Harburg v. Kumpf

• Decision Date: 14 June 1899
• Citation: 52 S.W. 19,151 Mo. 16
• Parties: HARBURG v. KUMPF.
• Court: Missouri Supreme Court

52 S.W. 19

151 Mo. 16

HARBURG v. KUMPF.

Supreme Court of Missouri, Division No. 1.

June 14, 1899.

NOTES — DISCHARGE OF SURETY — EXTENSION OF TIME OF PAYMENT — CONSIDERATION.

1. The promise of a holder of a note to extend it after maturity for a definite period, where based on no other consideration than the promise of the maker to keep the money during that period, and pay interest according to the note, is not based on a valid consideration, so as to discharge a surety on the note.

2. A mere gratuitous offer on the part of the holder of a note to reduce the rate of interest at maturity, and extend the time of payment, where acquiesced in by the maker, who made no further promise, is not a binding agreement, such as to discharge the surety.

Appeal from circuit court, Jackson county; E. L. Scarritt, Judge.

Action by William Harburg, as executor, against Henry C. Kumpf and another. From a judgment for plaintiff, defendant Henry C. Kumpf appeals. Affirmed.

Powell & Powell, for appellant. Grant I. Rosenzweig, for respondent.

VALLIANT, J.

This is a suit on a negotiable promissory note made by George Kumpf and Henry C. Kumpf to the order of Sophia Harburg, plaintiff's testatrix, for $5,000, dated December 13, 1888, due one year after date, bearing interest from date at 8 per cent. per annum, interest payable semiannually. Both makers were sued, but George Kumpf made no defense. Henry C. Kumpf pleaded that the consideration for the note was money borrowed of Sophia Harburg by George Kumpf for his own use; that Henry C. Kumpf signed it as security for George, and that Sophia Harburg knew that fact when she took the note; that afterwards the payee and George, without the knowledge or consent of Henry, made an agreement whereby the payee, "for a good and valuable consideration, extended the time of payment for one year from December 13, 1890," and that that agreement was executed, and George paid the interest as agreed; and that the payee and George, without the knowledge or consent of Henry, for a good and valuable consideration, agreed to reduce the rate of interest in the note from 8 to 7 per cent. from December 13, 1893, and to extend the note to June 13, 1894, and that agreement was carried out by George paying interest at 7 per cent. up to date last named. For those alleged alterations in the contract the defendant Henry claims that he, as surety, was discharged. The reply put the matters pleaded in the answer in issue. There was a trial by jury, verdict and judgment against both defendants for $5,213.12, from which Henry C. Kumpf alone, after due course, brings the cause here for review on appeal.

The evidence left some room to question what the relation of Henry C. Kumpf to the note was, and, if he was only surety, as he claimed, whether or not the payee knew it. But the theory of the instructions given and refused shows that the case was tried on the assumption that appellant was surety, as he claims, and that the payee of the note knew it; and under the view of the law of the case which we take it will not impair the plaintiff's rights if we make the same assumption. The answer does not state, unless it be inferentially, what the consideration was for the alleged new features attached to the original contract, nor does it state when the payments of interest alleged to have been made were made; that is, whether or not they were made in advance. The evidence shows that the interest was not paid in advance, and there was no consideration for the alleged agreement for extension, unless, as contended by counsel for appellant, the mutual assent of the parties to the extension created a binding obligation on the one not to demand payment within the time specified, and on the other to keep the money, and pay interest for that period. The evidence of defendant was to the effect that on December 13, 1890, George Kumpf paid the interest due on that date, and the parties then agreed to extend the note for a year, and afterwards, on June 13 and December 13, 1891, defendant George paid the interest due on those dates respectively according to the tenor of the note.

The effect that an extension of a note by agreement between the holder and the principal debtor will have on the surety's obligation is no new subject in the courts of this state. In Stillwell v. Aaron, 69 Mo. 539, per Henry, J., it is said: "It has uniformly been held in this state that if a creditor, for a valuable consideration, make an agreement with the principal debtor, which suspends his right of action on the demand for a definite period of time, without the consent of the surety, it operates to discharge the surety." And in support of the proposition citations are given running through our books from 19 Mo. to 68 Mo. And in that case it is also held that payment of interest in advance is a sufficient consideration to support the contract for extension. The same doctrine is declared in other cases. Insurance Co. v. Hauck, 71 Mo. 465; Id., 83 Mo. 21. In West v. Brison, 99 Mo. 684, 13 S. W. 95, it is said: "Again, when the surety claims to have been discharged by reason of an agreement between the creditor and the principal debtor, extending the time for payment, it must appear that the agreement was upon a valuable consideration, and that the extension was for a definite period of time." In Barrett v. Davis, 104 Mo. 549, 16 S. W. 377, it is said: "One of the reasons of this rule is found in equitable considerations growing out of the surety's right to be subrogated to the creditor's, at any moment, by payment of the debt to the latter. * * * We refer to its reason merely to add that the principle underlying it demands that such a contract, to be effective as a release of the surety, must be one creating a valid and enforceable obligation against the creditor with respect of the enforcement of his claim against the principal debtor." In Petty v. Douglass, 76 Mo. 70, it was held that payment of interest then due on a matured note and part payment of the principal was no valid consideration for an agreement to extend, and the surety was not thereby discharged. In Owings v. McKenzie, 133 Mo. 323, 33 S. W. 802, it was held that an agreement to extend, for which there was no consideration except the legal consequence of accruing interest according to the tenor of the note, was not valid. In Wolz v. Parker, 134 Mo. 458, 35 S. W. 1149, there were several notes. One was due in May, 1893, and one in April, 1894. In May, 1893, the holder agreed with the maker that if he would pay the first note in January, 1894, he would extend the second note until the fall of 1894. The maker paid the first note in January, 1894. It was held that there was no consideration to support the agreement, since the maker only undertook in the agreement for the extension to do what he was already bound to do by his note; citing Pars. Cont. (7th Ed.) 437, and 3 Am. & Eng. Enc. Law, 834. The supreme court of Massachusetts have held that a written agreement to extend for a definite period, and to apply part of the interest towards the payment of the principal in consideration that the principal debtor pay the interest past due, and continue to pay...