By JUDGE WHITE.
We will first, without reference to the particular situation of the parties, consider the general question, whether an agreement by parol, extending day of payment on a promissory note, is binding, so that suit cannot be brought, until the term of forbearance has expired ? Chitty on Bills, p. 47, in relating the different requisites of bills of exchange and promissory notes, says, that “ if the instrument, on its face, purports to be an absolute'engagement, to pay money at a certain time, no parol evidence of an agreement, at the time, to renew or give indulgence, will be admissible to defeat the action on the bill or note: arid for this, there is ample authority.” But the principle only goes to exclude evidence of a parol qualification, made at the time of the inception of the .bill. For, the same author, on page 292, when speaking of the effect of giving time to the acceptor of a bill, on the -liabilities of the drawers and indorsers, distinctly states, that “if a holder agree to give indulgence for a certain period of time, to any one of the parties to a bill, this takes away his right to call on that party for payment, before the period expires,” &e. By tracing the authorities on this subject, it will be found, that the main reason why securities to notes, and indorsers and drawers of bills, are released from liability, by the holder’s giving day, without their consent, to the principal or acceptor, is, because, by snch an agreement, he puts it out of his power to sue, for a time longer than was originally contemplated; thereby changing.the nature of the contract, and increasing ^[je r¡sj5 0f security.
[487]*487These eases and others, that might be referred to, all assume the principle, that the nolcler of a note may so enlarge the time of payment, as to deprive himself of the right to demand or sue for the money, until that time has elapsed ; and if he can neither demand or sue for it, until then, should a suit, be pro-viously brought, it would be subject to abatement, as if he had sued before the maturity of the note, upon its face. And that this agreement may be by parol, is fairly inferable, from the expressions of the books already quoted; and could be fully shewn, by reference to numerous authorities. I will, however, cite but one, which is the case of Keating v. Price.a There it is expressly decided, “ that evidence of a parol agreement, to enlarge the time of performance of a written contract, previously made, is admissible.” Though this was a contract for the delivery of property, yet, in principle, as to this point, it cannot be distinguished from one payable in money. Thei’e can, then, be no doubt, that if the arrangement, as stated, for giving day, had been made, and the suit was'between the original parties to the note, the plea would have been good in abatement. How, then, does the present situation-of the parties effect the question. As the note is not payable to bearer, and was not transferred, by indorsement, to Robertson, if compelled to sue, he must have brought the suit in the name of the payee, for his use. But, notwithstanding this, from long and well settled principles, his beneficial interest would have been protected by courts of law, against any acts of the mere nominal plaintiffj which might impair his rights of recovery.
If, as alleged in the plea, he was the sole owner of the note, he could have received payment, and given a valid discharge. And, if so, why should he be restrained from making a contract, giving further day of payment? His control over the note was complete; and, therefore, as ample for one purpose as another.
Conceding all this, however, it is said, that such a contract, made by one holding a note, by mere delivery, should not ef-feet the rights of another, who might subsequently acquire possession. — That, as the note would carry with it, no evidence of such an agreement, the rights of innocent holders might be greatly prejudiced. And so they might, if payments were made and not indorsed, to such previous holder, by delivery. And, by the spirit of our statute of 1S12, they would be allowed the payor, if they existed-prior to notice of such subsequent transfer. But, it is insisted, that nothing but the provisions of the statute referred to, of 1812, can authorise this [488]*488defence, between these parlies, and that they are not broad enough to embrace it- This statute, after allowing the assign-ment of various instruments named, provides, ‘‘that in all ac-lions to be commenced on every such assigned bond, &c,, the defendant shall be allowed the benefit of all payments, discounts and sets-off, made, had, or possessed against the same, previous to notice of the assignment, any law, usage, &c. to the contrary notwithstanding.’^ These words are very broad and comprehensive; and the legislature, by using them, evidently intended greatly to enlarge the rights of payors and ob-ligors of notes, bonds, &c. The words “ set-off,” and “ payment,” are oftener used in law, and have perhaps a more definite and precise meaning attached to them, than the word discount. Certain it is, that, even in common .parlance, the two former are more restricted in their signification, than the latter . At all events, it seems to me, that, as used in this statute, and in the connection it is, “discount,” must be understood to mean evey detention or abatement of the claim — or, more properly speaking, every equity against the claim. Prior to this enactment, the law on this subject, is known to have been very different. The single circumstance of the assignment having been made before, or after the maturity of the note, varied, most radically, the defence, which the payor could make When made before, he could avail himself of no payment which he might have made, nor of any equity which he had against the payee; but where the assignment was after maturity, all such defences were let in. The legislature, seeing this-distinction, and esteeming it an evil, no doubt, designed to remedy it, by subjecting notes in the hands of every assignee to the same equities and discounts, as they had previously been,, when held by assignment, after they were due: provided, that such matter of defence existed anterior to notice of assignment. Thus to construe the statute, would be to advance and give effect to its remedial provisions, and that, as I conceive, according to its true spirit.
Taking this, then, to be the proper construction of the act of 1812, the plea, in this case, is good. For, the books are full of authority, that a payor of a note, when sued by an as-signee, to whom it has been assigned, after maturity, is allowed, in defence, to introduce, not merely payments, which he may have made to the payee, or previous holder; and sets-off, which he may have against him, but the broad principle is that any equity, and every defence, which would have been good for him, against the payee, is available against such assignee. [489]*489To this point, one authority will be sufficient, as it is full to the purpose, and refers to many others. In the case of O’Callaghan v. Sawyer,a the court say, “ The set-off ought to have been received.
Free access — add to your briefcase to read the full text and ask questions with AI
By JUDGE WHITE.
We will first, without reference to the particular situation of the parties, consider the general question, whether an agreement by parol, extending day of payment on a promissory note, is binding, so that suit cannot be brought, until the term of forbearance has expired ? Chitty on Bills, p. 47, in relating the different requisites of bills of exchange and promissory notes, says, that “ if the instrument, on its face, purports to be an absolute'engagement, to pay money at a certain time, no parol evidence of an agreement, at the time, to renew or give indulgence, will be admissible to defeat the action on the bill or note: arid for this, there is ample authority.” But the principle only goes to exclude evidence of a parol qualification, made at the time of the inception of the .bill. For, the same author, on page 292, when speaking of the effect of giving time to the acceptor of a bill, on the -liabilities of the drawers and indorsers, distinctly states, that “if a holder agree to give indulgence for a certain period of time, to any one of the parties to a bill, this takes away his right to call on that party for payment, before the period expires,” &e. By tracing the authorities on this subject, it will be found, that the main reason why securities to notes, and indorsers and drawers of bills, are released from liability, by the holder’s giving day, without their consent, to the principal or acceptor, is, because, by snch an agreement, he puts it out of his power to sue, for a time longer than was originally contemplated; thereby changing.the nature of the contract, and increasing ^[je r¡sj5 0f security.
[487]*487These eases and others, that might be referred to, all assume the principle, that the nolcler of a note may so enlarge the time of payment, as to deprive himself of the right to demand or sue for the money, until that time has elapsed ; and if he can neither demand or sue for it, until then, should a suit, be pro-viously brought, it would be subject to abatement, as if he had sued before the maturity of the note, upon its face. And that this agreement may be by parol, is fairly inferable, from the expressions of the books already quoted; and could be fully shewn, by reference to numerous authorities. I will, however, cite but one, which is the case of Keating v. Price.a There it is expressly decided, “ that evidence of a parol agreement, to enlarge the time of performance of a written contract, previously made, is admissible.” Though this was a contract for the delivery of property, yet, in principle, as to this point, it cannot be distinguished from one payable in money. Thei’e can, then, be no doubt, that if the arrangement, as stated, for giving day, had been made, and the suit was'between the original parties to the note, the plea would have been good in abatement. How, then, does the present situation-of the parties effect the question. As the note is not payable to bearer, and was not transferred, by indorsement, to Robertson, if compelled to sue, he must have brought the suit in the name of the payee, for his use. But, notwithstanding this, from long and well settled principles, his beneficial interest would have been protected by courts of law, against any acts of the mere nominal plaintiffj which might impair his rights of recovery.
If, as alleged in the plea, he was the sole owner of the note, he could have received payment, and given a valid discharge. And, if so, why should he be restrained from making a contract, giving further day of payment? His control over the note was complete; and, therefore, as ample for one purpose as another.
Conceding all this, however, it is said, that such a contract, made by one holding a note, by mere delivery, should not ef-feet the rights of another, who might subsequently acquire possession. — That, as the note would carry with it, no evidence of such an agreement, the rights of innocent holders might be greatly prejudiced. And so they might, if payments were made and not indorsed, to such previous holder, by delivery. And, by the spirit of our statute of 1S12, they would be allowed the payor, if they existed-prior to notice of such subsequent transfer. But, it is insisted, that nothing but the provisions of the statute referred to, of 1812, can authorise this [488]*488defence, between these parlies, and that they are not broad enough to embrace it- This statute, after allowing the assign-ment of various instruments named, provides, ‘‘that in all ac-lions to be commenced on every such assigned bond, &c,, the defendant shall be allowed the benefit of all payments, discounts and sets-off, made, had, or possessed against the same, previous to notice of the assignment, any law, usage, &c. to the contrary notwithstanding.’^ These words are very broad and comprehensive; and the legislature, by using them, evidently intended greatly to enlarge the rights of payors and ob-ligors of notes, bonds, &c. The words “ set-off,” and “ payment,” are oftener used in law, and have perhaps a more definite and precise meaning attached to them, than the word discount. Certain it is, that, even in common .parlance, the two former are more restricted in their signification, than the latter . At all events, it seems to me, that, as used in this statute, and in the connection it is, “discount,” must be understood to mean evey detention or abatement of the claim — or, more properly speaking, every equity against the claim. Prior to this enactment, the law on this subject, is known to have been very different. The single circumstance of the assignment having been made before, or after the maturity of the note, varied, most radically, the defence, which the payor could make When made before, he could avail himself of no payment which he might have made, nor of any equity which he had against the payee; but where the assignment was after maturity, all such defences were let in. The legislature, seeing this-distinction, and esteeming it an evil, no doubt, designed to remedy it, by subjecting notes in the hands of every assignee to the same equities and discounts, as they had previously been,, when held by assignment, after they were due: provided, that such matter of defence existed anterior to notice of assignment. Thus to construe the statute, would be to advance and give effect to its remedial provisions, and that, as I conceive, according to its true spirit.
Taking this, then, to be the proper construction of the act of 1812, the plea, in this case, is good. For, the books are full of authority, that a payor of a note, when sued by an as-signee, to whom it has been assigned, after maturity, is allowed, in defence, to introduce, not merely payments, which he may have made to the payee, or previous holder; and sets-off, which he may have against him, but the broad principle is that any equity, and every defence, which would have been good for him, against the payee, is available against such assignee. [489]*489To this point, one authority will be sufficient, as it is full to the purpose, and refers to many others. In the case of O’Callaghan v. Sawyer,a the court say, “ The set-off ought to have been received. The note had long been due and dishonored, when it was indorsed; and, the point has been too long set-tied, and too repeatedly recognised, to require any discussion now, that the indorser took the note,- subject to all the equity and to ‘every defence, which existed'against it, in the hands of the original payee.” Then, as the facts stated in this plea, would have abated the suit, if brought for the use of Robertson, with whom the agreement was made for longer day of payment, they are equally available against the writ sued out for the use of De Jarnette, a subsequent holder. There was, therefore, no error, in overruling the demurrer, below: and the judgment must be affirmed.
JUDGE COLLIER concurs in the result, but not in the' reasoning, of the opinion of the court.
Judgment affirmed.
JUDGE CRENSHAW not sitting.
15 Johnson, 433-17 ib. 76.