Dickson v. Gourdin

The opinion of the court was delivered by

Mr. Justice MoIver.

This is the second appeal in this case, and for a full statement of the facts, reference may be had to the case as reported in 2 S. E. Rep., 303, as well as in 26 S. 0., 391. It is sufficient now to state that the action was on a joint and several bond, on which Robert N. Gourdin was principal and TIenry Gourdin was surety, which became payable on the 27th of April, 1857, and that suit was commenced on the 12th of April, 1885. The interest on the bond, however, was regularly paid up to the 27th day of April, 1884, which interest, as appears from the statement of facts agreed upon, “was paid by the checks of the firm of Gourdin, Matthiessen k Co., and charged to R. N. Gourdin, entered and appearing on their books (and within the knowledge of H. Gourdin, a partner).” There was, however, no payment ever in fact made by H, Gourdin personally, “unless the above be such.”

The real question is as to the effect of these payments: whether they were sufficient to rebut the presumption of payment of the bond arising from lapse of time, so far as H. Gourdin or his estate is concerned. At the last trial appellants offered certain additional testimony for the purpose of showing that IT. Gourdin acted as if the existence of this bond and his liability thereon had entirely escaped his memory. The case was heard by Judge Eraser, by consent, without a jury, who held that the additional testimony which had been taken subject to exception, was incompetent, as the fact it was intended to establish, if admitted, could not affect the liability of Henry Gourdin, and in conformity to the former decision of this court, he rendered judgment against the executors of ITenry Gourdin for the balance due on the bond, a judgment by default having been rendered at the former trial against the other defendant, Robert N. Gourdin.

The executors appeal upon the several grounds set out in the record. The first assigns error in holding that the testimony above referred to as additional testimony was incompetent. There was clearly no error in this, not only for the reason assigned by the Circuit Judge, but also because it was negative in its character and did not tend to establish the fact proposed to be established, and a portion of it was nothing more than an expression of the belief of the witnesses. Eive witnesses were examined, and assuming that all of them were well acquainted with the private affairs of Mr. Henry Gourdin, what does their testimony amount to ? The first witness said: “I have no recollection of ever having heard Mr. Henry Gourdin’s name mentioned in connection with the bond.” The second: “I did not know that Mr. Henry Gourdin was associated with the bond.” The third: “I have never known, and till the past few months have not heard, of Mr. H. Gourdin’s being on a bond of Mr. Robert N. Gourdin.” The fourth, speaking of Mr. H. Gourdin: “Not more than a year or two before his death he gave me a full statement of his debts and assets. He didn’t put down the bond of R. N. Gourdin to O’Hear as one of his debts. I am confident that he was ignorant that he was on. the bond.” The fifth witness, Mr. R. N. Gourdin himself, said: “It had escaped my memory that Mr. Henry Gourdin was on the bond. In all my conversations with him on the subject of the bond, it was spoken of as my bond. I am confident that it had escaped his memory as absolutely as it had mine.”

But even assuming that this testimony was sufficient to establish the fact that Mr. Henry Gourdin had entirely forgotten that his name was on the bond, we are at a loss to perceive its pertinency to the issue involved in this case. To use the apt and expressive language of the counsel for respondent: “Legal liability cannot be made to depend upon the memory of the debtor, nor can his forgetfulness discharge the debt.”

It is contended, however, that the Circuit Judge erred in holding that, even conceding the fact to be what the proposed testimony was designed to establish, he was bound to render judgment against the executors under the former decision in this case. This position is based upon the unfounded assumption that the former decision of this court rested upon the fact that. H. Gourdin knew all the time he was a surety on the bond. It is difficult to understand how such a view could be taken of that decision. On the contrary, it is manifest from the most casual reading of that opinion that it rests upon the legal proposition that payments by the principal upon a joint and several bond operate to rebut the presumption which arises after the lapse of twenty years from the maturity of the bond that it has been paid, as to the surety as well as the principal, and it is only towards the close of the opinion that anything is said in regard to the admissions of one being, in fact, the admissions of the other, because probably known to and acquiesced in by the other.

But the language in which this is said shows clearly that the court did not rest its decision upon any such ground. “The case at bar seems to be one in Avhich it could almost be said that in fact, as Avell as in laiv, the admissions of one Avere the admissions of the other;” and then folloAvs a statement of the circumstances pointing to such a conclusion. Now, the use of the word “almost” shoAvs clearly that the court did not intend, and could not properly be understood to have intended, to rest its conclusion upon a fact of which it could only be said that it-Avas almost established. Then, too, the expression, “that in fact, as well as in lato, the admissions of one Avere the admissions of the other,” manifestly shoAvs that the court, after having established the legal proposition that a payment by one of ttvo joint obligors on a bond rebuts the presumption arising from lapse of time as to both, merely added that this legal conclusion upon which the decision really rested was, in all probability, in accordance with the actual fact.

If, then, the additional testimony offered at the last trial was properly excluded, as Ave think it Avas, then it is plain that, under the principle of res adjudícala, the appellants Avould be concluded ; for it is conceded that the second trial was upon the same statement of facts agreed upon at the first trial, and even if there was any error in the former judgment of this court, such error could only be rectified by an application for a rehearing or revieAv in the proper form. But we are umvilling to rest our judgment on that ground, and, on the contrary, rest it upon the ground that the legal proposition upon which the former decision Avas based was right.

The Avhole argument of the counsel for appellants, as it seems to us, rests upon a failure to observe the broad distinction which exists betAveen the two defences of payment and the statute of limitations. They rest upon entirely different and distinct principles, and are presented by different and distinct pleas, and to ignore these distinctions necessarily leads to confusion and error.

Prior to the code the statute of limitations had no application whatever to a sealed instrument for the payment of money, while it did apply to a simple contract. There was, therefore, no limitation of time to the right of action on a bond, while there was such a limitation to the right of action on a simple contract. From this it followed necessarily that the legal liability of the obligor on a bond continued indefinitely, without limit as to time, while the legal liability of the maker of a promissory note terminated with the expiration of the statutory period; and from this it followed, with equal necessity, that lapse of time of itself merely, constituted no defence whatever to an action on a bond, except as it afforded a presumption that the bond was paid, while it did constitute a complete defence, of itself merely, to an action on a promissory note without any regard whatever to the question of payment. Hence when an action is brought on a bond, and lapse of time is relied on as a defence, the inquiry is totally different from what it would be in an action on a promissory note. In the former the question is whether a sufficient time has elapsed to afford a presumption of payment, and if so, whether there is anything to rebut that presumption, while in the latter the only question is, whether the time fixed by the statute has expired, without any inquiry as to the presumption of payment or whether such presumption is rebutted; for if such time has expired before the commencement of the action, then, under the express terms of the statute, the right of action on the note is forever barred, and if there has been any subsequent promise or acknowledgment, from which a promise might be implied, such subsequent promise constitutes the cause of action, and not that contained in the note.

Counsel for appellants denies the proposition that in such case the action must be upon the subsequent promise and not upon the original note, and claims that there is no authority for the proposition wdiich we have laid down. In view of the distinct declaration to the contrary by O’Neall, J., in Reigne v. Desportes (Dud., 124), and by Wardlaw, J., in Smith v. Caldwell (15 Rich., 373), followed by the cases of Walters v. Kraft (23 S. C., 580), and Colvin v. Phillips (25 Id., 234), it is difficult to understand how such a claim can be made. Indeed, the express terms of the statute itself would seem to be quite sufficient authority for the proposition which we have laid down ; for it declares that actions of the character referred to “shall be commenced * * * within four years next after the cause of such actions or suits, and not after." (Italics ours.) This is precisely equivalent to saying that actions shall not be brought after four years have expired from the accrual of the cause of action. Hence the statute itself forbids any action on a promissory note, unless it is commenced within four years after its maturity, aud if there has been any subsequent promise to pay such note, such subsequent promise must necessarily be the only cause of action.

It is true that this distinction was lost sight of under the former system of pleading, for, as explained by O’Neall, J., and by Wardlaw, J., in the cases above cited, under the general counts in declaration in assumpsit it was altogether unimportant; but, as Judge O’Neall says, it led to “many loose expressions” in the cases, indicating that the subsequent promise revived and renewed the original cause of action, whereas, without abrogating the statute, this was impossible, and the true theory was that the subsequent promise itself constituted a new cause of action, and not that the original cause of action was revived or renewed. But inasmuch as the statute of limitations had no application to actions on specialties, this doctrine could not be applied to an action on a bond, and in such a case the cause of action is always the same. There is nothing to forbid the right of action on a bond after the lapse of twenty years, but such a lapse of time only operates as a defence to an admitted right of action. The question in such a case is, not whether the original obligation has been revived or renewed, or whether any new obligation has been incurred, but the inquiry is whether the original obligation has been discharged by the presumption of payment arising from lapse of time, and whether such presumption has been rebutted.

The extent, as to time, of the legal obligation which one assumes when he signs a promissory note, is very different from that which he assumes when he signs a bond. In the former case the legal obligation terminates with the expiration of the statutory period, because the statute expressly forbids the enforcement of such obligation after that time. But not so with a bond ; for, as the statute does not apply, there is nothing to limit the extent, as to time, of the legal obligation, and hence it continues until it is discharged by payment either actual or presumed.

Keeping in mind these views, it is very obvious that there is no conflict whatever between the former decision in this case and Walters v. Kraft, supra, but that the two cases rest upon totally distinct and different well settled principles. In that case the question arose under the statute of limitations, and it was decided upon principles applicable to that statute and its proper construction. In this case the statute of limitations is, confessedly, inapplicable, and therefore it cannot be decided upon the same principles which governed in that case. Here the question is, whether a payment made by the principal obligor on a bond during the life-time of the surety, a joint obligor, and within twenty years before the commencement of the action, rebuts the presumption arising from lapse of time that the bond is paid. It is admitted- that, so far as the principal debtor is concerned, the payment does rebut the presumption, and the only contest is as to whether the presumption is rebutted as to the surety. Considering that the sole question is one of fact — whether the bond has been paid — it is difficult to understand how it can be said that the bond is paid as to one, but not as to the other, for payment by either ought, it seems, to operate as satisfaction, as to both. Now, in a case under the statute of limitations no such difficulty can arise, for when the statutory period has expired, the right of action on the original contract is, by the express terms of the statute, barred as to all of the parties, and if there is any liability at all it must rest upon the new promise implied from a payment on the original contract, and such new promise can only bind those who are parties to it.

But, in addition to this, there can be no doubt that a payment on a bond is such a fact as will be sufficient to rebut the presumption arising from lapse of time; and if such payment be made by one of several joint obligors, it enures to the benefit of all, and .is regarded as the act of all. They all have a common interest that the payment should be made, and they are all, therefore, bound by it. But their community of interest extends no further than the making of the payment, which is sufficient of itself to rebut the presumption arising from lapse of time. Hence, where one of several joint obligors makes a part payment on a bond, he acts as the agent of his co-obligors, but his agency does not extend far enough to enable him to make a new contract for his co-obligors. 1

Again, it is contended that the former decision in this case is in conflict with our decision in Shubrick v. Adams, 20 S. C., 49. It seems to us, however, that the “single difference” admitted to exist between the two cases is striking, and shows conclusively that there is no conflict. In Shubrick v. Adams the action was not commenced against Adams as administratrix of Gatewood until more than twenty years after his death; and as his death severed the obligation, or, to speak more accurately, terminated the relation of agency previously existing between him and his original co-obligor, Geddings, payments by the latter after Gate-wood’s death could not affect his estate, and hence there was nothing to rebut the presumption arising from the lapse of the twenty years. Here, however, the action w'as commenced within six years after the death of Henry Gourdin, and several partial payments had been made on the bond by his co-obligor during his life-time (and therefore before the obligation was severed by his death, or the relation of agency had terminated), and within a period of much less than twenty years before the commencement of the action; and such payments, under the principles hereinbefore laid down, were clearly sufficient to rebut the presumption arising from lapse of time, that the bond had been paid in full. In Shubrick v. Adams, the partial payments relied on to rebut the presumption were made after the death of Gatewood, and therefore could not affect either him or his estate; while here, the partial payments relied on for the same purpose were made before the death of Henry Gourdin, and therefore did affect him. This wide difference in the facts is amply sufficient to account for the difference in the result.

It is also contended by counsel for appellants in his printed argument, that the court held in Walters v. Kraft, “that wdien a note falls due, the joint obligation is severed, and payments by one joint contractor do not keep the note alive as to his other co-contractors,” and that the principle upon which that ease rests is, “that in all joint obligations to pay money, the joint obligation ceases as soon as the obligation falls due.” After a very careful examination of that case, we must confess that we are unablo to find a single expression, or even a single word, which gives countenance to the idea, “that when a note falls due, the joint obligation is severed,” or that the case rests upon the principle, “that in all joint obligations to pay money, the joint obligation ceases as soon as the obligation falls due” ; and we may add, that we know of no other case which recognizes any such principle. Indeed, if such a principle should be recognized, then it would follow necessarily that a joint action could never bo maintained upon a joint contract; for it is quite clear that, except in the cases specially provided for by statute, no action of any kind, either joint or several, can be commenced upon a note until it falls due; and if the joint obligation is then severed, it would follow inevitably that no joint action could ever be brought upon a joint note.

We must suppose, therefore, that what counsel really intended to say was that the court held in Walters v. Kraft, that when the statutory period applicable to a joint note has expired, the joint obligation is severed, and that the case rests upon the pi’inciple that in all joint obligations to pay money, the joint obligation ceases as soon as the statutory period applicable to such obligation expires. But from what we have said above, it is quite clear that the case of Walters v. Kraft rests upon no such principle; and, in fact, nothing is said in the opinion about the severance of the joint obligation. On the contrary, that case rests upon the express terms of the statute of limitations, as interpreted bv the later decisions of our courts, whereby it is declared that, after the statutory period has expired, no action can be maintained on the contract evidenced by the note against any of the parties to it; and if any action can be maintained at all, it must be on the new contract evidenced by the subsequent promise, either express or implied, and, of course, no one can be made liable upon such new contract except one who is a party to it. The case could not possibly have been rested upon the ground, that, after the expiration of the statutory period, the original joint obligation evidenced by the note was severed, for the theory upon which it proceeded was that, after the expiration of that period, the original obligation was absolutely gone as to all of the parties to it, because when the right of action to enforce an obligation is destroyed, there can be no longer any legal liability.

The following language, extracted from the opinion in Walters v. Kraft, shows clearly that this court then recognized and pointed out the distinction between the principle upon which that case rested and the principle applied to this case: ‘‘This notion, that one of several joint debtors may, by his own act, without the consent of the others, defeat the operation of the statute of limitations upon the original contract, manifestly rests upon what is now conceded, and we believe universally conceded, to be an erroneous view of the statute. As long as it was held that the statute operated ‘by raising a presumption of payment,’ and not ‘by creating a legal bar to the action,’ it was' very natural that anything which went to rebut that presumption should affect all the parties to the contract alike, and hence any act of any one of those parties tending to show that the debt was not in fact paid, was held sufficient to defeat the plea of the statute, which was then, in effect, a plea of payment, inasmuch as it was assumed that motives of self-interest would deter every one of the parties to the contract from any act or omission which would show that the debt was not paid, if, in fact, it was paid.”

It is quite clear from what has already been said, that the fourth ground of appeal cannot be sustained. For, so far as this question is concerned, II. Gourdin, though a surety on the bond, stands in the same relation to the obligee as his principal. It is an entire mistake to assume that his liability terminated with the expiration of twenty years from the time the bond fell due. On the contrary, as we have shown, his liability^ continued indefinitely as to time, until it was shown that the bond was paid.

In deference to the zeal and earnestness of the counsel for appellants, and his manifest confidence in the view for which he contends, we have extended these remarks to a much greater length than would otherwise have been deemed necessary or even proper.

It is scarcely necessary for us to add that inasmuch as the cause of action in this case accrued prior to the adoption of the code of procedure, we have considered the questions involved under the old law, and have not deemed it necessary to advert to the changes made in the statute of limitations by the code.

The judgment of this court is, that the judgment of the Circuit Court be affirmed.