William Strong, Registered Public Officer of the Northamptonshire Union Banking Company, v Foster
| Jurisdiction | England & Wales |
| Judgment Date | 23 November 1855 |
| Date | 23 November 1855 |
| Court | Court of Common Pleas |
English Reports Citation: 139 E.R. 1047
IN THE COURT OF COMMON PLEAS AND IN THE EXCHEQUER CHAMBER
S. C. 25 L. J. C. P. 106; 4 W. R. 151. Not applied, Pooley v. Harradine, 1857, 7 El. & Bl. 437; Wright v. Sanders, 1857, 3 Jur. N. S. 507. See Bailey v. Edwards, 1864, 4 B. & S. 772; Ewin v. Lancaster, 1865, 6 B. & S. 576. Referred to, York City and County Banking Company v. Bainbridge, 1880, 43 L. T. 734.
william strong, Registered Public Officer of the Northamptonshire Union Banking Company, v. foster. Nov. 23, 1855. [S. C. 25 L. J. C. P. 106; 4 W. E. 151. Not applied, Pooley v. Harradine, 1857, 7 El. & Bl. 437; Wright v. Sanders, 1857, 3 Jur. N. S. 507. See Bailey v. Edwards, 1864, 4 B. & S. 772; Ewin v. Lancaster, 1865, 6 B. & S. 576. Referred to, York City and County Banking Company v. Bainbridge, 1880, 43 L. T. 734.] To an action on a joint and several "promissory note of the defendant and one S., payable to the plaintiffs at six months after date, the defendant pleaded,-secondly, payment,-thirdly, by way of equitable defence, that he made the note at the request and as surety for S., to secure a debt due from S. to the plaintiffs (a banking company), and without value; that the plaintiffs took the note from the defendant as surety only; that the plaintiffs, whilst holders of the note, without the knowledge or consent of the defendant, for a good and valuable consideration, gave S. time for payment of the note, and forbore to enforce payment thereof; that they could and might and ought to have obtained payment from S. had they required it, and not given him time for the payment; and that the defendant had been and was by means of the premises damnified:-Held, that proof that the plaintiffs had funds to the credit of the principal debtor shortly after the bill became due, and had abstained from applying those funds in discharge of the note, or from communicating to the defendant for three years the fact that the note remained unpaid, -did not sustain either the plea of payment, or the equitable defence set up by the third plea. This was an action by the plaintiff as one of the registered public officers of the Northamptonshire Union Banking Company, upon a joint and several promissory note for 1501. drawn by the defendant and one Samuel Smeeton (since deceased) on the 3rd of June, 1851, and payable to the Northampton Union Bank, or order, six months after date. The defendant pleaded,-first, that he did not make the note,-secondly, payment; and he afterwards obtained leave to add the following:- Thirdly,-"And for a further plea by way of an equitable defence, the defendant says that he made the said note at the request of the said Samuel Smeeton as his surety, to secure a debt due to the said banking company from the said Samuel Smeeton, and save as aforesaid there never was any value or consideration for the [202] defendant's making the said note; and the said note was delivered to the banking company, and accepted by them from the defendant as surety only for the said Samuel Smeeton, and they then had notice and knowledge of the same having been so made by him as such surety: And the defendant further says that the said banking company, whilst holders of the said note, without the knowledge or consent of the defendant, for a good and valuable consideration in that behalf, gave the said Samuel Smeeton time for the payment of the said note beyond the time when the same became due and payable, and forbore to enforce payment of the same during that time, and the said banking company could and might and ought to have obtained payment from the said Samuel Smeeton of the said note, and all moneys due thereon, had they required payment of the same, and not given the said Samuel Smeeton time for the payment of it, and the defendant has been and is by means of the premises damaged." Fourthly,-"And for a further plea the defendant says that the said note was made upon the terms and in consideration that the said banking company should advance to the said Samuel Smeeton money on the security of the same; and the defendant further says that the said banking company did not at any time advance 1048 STRONG V. FOSTER 17C.B. 203. any money to the said Samuel Smeeton on the security of the said note, and the consideration for the making the said note has failed, and, save as aforesaid, there never was any value or consideration for the making of the said note." The plaintiff took issue upon each of these pleas. The cause was tried before Jervis, C. J., at the sittings at Westminster after last term. The facts were as follows :-Smeeton had banked for many years with Messrs. Whitburne, the predecessors of the Northamptonshire Union Banking Company, one Biggs becoming surety [203] for him to the extent of 1501., by signing a joint and several promissory note for that amount, which was renewed from time to time. In June, 1851, the last renewal becoming due, and Biggs declining to continue to be surety, Smeeton got the defendant to join him in the note declared on, which he sent to the banking company inclosed in a letter informing them that it was in exchange for Biggs's note, and that the amount would be paid off at maturity. This note was never entered in the pass-book to the debit of Smeeton: and, when it became due on the 6th of December, 1851, the balance in the books of the company was against Smeeton; but, within ten days after, there was a balance of about 2501. in his favour. . Upon these facts, it was submitted on the part of the defendant, that the note must be considered as paid; or that, at all events, the company were bound in equity to apply the first moneys of Smeeton's which came to their hands after the maturity of the note, to its discharge, or to give the surety prompt notice of its non-payment. His Lordship thought the evidence did not sustain the plea of payment, and disclosed no equitable defence : he therefore directed the jury to find a verdict for the plaintiff for 1571. 10s., the amount of the note and interest. Byles, Serjt., on a former day in this term, obtained a rule nisi for a new trial, on the ground of misdirection, there being evidence to go to the jury on the third plea, and that the verdict was against the evidence on the third plea. He submitted, that, though, as between the principal debtor and the creditor, the evidence disclosed a case of set-off only; yet, as between the creditor and the surety, who had a right to expect that the bill would be placed to the debit of the principal debtor, it clearly amounted to payment. [Crowder, J. Placing it to the debit of the principal would not make it pay-[204]-ment. Jervis, C. J. You clearly cannot at law vary the contract which appears upon the face of the note.] As an universal rule, that does not hold. [Jervis, C. J. I speak with reference to the action upon the written contract.] Suppose there had been an express agreement between the banking company and the surety, that the bill when due should be placed to the debit of the principal debtor, it would, if that had been done, have amounted to payment, as between them. The question is, what had the surety a right to expect the banking company to do under the circumstances. [Crowder, J., referred to Manley v. Boycott, 2 Ellis & B. 46.] Then, the third plea clearly discloses a state of facts which would afford a defence in a court of equity : Law v. The Hast India Company, 4 Ves. 824; 'Newton v. Chorlton, 2 Drewry, 333. [Willes, J., referred to Davis v. Stainbanlc(a).] The rule was granted on the last point only. Knowles and Field shewed cause. The defendant, no doubt, signed the note in question as surety for the running account of Smeeton with the banking company. The defence attempted to be set up by the third plea is, that the defendant, as surety, is discharged by reason of time having been given to the principal debtor. But there clearly has been no such giving of time here as will discharge the surety at law,-viz. under a binding contract to forbear to sue for a definite period : and there are abundant authorities to shew that the rule in equity is the same. The case of Law v. The East India Company, 4 Ves. 824, has little or nothing to do with the question : the Master of the Rolls (Sir R. P. Arden) expressly declined to decide whether the sureties were discharged. The rule is thus broadly laid down by Lord Eldon in Samuell v. Howarth, 3 Meriv. 272, 277,-[205] " The liabilities of sureties are governed by principles which have been long settled in equity, and are now adopted in courts of law : I say now, because the court of Common Pleas formerly held a different doctrine. But at present it is firmly established that the same principles which have been held to discharge the surety in equity, will operate to discharge him also at law. However, as the same relief is to be obtained in both, a court of equity will not send a party (a) Not reported as to this point. 17 C. B. 206. STRONG V. FOSTER 1049 who is suing here to a court of law, for the discharge to which he is equally entitled in this place. The rule is this,-that, if a creditor, without the consent of the surety, gives time to the principal debtor, by so doing he discharges the surety; that is, if time is given by virtue of positive contract between the creditor and the principal,- not where the creditor is merely inactive. And, in the case put, the surety is held to be discharged for this reason, because the creditor, by so giving time to the principal, has put it out of the power of the surety to consider whether he will have recourse to his remedy against the principal or not; and because he in fact cannot have the same remedy against the principal as he would have had under the original contract." That is exactly applicable to the case now before the court. The rule is similarly laid down in Heath v. Key, 1 Y. & J. 434, where...
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