Graham v. Negus — 62 N.Y. Sup. Ct. 440

Majority

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JOHN H. GRAHAM and WILLIAM A. GRAHAM, Appellants, v. WILLIAM I. NEGUS and WILLIAM B. C. CARPENTER, Respondents.

Headnote

Acceptance of the note of a debtor for a pre-existing debt does not extend the time of payment of the debt.

The mere acceptance of the note of a debtor, payable at a future time, representing the amount of a pre-existing debt, in the absence of any agreement on the part of the creditor to extend the time for the payment of the debt until the note matures, or of any new consideration for an acceptance of the note in place of the debt, does not operate as an extension of the time for the payment of a debt due at .the time when the note is made and delivered to the creditor.

p. 441

Appeal bj tbe plaintiffs from a judgment, entered, after a trial at tbe New York Circuit before tbe pourt and a jury, in tbe ■office of tbe clerk of tbe county of New York on tbe 27tb day of September, 1888 and from an order denying plaintiffs’ motion for .•a new trial.

Arthur Furher, for tbe appellants.

William F. Macrae, for tbe respondents.

Tbe complaint alleged tbe sale of goods by the plaintiffs to tbe ■defendants between tbe 1st of July, 1887, and tbe last day of January, 1888, amounting to tbe sum of $2,745.40. And it was .alleged that there was due and owing upon this amount, at tbe time ■of the commencement of tbe action, $2,527.55, with interest from the 15th of October, 1887. Tbe answer did not deny the sale and .delivery of the goods by tbe plaintiffs to tbe defendants, but it alleged that tbe goods were sold on credit, which had not expired at tbe time of the commencement of tbe suit. And for a further defense it was alleged that in settlement and discharge of the indebtedness, except as to tbe sum of $285.84, tbe defendants gave ■their negotiable promissory notes to tbe plaintiffs, which bad not matured at tbe time of tbe commencement of tbe action. Fpr this excepted balance tbe court directed a verdict in favor of tbe plaintiffs and thereby rejected tbe residue of their demand.

Tbe allegation that tbe plaintiffs bad sold and delivered tbe goods to tbe defendants was not denied, and it accordingly stood as an .admitted fact in tbe action. And it was for tbe defendants to .establish a defense relieving them from liability for tbe price of tbe .goods before a recovery in favor of tbe plaintiffs could be prevented. They offered no evidence as to tbe fact of tbe goods having been ¡sold upon credit. And it may, by reason of tbe absence of such proof, as tbe facts were alleged in tbe complaint, be assumed that there was no credit extended to tbe defendants for tbe purchase-price of tbe goods. "What they did endeavor to prove by way of defens e was under tbe other subdivision of their answer, alleging that notes bad been delivered to tbe plaintiffs which bad not

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matured at the time of the commencement of the suit. No agreement on the 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 H un, 223 ); Jagger Iron Company 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 contained was no more than promises to pay the indebtedness which had accrued and become-

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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 promises 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 ). 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 tire 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.tosrrrrender them to the defendants. The effect of the delivery of notes of this description, under these circumstances, was considered in Auburn, etc., Bank 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 precedent debt 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, 258.). And this view of the law was maintained and followed in Moore v. Fitz ( 59 N. H., 572 ).

In this case, as the evidence was given upon the trial, there was no.

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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, as the plaintiffs elected to regard them, 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 event.

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

Judgment reversed and new trial ordered, with costs to plaintiffs to abide event.