Williams v. Covillaud

10 Cal. 419

Opinion

Baldwin, J., delivered the opinion of the Court.

This case comes before this Court on an appeal from a motion for a new trial overruled in the Court below.

On the fourth of July, 1856, Murray made a note in the usual form, payable to plaintiff, or order, and upon this note C. Covillaud, the defendant, endorsed his name. The note was made payable on the fourth of September after. It was protested, and notice regularly given to defendant.

The defendant showed, in defence, that the note bore on the back of it the guaranty of Field, in these words : “ For value received, I guaranty -the payment of the within note within sixty days from date. October 29,1856.” Plaintiff read his note, and rested. For defence, Eugene Dupré testified that witness was employed by an agent of Wells, Fargo & Co., to protest the note at the maturity of the sixty days mentioned in the guaranty, and did protest it, and gave notice. After witness had protested the guaranty, the plaintiff came to the office of witness, and said that Oovillaud did not know of the guaranty, that plaintiff was aware of. He further stated that he had extended the payment sixty days in consequence of the guaranty, and that Murray and Field said it was all right.

Murray testified that he never saw the guaranty until months after it was given. It was not given at his request, nor upon any arrangement with Williams, the holder of the note. Witness did not make any contract with Williams, the holder, for the extension of the note; nor was this guaranty given upon any agreement whatever with Williams and himself. The first time he ever knew of its existence, to the best of his recollection, was when Dupre came to protest the note at the termination of the sixty days.

The principle of law applicable to these facts, is thus stated by Mr. Parsons, in his work on contracts, (1 vol., 512 :) “ It is well settled, that mere delay, without fraud, or agreement with the principal, does not discharge the' surety. (Hunt v. United States, 1 Gallison, 32; Naylor v. Moody, 3 Blackf., 93; Hunt v. Bridgham, 2 Pick., 581; Townsend v. Riddle, 2 New Hamp., 448; Leavitt v. Savage, 16 Maine, 72 ; Freeman’s Bank v. Rollins, 13 Maine, 202 ; Johnston v. Searcy, 4 Yerg., 182 ; Dawson v. Real Estate Bank, 5 Ark., 283; Montgomery v. Dillingham, 3 S. and M., 647; People v. White, 11 Ill., 342; Dorman v. Bigelow, 1 Flor., 281.) To have such effect, there must be an actual agreement between the creditor and the principal, to extend the time of payment. (Hutchinson v. Moody, 18 Maine, 393; Fuller v. Milford, 2 McLean, 74; Greely v. Dow, 2 Met., 176; Wagman v. Hoag, 14 Barb., 232.) And the agreement must be upon sufficient consideration, and must amount in law to an estoppel upon the creditor sufficient to prevent him from beginning a suit before the expiration of the extended time; and when such agreement is made, the surety is discharged. (Leavitt v. Savage, 16 Maine, 72; Bailey v. Adams, 10 New Hamp., 162; Hoyt v. French, 4 Foster, 198; Joslyn v. Smith, 13 Verm., 353; Wheeler v. Washburn, 24 Verm., 293; Chace v. Brooks, 5 Cush., 43; Hoff man v. Coombs, 9 Gill, 284; Payne v. Commercial Bank, 6 S. and M., 24; Newell v. Homer, 4 How., (Miss.,) 684; Coman v. State, 4 Blackf., 241; Farmers’ Bank v. Raynolds, 13 Ohio, 84; Haynes v. Covington, 9 S. and M., 470; Anderson v. Marmon, 7 B. Monr., 217; Sawyer v. Patterson, 11 Ala., 523 ; Bray’s Ex’rs v. Brown, 22 Ala., 263; Mass v. Hall, 5 Exch., 46; Phillips v. Rounds, 33 Maine, 357; Thomas v. Dow, Ib., 390; Turrill v. Boynton, 23 Verm., 192; Bangs v. Strong, 4 Coms., 315; Miller v. Stern, 12 Penn., 383; Mitchell v. Cotton, 3 Florida, 134; Burke v. Cruger, 8 Tex., 60.) Therefore, a surety in a specialty is not discharged by a parol agreement between the creditor and the principal, on the day the debt became due, to allow the principal one year more for payment. (Tate v. Wymond, 7 Blackf., 240.) But the agreement for extension must not only b.e valid .and binding in law, but the time of the extension must be definitely and precisely fixed. (Miller v. Stern, 2 Barr, 286; Parnell v. Price, 3 Rich., 121; Wadlington v. Gary, 7 S. and M., 522 ; Gardner v. Watson, 13 Ill., 347; Waters v. Simpson, 2 Gilman, 570; People v. McHalton, Ib., 638; McGee v. Metcalf, 12 S. and M., 535.) And the sureties are not discharged by the giving of time to the principal, if a right has been reserved, in the contract, to proceed against the sureties at any time. (Wyke v. Rogers, 12 E. L. and E., 163; Neile v. Hoag, 24 Verm., 46; Hubbell v. Carpenter, 1 Seld., 171; Wagman v. Hoag, 14 Barb., 232.)”

Considering this irregular endorsement sufficient to charge the defendant, as an ordinary endorser, as seems to be agreed by the counsel on both sides, and conceding, for the case, that there is no distinction as to the point of defence—the extension of time to the maker—between an endorser and surety, the question arises, whether the finding of the jury, upon the facts stated, should stand. To set aside the verdict, it must be clearly against the evidence. It has been seen, that the mere extension of time to the maker is not a sufficient plea to discharge the surety, or endorser. These things must concur: an extension of time, on an agreement with the maker, founded upon a valid consideration, and such as will suspend the right of action against the maker. Applying these principles to the proofs, we come to inquire whether the facts make out the defence. It is the duty of the Court and the jury to reconcile the evidence, when it can be done, and to give effect to all of it, when the nature of the case will admit of such a disposition. It is very true, as the counsel for the respondent suggests, that a jury are not bound to accept positive statements of witnesses, though swearing directly to the fact, against the weight of circumstances. But when the positive testimony is not really inconsistent with those circumstances or the inference naturally drawn from them, but the direct testimony and the circumstances may reasonably be made to harmonize, a verdict rendered against the direct proofs would, in effect, be a verdict with nothing to support it. How stands the case in this view ? The point of inquiry, in this aspect of the case, is not, we repeat, whether there was an agreement for this extension of time to the maker: this fact, though far from clear on the proofs, may be here safely conceded. But the real question is, was this extension given on agreement by the holder with the maker ? And of this there is not the slightest legal proof, in the record, and the evidence, as we have seen, is positive and direct to the contrary. We say, there is no legal proof. It is true that the counsel relies with confidence upon several cases which, he supposes, raise the presumption of an extension to the maker from the taking of fresh security. Hill v. Bostick, (10 Yerger, 415,) is one of the cases. The Court say : “It is certainly true that if the holder of a note take a fresh security, and agree to give time, he thereby discharges the endorsers. If there be no express agreement for time, but a further security, payable at a future time, is received, that would, in general, imply an engagement to wait until it becomes due.” But these general expressions must be construed in reference to the facts which elicited them. The Court did not mean to say that if one man guaranties another’s note, past due, to be paid within a given time, this guaranty implies an agreement by the holder with the maker of the note to wait on the maker until the time limited in the guaranty. The case in Yerger was that of a new contract, made between the maker and the holder. The fresh security was the new contract with the maker. So, in Baker v. Walker, (14 Mees, and Wels. E. R., 468,) the fact was that the creditor held a judgment, and took from Ms debtor his promissory note, payable at a certain time, and it was held that he thereby entered into an agreement to suspend his remedy for that period. Putnam v. Lewis, (8 Johns., 389,) holds that the acceptance of the debtor’s promissory note is a giving of time on the debt until the note is due. (See, also, 21 Wendell, 451.)

It has been seen that the guaranty in this case does not purport to secure time to the maker, or to be otherwise made for his benefit. He was no party to it. It was an independent agreement. It was made after the maturity of the note. It was not founded on any consideration connected with the execution of the note, so far as appears by the record. From anything appearing on the face of the writing, it may as well have been given for the benefit of Covillaud as of Murray. It stipulated for no time for either maker or endorser. It purports to be given on a consideration, running directly from the plaintiff to the guarantor. So far as we can see, it was the interest of the guarantor that the money should be made as soon as possible out of the other parties to the note, as thereby the liability of the guarantor would be saved. There is no presumption of'law that a guaranty like this is for the benefit of the maker. It is like any other contract which is undertaken for a money consideration. The inference, if there is any, is, that like other transactions of business, the parties entering into it do so because it is to their interest. If A has paper which he desires to be made more secure by a new contract, he may, as is often done, give another a premium to guaranty it; or the other may be, in some way, interested in insuring it, or some moral, honorary, benevolent, or friendly motive may influence him; or, being agent in taking the security, and having full confidence in the goodness of the note, he is willing to satisfy the principal by guarantying it. But this motive, whatever it may be, is not guessed at by the law, which does not raise a presumption from such loose surmises, some of which may be more or less probable, but leaves the fact to be established by proof, when necessary. Presumptions are the conclusions which the law draws from acts which leave no reasonable question of the intent, or motive. But neither in fact nor in law, would it be logical to infer, from the mere fact that one man guaranties another’s contract, to be performed by a given time, on a consideration from a third, that this guaranty was for the benefit of the contractor, or for an extension to him of the time of the performance of the contract. Still less that this contract was a contract with the contractor, or was the consideration for one.

This being the case, the greater portion of the argument of the counsel for the respondent is left without support. The mere fact that the holder, having a good note satisfactorily guarantied and drawing a fair rate of interest, rests without suit until the period of guaranty has passed, is not a very pregnant circumstance to prove that there had been a contract made with the maker to wait until that period. It seems he waited nearly two months without any guaranty. Nor is the loose testimony as to the declarations made by the holder and others, of much weight. Doubtless, when Williams took the guaranty for the payment of the note within sixty days, he considered that the note was extended for that time, intending to look to the guaranty in the first place, instead of suing at once; and this he probably would have done whether bound to so wait or not.

The whole argument on the facts may be thus condensed: Williams held an overdue note of Murray, endorsed by Covillaud. Field guarantied the payment in sixty days after date of guaranty; Williams said he had extended the note on the guaranty; no suit was brought on the note until after the sixty days. Inference: that this guaranty was given for the purpose of the extension, and as a consideration for it; and, inference again : that this was agreed (not understood) between Williams and Murray, (not Williams and Field,) on this consideration; and that these inferences are strong enough to prevail against the positive testimony of an unimpeached witness that there was no such agreement. It will be seen that the inference is just as strong that Field guarantied for Covillaud as for Murray; for though Williams said Covillaud knew' nothing of the guaranty at the time it was given, Murray says the same thing of himself. The mere statement of the case in this form is enough to show the error of the ingenious argument of respondent's counsel. It seems to us that it can scarcely be contended that this slender material of fact raises the proof of all the terms of a contract on good consideration, made for a definite extension of time, between the holder of the note and Murray, and which contract estopped Williams from suing on this note, especially in the face of positive, unimpeached testimony to the contrary. It will be seen that even if the guarantor bargained expressly for this extension for Murray, this would not be sufficient, for this would be a mere collateral contract, not estopping the holder from suing. (See the cases before cited.) To illustrate the insufficiency of this proof to justify a finding of the fact of the required contract, it is only necessary to put it in the form of a special pica or agreed statement, and its insufficiency at once appears.

The positive testimony, then, is in substance uncontradicted. A witness testifies that no agreement was made with the maker to extend the time, and we. have seen that the circumstances relied on by the respondent are really not inconsistent with the direct proof.

It must be remembered that this is purely a technical defence. It is not pretended that this was not a just debt of Oovillaud, or that he was not legally bound to pay it, or that this extension of time has operated in the slightest degree to his injury. He stands on strict law for his plea. He can not complain that he is held to strict law—that he should be required to yield to technical exactness, when upon technical right he relies for his escape from this liability. To this standard we have subjected his ease in this examination of it, and we think we have shown that he has not come up to the legal requirements in his proofs.

We are of opinion that the verdict was clearly contrary to the evidence.

Judgment reversed, and cause remanded.

Terry, C. J.—I concur in the judgment.

[Field, J., having been counsel in the Court below, did not sit in the case.]