Graham v. Negus — 29 N.Y. St. Rep. 114

Majority

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John H. Graham et al., App’lts, v. William I. Negus et al., Resp’ts.

(Supreme Court, General Term, First Department,

Filed January 24, 1890.)

Headnote

t. Sale—Extension of time of payment.

In the absence of proof that the goods were sold’on credit or of an agreement to accept the defendant’s notes in satisfaction of the indebtedness therefor, the mere acceptance of such notes will not operate as an extension of credit until the maturity of the notes.

3. Same—Defense.

Plaintiffs sold certain goods to defendants. On being pressed for payment defendants stated that they were short and gave notes for the amount.. No new consideration passed at that time, and no agreement to accept them in satisfaction of the debt was shown. In an action for the purchase price of the goods, Held, that the fact that the notes had not yet matured was no defense.

Appeal from a judgment recovered on the verdict of a jury.

Arthur Furber, for app’lts; William F. Macrae, for resp’ts.

The complaint alleged the sale of goods by the plaintiffs to the defendants, between the first of July, 1887, and the last day of January, 1888, amounting to the sum of $2,-745.40. And it was alleged that there was due and owing upon this amount, at the time of the commencement of the action,' $2,527.55 with interest from the 15th of October, 1887. The answer did not deny the sale and delivery of the goods by the-plaintiffs to the defendants, but it alleged that the goods were sold on credit which had not expired at the time of the commencement of the suit. And for a further defense it was alleged that in settlement and discharge of the indebtedness, except as to the sum .of $285.84, the defendants gave their negotiable promissory notes to the plaintiffs which had not matured at the time of the commencement of the action. ■ For this excepted balance the court directed a verdict in favor of the plaintiffs, and thereby rejected the residue of their demand.

The allegation that the plaintiffs had sold and delivered the goods to the defendants was not denied, and it accordingly stood ■ as an admitted fact in the action. And it was for the defendants to establish a defense relieving them from liability for the price of ■ the goods before a recovery in favor of the plaintiffs could be prevented. They offered no evidence as to the fact of the goods having been sold upon credit. And it may, by reason of the absence of such proof, as the facts were alleged in the complaint, be " assumed that there was no credit extended to -the defendants for the purchase price of the goods.

What they did endeavor to prove by way of defense was under" the other subdivision of their answer, alleging that notes had been delivered to the plaintiffs which had not matured at the time of

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the commencement of the suit. No agreement on tne part of the plaintiffs to extend the time for the payment of the debt until the notes should mature was alleged in the answer. But it stood solely and wholly upon the fact that the notes themselves being in this manner given, did extend the time for the payment of the indebtedness until they respectively matured. One of the plaintiffs was called and examined as the only witness sworn upon the trial, and he was a witness for the defendants. And his testimony was that the notes were not given to him at the time the goods were purchased, but were given after he had tried to collect the debt. That he was then informed by the defendants that they were short, and was asked to take the notes as an accommodation, and these notes were for the amounts of the bills he had rendered. This was the only further evidence appearing in the case, upon which it was held that the taking of these notes precluded a recovery by the plaintiffs for the amount unpaid upon the goods at the time when the notes were received. Neither party requested the court to submit any question of fact to the jury, but each applied for a direction of a verdict in their own favor. And the court, assuming that the plaintiffs were precluded by the receipt of the notes, which were produced and offered to be surrendered at the trial, from recovering the indebtedness for which they were given, directed the jury to render a verdict for so much only of the price of the goods as was not included in these notes. To that direction the plaintiffs excepted, and whether this exception is well founded is the point presented for the disposition of this appeal.

In support of the direction the cases of Claflin v. Taussig, 7 Hun, 223 ; Jagger Iron Co. v. Walker, 76 N. Y., 521 , and Fleischmann v. Stern, 90 id., 110, are relied upon as authorities establishing the legal proposition that the acceptance of the notes operated as an extension of the debt until the time of their respective maturity. And expressions are contained in the opinions in these cases favorable to that as a legal principle applicable to this controversy. But in neither of those cases was the point presented, as it has been by this appeal, whether the notes in and of themselves, without any agreement for the extension of the indebtedness, would be entitled to that effect. What they (meaning the notes in suit) contained was no more than promises to pay the indebtedness which had accrued and become due before they were-given, at future periods of time. No new consideration passed between the parties by or for which the plaintiffs became bound to give this extension for the payment of their debt, but the notes were given and received for the simple reason that the defendants at the time could not pay the amounts they had become obligated to pay for the purchase price of the goods. If the promise to pay in the future had been verbal only, as there was no consideration to sustain them, the plaintiffs after accepting them would have been at liberty at once to disregard the promises and commence an action for the recovery of their debt. This was considered and held to be the law in Parmelee v. Thompson, 45 N. Y., 58 .

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The authorities were there examined and the conclusion, adopted that such a promise would impose no obligation whatever on the part of the creditor afterwards to delay the collection of the debt included in the promise. And that was considered to be the legal rule also in Warren v. Hodge, 121 Mass., 106 . And the circumstances that the promises in this action -were made in writing, and in the form of promissory notes, adds nothing in the way of creating an obligation on the part of the plaintiffs afterwards to extend the time for the payment of the debt. What they were obligated to do by receiving the notes was to produce and surrender them at the trial when the action was brought as it was prosecuted by them for the recovery of the price of the goods. And that obligation they complied with, having the notes present when the trial took place and offering to surrender them to the defendants.

The effect of the delivery of notes of this description under these circumstances was considered in Auburn, etc., Bk. v. Hunsiker, 72 N. Y., 252 , where it was stated with the concurrence of all the judges that the debtor’s notes given on account of a preceding indebtedness produce no extinguishment of the debt itself,

“ unless there is an express agreement to accept the new obligation or security as a satisfaction of the old. One executory agreement is not a satisfaction of another, unless by virtue of some contract between the parties, and this contract cannot be inferred, but must be proved by evidence.” Id., 257-8 . And this view of the law was maintained and followed in Moore v. Fits, 59 N. Y., 572 .

In this case, as the evidence was given upon the trial, there was no proof whatever tending to establish the existence of the agreement required by this statement of the law. And for this reason, as well as the additional fact that there was no consideration whatever for the notes, they were legally inoperative in the way of extending the time of payment for the debt which was due at the time when they were made and delivered to the plaintiffs. The judgment should, therefore, be reversed and a new trial ordered, with costs to the plaintiffs to abide the evenf.

Yan Brunt, P. J., and Brady, J., concur.