which were renewed from time to time as they matured until the note in suit was finally given for the balance which remained unpaid. It is not claimed that these notes, in the absence of an express agreement to that effect, either merged or extinguished the original indebtedness; but it is contended that they did postpone the day of payment, and, therefore, discharged the surety from any obligation he might be under to pay the debt.
In this connection it is proper once more to observe that, if the question under consideration is to be disposed of upon the admissions contained in the pleadings instead of upon the facts agreed .upon, the plaintiffs would probably find themselves concluded by the averment in their complaint that this very note “ was given in payment of said balance of $200 for the purchase price of the coal hereinbefore, mentioned.” But, inasmuch as the defendant’s counsel apparently lays no stress upon this admission, but rather relies upon the stipulated facts, it may perhaps be regarded as deprived of the force which it would otherwise possess, and we pass, therefore, to a consideration of the question already adverted to.
The authorities are numerous which hold that the mere acceptance of the promissory note of the principal debtor for a pre-existing debt operates, in the absence of an agreement that such shall
We conclude, therefore, that the advantages which the plaintiffs . obtained by accepting the note of their debtor constituted of themselves sufficient consideration to sustain an agreement for the extension of time, and operated to suspend their right of action upon their original debt, and such, note was, consequently, a new and valid contract entered into between the creditors and their debtors, which, inasmuch as the defendant did not in any manner- assent to its execution,, had the effect to release him from any liability as surety to the original contract. (Gahn v. Niemcewicz, 11 Wend. 312; Lowman v. Yates, 37 N. Y. 601; Powers v. Silberstein, 108 id. 169.)
Having reached this, conclusion, we do not deem it necessary to consider the effect of the draft drawn by the plaintiffs upon their debtors, Harwood & Irish, and, therefore, we do not pass upon that question, preferring to rest our decision upon the proposition first discussed.
The judgment appealed from should be affirmed, with costs.
Concurrence Opinion
The guaranty is dated January 25, 1894. “I hereby guarantee * * * the payment for all bills for coal shipped to * * *
to the amount of fifteen hundred dollars per month. The understanding between all the parties is that at no time shall there be standing more than three months’ shipments of coal.”
At different times between April 13 and May 15v> J894, plaintiffs sold and delivered to Harwood & Irish coal to the amount of $970.74, which was the last monthly balance of coal sold and delivered to them, and no further shipments of coal were ever made. On June 23, 1894, -notes of different amounts were given by Harwood & Irish for the sum of $970.74, which notes were payable at different times. On the 21st of September, 1894, the amount had been reduced -by payments to $760.43, at which time a new note was given for that amount, payable November 8, 1894, when there was paid on the note $260.43, and interest to that date. Thereupon.
It may be assumed that the notes executed June 23, 1894, were impliedly authorized by the guaranty, but it does not follow that the successive notes were within the contemplation of the guarantor. No doubt, a period of credit was contemplated, but when the parties fixed the time for payment, and the debtor defaulted in payment, in whole or in part, the plaintiffs were not justified or warranted by anything expressed in the guaranty, to further extend the period fi-orn time to time, and suspend their right to enforce payment, without the assent of the guarantor. During these suspensions the guarantor was prevented from proceeding against the principal upon payment of the debt, nor could he compel the plaintiffs to proceed. In view of the authorities hereafter quoted, it seems that the guarantor must be held discharged, because the extensions of credit were not fair and-reasonable as to him, m point of law and equity, though as a matter of fact it may have been otherwise. This is not only the law but it is also justice and equity — at least courts of equity, say it is, though there is every reason to believe otherwise in this case.
What is “ giving time ” was defined by the court in Howell v. Jones (1 Chomp., M. & R. *107) in the following terms: “We think it means extending the period at which, by the contractbetween them, the principal debtor was originally liable to pay the creditor, arid extending, it by a new and valid contract between the creditor and the principal debtor, to which the surety does not assent.” Although the general meaning of the expression “ giving time ” is thus defined, it is sometimes difficult to say what really was “ the
In Combe v. Woolf (8 Bingh. [21 Eng. C. L.] 156) defendant guaranteed the payment of porter, to be delivered by plaintiffs to J., the guaranty containing no stipulation as to the credit to be given to J. The custom of the trade was to give six months, and then, sometimes, to take a bill at two. The plaintiffs having, without the knowledge of the defendant, given J. eleven months’ credit, the defendant was held discharged from his guaranty. Tindal, Oh. J., said: “ The plaintiffs allow three months to elapse after the six, and are then paid by a note at two, thus virtually giving a credit of eleven months; and this, not as a matter of favor winch they might afterwards repudiate, but as a right on which Joseph might insist, for, after the receipt of the note, payment could no longer be demanded till it had run its time. * * * Although no specific time of payment is fixed by the guarantee, yet it must be implied that the guarantee was given on the supposition that the debtor would not have more than the usual credit. But how, it is said, is the situation of the surety altered by this ? At the end of eight months he had a right to inquire whether the debt due to the plaintiffs had been discharged, and if he found it still due, to take his measures against the debtor accordingly; whereas, if the creditor could, without his assent, extend the credit to an unlimited tim.e, the surety might be deprived of all remedy by the subsequent insolvency of the debtor.”
In Samuell v. Howarth (3 Mer. 272; 17 Rev. Rep. 81)defendant guaranteed the payment of any goods to be supplied. by plaintiff to C. between, the 2d of April, 1814, and the 2d of April,-1815. Although no period of credit was specified, this could not be taken as a guaranty for an unlimited period, but was to be restrained by the usual course of trade, and C. having accepted bills for the amount of the goods delivered, which plaintiff permitted him to renew when payable, without any communication-to defendant on the subject of such renewal, it was held that defendant was discharged, even though.the renewal was given only in consequence of C.’.s inability to,pay, and that no injury could accrue to defendant, the surety being himself the fit judge of what is, or is not, for his benefit.
In Petty v. Cooke (L. R.,[6 Q. B.] 794) a very able judge (Blackburn) said : “.I think it impossible to. read the principle laid down by Lord Eldon (3 Merivale, 272) without thinking that it is based upon highly technical reasoning, however accurate it may be. .* * * But that time given by a creditor, which in numberless cases does hot injure the surety, should discharge him, is to my mind not justice, although established by courts of equity.”
Where a guaranty is given to a bank to secure advances on drafts and notes, the guaranty may be construed to apply to successive advances, acceptances and indorsements which would be renewed and discharged from time to time. The reason why this should be so is stated in Merchants' National Bank of Whitehall v. Hall (83 N. Y. 343-346), and this is assumed in City National Bank of Poughkeepsie v. Phelps (86 id. 484, 491), but there the surety assented to the renevoal notes,
The principle is well established by a long series of decisions in this State, that the taking of a negotiable bill or note from -the debtor payable on a future day suspends until then the creditor’s right of action for the original debt, and, therefore, operates in all cases as an extension of credit by which not merely an ordinary surety, but an indorser, not assenting to the transaction, is discharged ; that a negotiable note taken from a debtor, even as between the immediate parties, is a conditional satisfaction of the debt which forms its consideration, and that in respect to a surety, whether a guarantor or indorser, whose assent to the transaction is ndt proved, the satisfaction which it works, and of which it is evidence, is absolute.
When a note is given upon an account, or for goods sold, the demand is thereby liquidated, which is a benefit to the creditor, or if, after a note is due, a new note or bill for the amount of the debt is taken from the debtor, payable at a future day, the creditor acquires a negotiable instrument, which may be used more beneficially than a note which is past due, and these considerations constitute a sufficient consideration to support the agreement implied from taking the note. In other language, where a negotiable note, payable at a future time, is taken by the creditor, he receives some benefit or advantage, as he may use the note in the market as com- ■
Cary v. White (52 N. Y. 138) is not inconsistent, and merely holds that taking collateral security (mortgage) does not per se extend payment of the debt, and that the mortgagee is not a purchaser for value within the recording acts: (Distinguished in 64 N. Y. 468.)
In Hubbard. v. Gurney (64 N. Y. 466, 468), Church, Ch. L, states the general principle as well settled, and then makes this qualification : “ To establish a case, however, within the rule land down, it is essential that it should be made to appear that there was an agreement, either express or implied from the facts proved, that the new note was taken in payment of the first note, or that the time of payment of the latter was extended in favor of the party who was primarily liable.”
He cites many of the cases above, and' yet those cases lay down the rule without gualification. . It will be observed, from a careful réading, that the court was led to state the rule with this qualification, because the plaintiff was contending that the note of the husband was taken, or should be.held to have been taken, as collateral security for. the original note signed by himself and wife, but the court held that the circumstances indicated clearly that it was the intention to substitute the single note for the joint note, and the plaintiff received the money at the bank.
• It may be that the taking of the individual note of the- principal debtor, upon default in payment of the prior note signed by the surety, will not, of itself, suspend the right of action on the prior
If you compare the words of the “ qualification” with the statement of the i;ule laid down in Taylor v. Allen (36 Barb. 297), it will be observed that there is much similarity— the same substance, though not cited by Judge Church. For in 36 Barbour, 29Y, the rule is stated to be that the receipt of a bill or note does not operate to discharge an indorser on the overdue note, unless there is an agreement, express or implied,, extending time of payment. But there the court was considering, whether or not the d/raft was intended as collateral security, that it became a question for the jury, etc. But' this case is criticised and condemned by Judge Daly, in Eisner v. Keller (3 Daly, 488-494).
As there can be no question here as to the note being taken as collateral security, that matter is irrelevant and immaterial. But it may be remarked that the qualification to the principle, as stated by Church, Ch. J., is not supported by the cases cited, but,.on the contrary, is diametrically opposed to the rule, there laid down.
In regard to Graham v. Negus (55 Hun, 440; 8 N. Y. Supp. 679), and Fuller v. Negus (Id. 681), it is clear that the rule there stated is inconsistent with the rule as stated in the books since the beginning of the century. According to the same reasoning, every renewal note would be of no legal effect in extending time, unless there was some new consideration. It is impossible to reconcile these cases in principle and reasoning with the ones we have cited. The cases cited by Judge Daniels- do not support, and the “ expressions ” in one of them, at least, are against him. (Fleischmann v. Stern, 90 N. Y. 110, citing Putnam v. Lewis, 8 Johns. 389; Fellows v. Prentiss,3 Den. 512.)
The judgment should be affirmed, with costs.
Judgment affirmed, with costs.
Opinion by Adams, J., in which Hardin, P. J., concurs. Opinion by .Green, J., in which Follett, J., concurs. Opinion by Ward, J.
Concurrence Opinion
The plaintiffs were coal dealers in the city of Buffalo in the year 1894, and Harwood & Irish were a firm engaged in the same business at the village of Skaneateles, N. Y. This latter firm desired to obtain credit with the plaintiffs in the purchase of coal, and for the purpose of creating such credit the defendant executed and delivered to the plaintiffs the following instrument in writing:
“ Skaneateles, N. Y., Jan. 25, 1894.
“For a valuable consideration, I hereby guarantee to O. N. Shiprnan & Co. the payment for all bills for coal shipped to said Harwood & Trish, at Skaneateles, N. Y., by 0. N. Shipman & Co., to the amount of fif teen hundred dollars per month. The understanding between all the parties is, that at no time shall there be standing more than three months’ shipments of coal.
“T. KELLEY.”
The actiori went to trial upon an agreed case stipulated in the evidence from which it appears that at “ different times between the 13th day of April, 1894, and the 15th day of May, 1894, both inclusive, the said plaintiffs did sell to the said Harwood & Irish, coal to the amount and value of $970.74, which sum the said Harwood & Irish agreed to pay therefor, but have wholly neglected so to do, except that they have paid to apply thereon, from time to time, sums amounting in all to the sum of $770.74, being in shape of notes given and paid as hereinafter stated, leaving a balance still due and unpaid of $200.00, for which said Harwood & Irish thereafter, and on or about the 14th day of January, 1895, made and executed their certain promissory, note in writing for the sum of
It was further admitted that on the 11th day .of March,-1895, Harwood & Irish made a general assignment for the benefit of their creditors, and that they were insolvent,- and that no action had at any time been brought against the said Harwood & Irish by the plaintiff upon any of the said notes or debts represented thereby.
The complaint in the action was upon the guarantee of the defendant above set;forth, alleging the sale of the coal, and it contained this averment: “That thereafter and on or about the 14th day of January, 1895, the said Harwood & Irish made and executed their .certain promissory note, in writing, for the sum of $200.00, payable in one month from the date thereof, with interest, and delivered the same to these plaintiffs, to whose order the said note was made payable. That said note was given inpayment of said balance of $200.00, for .the purchase price of the coal hereinbefore mentioned. That the said note and the debt secured thereby is now past due and payable, that the plaintiffs are now the lawful owners and holders thereof, and that no part' of the same, or of the said balance of purchase price.of said coal has been-paid.” And judgment was demanded for the amount of the note and interest.
The defendant’s answer admitted the signing of the instrument of guaranty, and. alleged by way of defense that the plaintiff had, without the knowledge or consent of the defendant, repeatedly postponed and extended by agreements between the said plaintiffs and Harwood & Irish;. and had on 'various occasions from time to time extended the payment of said sums or a part thereof .by receiving and accepting notes and drafts from said Harwood' & Irish unknown to defendant, in payment of the whole or a part thereof, due at some' future time, and had at divers times accepted part payment of said notes and account, agreeing therefor to extend further the payment of a part thereof, and- had wrongfully neglected and
The learned trial court found the facts as stipulated upon the trial as above set forth, and as conclusions of law therefrom that the defendant was discharged from all obligation as the surety of Harwood & Irish and it dismissed the complaint upon the merits.
The appellants here contend that the conclusions of the trial court were erroneous, and that the defendant Was not discharged for the reason : First, that by the terms of the guaranty signed by the defendant, fairly construed, no limit is created upon the time of' credit which might be given to Harwood & Irish, and, therefore, the-extension of such payment by note or otherwise, as appears in the evidence, was within the contemplation and permission of the guaranty ; second, that the transactions of giving the notes, draft and part payments, as above stated, did not in law extend the time of payment of debt for the coal as there was no consideration for such extension, and that the original indebtedness remained unimpaired by these transactions and could have been enforced at any time by the plaintiffs against Harwood & Irish.
It is difficult to see how either of these contentions can prevail, •The guaranty limited the credit in the first place to $1,500 per month with the further limitation of three months as the final period of credit, making the total credit $4,500, that should not he exceeded at any one time. No authority was given by this guaranty to the-plaintiff to give extended credit, and at the expiration of such credit, tc again extend, and extend thereafter repeatedly, as appears to have been the case under the instrument of guaranty passed upon in The D. L. & W. R. R. Co. v. Burkard (114 N. Y. 191), and no such power will be inferred.
The liability of a surety is limited to the express terms of his, contract. His obligations, so far as warranted by the terms employed, should be construed strictly and favorably to him, (Ward v. Stahl,. 81 N. Y. 406, 408.)
This was simply a guaranty to pay the plaintiffs for the- coal upon sale within the limitations .aforesaid. No authority to the-plaintiffs can be inferred from this instrument to. extend the pay
It would seem superfluous to argue, that in view of the allegation in the complaint that the $200 was received in payment of the balance dtie for the opal by the plaintiffs from Harwood & Irish, and of the conceded transactions by way of extensions of payment by 'means of notes, the draft and-part payments, that the time of payment for the amount claimed in this action liad not been legally extended for nearly .a year after the debt guaranteed had become due, without the consent of the surety.
It is said in Holliday v. Hart (30 N. Y. 488): “ It was. formerly held that any absolute and distinct agreement to give the acceptor time was considered as discharging the drawer and indorsers of á bill of exchange, without any distinction whether or not such agreement -was founded on a sufficient consideration to bind the party making it; because, at least, the acceptor, relying on the honor, of the party making it and that he would abide by it, would naturally relax in his endeavors to pay the bill before the enlarged time, and, in the meantime, might pay less, accommodating holders. (Cliitty on Bills [9th Am. ed.], 466, and cases cited.) But the same author observes that of late a distinction has been taken and- a. new doctrine has sprung up and been acted upon, namely, that even an express agreement not to sue, made after giving notice of non-payment, but without sufficient consideration, and without tahing any new security, being nudum pactum, will not discharge the other - parties, and several authorities are cited to maintain this- proposition,”
And, in defining what is a sufficient consideration for such extension, at section 1317b; page 333, this authority states in effect that a part payment upon the original note, with a new note given for the balance, is a sufficient consideration, and this doctrine is well supported by authority.
In Hubbard v. Gurney (64 N. Y. 457, 466, 467), where a new note was given and a small payment made upon the old note that had been signed by the surety, it was held that such new note and payment was a sufficient consideration to support the agreement extending the time of payment, and the court says, at page 466': “ The principle is well settled that where the holder of a ¡iromissory note takes a new note from the debtor, payable at a future day, he suspends the right of action, upon the original demand until the maturity of the last-mentioned note, and the surety upon the same,' not assenting thereto, thereby becomes discharged from liability,” citing numerous authorities. And this, the court says, is so, notwithstanding the fact that the original note is not surrendered or .given up.
From these facts, the court says, at page" 467 : “ "When this note became due, a small payment was made and a new note given for thirty days, upon which $200.00 was afterwards paid, leaving a balance of $700.00 unpaid. It is quite obvious that here was am imjpUed agreement by which the time of payment of the original note was extended, and this being done without the knowledge or assent of the defendant, who was a surety, his rights were thereby affected.”
In the case at bar, the trial court found" (all questions of fact being left to it) that there was, from the facts in this case, such an implied agreement, and it. is difficult to see how any other inference could be drawn from the evidence.
In Schnitzler v. The Fourth National Bank (1 Kan. App. 674) it was held that taking a renewal note and interest thereon is.
The reason of the rule relieving the surety is this: The surety, by his contract, is entitled, as soon as the debt which he secures is due, to pay it and be subrogated to the rights of the creditor to collect the debt of the debtor. If the creditor,, by extending the time of the payment of the debt, deprives the surety, during the extended period, of this right, the surety is discharged, no matter how brief is the period of extension, and this is so, whether the debt during the extended period becomes uncollectible in whole or in part or otherwise.
It is clear that the facts established in this case and found by the court created a valid extension of the payment of the debt from time to time for a period of nearly a year and until the debtors primarily liable for the coal sold had become insolvent. Many cases may be cited in support of this position in addition to those already referred to, and among them are the following: Pomeroy v. Tanner (70 N. Y. 547); Jagger Iron Co. v. Walker (76 id. 521); City Nat. Bank of Poughkeepsie v. Phelps (86 id. 484); Kane v. Cortesy (100 id. 132); Taffray v. Crane (50 Wis. 349), when a note for part of a debt taken in satisfaction was held to discharge a surety.
In Putnam v. Lewis, Administrator, etc. (8 Johns. 389),. it was held that the giving of a promissory note for a book debt suspends the right óf action on the book account during the time allowed for the payment by the note.
In Fellows v. Prentiss (3 Den. 512) there had been a guaranty to pay for goods as in the case at bar, and it was there held that if a principal debtor gave the creditor his note for the debt payable one day after date, the surety was thereby discharged. This was a case in the Court of Errors, and the rule laid down by that court was clearly in accordance with the respondent’s contention here..
In Myers v. Welles (5 Hill, 463) the old Supreme Court, through Cowen, J., where A. was the indorser for the accommodation of the maker, and a note was given for the debt subsequently without consent of the indorser, it was held that he Avas discharged; that the giving of such note suspended the remedy as against the debtor.
The American and English Encyclopaedia of Law sums up the whole matter in volume 24,' at pages 833 and 835, as follows:
The appellant relies upon Parmelee v. Thompson (45 N. Y. 58); Auburn City National Bank v. Hunsiker (72 id. 252), and upon two cases decided by the General Term of the first department and reported in 8 N. Y. Supp. 679, 681, being Graham v. Negus and Fuller v. Negus, where. goods were sold, and after the purchase price thereof had become due the debtors’ notes were given upon time. In these Negus cases Judge Daniels says that no agreement on the part of the plaintiffs to extend, the time for the payment of the debt until the note should mature, was alleged in the answer, but that it-stood wholly and solely upon the fact that the notes themselves, being in this manner given, did extend the time for the payment of the indebtedness until they respectively matured. An examination of these cases discloses such a different state of facts from the one at bar. that they cannot be said to be authority applicable to this case.
In these cases no agreement was shown that the time of payment should be extended by the giving of the notes, and the court held that none could be inferred from the bare, circumstance that notes had been given and accepted, payable at a future day, for a preexisting debt.
We cannot conclude that the General Term of the first department in these decisions assumed to overrule the law as settled by a long line of authorities upon this subject in the.courts of this State, including the Court of Appeals.
The case in 45 N. Y. (Parmalee v. Thompson, supra) was where an action upon a note was discontinued, and the costs paid bv the
In 72 N. Y. (Auburn City National Bank v. Hunsiher, sufra) there were renewal notes accepted by the creditor (the banks) conditionally, dependent upon the consent of the sureties, which was never obtained, and there was a question of fact in the case as to whether the renewal was absolute or conditional, and the court refused to interfere with the finding of the jury upon that subject. In none of - the cases relied upon by the plaintiffs was the right of a surety involved.
The view here taken does not in any manner conflict with the doctrine asserted in Halliday v. Hart (30 N. Y. 477) and kindred cases cited in Manchester v. Van Brunt (19 N. Y. Supp. 685, 687), that a part payment of the matured debt, even if accompanied with a verbal agreement for time, does not constitute a sufficient consideration to support such an agreement, but the proposition is here asserted that where such agreement and part payment, is accompanied by a new security extending such time of payment,, it is valid and binding, and discharges the surety.
The law is well settled that where a new obligation is given in payment of a debt the debt is canceled and the creditor must rely upon the new obligation alone.
As we have seen, the complaint in this case alleges that the last note given for $200, the amount of which is sought to be recovered in this action, was given in payment of the balance due from Harwood & Irish upon the coal they liad purchased of the plaintiffs. The plaintiffs cannot avoid the force of this allegation in their complaint. Independent of any other question in the case, we must hold that the plaintiffs, having received this note in payment of the balance due for the coal, that debt was discharged, and that discharge relieves the defendant absolutely, as the debt which he guaranteed, is paid and, therefore, while the plaintiffs have a good cause of action upon the note against Harwood & Irish, they have none against the defendant.
The judgment in this action should be affirmed, with costs.
Judgment.affirmed, with costs.