Walters v. Kraft

• Decision Date: 27 November 1885
• Citation: 23 S.C. 578
• Parties: WALTERS v. KRAFT.
• Court: South Carolina Supreme Court

23 S.C. 578

WALTERS

v.KRAFT.

Supreme Court of South Carolina.

Nov. 27, 1885.

1. Where a principal and sureties gave their joint and several promissory note, upon which, after maturity, the principal debtor, from time to time, made several payments, the legal liability of all the parties to the note was discharged at the expiration of six years from its maturity, and thereafter action could be maintained only on the new promise implied from the partial payments credited on the note.

2. But as such subsequent promise constituted a new contract and a new cause of action, no one is liable except him who made it; the liability of the sureties was not continued by the payments and promises of the principal debtor.

3. The relation of agency does not exist between joint-debtors arising from community of interest; their community of interest is confined to the payment of the debt. Payment by a principal debtor cannot continue the obligation of a surety, without his consent, beyond the period fixed by the original contract.

4. Silman v. Silman (2 Hill, 416) is inconsistent with Smith v. Caldwell (15 Rich., 378), and was practically overruled by this later case.

MR. JUSTICE MCGOWAN, dissenting.

Before WITHERSPOON, J., Richland, April, 1885.

This was an action by Caroline Walters against P. W. Kraft and others, the makers of a joint and several promissory note. The judge refused several requests to charge made by the sureties, and did charge as follows:

1. That if P. W. Kraft had made a payment on the note within six years from its maturity, and this action was commenced within six years from that payment, the defence of the statute of limitations cannot avail the other defendants.

2. That the note carried with it a liability on all the makers for six years from the date of any payment made on it by any of the joint makers within six years from its maturity.

The jury found a verdict for the plaintiff against all of the defendants for $499.17.

From the judgment entered upon this verdict the defendants, Anna C. Kraft and the executors of Hei, duly appealed on exceptions, alleging error in the refusals to charge and the charge as made.Mr. LeRoy F. Youmans, for appellants.

Messrs. Clark & Muller, contra.

The opinion of the court was delivered by

MR. JUSTICE MCIVER.

On May 29, 1872, P. W. Kraft, Anna C. Kraft, and E. F. Hei, executed their joint and several promissory note, whereby they promised to pay to the plaintiff or bearer thirty days after the date thereof five hundred dollars, with interest at two per cent. per month if not paid at maturity. The interest was regularly paid each year by P. W. Kraft, the principal debtor, the other two parties being his sureties, the last two payments of interest being dated, one on June 1, 1877, and the other on June 1, 1878, the latter being acknowledged to be for interest to January 1, 1879, on which day there was another payment by P. W. Kraft on account of the principal. The action was commenced on the note on February 21, 1880, and in the complaint the several payments endorsed on the note were set out, and judgment was demanded for the balance after deducting said payments, together with the interest on such balance. Pending the action the said E. F. Hei died testate, and the same has been regularly continued against his executors.

The defence relied upon by the sureties was the statute of limitations, and the only question raised by the appeal is whether the payments made by the principal debtor, before the statutory period as to the note had expired, would take the case out of the statute as to the sureties. There is no doubt that at one time the courts of this State held that a payment made by one of several joint makers of a note, whether before or after the statutory period had expired, would take the case out of the statute as to the others. Beitz v. Fuller, 1 McCord, 541, following the famous case of Whitcomb v. Whiting, Doug., *629; 1 Sm. Lead. Cas., 318. Subsequently, however, this doctrine was modified, so that while payment made by one of several joint contractors before the statutory period had run out, might have the effect of taking the case out of the statute as to the others, yet that a payment made after the expiration of the statutory period would have no such effect. Steele v. Jennings, 1 McMull., 297;Goudy v. Gillam, 6 Rich., 29;Smith v. Caldwell, 15 Rich., 365.

Again, it is manifest that in the earlier decisions the statute of limitations was, in disregard of the terms of the statute, regarded as raising a presumption of payment, and therefore anything that went to rebut such a presumption was regarded as sufficient to take a case out of the statute. Aiken v. Benton, 2 Brev., 330;Pearce v. Zimmerman, Harp., 305; Beitz v. Fuller, supra, and other cases of that class. But the later decisions, giving effect to the express language of the statute, which declared that the action shall be commenced within the time limited, “ and not after,” treat the statute as an absolute bar to the recovery of the debt, unaffected by any presumption that the debt was actually paid. Reigne v. Desportes, Dudley, 118; Smith v. Caldwell, supra. From this it logically followed that when the statutory period from the maturity of a note has run out before any action is commenced upon it, and reliance is placed upon a subsequent promise, whether express or implied, the action must be upon such promise, whether it is made before or after the expiration of the statutory period, and not upon the note.

As is said by O'Neall, J., in Reigne v. Desportes, at page 124: “The statute directs that the action of debt on simple contract and assumpsit shall be brought within four years next after the cause of said action or suit, and not after; the words of the statute are of plain and obvious meaning, and to give it effect only two questions need be asked: When did the cause of action accrue? Is the suit brought within four years from the accrual of the cause of action? *** If more than four years intervenes between the time at which the party by his contract had the right to demand the payment and the institution of the suit, the bar of the statute is complete and effectual, and the cause of action is gone. But the old debt, as a past consideration, will support a new promise, for notwithstanding it cannot be legally enforced as a cause of action, yet if it has not been paid, the party who contracted it is in honesty *** bound to pay it. This obligation of honesty and morality is a good consideration, and the new promise founded upon it will be enforced; but it is a new cause of action, not as the revival of the old one. For if not regarded as a new cause of action, the words of the statute would prevent it from enabling the party to recover. Regard it as a new contract, a new cause of action, and the case is not affected by either the intent or the words of the statute.” He then goes on to show that a contrary impression had grown up, from the fact that under the old form of pleading in assumpsit, a new promise could be treated as the real cause of action under the general counts in the declaration, and from “many loose expressions *** to be found in the opinions of some of the most learned judges.”

So in Smith v. Caldwell, supra, Wardlaw, J., in laying down certain propositions which are held to be settled, uses this language: “1. That the statute of limitations does not operate by raising a presumption of payment, but by creating a legal bar to the action. *** 2. That where the statutory period, counting from the original accrual of the cause of action, expired before commencement of the suit, a promise shown for the purpose of opposing the plea of the statute, is itself the true cause of action; and this, whether such promise was made before or after the expiration of the period just mentioned. If before, the legal liability was its consideration; if after, the moral obligation. This proposition, under the general form of pleading which is allowed, is, in practice, unimportant, where the declaration is in assumpsit upon an executed consideration; but it is material in the declaration of the rights of parties wherever the new promise, and that alone, stands unaffected by the statute; and from this proposition it follows that payment, admission, and the like are but evidence of a promise to pay, and that whatever is said to revive a debt must operate through a promise expressed or implied.”

It will be observed that these principles, announced by these two distinguished judges in the cases last cited, are deduced from the terms of the former statute of limitations, which required actions to be commenced within the time limited, and not after; but we think that the language of the present statute-“civil actions can only be commenced within the periods prescribed in this title”-is equally imperative, and requires the same construction. It follows, therefore, that this action, not having been commenced within six years from the maturity of the note, cannot be maintained on the note, and the only question, assuming the action to be upon the subsequent promise implied by the payments, about which no question seems to have been raised, is as to whether the appellants are bound by such promise.

If this question be considered apart from authority, we do not see how there could be a doubt about it. If it be true, as we have shown it to be, that the legal liability of all the parties on the note is forever discharged by reason of the failure of the plaintiff to bring her action within six years from the maturity of the note, and that the plaintiff's only cause of action is the subsequent promise implied by the partial payments made by the principal debtor, P. W. Kraft, and credited on the note, then nothing would seem to be clearer than that no one is bound by such promise except the person who made it. If the subsequent promise, as we have seen, constitutes a new contract and a new...