Brooklyn Bank v. Waring

The Assistant Vice-Chancellor.

When W. agreed to give the note for $1000, which he alleges was made solely in consideration of the forbearance of the mortgage debt, the bank had an undisputed claim against him for that debt, and a claim for $3150 more, which he disputed and denied. On a review of the circumstances, I think that the mortgagor has failed to show that the note was given for the alleged forbearance, or as a cover to an usurious transaction.

1. The liability of W. on the note of $3150, if not clear, was a very serious question. It is not necessary for me to decide the *4point, but I must say that my impression is that he was liable. Nelson, J. in Mechanic's Bank of N. Y. v. Griswold, 7 Wend. 165, says “ the object of notice is to advise the indorser of his situation, that he is to be held responsible, so that he may take such steps as he thinks proper to indemnify himself against his liability.” “ Upon the maxim that when the reason for the rule of law does not exist, it ought not to be applied, it has frequently been decided that where the non-payment by the maker and failure of notice to the indorser cannot possibly operate to the injury of the indorser, the omission will not discharge him.” And see Commercial Bank of Albany v. Hughes, 17 Wend. 94, to the same effect.

Now what possible injury resulted to W. in this instance from the omission? He knew the note was not paid. He knew it would not be paid. He came with that knowledge and for that cause, and indorsed the new note prepared to replace the one which was then falling due. If the old note had gone into Mr. Covert’s hands to be protested, and notice had been given, W. would have done no more than he had done already. In fast if it had reached the notary’s hands, the note would not have been protested- Mr. W. would have heard nothing from it. And his situation and the extent of his liability in Dune, 1838, would have been the same precisely as it actually was, with the immaterial exception of the payment of the discount for sixty days, for which his son had provided the check. A defendant in a suit sought to be charged as indorser on a note of $3150 under circumstances like these, might well congratulate himself on being let off for $1000.

2. But suppose Mr. W. was not liable on the note after the 31st of July, 1837, and that the complainants’ suit would have failed. He knew all the facts—he insisted that he was not liable ; yet by the agreement of June 6, 1838, he promised to pay $1000 of the note, and in August following ratified the promise by giving his note for that amount. It is well settled that evidence of such a promise would sustain an action against him on the note for the amount. (Tebbetts v. Dowd, 23 Wend. 379, 411; Davis v. Gowen, 5 Shepley’s R. 387.) Whether put upon *5the ground of waiver, or of a moral obligation which forms a consideration, the consequence is undeniable.

The motives for recognizing and paying a portion of this claim referable to the manner in which the legal liability was lost, (if it were discharged;) are ample to support the note for $1000, and it seems to me that it would be inequitable, and do injustice to Mr. W. himself, to hold that these considerations were of no weight with him, and that the forbearance was the sole inducement for assuming the $1000.

3. There is still another view of this case. The Bank claimed the whole amount of this note against W. The suit at law brought against him, five or six months before the prior mortgages became due, is conclusive to show that the Bank made this claim in good faith, and without the slightest reference to the disposition of it which was subsequently made. The claim was contested, and doubtless with equal good faith. It was then compromised by the payment of less than one-third of its amount. If no other transaction had been connected with it, such a compromise would not have occasioned surprise, and scarcely remark. Probably Mr. W.’s own friends would have declared it a favorable settlement. At all events it is well settled that such a compromise cannot be disturbed. In Russell v. Cook, 3 Hill’s R. 504, it was decided that a note given upon the settlement of a doubtful claim preferred against the maker, will be upheld, as founded upon a sufficient consideration, without regard to the legal validity of the claim. In Stoddard v. Mix, 14 Conn. R. 12, there was a similar decision in a case like the one at bar. There a suit had been brought upon a bill of exchange, against the drawer; and the defence was that the bill had never been presented for payment. The suit was settled by the defendant’s giving his note for a part of the bill without costs.

In Leonard v. Leonard, 2 Ball & B. 171, it was held that the validity of a compromise cannot depend upon a subsequent adjudication of the rights; and equity will not set aside a compromise of doubtful rights on the ground of its being prejudicial to one of the parties to it. And in Steele v. White, 2 Paige, 478, the Chancellor held that when a party in a suit compromises the same, without any fraud or imposition, he cannot be relieved *6from it, although he shows that it was not beneficial to him, or that he had the right to recover in the suit in point of law. The authorities to this effect are very numerous, but these will suffice.

I have no doubt but that the extension of time upon his large mortgage debt, entered into the inducements, which resulted in Mr. W.’s giving the note of $1000. But it is impossible to hold that this was the only or the chief inducement, when there are so many strong and sufficient reasons for the act, which form a valid legal consideration.

The testimony does not prove any imposition or oppression. The first proposition connecting the $3150 note with the mortgages, came from Mr. Kimberly, the friend, and relative of the mortgagor. What one of the sons relates as having been said in that connection, soon after the note of $3150 fell due, must have been an error as to time at least; for the mortgages had then been given but a short time, and would not be due in seven or eight months.

But I need not collate the testimony. It does not add to or vary the agreement, as evidenced by the written instrument executed by the parties.

I have not looked into the point of variance between the usury proved and that alleged in the answer. I have preferred to rest the case upon the merits.

The complainants are entitled to the usual decree for a foreclosure and sale of the premises.