Winne v. Colorado Springs Co.

3 Colo. 155 | Colo. | 1876

Lead Opinion

Thatcher, C. J.

This was an action brought against Myron F. Thomas and the appellants upon a promissory note. Judgment by default was taken against Thomas. The other defendants, the appellants herein, plead the general issue, nut tiel corporation, and two special pleas, setting up in each a defense as sureties. To each of the special pleas a demurrer was allowed. Judgment was taken against all the defendants at a subsequent term.

The first error assigned is, that “ the district court erred in sustaining the demurrer of the plaintiff in said court to the third plea of the appellants.” This is a plea that the appellee, by an agreement with Thomas, and without the consent of the sureties (the appellants), gave him further time for the payment of the note “for a good and valuable consideration,” and that thereby the sureties became discharged.

The demurrer to this plea is general and special. The special ground of demurrer is, that the plea contains no statement of the consideration. The plea is bad. The consideration is the very gist of the agreement to extend the time, and should be truly and fully pleaded. The mere averment that the time was extended “ for a good and valuable consideration ” is not sufficient. It is but the statement of the existence of a consideration, without the facts out of which it arose. It is simply a conclusion of law which, as a rule, ought not to be pleaded. It may be laid down as a general proposition that whenever a parol agreement is declared upon, or pleaded in defense of an action (unless the agreement be a written instrument, purporting to be for value received, Prindle v. Caruthers, 15 N. Y. 425), the declaration or plea should disclose the facts from which it must appear that there was a legal consideration to support the agreement relied on. If such an averment be wanting, the court cannot on demurrer determine the legal sufficiency of the consideration. On another ground, it is necessary that the consideration should be explicitly stated, viz.: that the adverse party may not be surprised at the trial by the introduction of the testimony to prove a consideration not stated in the pleading. Marshall v. Aiken, 25 Vt. 332; 1 Chitty’s Pl. (16th Am. ed.) 300, note k; Harris v. Rayner, 8 Pick. 542; Moore v. Ross, 7 N. H. 528; Bailey v. Bussing, 29 Conn. 5.

It was not necessary to set up this defense by a special plea, as even if well pleaded, the same defense is available under the general issue. Warner v. Crane, 20 Ill. 148.

The next error assigned is,' to the allowance of the demurrer to the defendants’ fourth plea, which sets up substantially that the principal debtor being solvent and prepared to pay at the maturity of the note “ offered to pay the said plaintiff the amount due thereon,” which offer the plaintiff' refused, and that thereafter Thomas became and remained insolvent, whereby the sureties became discharged. If this is intended to be a plea of tender, it is substantially defective. Not a mere offer to pay, but an actual tender must be averred, unless the production of the money was waived, in which case the waiver must be pleaded, and it must be alleged that the defendant was about to tender, etc. 2 Chitty’s Pl. (16th Am. ed.) 471, note a.

If the plea is intended to set up an offer to pay by the principal debtor, he being solvent, the question is, does such a plea present a valid defense to an action against the sureties ? When a tender is actually made of the amount due, satisfaction of the debt is within the reach of the creditor. Glood faith to the sureties requires that he should accept the money. Sureties are liable to the creditor; but their obligation is accessory to that of the principal. When the principal makes payment, or actually tenders payment of the sum due to the creditor, he does all that the sureties are legally and equitably required by their contract to see that their principal shall do. If the creditor refuses to accept the money, when actully tendered and clearly within his grasp, he is guilty of a palpable omission of duty to thé sureties, and they are thereby released from all liability. This doctrine rests upon an intelligible ground. Joslyn v. Eastman, 46 Vt. 263. But an actual tender of money by the principal differs very widely from a mere verbal offer to pay, even though he be in a perfectly solvent condition when he makes the offer. The contract of the sureties is not that the principal will offer to pay the debt at maturity, but that he will in fact pay it, or what, so far as the obligation of the sureties is concerned, is equivalent thereto, he will make an actual tender thereof. To declare that a mere offer to pay, which chronic borrowers are in the constant habit of making, without a dollar in sight, operates to discharge the sureties, would be to announce a dangerous principle; to relax, if not to nullify the binding character of the sureties’ contract, in a case where their rights and remedies remain unaffected by any act of their principal or creditor. The ground upon which sureties are discharged, when an actual tender is made and rejected, is, that at the time of the creditor’s refusal to accept the money, the complete satisfaction of the debt is not contingently or conditionally, but absolutely under his control and in his power. In such case the conduct of the creditor in omitting to perform the duty which the law clearly enjoins, to wit: to accept the tender, is a fraud upon the sureties and the reason for their exoneration is stronger than in a case where a security is abandoned or surrendered to the principal, or an execution actually levied has been withdrawn, and the authorities are agreed that in the latter class of cases the sureties are discharged at least pro tanto by the act of the creditor. Sneed v. White, 3 J. J. Marsh. 525; Jones v. Bullock, 3 Bibb, 467; Curran v. Colbert, 3 Ga. 239; DeColyar on Guaranties, etc. 438 (Morgan’s Am. ed.); Daniels on Negotiable Instruments, 289; 2 Am. L. Cas. 395 (5th ed.). But the principle upon which these decisions rest, viz.: that the means of satisfying the debt is actually under the control of the creditor, cannot be evoked in aid of the doctrine, that a mere unaccepted offer to pay, unaccompanied by a production of the money exonerates the sureties. Sears v. Van Dusen, 25 Mich. 351, is, so far as our research has extended, the only case in conflict with the doctrine here laid down. The supreme court of Michigan does not in this case rest its decision upon any substantial foundation. Says the court: “ The finding of. facts does not show that the defendant in error (surety) consented to be bound by the extension.” This is true. But neither does the finding of the facts show that the creditor was bound by any valid agreement to extend the time. After a verbal offer to pay has once been made, consent to forbear or mere indulgenee determinable at the will of the creditor, binds no one. To exonerate a surety from liability, the extension must be for a time certain and based upon a sufficient consideration. Gardner v. Watson, 13 Ill. 347; Woolford v. Dow, 34 id. 427; Miller v. Stem, 2 Penn. St. 286; M’Lemore v. Powell, 12 Wheat. 554; Coman v. The State, 4 Blackf. 242.

In the absence of a valid agreement to extend the time, the rights and remedies of the creditor against the principal and sureties as well as the rights • and remedies of the sureties against the principal are unchanged. The creditor’ s hands are not tied up for a single moment; he may sue at any time. The sureties are entirely free to pay the debt and sue the principal for the amount. The relations of the parties are in no respect altered. When sureties seek to be discharged on the ground of extension of time, the controlling question is, was the extension of such a character as to bind the creditor and thereby preclude him from pursuing his remedy against the principal ? If yea, even if the suspension of the remedy be but for a day, the sureties are exonerated; otherwise, they are held. ' In the case before us, the creditor was not bound to delay suit an instant by reason of the forbearance he had extended. However high respect we may entertain for the opinion of the supreme court of Michigan, we cannot bow to its authority when so clearly in conflict with sound reasoning, and the great current of decisions.

The two remaining assignments of error, both going to the sufficiency of the entry of the judgment upon allowing the demurrer to the third and fourth pleas, are not well taken. The judgment is not, as contended, interlocutory. It clearly shows a final disposition of the third and fourth pleas and is in substantial conformity with approved pre-' cedents. Robinson’s Forms, 110.

The judgment of the court below is in excess of the ad damnum laid in the declaration, by $132. The appellee has remitted the excess, as under the authorities it may do. Consolidated Gregory Co. v. Raber, 1 Col. 513; Linder v. Monroe’ s Executors, 33 Ill. 389.

For the residue, the judgment of the lower court will be affirmed. The appellants will recover costs in this court.

Affirmed.

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Rehearing

On petition for rehearing, the following opinion was rendered by

Wells, J.

We are unable to find in the fourth plea, what counsel supposed to be contained there. As we think the plea cannot, by any reasonable interpretation, be said to impart more than this, to wit: that the principal debtor neither produced the sum due, nor had it in hand, nor indeed elsewhere, but was possessed of a large estate and ample means and might presently have procured it.

If the allegation that the debtor was possessed of much property and ample means is not to be taken as qualifying the allegation, that he was there, prepared to pay, and as showing wherein the preparation consisted, the words are meaningless.

It is said, however, that the creditor’s refusal dispenses with the production of the money, and the actual offer of it. No case is cited to show that the creditor’s refusal will dispense with having the money present, nor can it be maintained upon authority, that the offer to produce is dispensed with by the creditor’s refusal to accept.

Now, as between debtor and creditor, the rejection of an offer to pay, under the circumstances stated in the plea, would in no respect have changed the position of the parties. The rejection of such a proposal neither impairs the right of action nor diminishes the damages. It is not effectual even to stay accruing interest nor relieve the debtor of costs in a subsequent action. The reason is, that the offer amounts to a mere proposition to perform what the debtor has already more solemnly undertaken. It is, therefore, mere empty clamor, which the creditor is under no requirement to even notice. Whether he assent, or • refuse, or maintain silence, is all one. Now if this be its effect as between parties, how can the circumstance that a third person stands as surety to the debtor, affect the duty of the creditor ? Can he, in either .case, accept what is not tendered nor even presented ? He can neither accept nor reject-

The most positive refusal of. a mere theoretical offer in words, no money being present or shown, is a nullity, whosever rights are concerned. *

The case of Ramsey v. The Westmoreland Bank, 2 Pen. & W. 203, the broadest of the cases cited by counsel, is questioned by high authority (2 Am. L. Cas. 397), but even this case does not countenance such a defense ; the money was there in court subject to the order of the creditor; in the words of the court, the creditors “ had the means of payment in their power.”

We see no reason to modify our former conclusions.'

Rehearing denied.