First Nat'l Bank of Springfield v. Leavitt

• Decision Date: 31 October 1877
• Citation: 65 Mo. 562
• Parties: FIRST NATIONAL BANK OF SPRINGFIELD v. LEAVITT ET AL, APPELLANTS.
• Court: Missouri Supreme Court

65 Mo. 562

FIRST NATIONAL BANK OF SPRINGFIELD

v.LEAVITT ET AL, APPELLANTS.

Supreme Court of Missouri.

October Term, 1877.

Appeal from Greene Circuit Court.--HON. W. F. GEIGER, Judge.

The instructions given at the request of the plaintiff, to which reference is made in the opinion of the court, are as follows:

No. 1. That the payment or satisfaction of a note is that act which entitles the payors to a delivery of the note, and requires the assent of the legal holders of the note to the act to render it a payment or satisfaction of the note.

No. 2. That in this case the plaintiff has never surrendered, nor has the defendant, Robberson, done any act to entitle him to have possession of the note.

No. 3. That the several notes given by the co-defendants of Robberson to John J. Culbertson, though for same amount, yet not payable to the bank by name, nor to its cashier in his official capacity, were not accepted by the bank as payment, nor in discharge or satisfaction of the note sued on, nor does that fact entitle Robberson, or either of the defendants, to claim said notes, or either of them, as payment of the note sued on.

Bray & Cravens, Young & Thrasher for appellants

I. The renewal of a note in bank is a cancellation and payment of the former note, and is so regarded by the commercial world. 2 Pars. Bills and Notes 203-4; and is such an extension of credit as to release sureties not consenting thereto. Edwards on Bills and Notes 355; Bangs v. Mosher, 23 Barb. 478; Frisbie v. Larned, 21 Wend. 450; La Farge v. Herter, 4 Barb. 346.

II. If for a good or sufficient consideration the creditor gives time or forbearance to the principal debtor, the surety is discharged. 1 Pars. Bills and Notes 238; Gahn v. Niemcowiez, 11 Wend. 312; Rathbone v. Warren, 10 Johns. 587; Clippinger v. Cress, 2 Watts 45; Globe Mut. Ins. Co. v. Carson, 31 Mo. 218; Rucker v. Robinson, 38 Mo. 154; McCune v. Belt, 38 Mo. 281.

III. The receipt of interest, in advance, after maturity of a note, is a sufficient consideration, and is prima facie evidence of a valid agreement to extend the time of payment. 2 Pars. Bills and Notes 241; Crosby v. Wyatt, 10 N. H. 318. Hosea v. Rowley, 57 Mo. 357, is not in conflict with this view. We do not contend that it is conclusive, but only prima facie evidence of extension, and may of course be rebutted.

IV. There were four renewals of the note sued on, for three months each--for the same sum of money--interest paid in advance on each. It was “conditionally paid,” as marked on the books of the bank.

V. The contract of suretyship imports entire good faith and confidence between the parties in regard to the whole transaction. Any concealment of material facts, or any undue advantage taken of the surety by the creditor, either by surprise or by withholding proper information, will invalidate the contract. And upon the same ground the creditor is, in all subsequent transactions with the debtor, bound to equal good faith to the surety. And if any stipulations are made between the creditor and debtor which are not communicated to the surety, and are prejudicial to his interests, they will operate to discharge him. 1 Story Eq. Jur., §§ 324, 325, 326; 1 Parsons on Bills and Notes 236.

VI. If there be a failure on the part of the principal, and the surety or guarantor is looked to for payment, he should have reasonable notice of such facts, and, if from want of such notice, he is placed in a position where he cannot save himself by reason of the insolvency of the principal occuring after maturity of the note, he will be discharged. Edwards on Bills and Notes 243; 2 Parsons on Notes and Bills 141-2; Parsons Mercantile Law 70, and Notes; Oxford Bank v. Haynes, 8 Pick. 423; Bickford v. Gibbs, 8 Cush. 154; Babcock v. Bryant, 12 Pick. 133.

C. B. McAfee for respondent.

1. There was no satisfaction or payment of the note sued upon, nor any enlargement or extension of time for the payment of the same.

2. Plaintiff never surrendered said note, nor has defendant, Robberson, or either of his co-defendants done any act to entitle him or them to the possession of said note.

3. The several notes given by the co-defendants of Robberson to Culberson, though for the same amount, yet not payable to the bank by name, nor to its cashier in his official capacity, were not accepted as payment, discharge or satisfaction of the note sued on, nor does that fact entitle said Robberson, or either of said defendants, to claim said notes or either of them, as payment of the note sued on.

4. The note sued on is joint and several, and the parties are all principals. There is no law requiring notice and protest to fix the liability of joint makers of a note.

5. The receipt of interest on a claim in advance, is not a sufficient consideration for an extension of time of payment.

6. It is the business of the surety to see that the principal pays. If he does not, the surety may pay and take measures for his indemnity.

7. The plaintiff was not precluded at any time after the note sued on became due from commencing suit upon it. Authorities relied on by respondent: Oxford Bank v. Lewis, 8 Pick. 458; Blackstone Bank v. Hill, 10 Pick. 129; Freeman Bank v. Rollins, 13 Maine 202; McLemore v. Powell, 12 Wheat. 554; Wilson v. Foot, 11 Met. 287.

1. PRINCIPAL AND SURETY: renewal note: payment of interest: discharge of surety.

HENRY, J.

When time is given to the principal debtor by a valid agreement which ties up the hands of the creditor, though it be for a single day, the surety is discharged. Edwards on Bills and Notes 355. The rule and the reason for the rule are much better stated by Rogers, J., in Clippinger v. Cress, 2 Watts 45. “If a creditor, by any contract which can be enforced againt him, at law or in equity, gives time to his debtor, he discharges the surety, for if, notwithstanding such contract, it were competent to sue the surety, the latter would immediately have his remedy over against the debtor. This would be in fraud of the contract of forbearance which the creditor would thereby immediately defeat.” See, also, Kincaid v. Yates, 63 Mo. 47. There is a conflict between the cases as to what facts, in the absence of an express stipulation, will authorize a jury to find that there was such an agreement. In Machusetts and Maine it is held that the payment of interest in advance is not of itself evidence of an agreement to delay. In Crosby v. Wyatt, 10 N. H. 322, Parker, Ch. J., held that “payment of interest in advance is not of itself a contract to delay, but is evidence of such contract. The evidence derived from it may be rebutted, but, unless rebutted, such evidence is conclusive.”

2. RENEWAL NOTE RECEIVED AS CONDITIONAL PAYMENT.

In the case of Hosea v. Rowley, 57 Mo. 357, this court followed the Massachusetts cases. In some of the States it is held that the taking of a bill or note from the debtor, payable on a future day, suspends the creditor's right of action for the original debt, and operates as an extension of credit by which a surety is discharged. Hart v. Hudson, 6 Duer 305, in which are cited, as authority for the doctrine: Putnam v. Lewis, 8 John. 389; McLean v. Lafayette Bank, 3 McLean 589; 5 Hill 465; 1 Denio 116, 1 John. 34; 15 Id. 243; Id. 349; 16 John. 273; 3 Denio 512. The doctrine is probably too broadly stated in Hart v. Hudson, and requires the qualification that the note or bill was received in payment. Certainly if there were an express agreement to the contrary, or that the bill or note were received as a collateral, its acceptance by the creditor would not discharge the surety.

3. ___

In Fellows v. Brantiss, 3 Denio 512, the creditor gave the debtor a receipt for the check, which expressly stated that the check was taken in payment of the original indebtedness, and, in several of the cases cited, it appears that the security was taken expressly as payment of the prior indebtedness. If, after the maturity of a note, the creditor received a note or bill from the principal debtor in absolute payment thereof, a surety in the first note would be discharged. We think it equally clear that the fact of taking such note and receiving interest upon it, from its date to its maturity, would be evidence of a contract to receive it in payment, and for delay on the original, until the maturity of the renewal note, and, unless rebutted, such evidence would be conclusive.

In addition to these two important facts, the...