Matchett v. Winona Assembly & Summer School Association

• Decision Date: 23 June 1916
• Docket Number: 22,882
• Citation: 113 N.E. 1,185 Ind. 128
• Parties: Matchett v. The Winona Assembly and Summer School Association et al
• Court: Indiana Supreme Court

113 N.E. 1

185 Ind. 128

Matchett v. The Winona Assembly and Summer School Association et al

No. 22,882

Supreme Court of Indiana

June 23, 1916

From Kosciusko Circuit Court; Francis E. Bowser, Judge.

Action by James H. Matchett against The Winona Assembly and Summer School Association and John F. Beyer and others as sureties. From a judgment for plaintiff against the party first named and in favor of the sureties, the plaintiff appeals.

Affirmed.

H. W Graham, Anthony Deahl and L. W. Royse, for appellant.

John W Widaman, Allen S. Widaman, William F. McNagny, Rob R. McNagny and Phil M. McNagny, for appellees.

OPINION

Lairy, J.

The judgment from which this appeal is taken was based upon a promissory note executed by appellees and payable to appellant. The trial court rendered judgment in favor of appellant for the sum of $ 12,592 as against the Winona Assembly and Summer School Association and against appellant and in favor of appellees John F. Beyer, Christian C. Beyer and J. Edward Beyer for costs. Upon proper request the court found the facts specially and pronounced its conclusions of law thereon. The questions here presented arise upon the exceptions to the conclusions of law.

As shown by the findings of fact, the note in suit was executed November 6, 1908, by the Winona Assembly and Summer School Association, as principal, and the other three appellees, as sureties, and that appellant knew at the time the note was executed that the three last-named appellees were sureties for the principal maker of the note. The note was for the principal sum of $ 9,000 due sixty days after date with interest after maturity at the rate of eight per cent. per annum. The interest to maturity was paid in advance and by the terms of the note it fell due on January 5, 1909. The note was not paid at maturity and interest was paid from time to time by the principal maker. The first three payments, aggregating $ 360, paid the interest to July 5, 1909, but by none of these payments was the interest paid in advance of the time it was fully earned. After the payment which discharged the interest to July 5, 1909, no further payment was made until January 1, 1910, on which date the principal maker paid to appellant by check $ 360, as interest on the note in suit for six months to January 5, 1910, and the following endorsement was made on the back of the note: "Interest 12-31 paid on this note to Jan. 5th, 1910, $ 360." The court's finding No. 6 is as follows: "That at neither of the times when said payments were so made on said note was there any request made by the said principal on said note for any extension of the time of its payment, nor were either of said payments made under any agreement and understanding by and between the plaintiff and said principal, that in consideration thereof the time for the payment of said note should be extended, except such agreement as would be implied therefrom, and that each and all of said payments were made without anything said by said principal or said plaintiff about the extension of the time of the payment of said note." The court further finds that all of such payments were made and endorsed on the note without the knowledge of the sureties.

As a matter of law the court concluded that appellant was entitled to recover on the note as against the principal maker, but that he was not entitled to recover as against the sureties, and that they were entitled to recover their costs.

It appears from the special finding that the payment of $ 360 as interest on January 1, 1910, paid the interest on the principal until January 5, 1910, which was four days, at least, in advance of such payment. There is no controversy as to the law governing the case, if, in connection with the other facts shown in the special finding, it is also found as a fact that there was an agreement between appellant and the principal debtor extending the time for the payment of the note. All parties concede that the law applicable to the facts shown by the special finding released the sureties if it is properly found as a fact that the time of payment was extended by agreement between the creditor and the principal debtor. Such is undoubtedly the law. Williams v. Scott (1882), 83 Ind. 405; Post, Admr. v. Losey (1887), 111 Ind. 74, 12 N.E. 121, 60 Am. Rep. 677.

Appellant asserts that the finding does not show that there was any agreement between him and the principal debtor to extend the time for the payment of the note to January 5, 1910, at the time interest was paid to that date on the first day of that month, and that finding No. 6 shows that there was no express agreement to that effect. It is the position of appellant that, in order to constitute such an agreement, both parties must have understood that, in consideration of the payment of interest in advance, the time for the payment of the principal debt was extended until the date to which interest was paid, and that their minds must have met and agreed upon that proposition. It is further asserted that the fact of such agreement is the ultimate fact to be found and that the failure to find such ultimate fact is fatal. Appellant claims that the finding to the effect that interest was paid in advance from January 1, 1910, to the fifth day of that month is an evidentiary fact from which the ultimate fact of an agreement to extend the time for the payment of the principal debt until the latter date might be inferred, but that it does not amount to a finding of such ultimate fact. Decisions in some other states may be found to sustain appellant's position. Haydenville Sav. Bank v. Parsons (1884), 138 Mass. 53; Nat. Bank, etc. v. Love (1895), 62 Mo.App. 378; Vilas v. Jones (1843), 10 Paige (N. Y.) 76; Williams v. Smith (1858), 48 Me. 135. The rule adopted in this State, however, does not sustain the position of appellant, and does not accord with that announced in the decisions cited in its support. On the contrary this court has held that the payment of interest in advance has the legal effect of extending the time for the payment of the principal debt to the date to which the interest is paid, and that such agreement need not be alleged or proved for the reason that it is implied as a matter of law from the mere payment of the interest in advance. Hamilton v. Winterrowd (1873), 43 Ind. 393; Starret v. Burkhalter (1882), 86 Ind. 439.

In the case of Hamilton v. Winterrowd, supra, the court said: "There is, to be sure, no allegation of an agreement to forbear for three months and a half, but the facts are stated from which the presumption of such an agreement arises. The doctrine of implied agreements rests on presumption. '"Implied contracts", says Blackstone (vol. 2, p. 443), "are such as reason and justice dictate, and which, therefore, the law presumes that every man undertakes to perform."' 1 Pars. Con., 5th Ed., p. 4. Presumptions of law, however, need not be stated in pleading. 2 G. & H. 111. It follows that under our code it is sufficient to state facts from which the law implies an agreement, without in terms averring the agreement." In each of the cases cited the question arose in the determination of the sufficiency of an averment of an answer, but the reason for the rule as stated by the court applies with equal force where the sufficiency of a special finding of fact is in question. In other cases this court approved the same proposition of law embodied in instructions. Woodburn v. Carter (1875), 50 Ind. 376; Jarvis v. Hyatt (1873), 43 Ind. 163.

It may be that interest paid in advance by reason of a mutual mistake of the parties or on account of a miscalculation of the amount due as interest would not have the legal effect of extending the time for the payment of the principal debt, but the finding here shows that an endorsement was made on the note showing that on December 31, 1909, interest was paid to January 5, 1910. This clearly shows that the payment of interest in advance was not made or received by mistake. It is also apparent from the finding that there was no agreement or understanding between the principal debtor and his creditor to the...