Green v. Greensboro Female College.

The law is well settled by adjudications in England and in this State, that a partial payment by one of several makers of a promissory note given for a specific sum takes the case out of the statute as to all, and a like effect follows the payment of interest. Brown Act. at Law, Law Lib. 90.

The indorsement of such payments, before the expiration of the time limited for bringing the action, and when the entry is against the interest of the creditor, is received as evidence of the fact that the money was paid. The rule is founded upon the community of interest among the debtors and the presumption that no one would make a false admission against his own interest. 2 Greenl. Ev., § 444; Woodhouse v. Simmons, 73 N. C. 30.

The same doctrine is declared by this court in Davis v. Coleman, 7 Ired. 424; McKeethan v. Atkinson, 1 Jones, 421; Lowe v. Sowell, 3 id. 67, and in other cases.

In Lowe v. Sowell, PEARSON, J., thus expresses the opinion of the court: "In an action on a joint and several bond, the idea that a plea of payment can be true as to one and not true as to another defendant, necessarily involves a contradiction; because payment by one obligor discharges the debt, and in the very nature of things must support the plea as to all the obligors. An action may be barred as to one defendant and not as to another; but a debt cannot be paid as to one defendant and unpaid as to another."

This was the legal effect of a partial payment in rebutting the presumption of full payment, arising under the statute from the lapse of time unexplained. But it was also decided in numerous cases that a promise by one member of a partnership firm after its dissolution to pay a partnership debt, revived the liability of the other member as well as his own; and in like manner the promise of one maker of a promissory note, made before the statutory bar was reached, arrested the running of the statute as to all, and made the time of such promise a new starting-point. McIntyre v. Oliver, 2 Hawks, 209; 11 Am. Dec. 760; Willis v. Hill, 2 D. & B. 231; Walton v. Robinson, 5 Ired. 341; Davis v. Coleman, 7 id. 424. In consequence of these rulings, the general assembly in 1852 passed an act that no acknowledgment or admission of a partner after the dissolution of the firm, or of a maker of a promissory note after the statutory bar obstructed a recovery, should repel the statute as to the other partners or the other makers. Rev. Code, ch 65, § 22.

Green v. Greensboro Female College.

The purpose and meaning of the act are to withdraw the power of one member of a dissolved partnership, by his acknowledgment or promise to continue or revive the liability of the other, and of a maker of a note by the same means, to remove the protection which the statute had secured to the other makers. It does not undertake to interfere with the legal force and effect of a recognition of the debt by the payment of a part of it.

Such was the state of the law when the new limitations prescribed in the Code superseded those previously existing in their application to causes of action thereafter accruing. By the new statute it is declared that "no acknowledgment or promise shall be received as evidence of a new or continuing contract whereby to take the case out of the operation of this title, unless the same be contained in some writing signed by the party to be charged thereby; but this section shall not alter the effect of any payment of principal or interest." C. C. P., § 51..

We

We are aware of no case in which this clause has been construed by this court, and as it is silent as to the effect a part payment upon the others, we may be aided in examining the adjudications in England upon a very similar enactment in ascertaining its true meaning.

In Wyatt v. Hodson, 21 E. C. L. 302, Chief Justice TILDEN speaks as follows: "Then with respect to payment of principal or interest it provides that nothing herein contained shall alter, take away, or lessen the effect of any payment of any principal or interest made by any person whatsoever,' not confining the effect to the individual paying. Why? Because the payment of principal or interest stands on a different footing from the making of promises which are often rash or ill interpreted, while money is not usually paid without deliberation; and payment is an unequivocal act, so little liable to misconstruction as not to be open to the objection of an ordinary acknowledgment. On the broad construction of the act, we think payment of money by one of several joint contractors not within the mischief or the remedy provided by the legislature against the effect of an oral promise."

* * *

More directly in point is the case of Channel v. Ditchburn, 5 M. & W. (Exch.) 494, in which PARK, B., says: "Since the decisions in Atkins v. Tredgold, and Slater v. Lawson (cited in the argument), the Court of King's Bench have twice decided that payment by one of two joint makers of a promissory note is sufficient to take the

First National Bank of Charlotte v. Lineberger.

case out of the statute as against the other. The first of these cases was that of Burleigh v. Stott, where the defendant was sued as the joint and several maker of a promissory note, and there the court held that payment of interest by the other joint maker was nough to take the case out of the statute as against the defendant; and that it was to be considered as a promise by both so as to make both liable. Since this decision, the Court of King's Bench have come to the same conclusion in the case of Manderston v. Robertson, 4 Man. & Ryl. 440."

Referring to a distinction in the argument drawn between payments made before and after the statute had run, he adds, that in Manderston v. Robertson the payment was made after the six years had elapsed, and yet it was held to be sufficient.

The reservation contained in the section leaves to a partial payment the force and effect unimpaired, which the act before possessed, in continuing the common liability in the light of the decisions to which we have adverted. The act of 1852 in terms confines to the person making an acknowledgment or admission, or doing an act which recognizes the obligation before the bar interposes against a recovery, the legal consequences flowing from either, but does not include such as may be made or done before, and hence does not apply to the facts of the present case.

Upon a full and careful review, we are of opinion and so declare, that the payments of interest on the note, before it was barred by lapse of time, arrested the operation of the statute as to all the makers, sureties as well as principal, and it commenced again to run only from the day when the last payment was made.

This being the ruling of the court below, there is no error and the judgment must be affirmed.

Judgment affirmed.

No error.

FIRST NATIONAL BANK OF CHARLOTTE V. LINEBerger.

(83 N. C. 454.)

Surety-indulgence by creditor to principal usurious consideration.

An indorser is not discharged by an agreement of indulgence by the creditor to the principal debtor founded upon a usurious consideration paid in ad. vance, and reserving his rights and remedies against the indorser. (See note, p. 585.)

A

First National Bank of Charlotte v. Lineberger.

CTION on promissory note against indorser.

Defense, that

after the note became due, and without the knowledge or consent of defendants, plaintiff, for a valuable consideration, made an agreement with the makers, whereby they agreed to extend the time for the payment of the note by the makers for thirty days Thereupon the following issues were submitted to a

or more.

jury:

1. Did the plaintiff at or before the maturity of the note sued upon receive from the makers thereof interest thereon in advance, and if so, when, at what rate, and for what time? Answer - They did; one and one-half per cent per month from maturity until January, 1876.

2. Did plaintiff, in consideration of the payment of interest in advance on the note sued on, agree with the makers to forbear the collection of said note for the time for which interest was so paid? AnswerThey did.

3. Did the defendants have any knowledge of or assent to such agreement to forbear? Answer - They did not.

4. Did the plaintiff at the time of the agreement to forbear as to the maker, reserve its rights and remedies against the indorser? Answer Yes.

5. Has the note or any part of it been paid? Answer-Yes; amount $71.55.

Upon this finding of the jury there was judgment for the plaintiff. Bynum & Grier, for plaintiff.

A. Burwell and Jones & Johnston, for defendants.

ASHE, J. There was no exception taken on the trial to the issues submitted to the jury nor to the ruling of the court upon the introduction of evidence, and the only question for our consideration is, was there a proper judgment rendered upon the finding of the jury.

The principle is well settled that where time or forbearance is given by the creditor to the principal debtor, by a promise or contract which binds him in law and would bar his action against the debtor, the surety is discharged. Because it essentially varies the terms of the original obligation which ceases to be that for the due discharge of which he became surety, and would deprive the surety of the power of instantly saving himself by suit against the debtor,

First National Bank of Charlotte v. Lineberger.

if he should be forced to pay the debt. Pars. on Notes and Bills, 259; Dan. on Neg. Inst., § 1312; Story on Notes, § 14.

But this general principle is subject to qualification. The surety will not be discharged by indulgence given to the principal when at the time of the agreement for forbearance there is an unqualified reservation of the creditor's rights and remedies against the surety. The reason assigned for this doctrine is that the reservation rebuts the implication that the indorser was meant to be discharged, and prevents the rights of the indorser against the maker being impaired. For the indorser after such an agreement may immediately pay the debt and bring his action against the maker, and his consent that the creditor shall reserve his remedy against the indorser is impliedly a consent that such indorser shall have recourse against him. Evans v. Raper, 74 N. C. 639; Rees v. Bennington, White and Tudor, Hare and Wallace Notes, 382; Dan. on Neg. Inst., § 1322; Story on Notes, § 416. These authorities fully sustain the judgment of his honor in the court below, upon the finding of the jury upon the issues submitted.

But there is still another view of the case which is equally strong in support of the judgment of the Supreme Court.

To make an extension of time to the debtor have the effect of exonerating the indorser or surety, it is not merely necessary that there should be an agreement which varies the original contract by postponing the time for its performance beyond that fixed originally by the terms of the obligation, but the agreement for indulgence, if not under seal, must be founded upon a sufficient consideration. It must be such as is legally binding upon the creditor, one that the debtor may enforce against him, either as a cause of action or as a defense, for if he could not the surety or indorser will not be discharged. Pars. on Cont. 240; Dan. on Neg. Inst., § 1315, and Rees v. Bennington, supra, 383. Hence it must be that if the consideration for the forbearance be usurious, when such a contract is void by law, the agreement will not discharge the indorser. Rees v. Bennington, supra, 384, and cases there cited in note; Dan. on Neg. Inst., § 1317; Richmond v. Standcliff, 14 Vt. 258; Vilas v. Jones, 1 Comst. 286, 287.

In this last case BRONSON, J., who delivered the opinion of the court, in reference to some contrariety in the decisions of some of the courts, with respect to the effect which the fact might have upon the rights of the surety, whether the usurious contract was