Merchants' Nat. Bank v. Lewis
| Decision Date | 07 February 1933 |
| Citation | 164 A. 773 |
| Parties | MERCHANTS' NAT. BANK v. LEWIS. |
| Court | New Hampshire Supreme Court |
Transferred from Superior Court, Strafford County; Young, Judge.
Action by the Merchants' National Bank against Herman E. Lewis. Case transferred from the trial term without ruling.
Judgment for defendant.
Action against the defendant as guarantor of a promissory note for $2,500 dated January 2, 1929, signed by the Roslin Shoe Company, Inc., and payable to the plaintiff or order three months after date. When the note became due, the interest for three months in advance was paid and indorsed thereon. Similar payments and indorsements were made on October 28, 1929, and on January 6, 1930. These payments were accepted by the plaintiff without the knowledge or consent of the defendant. No right of recourse against the defendant was reserved. If, on these facts, the defendant was discharged from liability, it is agreed that there shall be judgment in his favor. Transferred by Young, J., without a ruling.
Frank E. Blackburn, of Dover, for plaintiff.
Richard E. Shute, of Exeter, for defendant.
The case is governed by section 120 of the Negotiable Instruments Act (P. L. c. 312), which provides that a person secondarily liable on a negotiable instrument is discharged by any agreement binding upon the holder to extend the time of payment, or to postpone the holder's right to enforce the instrument, unless made with the assent of the party secondarily liable, or unless recourse against such party is expressly reserved. The person "primarily" liable is the person who by the terms of the instrument is absolutely required to pay the same. All other parties are "secondarily" liable. P. L. c. 312, § 191.
Obviously, one who guarantees the payment of a promissory note is only secondarily liable thereon, and a binding extension of time by the holder to the maker without the guarantor's consent operates under section 120 to release the guarantor from liability. Brannan, Negotiable Instruments (5th Ed.) pp. 913, 914; Farmers' & Drovers' Bank v. Bashor, 98 Kan. 729, 160 P. 208; Northern State Bank v. Bellamy, 19 N. D. 509,125 N. W. 888, 31 L. R. A. (N. S.) 149. Such was the rule in this state before the passage of the Negotiable Instruments Law. New Hampshire Savings Bank v. Ela, 11 N. H. 335; Rochester Savings Bank v. Chick, 64 N. H. 410, 411,13 A. 872, and cases cited.
The agreement for extension may he express or implied, oral or written (Cape Charles Bank v. Farmers' Mut. Exchange, 120 Va. 771, 778, 92 S. E. 918), and reception of interest in advance is prima facie evidence of its existence. Crosby v. Wyatt, 10 N. H. 318, 323; New...
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