The Bank of Horton v. Brooks

• Decision Date: 08 February 1902
• Docket Number: 11,984. [*]
• Citation: 64 Kan. 285,67 P. 860
• Court: Kansas Supreme Court
• Parties: THE BANK OF HORTON v. C. M. BROOKS AND CALE BROOKS, Partners as C. M. Brooks & Bro., AND JOSEPH BARBER

67 P. 860

64 Kan. 285

THE BANK OF HORTON v. C. M. BROOKS AND CALE BROOKS, Partners as C. M. Brooks & Bro., AND JOSEPH BARBER

No. 11,984. ^[*]

Supreme Court of Kansas

February 8, 1902

Decided January, 1902.

Error from court of appeals, northern department; JOHN H. MAHAN ABIJAH WELLS, and SAM'L W. MCELROY, judges.

Judgments of court of appeals and of district court affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

SURETIES--Promissory Note--Extension of Time of Payment--Release of Surety. Where a holder of a note on which there is a surety agrees with the maker thereof to extend the time of payment, if he, the maker, will enter into a contract with a stranger, the said holder to be the beneficiary of such contract, the fact that by such contract such maker is liable to be made to respond in damages for its breach to the third person--even though the performance of such agreement cannot be specifically enforced--constitutes a sufficient consideration moving from the maker of such note to the holder to support the agreement to extend, and thereby excuse the surety from payment.

M. A. Low, W. F. Evans, and James A. Clark, for plaintiff in error.

W. F. Guthrie, for defendants in error.

CUNNINGHAM, J. JOHNSTON, GREENE, ELLIS, JJ., concurring.

OPINION

CUNNINGHAM, J.:

The Bank of Horton held the note of the Brooks brothers for $ 614.11, on which the defendant Barber was an indorser. After it became due and before the days of grace had expired, and without the knowledge or consent of Barber, the cashier of the bank, Hovey, went with one Leverton to the home of Brooks, where Leverton proposed to purchase 4000 bushels of corn from him. Brooks informed them that he would sell the corn, but that the proceeds of such sale would have to go to pay the Barber note, and Hovey told him that if he would sell the corn to Leverton the bank would extend the note for thirty days, within which time the corn was to be delivered and the proceeds paid upon the note. Thereupon Brooks agreed to sell the corn to Leverton, and, as expressing the contract, a written agreement was drawn up, which is as follows:

"BILL OF SALE.

"Know all men by these presents, that I have this day sold, and by these presents do hereby sell, assign, transfer and set over unto Geo. W. Leverton, his administrators or assigns, 4000 bushels of No. 2 yellow corn, now located on quarter section No. , township No. of range No. , Brown county, Kansas, to be delivered at Germantown, Kan., in crib or on cars, at the option of said Geo. W. Leverton, the purchase-price to be determined by deducting five cents per bushel from the closing quotation on the Kansas City Stock Exchange for a like grade of corn, upon any day between the date of delivery and the 1st day of January, 1897.

"I further agree to file with Geo. W. Leverton, at his office in Horton, Kan., a written acceptance of the day which I may choose to name the price as above stipulated, not later than ten o'clock of the day so selected. I further certify that I have full power to sell and convey the corn herein mentioned; that there are no encumbrances of whatsoever nature or kind against it.

"Payment of ten dollars has been made hereon, receipt whereof is hereby acknowledged.

"In witness whereof, the said grantor has hereunto set his hand and seal, this 8th day of December, A. D. 1896. C. M. BROOKS & BRO."

But a small portion of the corn was ever delivered by Brooks to Leverton, the balance being disposed of by them to other parties for other purposes. The note not being paid by the principals, the Bank of Horton brought this action against them and Barber, the surety, to collect. Barber had judgment for his costs and the bank took the case on error to the court of appeals, where the judgment of the district court was affirmed. (Bank v. Brooks, 10 Kan.App. 576, 62 P. 675.) It was then certified to this court.

Barber set up in his answer the extension granted to Brooks, and also pleaded matter by way of estoppel. The errors here complained of by the bank relate to the defense urged by him arising out of the extension of time by it to Brooks, and cluster about the proposition that no valid and binding extension of the time of the payment of the note was given to Brooks. The fundamental principle that if a creditor shall give to a principal debtor a valid extension...