N.Y. Life Ins. Co. v. McKellar

• Decision Date: 26 July 1895
• Parties: NEW YORK LIFE INS. CO. v. McKELLAR et al.
• Court: New Hampshire Supreme Court

44 A. 516

68 N.H. 326

NEW YORK LIFE INS. CO.

v. McKELLAR et al.

Supreme Court of New Hampshire. Merrimack.

July 26, 1895.

Case reserved from Merrimack county.

Action by the New York Life Insurance Company against George A. McKellar and others. On case reserved. Judgment for defendants.

Assumpsit on a promissory note for $290 payable to the plaintiffs at Boston, Mass., in six months, with interest, and dated November 9, 1892. Facts agreed: The note is signed upon its face by one of the defendants, McKellar, while the names of the other defendants, Priest and Bell, are written across the back in the usual manner of indorsements. Priest and Bell, only, defend the suit, and place their defense upon the following grounds: (1) That the note was without consideration as to them; (2) that the note was a Massachusetts contract, and that by Massachusetts law they are discharged by the plaintiffs' failure to give them notice of nonpayment by McKellar; (3) that they were sureties for McKellar, and have been discharged by an agreement between McKellar and the plaintiffs extending the time of payment of the note; (4) that material alterations of the note have been made by the plaintiffs. The note was given under the following circumstances: McKellar was canvassing agent for the plaintiffs, according to the terms of two written contracts,—the first dated January 26, 1891, and the second dated February 29, 1892. McKellar began work under the terms incorporated in the first contract about January 1, 1891, and was to receive as compensation commissions on the policies written, according to terms set out in the contract, or, in lieu of the commissions, on written request, whenever a certain amount of insurance was placed in any week, he might, under the contract, receive a weekly loan of $20. From January, 1891, to February, 1892, McKellar received advances or loans to the amount of $20 per week for himself, and various advances for sub-agents, whether he had placed the required amount of insurance or not. August 8, 1891, after frequent requests by the plaintiffs, McKellar gave a bond to the plaintiffs (filled out by them), with defendants Priest and Bell as sureties, for the sum of $500, conditioned for the faithful performance of McKellar's duties as agent for the plaintiffs. At the date of the bond, McKellar was indebted to the company in the sum of $900, of which $380 was for advances to subagents. When Priest and Bell signed the bond, McKellar informed them that he owed nothing to the company, but no representations were made to or by the company, except so far as McKellar may have made them. On February 29, 1892, the plaintiffs cauceled McKellar's first contract, he being then indebted to the company to the amount of $1,717.88. On that date a new contract was made, by the terms of which McKellar was to receive as compensation commissions at a certain rate on first-year premiums, while commissions on renewals were to be applied to reduce his indebtedness to the company, as specified therein. October 31, 1892, the plaintiffs notified Bell and Priest that the company would hold them for the amount of the bond. As a result, a conference was held in Boston, where it was agreed that the company should receive $204.17 in cash, being the total amount received by McKellar for premiums and not turned over to the company, and a note for the balance of the bond, drawn at six months, with interest, signed by McKellar and indorsed by Bell and Priest. At that time McKellar's total indebtedness to the company was $1,134.63, the balance above the amount of $204.17 being advances made to McKellar and sub-agents. In accordance with this agreement, cash to the amount of $210 was paid to the plaintiffs by the defendants, and the note in suit was delivered to the plaintiffs, and thereupon the plaintiffs canceled and surrendered the bond. The note was written by Bell, signed by McKellar, and indorsed by Bell and Priest, at Derry Depot, N.H., and delivered to the plaintiffs by McKellar at Boston, Mass., where the bond was surrendered.

Sargent & Hollis, for plaintiffs.

Greenleaf K. Bartlett, for defendants Bell and Priest.

PARSONS, J. It is not material whether the defendants Priest and Bell were liable to the plaintiffs upon the bond or not. There is no question but that McKellar was indebted to the plaintiffs, and was liable upon the bond, which was surrendered upon the giving of the note in suit. His liability and the surrender of the bond was a sufficient consideration for the note; and a distinct consideration moving from the plaintiffs to the defendants, who entered into the undertaking prior to the delivery of the note to the payee, is unnecessary. In Savage v. Fox, 60 N.H. 17, the defendant, a married woman, was sued as surety upon a promissory note. The consideration of the note sued was a prior note given by the same person, which she also signed as surety. At the time of signing the first note, she, as a married woman, had no legal capacity to enter into a contract of suretyship, and the note was invalid as against her. The first note being valid against the principal, its surrender coincident with the defendant's contract of suretyship was held a good consideration for the note in suit. It is said: "'The undertaking of one man for the debt of another does not require a consideration moving between them.' There being in this case a sufficient consideration for the note in suit as between the payee and the principal, it is immaterial whether the defendant was liable on the first note or not." Savage v. Fox, 60 N.H. 19. So in the present case the surrender of the bond upon which McKellar was admittedly liable, coincident with the defendants' promise as sureties, furnishes a sufficient consideration for their promise.

The defendants, having signed in blank upon the back of the note before its delivery to the payee, are by the law of this state liable as original promisors, and are not indorsers entitled to notice. Phillips v. Johnson, 64 N.H. 393, 400, 10 Atl. 819; Currier v. Fellows, 27 N.H. 366, 370; Benton v. Willard, 17 N.H. 593, 595; Martin v. Boyd, 11 N.H. 385. But by Pub. St. Mass. c. 77, § 15, "Every person becoming a party to a promissory note payable on time, by a signature in blank on the back thereof, shall be entitled to notice of non-payment the same as an indorser." The defendants Priest and Bell were not notified of the nonpayment of the note at maturity, and claim that their contract with the plaintiffs was a Massachusetts contract, governed by Massachusetts law, and that by the failure to give notice to them, such as indorsers would be entitled to, they are discharged. "The general rule is that the law of the place where the contract is made is to govern,...