Schieber v. Traudt

49 N.E. 605, 19 Ind. App. 349, 1898 Ind. App. LEXIS 40
CourtIndiana Court of Appeals
DecidedFebruary 23, 1898
DocketNo. 2,388
StatusPublished
Cited by1 cases

This text of 49 N.E. 605 (Schieber v. Traudt) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schieber v. Traudt, 49 N.E. 605, 19 Ind. App. 349, 1898 Ind. App. LEXIS 40 (Ind. Ct. App. 1898).

Opinion

Wiley, J.

— Appellant sued appellees upon a promissory note, of which the following is a copy:

“$1,000.00. Mt. Yernon, Ind., July 24, 1893. Thirty days after date, we or either of us, promise to pay to the order of J. W. Bluff, one thousand dollars and attorney’s fees for collection; negotiable and payable at the office of the Mt. Yernon Banking Co.; Mt. Yernon, Ind., for value received, without relief from valuation or appraisement laws with eight per cent; interest from maturity. Philip Traudt. C. P. Klein & Co. Security.”

The principal on the note, Phillip Traudt, was defaulted and judgment rendered against him for the amount due. The appellees Klein and Wasem were partners, and signed the note in their firm name and capacity. That they were sureties on the note, is conceded.

The complaint avers, that after the maturity of the note the original payee, Bluff, for a valuable consideration, assigned it in writing to appellant, and a copy of the assignement, or rather.of the indorsement, accompanies the complaint as an exhibit. On the back of the note are the following indorsements of the payment of interest: “Paid interest on within note, $80.00 July 24, ’94. Paid interest on within note, $80.00 July 24, ’95.”

Appellees Klein and Wasem answered in three paragraphs. In each of the paragraphs of answer, appellees admit the execution of the note, but aver that they executed it as sureties of Traudt, who was principal, and that said fact was well known to the original payee, and to appellant at the time it was indorsed to him.

In the first paragraph of answer it is charged that on July 24th 1894, after the maturity of said note, the principal thereon paid to appellant $80.00 as one [351]*351year’s interest, when at that time there was only due as interest $73.33 for eleven months, and that the amount in excess thereof, to wit, $6.67, was paid by said Traudt and received by the appellant, as interest in advance from July 24th 1894, to August 24th 1894, and that, as part of said agreement, appellant extended the payment of said note from July 24th to August 24th 1894. The answer then avers that such payment of interest and extension of time of payment were without the knowledge or consent of appellees or either of them. The second paragraph is like the first, except that its averments have reference to the payment of interest, etc., July 24th 1895.

The third paragraph is similar to the first and second, except that it is charged that in consideration of the payment of interest in advance July 24th 1894, appellant agreed with said Traudt to, and did without' the knowledge or consent of appellees, extend the time of the payment of said note one year from said date. Appellant replied in two paragraphs: (1) General denial, and (2), that at the time the sums were paid on said note, as charged in the answer, apr pellant believed that it drew interest from date, and not from maturity, and that said sums were paid to and accepted by him in the honest belief that they were in settlement of interest that had accumulated, and were not accepted by him as payment of interest in advance. Upon the issues thus made, the cause wras tried by the court, _ resulting in a finding and judgment for appellees Klein and Wasem. Appellant’s motion for a new trial, which was .overruled, rested upon the statutory grounds that the decision of the court was not sustained by sufficient evidence; that the decision of the court was contrary to law; and that the decision of the court was contrary to the law and evidence.

[352]*352It being conceded that appellees Klein and Wasem were sureties on the note, then the payment of Traudt, and the acceptance by appellant of' interest in advance, and, in consideration thereof the time of the payment being extended for a definite period, without the knowledge or consent of appellees, would in law release them from liability. The law is well settled upon this question. The general rule, as stated in the 24 Am. and Eng. Ency. of Law, p. 822, is, that “Any agreement upon a consideration between the creditor and the principal for an extension of time to the principal,’ without the surety’s consent, will release the surety.” In a very recent case.it was said by the supreme court of Washington that where the payee of a joint and several note, with knowledge of the fact that one of the makers is a surety, after maturity of the note, accepts from the principal payment of interest to a time in the future, however short, such an acceptance amounts to an extension of the note, which releases the surety, unless made with his consent. Bank of British Columbia v. Jeffs, 15 Wash. 230, 46 Pac. 247. The agreement to extend must be based upon a sufficient consideration, and it has been held repeatedly that the actual payment of interest in advance for an extended period is a sufficient consideration upon which to base an agreement of extension, so as to discharge the surety. It also seems to be the settled law that the acceptance of interest in advance, at or after the maturity of the note, by the payee, is prima facie evidence of a contract to extend the time of the note, and to forbear to sue thereon. Among many cases so holding, we cite the following: Hollingsworth v. Tomlinson, 108 N. C. 245, 12 S. E. 989; Wakefield Bank v. Truesdell, 55 Barb. (N. Y.) 602; Scott v. Saffold, 37 Ga. 384. See, also, Brandt on Suretyship, 305.

[353]*353It will be observed from the authorities cited that the payment of interest in advance by the principal debtor to the creditor, after maturity of a note, is prima fade evidence of an extension of time, and a forbearance to sue. Mr. Brandt says the payment of interest in advance is not of itself a contract to delay, but is evidence of such contract, but he also adds that the contract for • forbearance need not be in express terms, nor proved by direct evidence. Brandt on Suretyship, 304, 305. Our Supreme Court has gone so far as to hold that the payment of interest in advance by the principal debtor, for a definite period, and its indorsement on the note, constitute an implied agreement to give time, and discharge the surety. In Woodburn v. Carter, 50 Ind. 376, the court, by Downey, J., said: “The inference is irresistible that, where a creditor receives a payment of interest in advance on his note from the debtor, there is a contract to extend the time of payment during the period for which the interest is paid.”

In Hamilton v. Winterrowd, 43 Ind. 393, the court said: “The payment of interest in advance by a debtor to the creditor, the latter receiving it as such, implies an agreement for forbearance during the time for which such interest is paid, unless there is some agreement or understanding to the contrary. The counsel for the appellant claim that there must have been'an express agreement for forbearance. We do not think so. The law implies contracts in a great variety of cases. Those that are implied are as binding as those which are expressed by the parties. A very large proportion of the contracts that are made upon the subjects of adjudication are those implied by law. When a debtor pays to his creditor interest in advance on money which he owes him, and the [354]*354creditor receives it as such, in the absence of any understanding to the contrary, the implication is irresistible that the debtor is to have the use of the money during the time for which interest is paid, and that the creditor shall forbear enforcing collection during the same time.

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Related

Hollingsworth v. Hollingsworth
98 N.E. 79 (Indiana Court of Appeals, 1912)

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Bluebook (online)
49 N.E. 605, 19 Ind. App. 349, 1898 Ind. App. LEXIS 40, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schieber-v-traudt-indctapp-1898.