Morrison v. Kendall
| Decision Date | 14 February 1893 |
| Docket Number | 706 |
| Parties | MORRISON v. KENDALL ET AL |
| Court | Indiana Appellate Court |
From the Laporte Circuit Court.
Judgment affirmed, at the costs of appellant.
M. H Weir and W. E. Higgins, for appellant.
W. B Biddle, for appellees.
The appellant was the plaintiff, and the appellee Edward H Leaming was the defendant in the court below. The action was on a promissory note, executed by the defendant and one David Kendall, by the name and style of Kendall & Leaming. It was dated at Laporte, Indiana, on November 13, 1863, due in twelve months after date, payable to the order of one Ezekiel Morrison. It was indorsed by said Morrison in blank. It appears by the averments of the complaint that David Kendall was dead at the time the suit was instituted. No reason is given for including his name in the complaint. The defendant answered the complaint in three paragraphs. Demurrers were filed to each paragraph and overruled. The plaintiff replied to the first paragraph, and refused to plead further to the second and third, but elected to abide by and stand upon the rulings of the count thereon. There was a submission of the cause to the court, and a finding for the defendant. A motion for a new trial was filed and overruled, and final judgment rendered for the defendant. The errors assigned are the overruling of the demurrers to each paragraph of the answer, and of the motion for a new trial.
We will consider these in their order.
The first paragraph of the answer admits the execution of the note by the firm of Kendall & Leaming, but alleges that the plaintiff ought not to maintain the action against him, for that, after the execution of said note, to wit: on or about July, 1865, this defendant sold his interest in the firm property of the firm of Kendall & Leaming to one Lorenzo Billington, and said firm of Kendall & Leaming was dissolved; that in consideration of the sale and transfer of defendant's interest in said partnership property, and in the adjustment of the affairs of said partnership, the said Kendall & Billington agreed with the defendant, and with said Ezekiel Morrison to assume, pay, and discharge all the debts of said firm of Kendall & Leaming, including the note sued on, then held by Ezekiel Morrison, the payee; that said Billington was then solvent and abundantly able to pay said note and all other liabilities; that in consideration of the promise of said Kendall & Billington, said Ezekiel Morrison, the payee of said note, and then the holder thereof, agreed with the defendant, to accept the liability of said Kendall & Billington in lieu of the defendant, and release defendant therefrom; that in consideration of said promise of said Kendall & Billington, the said Ezekiel Morrison released and discharged the defendant from any liability on said note.
Counsel for both appellee and appellant call this answer a novation. As an answer of novation, we think it insufficient. Novation is the act of making something new. It is the substitution of a new obligation for an existing one. It takes place when a new debtor is substituted for an old one, or when a new obligation takes the place of an old one. In every case of a novation there are four requisites: a previous valid obligation, an agreement of all the parties to the new contract, an extinguishment of the old contract, and a valid new contract. It may take place in three ways: when the debtor and creditor remain the same but a new debt takes the place of an old one; when the debt remains the same but a new debtor is substituted for the old debtor; and where the debt and debtor remain the same but a new creditor is substituted for the old one. The contract of novation, like any other contract, must have a consideration to support it. The extinguishment of the old debt is the consideration for the new contract. Hence it follows that the original obligation or debt, of which novation is sought, must be absolutely extinguished. Unless it is extinguished, the new agreement is wanting in an essential element, and the novation fails. It is also essential in such contract that the discharge or extinguishment of the old obligation takes place simultaneously with and result from the creation of the new obligation. Clark v. Billings, 59 Ind. 508; Bristol Milling and Mfg. Co. v. Probasco, 64 Ind. 406; McClellan v. Robe, 93 Ind. 298; Parsons v. Tillman, 95 Ind. 452; Kelso v. Fleming, 104 Ind. 180, 3 N.E. 830.
The novation attempted to be made by the answer is the substitution of one debtor for another, namely: Kendall & Billington for Kendall & Leaming. To make it a valid novation under the rules above laid down, all of the parties, Morrison the payee, and Kendall, Leaming and Billington must have agreed upon the same terms at the same time, and the debt of Kendall & Leaming to Morrison must have been absolutely extinguished at the moment the contract of novation came into existence. The case made by the answer is wanting in these two elements. The averment is that "Kendall & Billington agreed with this defendant, and with the said Ezekiel Morrison, to assume pay and discharge all the debts of said firm of Kendall & Leaming, including the note sued on, * * * and in consideration of the promise of said Kendall & Billington, said Ezekiel Morrison agreed with this defendant, to accept the liability of said Kendall & Billington in lieu of that of the defendant and release him therefrom." The agreement on the part of Kendall & Billington to assume, pay, and discharge the note in suit, falls far short of a substitution and extinguishment, for though they may have assumed and promised to pay the note, such promise is one made for the benefit of Morrison, and he might sue upon it either with or without their consent, and without releasing the original obligation. The assumption of the debt by Kendall & Billington made them as between themselves and this defendant primarily liable, but there is no extinguishment until the debt is paid. This has been many times decided in this State. Birke v. Abbott, 103 Ind. 1, 1 N.E. 485; Redelsheimer v. Miller, 107 Ind. 485, 8 N.E. 447.
The fact that some third person has assumed a debt does not release the original debtor, nor affect the right of the holder of the note to proceed against the maker. Davis v. Hardy, 76 Ind. 272; Josselyn v. Edwards, 57 Ind. 212; Kelso v. Fleming, supra.
The further allegation that Ezekiel Morrison, in consideration of the promise of Leaming & Billington, agreed with the defendant, to accept the liability of Kendall & Billington in lieu of that of the defendant and release him therefrom, does not show an extinguishment of the original debt or note. For aught that appears, the firm of Kendall & Leaming, and the individual liability of Kendall still exist. Nor does it appear that either Kendall or Billington, who were to be charged with the new debt, ever agreed to the release of the defendant, or that their promise should be substituted in place of the note. Such agreement, according to the pleading, was between the defendant and Morrison only.
The answer has some of the elements of a release, but as counsel for neither the appellee nor appellant have considered it in this aspect, we may be excused if we give this view of it but little consideration. The release of the defendant, if any exists under this pleading, is one that arises from contract, and like novation, it must be supported by a valuable consideration. Fitzgerald v. Smith, 1 Ind. 310; Pope v. Vajen, 121 Ind. 317, 22 N.E. 308.
There is nothing in the pleading to show that the promise of Kendall & Billington is any better than the promise of Kendall & Leaming. The rights of Morrison, the holder of the note, are the same whether the defendant was released or not. In either event, he might sue on the promise or assumption of Kendall & Billington. For the release of the defendant, he received nothing whatever. An averment that the payee did release the maker is the statement of a mere conclusion of law, and not the statement of a fact. Kelso v. Fleming, supra. The court erred in overruling the demurrer to this paragraph.
The second paragraph of the answer pleads the twenty-years statute of limitation. There was no error in overruling the demurrer to it.
The third paragraph avers that in the year of 1868, and four years after the maturity of the note, the defendant removed from the State of Indiana and became a resident of the State of Michigan, and has ever since been a resident of the State of Michigan; that during all the time he has resided in said State of Michigan, the following statute has been and still is in force, to wit:
The defendant further alleges that under said statute of the State of Michigan the plaintiff's cause of action was barred in said State, while the defendant resided therein, and was so barred prior to the 24th day of August, 1875, and was barred by the statutes of this State.
The appellant contends that as the cause of action declared in the complaint arose within this State, the time during which the defendant was a non-resident of the State should not be computed in the period of limitation; that the defendant can not interpose the bar of a foreign statute to defeat an action which arises within this State, and that, as the statute of limitations affects only the...
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