Grimes v. Osterhoudt — 18 N.Y. St. Rep. 422

Majority

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James H. Grimes, Resp’t, v. Mary A. Osterhoudt et al., Exr’s, etc., App’lts,

(Supreme Court, General Term, Fifth Department,

Filed October 19, 1888.)

Headnote

1. Bills and notes—Contract—Consideration—Promise to perform a LEGAL OBLIGATION DOES NOT CONSTITUTE CONSIDERATION FOR A CONTRACT.

This action was between the successor in interest of one co-partner and the personal representatives of the other, for an accounting and settlement of the co-partnership accounts. During the life-time of the co-partners, the firm became the owner of certain notes, which it indorsed and had discounted at a bank. The notes were dishonored at maturity and duly protested. After the liability of the co-partners as indorsers on “the notes had become fixed, the firm agreed with the bank that the latter should make effort to collect the notes of the makers, and, in event of its failure to collect of the makers, the firm would pay them. Subsequently and after a period of about ten years had elapsed since the notes were dis

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honored, the defendants, the executors of one of the partners, paid the balance remaining unpaid, together with interest. Held, that the agreement of the bank to delay collection of the notes from the firm was without consideration, as the firm were bound to make such payment by their contract of indorsement.

3. Voluntary payment—Payment op a debt barred by statute op LIMITATIONS IS VOLUNTARY.

Held, that the obligation of the firm or its successors, arising from the contract of indorsement, was barred by the statute of limitations at the time when payment was made by the executors of the deceased partner, and that such payment was voluntary and no part of it could be charged against the plaintiff on an accounting.

Appeal from a judgment entered on the report of a referee.

J. R. Jewell, for applets; Charles Cary, for resp’t.

The action is between the successor in interest of one co-partner, and the personal representatives of the other, for an accounting and settlement of the partnership accounts. The co-partners were William Grimes, who died in January, 1877, and Samuel Osterhoudt, who died in November, 1884. In April, 1885, the firm became the owner of certain notes amounting in the aggregate to $2,800, which it endorsed and presented to be discounted by the First National Bank of Olean. The notes all became due on or before January 26, 1876, were not paid by the makers and were duly protested for non-payment.

The referee finds that, soon after the liability of the indorsers thus became fixed, Osterhout, for the firm agreed with the bank that the latter should put the notes in the hands of its attorney for collection, if possible, from the makers, “ and upon its failure to collect from the makers the said Osterhoudt and Grimes would pay the said notes.” The notes were accordingly put in judgment against the makers, and on or before January 8, 1878, $700 was collected thereon by the bank, and applied in reduction of the amount due. No further sum was ever collected thereon from the makers, and on or about the 10th day of April, 1886, the bank demanded payment of the balance from the defendants, executors of Osterhoudt, and on that day, the defendants paid to the bank the sum of $3,000, in full of the amounts remaining due on the notes, with interest.

The referee also finds that the firm was at all times solvent and able to pay all its liabilities, from the time the notes fell due until its dissolution, and that each of the partners, during his life, and his estate, after his death, was solvent and able to pay all his liabilities.

On the accounting, the defendants claimed! to charge the plaintiff with one-half of the $3,000, so paid on the notes and this contention presents the only question made on this appeal.

On that question the referee finds, as a conclusion of law, ‘‘Ghat the defendants are not entitled to be credited with the

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payment of the said sum of $3,000, paid by them to the First National Bank of Olean, for the reason that the claim" of the bank against the firm of Osterhoudt and Grimes, and against Samuel Osterhoudt, as surviving partner of the firm was barred by the statute of limitations before the time of such payment; more than ten years having elapsed since the notes became due, and since" they were indorsed by Osterhoudt and Grimes, and since any payment had been made thereon hy said firm, or either member thereof, and more than eight years having elapsed since the bank should have ascertained that it was impossible to collect any further sum from the makers of the notes, and since it did, in fact, collect anything from them; and the payment so made by said executors was a voluntary payment with which this plaintiff cannot be charged.”

We have no doubt that the referee was entirely right in this conclusion. It is not contended by counsel for the appellant, that if the claim of the bank was barred by the statute and the payment by the defendants voluntary, the plaintiff can be charged with any part of such payment. The contention of the appellants seems to be based wholly upon the agreement of Osterhoudt and Grimes with the bank, which is stated above as found by the referee. But clearly this agreement was of no effect upon the rights of either of the parties. The bank did not relinquish or suspend for a moment its right to collect the notes of the endorsers, because there was no consideration for its agreement to do so. The endorsers assumed no new or added liability by the agreement on their part. They only agreed to pay the notes if, or so far as, they could not be collected from the makers; and this was not more, but less, than they were held to do by their contract of endorsement. The bank was therefore at liberty at any moment to retract its consent to delay, and proceed at once to enforce the collection of the notes against them. The agreement could not operate in any manner as an estoppel because there was no representation of fact by the endorsers which could mislead, or influence the conduct of the creditor.

But even if there had been a consideration to support the agreement by the bank to delay action against the endorsers, the delay was to continue only until the attempt should be made to collect of the makers. Lawton, the cashier, with whom the talk was had, testifies “the substance of it was we were to collect of the makers if possible and failing in that the endorsers agreed to pay the bank. ” The attempt to collect of the makers ended in January 1876, when the last payment was received from them. The allowance by the referee of two years after that time for the bank officers to make up their minds whether they would proceed further with that attempt, was a liberal one; and more than ten

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years had elapsed when the payment was made by the defendants. It was clearly a voluntary payment, of a claim barred by the statute of Limitations, and no part of it can be charged to the plaintiff.

The judgment must be affirmed with costs.

All concur.