Kelly v. Gillespie

12 Iowa 55

• Court: Supreme Court of Iowa
• Decided: June 8, 1861
• Status: Published

Opinion

Wright, J.

If two persons sign a promissory note jointly, or jointly and severally, it is competent for one of them to show, in an action at law, brought thereon, that he was surety for the other, and this he may do by evidence aliunde, it being shown that the payee, knew the fact. (Carpenter v. King, 9 Met. 511, and cases there cited ; 2 Am. L. C. 295; Harris v. Brooks, 21 Pick. 195; Bank of Steubenville v. Hoge, et al., 6 Ohio 17).

When the creditor in such a case, for a valuable consideration, suspends his right of action against the principal debtor, and gives further time for the payment of the note, without the consent of the surety, pending which the principal becomes insolvent and entirely unable to pay the debt, such agreement is a good defense for the surety in an action against him on the note. (See the same authorities and others there cited).

If the consideration thus paid is an additional note of the principal, forming a contract usurious in its nature, such usury does not make the contract a nullity, as the party contracting for the same, can not set up the usury and claim that his agreement to gire time was without consideration. Willard’s Ecp 109.

Following these rules it is held, that the facts stated in defendant’s plea were a good defense to plaintiff’s action, and • the demurrer should have been overruled.

Reversed.