Macaulay v. Schurmann

22 Haw. 140, 1914 Haw. LEXIS 22

• Court: Hawaii Supreme Court
• Decided: May 29, 1914
• Status: Published

Opinions

OPINION OP THE COURT BY

ROBERTSON, C. J.

(Quarles, J., Dissenting.)

In an action of assumpsit upon a promissory note the defendanbin-error, who was the plaintiff below, recovered a judgment which the plaintiff-in-error, Schurmann, seeks to have reversed. The note, which was for $500, was the joint and several one of the plaintiff-in-error and one McManus, executed in California on September 18, 1907, and due six months after date. The defense was the statute of limitations. Payments endorsed on the note were as follows: January 15, 1908, interest to December 18, 1907, $10; April 6, 1909,-interest to February 18, 1909, $52; January 7, 1911, interest to January 3, 1911, $84.39; January 7, 1911, on account of principal, $15.61; August 20, 1911, interest to April 3, 1911, $9.66. The first payment of interest was made by the plaintiff-in-error, who, a few months later, left California and arrived in Hawaii in July 1908. The other payments were made-by McManus without the knowledge or authorization of the plaintiff-in-error, though the latter had supposed that McManus had paid the note. The action was commenced on September 23, 1912.

The question to be determined is the much discussed one as to whether a payment made by one joint obligor on account of the principal or interest on a debt will start the statute of limitations to run afresh as to a co-obligor. Our statute provides that actions for the recovery of any debt founded upon any contract, obligation or liability, excepting such as are brought upon the judgment or decree of some-court of record, shall be commenced within six years next after the cause of action accrued (E. L. Sec. 1971) but that where the cause of action has arisen in any foreign country action upon it shall be commenced within four years after it accrued (R. L. Sec. 1976). The action against Schurmann, therefore, was barred unless the payments made by McManus served to toll the statute. “Payment of interest is, of course, evidence that the principal is owing np to the date to which the interest is reckoned.” Warren v. Nahea, 19 Haw. 382, 384.

In Whitcomb v. Whiting, 2 Douglas 652, decided in 1781, it was held that in the absence of fraud payment of interest by one of several makers of a joint and several promissory note takes it out of the statute of limitations as against the others, Lord Mansfield saying “Payment by one is payment for all, the one acting, virtually, as agent for the rest; and in the same manner, an admission by one is an admission by all; and the law raises the promise to pay, when the debt is admitted to be due.” That case was criticized by Lord Ellenborough in Brandram v. Wharton, 1 Barn. & Ald. 463, though he admitted its authority, and it remained the accepted rule in England until changed by statute. Burleigh v. Stott, 8 B. & C. 36; Wyatt v. Hodson, 8 Bing. 309. Lord Tenterden’s Act, passed in 1828, limited the effect of written acknowledgments and new promises to the parties making them, and contained the proviso that “nothing herein contained shall alter or take away -or lessen the effect of any payment of any principal or interest made by any person whatsoever.” The rule as to payments was completely changed however by the Mercantile Law Amendment Act of 1856 (19 and 20 Yiet. c. 97) which provided that no co-contractor or co-debtor, whether bound jointly only or jointly and severally with others, shall lose the benefit of the statute of limitations so as to be chargeable by reason only of the payment of any principal or interest by another or others of such co-contractors or co-debtors. Of the early decisions in this country some followed the rule laid down in Whitcomb v. Whiting while others repudiated it as being unsound. In Wood on Limitations (3d ed.), Sec. 285, it is said that “The doctrine of Whitcomb v. Whiting, that an acknowledgment, new promise, or payment, made by one of two or more joint contractors, will remove the statute bar as to all, has practically but little force at the present day, as in many of the States the legislature has expressly overridden it by providing that no acknowledgment, promise or part payment made by one joint debtor shall deprive the others of the benefit of the statute; while in others the same result is practically reached by a provision that no acknowledgment or promise shall be sufficient to revive a debt, unless it is made in writing, under the hand of the party to be charged thereby; and in others, the courts, without any express legislation, have repudiated the doctrine as unsound, predicated upon erroneous reasoning, and opposed to the spirit of these statutes. Especially is this the case in New Hampshire, Pennsylvania, Tennessee, Kansas, Elorida, Maryland, Illinois, and by the United States Supreme Court;, while in Connecticut, New Jersey, Rhode Island and Delaware the doctrine of Whitcomb v. Whiting is still adhered to. It is not necessary to discuss the accuracy of this doctrine, as it has been attacked and also sustained by some of the ablest judges in this country; and the judgment of the profession, as well as of the people generally, as to the wisdom of the doctrine is best evidenced by the circumstance that it has been nearly obliterated by legislative and judicial action.” In a note the author names thirty-two States in which the law has been settled by statutory enactment. The United States Supreme Court case referred to by the author is that of Bell v. Morrison, 1. Pet. 351. The case arose in Kentucky, and the question -was whether the acknowledgment of a debt by one partner, after a dissolution of the copartnership, was sufficient to take the case out of the statute of limitations as to the other partners.. It was held that it was not. Mr. Justice Story, delivering the opinion, said that Lord Mansfield’s reasoning in Whitcomb v. Whiting was “certainly not very satisfactory;” he pointed out that the “English cases decided since the American revolution, are, by an express statute of Kentucky, declared not to be of authority in their courts;” that in Kentucky the question was “quite open to be decided upon principle;” that a review of the Kentucky decisions led to “the most serious doubts, whether the state courts of Kentucky would ever adopt the doctrine of Whitcomb v. Whiting j" and concluded by saying that “this opinion thus expressed is not unanimous, but of the majority of the court; and as it is apparent, from the preceding reasoning, it has been principally, although not exclusively, influenced by the course of decisions in Kentucky upon this subjcet.” In the case at bar, however, we are confronted by section 1 of the Revised Laws providing that “The common law of England, as ascertained by English and American decisions, is hereby declared to be the common law of the Territory of Hawaii in all cases, except as otherwise expressly provided by the Constitution or laws of the United States, or by the laws of the Territory of Hawaii, or fixed by Hawaiian judicial precedent, or established by Hawaiian usage.” On behalf of the plaintiff-in-error it is contended that the trend of cases heretofore decided by this court is such as to require us to adopt the modern doctrine, but we find no case in our reports which can be regarded as a precedent in the decision of the question involved here. The legislature of this Territory having seen fit not only not to pass a statute such as 'has been enacted in England and so many of the States but to expressly enact the common law (with exceptions which do not apply here) we have no option but to apply the rule of the common law. In ascertaining what the common law is we are to consult American as well as English decisions. Ena Estate v. Ena, 18 Haw. 588, 591. And, as pointed out in Dole v. Gear, 14 Haw. 554, 561, the common law consists of principles and not of set rules and admits of different applications under different conditions, but none of the considerations referred to by Chief Justice Frear as reasons for preferring the modern view to the old one on the question there discussed apply here. The English act of 1856 is, of course, too recent to be regarded as a part of the common law. In re Frank B. Craig, 20 Haw. 447, 450. In Cowhick v. Shingle, 5 Wyo. 87, 95, the court said “As a rule the term ‘common law’ means both the common law of' England as opposed to statute or written law, and the statutes passed before the emigration of the first settlers of America. And applying this definition to the matter in hand, 1 am unable to perceive that there is any ‘common law’ rule upon the subject. At common law there was no limitation as to time upon the right to bring a personal action. Such limitations are and always have been pure creations of the statute, and the rule contended for is a rule which grew up and developed in the construction of the statute of 21st. James 1, and in no other way. It was first announced in 1781 hy Lord Mansfield in Whitcomb v. Whiting, and, while any statement of the law made by that great judge is entitled to great weight and respect, his declarations even as to the common law are simply persuasive authority.” We are unable to take that view of the matter. The decision in Whitcomb v. Whiting did not turn upon the construction of the statute of limitations but upon a principle of the law of contracts. That this is so appears from the discussions in cases in which Lord Mansfield’s reasoning has been disapproved. Thus, in Bell v. Morrison, supra, Justice Story said “It assumes' that one party who has authority to discharge has, necessarily, also authority to charge the others; that a virtual agency exists in each joint debtor to pay for the whole; and that a virtual agency exists, by analogy, to charge the whole. Now, this very often constitutes the matter in controversy. It is true, that a payment by one does inure for the benefit of the whole; but this arises not so much from any virtual agency for the whole, as by operation of law; for the payment extinguishes the debt. * * * A person may well authorize the payment of a debt for which he is now liable; and yet refuse to authorize a charge, where there at present exists no legal liability to pay. Tet, if the principle of Lord Mansfield be correct, the acknowledgment of one joint debtor will bind all the rest, even though they should have utterly denied the debt, at the time when acknowledgement was made.” 1 Pet. 368. See also. Van Keuren v. Parmelee, 2 N. Y. 523, 527. And so in the case at bar, although the ultimate question to be decided is whether the defense of the statute of limitations can be sustained, the determination of that question depends entirely upon the preliminary but vital question as to whether in contemplation of law the payments which were made upon this note by McManus amounted to an acknowledgment of or a promise to pay the debt by the plaintiff-in-error, for if the law is that a payment by one maker of a promissory note affects his co-maker to such extent then the defense relied on has failed. The latter question is one of .contract — of agency — and obviously does not involve the construction or application of any provision of our statute of limitations. It seems to be generally conceded that Whitcomb v. Whiting determined the common law on the subject. In Brown v. Hayes, 146 Mich. 474, 476, the court said “At the common law, according to the weight of authority, a payment by one jointly bound was, unless the statute established a contrary rule, sufficient to prevent the running of the statute. The leading case is Whitcomb v. Whiting, 2 Doug. 652. This was followed in Wyatt v. Hobson, 8 Bing. 309, which latter case was cited by Mr. Justice Cooley in Mainzinger v. Mohr, 41 Mich. 685, as establishing the common law rule first enunciated in Whitcomb v. Whiting." And in Cross v. Allen, 141 U. S. 528, 535, the court said “At common law, a payment made upon a note by the principal debtor before the completion of the bar of the statute, served to keep the debt alive, both as to himself and the surety. * * * This is the rule in many of the States of this Union — in all, in fact, where it has not been changed by statute.”

However much we may prefer the rule prescribed by modern legislation, we hold that the common law rule must control and that the payments of McManus which were made within the period of limitation prevented the statute from running in favor of the plaintiff-in-error.

J. Lightfoot for plaintiff-in-error. Holmes, Stanley & Olson for defendant-in-error.

Judgment affirmed.