in renewal his note as maker, with the original maker as indorser, the latter cannot set up his agreement with the original surety as against a holder who was not a party to the old note or the original consideration.2

And the maker cannot set up the insufficiency of the consideration received by the payee upon his transfer and not questioned by him.3 But an acceptor who sets up the want of consideration, as against a third indorsee, must prove want of consideration not only between himself and the drawer, but also between the drawer and his subsequent indorsee. Where the consideration to the drawer fails, and he notifies the acceptor not to pay the bill, the acceptor may call him in to defend. An indorser, in like manner, cannot set up the want of consideration between the drawer and acceptor. But, upon interrogatories in equity, the defendant may not only be required to answer as to the consideration received by him, but also as to that received by other parties, to the extent of his knowledge."

8

An indorser may set up, against his indorsee, the nonperformance of an agreement between the indorsee and the maker to deposit collateral for the indorser's security. And a maker may set up a subsequent agreement, made by him with the plaintiff, that the note should be paid out of the profits of a certain business; or a contemporaneous writing to the effect that the note should not be paid until the happening of a certain event.10

2 Dougherty v. Mackenzie's Adm'x, 34 Mo. 462.

3 Forestville Baptist Soc. v. Farnham, 15 Hun (N. Y.) 381. supra.

9

4 Whittaker v. Edmunds, 1 Moody & R. 366, 1 Adol. & E. 638.

5 Gilman v. Pilsbury, 16 La. Ann. 51.

• Robinson v. Reynolds, 2 Q. B. 196.

And see § 445,

7 Glengall v. Edwards, 2 Younge & C. Exch. 125; Culverhouse v. Alexander, Id. 218.

8 Baumgardner v. Reeves, 35 Pa. St. 250. But he cannot set up as satisfaction a deposit of collateral by another party to indemnify the accommodation maker. Dougherty v. Mackenzie's Adm'x, 34 Mo. 462.

9 Gleason v. Saunders, 121 Mass. 436. But a contemporaneous agreement, accompanying a note for the purchase of land, that the profits should be divided, cannot be set up in defense. Costelo v. Crowell, 134 Mass. 280.

10 Webb v. Spicer, 13 Q. B. 886. But this does not include written rules of a loan society, not made part of the note. Brown v. Langley, 4 Man. & G. 466. Nor an insurance policy, although the note was made expressly for

12

11

§ 1816. But the maker cannot set up an agreement between his father and the payee for forbearance, or for a transfer of the note; or an agreement to give time on the note; or an agreement that the judgment should be discharged "when notes to be agreed upon are given," such notes not having been given; 13 or an agreement on the part of the payee's agent to pay the maker for time lost in waiting for the consideration of the note.14 And where a bond and mortgage are given in payment of a debt, with a note as collateral, under an agreement not to use the note for a year, and to return either the note or the bond and mortgage within a time fixed, the fact that the holder returned the bond and mortgage, and transferred the note within the year, contrary to agreement, will not be a defense to the note.15 So, the maker cannot set up an agreement with the payee for a novation of the debt, by which the purchaser of land securing it was to take up the note and give another, although performed on the part of the maker and the purchaser of the land.16 So, an accommodation joint maker cannot set up an agreement on the holder's part to look to the co-maker who was accommodated.1 And an indorser cannot set up an agreement on the holder's part to first sue the maker and exhaust collateral given by him.1 But an accommodation indorser may set up the payee's agreement to protect him out of certain funds in hand due to the maker.19

18

17

The admissibility of parol evidence to show another contract by contemporaneous condition or agreement for extension, satisfaction, or release is considered in other parts of this work.2

20

insurance premiums. American Ins. Co. v. Gallahan, 75 Ind. 168; Adams v. Smith, 35 Me. 324.

11 Porter v. Pierce, 22 N. H. 275. 12 Garnier v. Papin, 30 Mo. 243; though it was made after the note Newkirk v. Neild, 19 Ind. 194.

13 Klett v. Claridge, 31 Pa. St. 106. 14 Bunting v. Heilman, 74 Ind. 344. 15 Wood v. Sheehan, 68 N. Y. 365.

16 Kimball v. Grover, 11 N. H. 375.

Even

Nelson v. White, 61 Ind. 139. matured, and on fresh consideration.

17 Although made after maturity. Harris v. Brooks, 21 Pick. (Mass.) 195.

18 Planters' Bank of Ft. Valley v. Houser, 57 Ga. 140.

19 Hawley v. McCredy, 54 Cal. 388.

20 See § 1896 et seq., infra.

Effect of Extension.

§ 1817. The drawer of a bill is discharged by a valid extension of time given to the acceptor.21 In like manner, an extension given to the maker or acceptor discharges the indorser.22 And, if given to the principal debtor, it discharges the surety.23 But the principal cannot set up an extension of time to the surety.24 So, an extension of time to an accommodation acceptor will not discharge the drawer accommodated by the acceptor.25

Undisclosed Suretyship.

§ 1818. An accommodation maker, who is not known to be such, will not be discharged by an extension to the accommodated payee; 26 although the relation between them is that of principal and surety. But, if the accommodation is known to the holder giving the extension, it will discharge the accommodation maker. 27 The knowledge on the holder's part must, however, be at the time of purchase; and, if he purchased the note without such knowledge, his subsequent extension to the payee after learning that the note was made for his accommodation will not discharge the maker.2

21 Moss v. Hall, 5 Exch. 46; High v. Cox, 55 Ga. 662.

28

22 Gould v. Robson, 8 East, 576. And see §§ 767, 768, supra. So, if a demand note is indorsed for the maker's accommodation to obtain a sixmonths credit, and the credit is renewed without the indorser's consent. Smith v. Becket, 13 East, 187.

23 Oakeley v. Pasheller, 10 Bligh (N. S.) 548; Parmelee v. Williams, 72 Ga. 42; St. Joseph Fire & Marine Ins. Co. v. Hauck, 71 Mo. 465; Starret v. Burkhalter, 86 Ind. 439. And see $$ 926, 954, et seq., supra. But the maker of a note secured by his mortgage is not discharged in law by an extension given to a purchaser of the mortgaged premises who had assumed the payment of the note and become in equity the principal debtor, although he may be relieved in equity. Teeters v. Lamborn, 43 Ohio St. 144, 1 N. E. 513. 24 Williams v. Scott, 83 Ind. 405.

25 Collott v. Haigh, 3 Camp. 281. 26 Pinney v. Kimpton, 46 Vt. 80.

27 Taylor v. Burgess, 5 Hurl. & N. 1; Bank of Upper Canada v. Ockerman, 15 U. C. C. P. 363; Same v. Thomas, Id 515. But see, contra, Bank of Montgomery Co. v. Walker, 9 Serg. & R. (Pa.) 229; 12 Serg. & R. (Pa.) 382; Love v. Brown, 38 Pa. St. 307.

28 Hoge v. Lansing, 35 N. Y. 136.

Where the drawer of a bill is the principal debtor, and the acceptor signed it for his accommodation, the latter will be discharged in equity by an extension given to the former by a party having notice. of the accommodation.29 And it has been held that an accommodation acceptor will be discharged at law by an extension granted to the accommodated drawer with knowledge of their relation.30 Where a note is signed by several parties as joint makers, an extension to one will not discharge the others, although they were in reality sureties for him,31 where this was not known to the holder; 32 or even, it has been held, where it was known.33 A surety, who is not disclosed as such, will not be discharged at law in such case without an averment that the relation was recognized by agreement to that effect with the holder. But such extension, coupled with the holder's knowledge of the relationship of the parties, may be set up at law with such averment as an equitable defense, where it would be admissible as a defense in equity.35

34

Extension-What is Sufficient.

§ 1819. To constitute a valid extension of time there must be a binding agreement to that effect. The time given need not, how

36

29 Although such notice was after purchase of the bill, but before the extension. Davies v. Stainbank, 6 De Gex, M. & G. 679.

30 Laxton v. Peat, 2 Camp. 185. Although the acceptor afterwards deposited title deeds to secure the acceptance, and gave the note in suit in order to obtain them again. Bristow v. Brown, 13 Ir. C. L. 201. But the acceptor is not discharged, where the holder expressly reserves his rights against him. Bank of Upper Canada v. Jardine, 9 U. C. C. P. 332.

31 Davidson v. Bartlett, 1 U. C. Q. B. 50; Nichols v. Parsons, 6 N. H. 30. And the fact of suretyship will not be presumed. Mullendore v. Wertz, 75 Ind. 431.

22 Fentum v. Pocock, 5 Taunt. 192; Harrison v. Courtauld, 3 Barn. & Adol. 36. And see § 955, supra.

33 Anthony v. Fritts, 45 N. J. Law, 1. And see Pintard v. Davis, 20 N. J. Law, 205.

84 Manley v. Boycot, 2 El. & Bl. 46.

85 Pooley v. Harradine, 7 El. & Bl. 430; Hubbard v. Gurney, 64 N. Y. 457. 36 Thompson v. McDonald, 17 U. C. Q. B. 304. Of a definite and positive character. Boardman v. Larrabee, 51 Conn. 39. And see §§ 768, 957, et seq., supra.

41

ever, be long, and the mere addition of days of grace is sufficient.37 Payment of interest in advance raises a presumption of agreement. for time so far as the payment extends.38 So, a renewal is an extension of time; 39 or an agreement for a renewal, which is applied for within a reasonable time after the maturity of the original note.** So, it is an extension to take a new note payable at a future day; or a mortgage.42 So, where a renewal is sent, and the original draft retained by the holder without further action until the maturity of the second draft, the jury may find an agreement on the holder's part to give time until then.43 So, if the holder consents to an order for a stay of proceedings beyond the time necessary for him to obtain judgment, it will amount to an extension.**

Extension-What is Not Sufficient.

§ 1820. The time of an extension, however short, must be definitely fixed. An agreement for an indefinite time will not be suffi cient.4 45 So, the maker cannot set up a contemporaneous written

37 Appleton v. Parker, 15 Gray (Mass.) 173.

38 Skelly v. Bank, 63 Conn. 83, 26 Atl. 474; Armendt v. Perkins (Ky.) 32 S. W. 270; Walley v. Bank, 14 Utah, 305, 47 Pac. 147; St. Paul Trust Co. v. St. Paul Chamber of Commerce, 64 Minn. 439, 67 N. W. 350.

39 Curry v. Van Wagner, 32 Hun (N. Y.) 453. Although the original note was to be held as collateral. Dundas v. Sterling, 4 Pa. St. 73.

40 Maillard v. Page, L. R. 5 Exch. 312. But an agreement for one renewal does not entitle the maker to several renewals. Innes v. Munro, 1 Exch. 473. 41 Pratt v. Coman, 37 N. Y. 440; Myers v. Welles, 5 Hill (N. Y.) 463; Robertson v. Allen, 3 Baxt. (Tenn.) 233. At least, prima facie. Holzworth v. Koch, 26 Ohio St. 33.

42 Bank of Upper Canada v. Ockerman, 15 U. C. C. P. 363. 43 Brooks v. Wright, 13 Allen (Mass.) 72.

44 Michael v. Myers, 7 Jur. 1156.

45 "A little longer." Atlantic Nat Bank v. Franklin, 55 N. Y. 235. Or "beyond the day of maturity." Ward v. Wick, 17 Ohio St. 159. Or in a few weeks. McLemore v. Powell, 12 Wheat. 554. Or when the squatters are removed from the land conveyed. Benson v. Harrison, 39 Mo. 303. Or until the maker can pay from the proceeds of lumber, to be sold as fast as possible. Union Nat. Bank v. Cross (Wis.) 75 N. W. 992. Or "if you keep up the interest, as you have done." Haydenville Sav. Bank v. Parsons, 138 Mass. 53. But see, contra, so long as the maker should be assignee of A., Brick v. Campbell, 50 N. J. Law, 282, 13 Atl. 255.