Summary
Appeal from the Circuit Court for Washington County.
This suit was instituted by the appellee on the 4th day of February, 1876, against Jonathan Middlekauff and the appellant, to recover the amount of a joint and several promissory note for $765.00, dated March 31, 1866, payable in one year with interest, from date, signed by Jonathan Middlekauff, and the appellant, Lewis Schindel.
At the trial, Schindel pleaded non-assumpsit, limitations, and that he was the mere surety for Middlekauff, and gave him no authority to do any act so as to revive the note against him, and thereby defeat his plea of limitations.
Issue was joined on the first two pleas, and a demurrer interposed to the third plea, which demurrer was sustained by the Court.
The case as against Schindel was tried before the Court, (Motter, J.)
First Exception. — The plaintiff, to sustain the issues on his part joined, gave in evidence the note sued on in this case, and the counsel of the defendant admitted that the signatures to said note were genuine. The plaintiff then proved by himself, that he got said note at the office of Mr. Wiles, his attorney, who had collected some money for him, and as his attorney, and at his request, had re-invested the same for him, the plaintiff, in the said note, and had received said note as attorney for the plaintiff, and that said Wiles gave the note to the plaintiff some time after its execution, and that the plaintiff never personally knew the defendant Lewis Schindel.
And then further to support the issues joined on his part, offered to prove by the plaintiff, that said Jonathan Middlekauff, in each and every year since the making of said note, up to April 1st, 1874, had paid the interest due on said note as said interest became due, and said Jonathan Middlekauff, on April 1st, 1874, promised to pay said note to the plaintiff. The defendant, Lewis Schindel, objected to the said evidence so offered, but the Court overruled the objection and admitted the evidence. The defendant excepted.
Second Exception. — The defendant further to prove the issue on his part joined, offered to prove by the plaintiff, that at the time he accepted the note offered in evidence, he, the plaintiff, knew that Jonathan Middlekauff was principal debtor, and that Lewis Schindel was surety on said note: and the plaintiff, by his counsel, objected, and the Court sustained the objection. The defendant excepted.
Third Exception. — After the evidence in the aforegoing bills of exceptions had been introduced, the plaintiff offered the following prayer.
1. That if the Court finds from the evidence in the cause that the note sued on was executed and delivered by Jonathan Middlekauff and Lewis Schindel to the plaintiff, and that the said Jonathan paid the interest on said note, from the maturity thereof, annually to the plaintiff, and up to April 1, 1874, and that the said Jonathan, on the 1st April, 1874, before the institution of the suit, promised to pay the said note to the plaintiff, then the Statute of Limitations, as pleaded, is no defence in this action.
And the defendant offered the four following prayers.
1. This defendant, Lewis Schindel, by his counsel, prays the Court to say, that if the Court finds from the evidence that the plaintiff is the payee and holder of the note offered in evidence, and that the plaintiff got the said note at Mr. Wiles’, his attorney’s,-office, and that the plaintiff"never personally knew this defendant, and that said note became due on the 31st day'of March, 1861, and that' this defendant made' said note jointly with. Jonathan Middlekauff, and that the said Jonathan Middlekauff paid the interest on said note every yéar up to April 1st, 1814, and said Middlekauff oh April 1st, 1814, promised to pay said note to the plaintiff, then on the pleadings in this case, the plaintiff is not entitled to recover, unless the Court further find from the evidence'that this defendant, Lewis Schindel, at some time within three years before the bringing of this suit, acknowledged said note, or authorized said Jonathan Middlekauff to make said payments, or any of them, or ratified the making of said payments, or any of them.
2. This defendant, Lewis Schindel, by his counsel, prays the Court to say, that if the Court finds from the evidence that the plaintiff is the payee and holder of the note offered in evidence, and that the plaintiff' got said note at the office of Mr. Wiles, his attorney, and that the plaintiff never personally knew this defendant, and that said note became due on the 31st of March, 1861, and that this defendant made said note jointly with Jonathan Middlekauff, and that said Jonathan Middlekauff paid the interest on said note every year up to April 1st, 1814, and said Middlekauff, on April 1st, 1814, promised to pay said note to the plaintiff, then on the pleadings in this case, the plaintiff is not entitled to recover, unless the Court further find from the evidence that this defendant, Lewis Schindel, at some time within six years before the bringing of this suit, acknowledged the said note, or authorized said Jonathan Middlekauff to' make said payments, or any of them, or ratified the making of said payments, or any of them.
3. This defendant, Lewis Schindel, by his counsel, prays the Court to say in this case, that said Jonathan Middlekauff had no authority, only and solely from the fact that he was the joint maker with this defendant, Lewis Schindel, of the note sued on in this case, to bind this defendant Lewis Schindel, by any acknowledgment of said note, or by any promise to pay said note, or by any payment on said note, made by him, the said Jonathan Middlekauff, more than three years after the maturity of said note.
4. This defendant, Lewis Schindel, by his counsel, prays the Court, that if the Court find from the evidence, that Jonathan Middlekauff and Lewis Schindel made the note offered in evidence, and that from the time of its maturity to the year 1874, inclusive, the said Middlekauff annually paid the interest on said note, and frequently promised to pay the principal, nevertheless the plaintiff is not entitled to recover under the pleadings in this cause, unless the Court further find that Lewis Schindel personally authorized or ratified said payments or promises, or any of them, or himself promised to pay said note, or himself acknowledged .the debt evidenced by said note, within three years before the bringing of said suit. And .the Court granted the plaintiff’s prayer, and rejected the defendant’s prayers. The defendant, Lewis Schindel, excepted.
A judgment was entered for the plaintiff, and the defendant appealed.
In regard to the power of one joint maker of a note to deprive the other of the defence of the statute, three distinct and irreconcilable theories are found.
The First. That there is such a power, and that it exists indefinitely. Channell vs. Ditchburn, 5 Mees, and Wells., 494 ; Goddard vs. Ingram, 3 Gale and David, 46.
(Both of these cases are specially repudiated in Ellicott vs. Nichols, 7 Gill, 105, 106 )
Whitcomb vs. Whiting, as construed hy the English cases, was a departure from the letter and spirit of the Statute of Limitations.
In England this interpretation of the statute has been partly corrected by 9 George IV, ch. 14, sec. 1, (Lord T.enterden’s Act,) and entirely by the Mercantile Law Amendment Act of 1858, 19 and 20 Vict., ch. 97, sec. 14.
Since which Acts no co-contractor can bind the other by virtue of any promise, acknowledgment or payment of interest or principal. Smith’s Lead. Cas., (7th Ed.,) vol. 1, part 2, pages 942, 945, 980 and 981; American Notes to Whitcomb vs. Whiting.
In Massachusetts, where this theory was once accepted, (Vid. White vs. Hale, 3 Pick., 292,) it has been repudiated by statute.
(That case, White vs. Hale, has itself been overruled by Sigourney vs. Drury, 14 Pick., 391 ;) Sm. Lead. Cas., Ibid, 984 and 985.
In Maine, also, where the doctrine was held, it has been changed by the revised statutes. Sm. Lead. Cas., Ibid, 981.
So, too, in Vermont. Rev. Stat., ch. 28, secs. 22-27.
The Second. That there is no such power.
. This second theory is held in Supreme Court U. S , Bell vs. Morrison, 1 Peters, 351; in New Hampshire, Exeter Bank vs. Sullivan, 6 N. H., 124; in Ohio, Palmer vs. Dodge, 4 Ohio N. S., 21-36 ; in Pennsylvania, in a series of well considered cases : Coleman vs. Fobes, 22 Pa. St., (10 Harris,) 156; Levy vs. Cadet, 17 Serg. & R., 126; Searigh vs. Craighead, 1 Penn. Rep., 135 ; Howser vs. Irvine, 3 Watts & S., 345 ; Schoneman vs. Fegley, 7 Barr., 433 : Bush vs. Stowell, 71 Pa. St., 208 ; Reppert vs. Colvin, 48 Pa. St., 248.
In New York, where the first theory was adopted in the earlier cases, it has been entirely repudiated, and this second doctrine is now maintained, in cases very ably reasoned. Vankeuren vs. Parmalee, 2 N. Y., (Comstock,) 523 ; Payne vs. Slete, 39 Barbour, 634 ; Shoemaker vs. Benedict, 11 N. Y., 176 ; Winchell vs. Hicks, 18 N. Y, 558 ; Dunham vs. Dodge, 10 Barbour, 556.
Wherein it is said that a part payment by one co-contractor will not bind the other, whether such acknowledgment be made before or after the bar of the Statute.
And see the cases cited: Sm. Lead. Cas., Ibid, 982 and 983.
And the latest case, Layberry vs. Willoughby, Nebraska Sup. Ct., January T., 1877.
The Third. (A middle ground.) That there is such a power, but that it ends when the legal term prescribed by the statute has elapsed.
This doctrine rests “ on the ground that the common interest, which alone makes the admission of one debtor binding on another, ceases whenever the statute takes effect, and leaves both in the position of mere strangers, who are not answerable for each other’s words or acts.” Sm. Lead. Cas., Ibid, 684, and cases cited.
It appears that in most of the States as well as now in England, the second doctrine prevails either by legislation or adjudication.
Whilst comparatively few States adopt the third doctrine, among which is Maryland. See Ellicott vs. Nichols, 7 Gill, 85 ; Newman vs. McComas, 43 Md., 70; McCann, et al. vs. Sloan & Caldwell, 25 Md., 588 ; Lingan vs. Henderson, 1 Bland, 236.
In Ellicott vs. Nichols, the sentence, which, after the conclusion of the reasoning, gives the rule laid down by the case, is, “ the acknowledgment of one partner of a subsisting partnership debt, if made subsequent to the dissolution of the partnership, and after the Statute of Limitations has operated on the demand, is not evidence against his co-partners, so as to deprive them of the benefit of the statutory bar.” (Page 108.)
The words “ the Statute of Limitations has operated on the demand,’’ are used as equivalent to the words, (used all through the opinion in Ellicott vs. Nichols,) “the Statute of Limitations has attached to the note,” which • last words are more clearly defined in Newman vs. McComas, 42 Md., page 79, bottom of page, as equivalent to “ three years after the date of the note,” which the note, in that last case, being payable on demand, are equivalent to three years after the maturity of the note.
The promise of one co-contractor to avoid the Statute as to the other, must have two qualities :
1st. It must have force to revive the debt, i. e., he within three years after maturity.
2d. It must be withiu the issue, i. e., he within three years before suit brought.
That, these incidents are each essential to a binding promise has recently been decided by this Court in Newman vs. McComas. In that case, also, the doctrine of continuing promises was invoked by counsel to bind one late partner by the promise of the other The Court, in deciding how the plaintiff’s prayer should have been drawn, say that the words “promise made before the Statute of Limitations had attached to the note,” are equivalent to the words, “ such promise had been made ivithin three years after the date of the note,” (i. e., after maturity,) and also that ‘‘such promise had been made within three years before the institution of the suit.” That both conditions are “ necessary to remove the bar of the statute thus repudiating the doctrine of continuing promises. Newman vs. McComas, 43 Md., 79 and 80; also, in Smith vs. Caldwell, 15 Rich. (S. C.,) Law, 365.
The distinction taken in some cases, between a new promise being a new contract supported by the old contract, and its being a revival of the old contract, seems to be iCa distinction too thin and subtle to be received with satisfaction.” Vid. opinion of Harris, J., in Carshore vs. Huyck, 6 Barb., (N. Y.,) 583.
This Court having said that the “ new promise alone gives vitality and is substantially the cause of action.” Ellicott vs. Nichols, 7 Gill, 90.
The reasoning in Bell vs. Morrison would have been equally conclusive, omitting the remarks of Mr. Justice Story, about the new cause of action.
In either view, the reasoning of the best considered cases applies with equal force in support of the bar of the statute.
Especially since the modern, and now the only prevailing, view is to regard the Statute of Limitations as a beneficial statute, as a statute of repose, one on which defendants have a right to rely with the same confidence as on any other statute, and the force of which should be extended rather than restricted. Sm. Lead. Gases, 980; Angell on Limit., (6 Ed.,) 283-18 and 20 ; Shoemaker vs. Benedict, 11 N. Y., 176 ; Winchell vs. Hicks, 18 N. Y., 558 ; Green, Executor vs. Johnson, et ux., 3 Gill & Johns., 394 ; Fisher vs. Hamden, Paine, 61.
By the demurrer and the second exception, the appellant raises the question whether a defendant who has signed his name as joint maker of a note, and who is in fact a surety, and is accepted by the payee as such surety only, cannot plead or offer in evidence the suretyship at law in a suit brought by the payee. Yates vs. Donaldson, 5 Md., 389; Ives vs. Bosley, 25 Md., 262; Harris vs. Brooke, 21 Pick., 195.
And if so, is not the statute a defence for such surety when, he has not, within three years before suit brought, acknowledged the note in anyway. Angell on Limit., 218 and 219; Lowther vs. Chappell, 8 Ala., 353; Knight vs. Clements, 45 Ala., 89 ; Emmons vs. Overton, 18 B. Monroe, 643 ; 1 Rob. Pr., 549, 560-1.
There is no moral consideration as to a surety.
Principal cannot hind surety hy acts, &c. Natl. Bank vs. Darragh, 3 Thomp. & Cooke, 138; Hunter vs. Robertson, 30 Ga., 479.
This point is definitely settled on a case exactly like this, by Smith vs. Caldwell, 15 Rich., S. C. (Law,) 365, which was a case at law.
Surprised by a suit on a note on which he was only a surety, ten years after signing it, the equities in this case are all with the appellant.
The signing of the note created a joint obligation as between the party signing and Gates, the payee in the note, equally binding on each of the obligors for the payment of the sum specified in the note. Whitcombe vs. Whiting, 2 Dougl., 652, again announced in the case of Wyatt vs. Hodson, 8 Bingh., 300.
The American Courts have almost uniformly supported the same doctrine. In the case of Hunt, Ex. vs. Bridgman, 2 Pick., 581, the Court decided that “a partial payment made on a note hy the principal promisor, will take the debt out of the Statute of Limitations as to the surety.”
This point was subsequently affirmed hy the same Court in White vs. Hale, 3 Pick., 291. But the leading case in which all the most noted authorities were based upon, is Sigourney vs. Duirey, Jr., 14 Pick., 387, which was also based on a promissory note against several defendants, and the Statute of Limitations pleaded. The Court again decided that “the payment of interest hy the principal promisor in a joint and several promissory note, annually, from the time the note was given, is sufficient to take the note out of the Statute of Limitations as against the sureties.”
The same principle has been announced as the law of Maryland.
In the case of Ellicott vs. Nichols, 7 Gill, 85, the Court reviewed the leading cases on the subject, and decided where one of the parties to a note makes a partial payment on the note before the Statute of Limitations applies, it renews the note against the other promisors, and the Court fully endorsed the rulings in the case of Whitcomb vs. Whiting.
“ There is no difference between accommodation notes, and those negotiated for value.” “ The Court will look to the relation the parties hear to each other on the instrument itself, and determine their liabilities accordingly.” Clopper vs. Union Bank, 7 H. & J., 92 ; Yates vs. Donaldson, 5 Md., 400 and 401.
The whole doctrine is fully reviewed in Angelí on Limitations, commencing at sec. 248, and the notes thereto.
The third plea is a mere repetition of the second plea, being the Statute of Limitations, in a different form, provided the law would release from the payment of the note, upon the facts set forth in said plea; hut admitting all the matters stated in said plea, as the demurrer does, still he would be liable, and hence the Court ruled correctly in sustaining the demurrer. The plea is put in on equitable grounds as stated. But there is no equity in it. It does not allege that time was given by the plaintiff to Middlekauff, without the consent of Sehindel, and that he was in any manner injured or damnified by any act of the plaintiff. It merely asserts that he was surety, and that the Statute of Limitations applied, and that he never did anything, or in any manner authorized Middlekauff to do any act, or make any promises to remove the effect of the Statute of Limitations. In the case of Sigourney vs. Duirey, before cited, the Court sayón page 398: “Some reliance was placed in the argument, upon the fact that the defendant, who pleads the present case, was'q. surety, and tire consideration of hardship was strongly pressed upon the Court.” “We have already remarked, that on a joint and several note as to the promisee all are principals.”
“The case of Hunt vs. Bridgham, in Massachusetts, and most of the English cases cited, were those of sureties, and yet that circumstance was considered as making no difference upon the question of legal liability.” “When a note is given with a surety, it indicates that the promisee wishes and means to have security; it indicates that it is intended for the accommodation of the principal; and with a view to such accommodation, it may reasonably be expected that it will continue beyond the particular time stipulated, and the law binds all parties till payment.”
Syllabus and headnotes are prepared by the reporter or publisher, not the court, and are not part of the opinion.
