Pleasantville Mutual Loan & Building Society v. Moore

The opinion of the court was delivered by Swayze, J.

This action was upon an absolute guaranty'of payment of a non-negotiable promissory note made by Champion. The defences relied upon were (1) that no notice of Champion’s default in payment was given the defendants; (2) that the plaintiff made a binding agreement upon sufficient consideration to extend the time of pajonent.

Upon the first point we are referred to Douglass v. Byrne, 7 Pet. 126 ; Oxford Bank v. Haines, 8 Pick. 423 ; Talbott v. Gay, 18 Id. 534 .

It is true that some of the authorities hold that notice of default in payment by the principal debtor is necessary to charge the guarantor even upon an absolute guaranty of payment, but this rule has not been adopted in New Jersey, and in the early case of Woolley v. Sergeant, 3 Halst. 262 (1826), Justice Ford carefully stated the reason for not requiring notice in case of a non-negotiable instrument. The same rule was followed in Grover v. Hoppock, 2 Dutcher 191. See, also, *307 Wilkinson-Gaddis Company v. Van Riper, 34 Vroom 394 ; Columbia Electrical Supply Company v. Kemmet, 38 Id. 18.

The weight of authority elsewhere is to the same effect. Walton v. Mascall, 13 Mees. & W. 452; 4 Eng. Rul. Cas. 483, where the American editor has collected many of the American cases.

Even in those jurisdictions where notice of default of the principal debtor is held to be neeessaryq failure to give notice is not- of itself sufficient to discharge the guarantor. Parkman v. Brewster, 15 Gray 271 ; Davis v. Wells, Fargo & Co., 104 U. S. 159 .

In the latter case Justice Mathews said: ' “Both the laches of the plaintiff and the loss of the defendant must concur to constitute a defence.”

The proofs in this case fail to show that any loss was attributable to delay in collecting the note.

The second defence raises a question of fact. If the plaintiff made a binding agreement upon sufficient consideration to extend the time for payment to Champion, the defendants were thereby released from their contract of guaranty. There is no evidence of an express agreement to extend time, but it is said that the premium on the loan, which the plaintiff was authorized to take by statute (Gen. Stat., p. 333, § 18), was payable in monthly installments, and was paid for several months after the maturity of the note, and that this payment of premium is evidence of an agreement to extend the time for payment of the note, and is a sufficient consideration therefor. We do not doubt that if the plaintiff had taken this premium in advance for any month, the necessary inference would be that the time for payment had been extended for that month. The evidence, however, fails to show a payment in advance. Champion received $200, the exact amount of the note. To qualify himself to borrow this amount he bought one share in the then current series of stock, for which he paid $11.55, the value of that share. The next month — March—he paid $3.06, of which $1 was for interest, $1 for dues on the stock and $1.06 for the premium, at the rate of fifty-three cents per $100. *308 Both the interest and premium had already been earned in the month of February. No inference can be drawn from this payment of interest and premium already earned that there was any binding agreement to extend the payment for the month of March, and the case does not show that anjr subsequent payments were made in advance. The defence, therefore, failed.

The trial judge charged that guarantors may compel holders of paper which they have guaranteed to bring suit. This was erroneous. Pintard v. Davis, Spenc. 205; affirmed, 1 Zab. 632.

As no defence had been established, and the plaintiffs were entitled to a verdict, the error was harmless.

The judgment for the plaintiff should be affirmed.

For affirmance — The Chancellor, Chief Justice, Dixon, Garrison, Fort, Hendrickson, Pitney, Swayze, Bogert, Vredenburgh, Vroom, Green. 12. For reversal — None.