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formed by the party to whom the note is given, and are put in an
absolute form for the convenience of the parties, is a fact well known.
When a party gives his note upon the promise of the payee to pcr-
forni a certain act, and the payee fails to perform, it is reasonable
ihat the transaction should be considered as a whole for the purpose
of ascertaining what is due between the parties. This cannot be
done where a negotiable note has come into the hands of one who
is not affected by the rights and equities existing between the
original parties independently of tiic terms of the note itself; as
where held by a purchaser before maturity without notice. The
question is, whether such a defense to a promissory note is sanc-
tioned by tlie principles of law and the adjudicated cases.

The principle upon which such evidence has been admitted seems
to be this: That a promissory note as between the original parties
to it, unless supported by a consideration, is nudum pactum. Bank
v. TopplnQy 9 Wertd. 273. Here arises the propriety of inquiring
whether such a consideration existed. When the note states the
consideration specifically, it may well be said, that to admit oral
testimony to show a different consideration, is, in effect, to vary the
t-erms of the written instrument by oral proof. McClenaghan v.

Digitized by



McGratli v. Barnes.

nines, 2 Strobh. 122^ is a case of this class. In that case, according
to the express terms of the note, the payer promised to pay the
amount due upon the notes of a third party belonging to the payee.
The court held that an attempt to show by parol proof that the
maker merely promised to take in hand the collection of such notes
and to pay over only what was collected thereon^ was an attempt to
change the contract as it ap})eared on the face of the note, and
therefore inadmissible nnder the rule that precluded the alteration
of the terms of written instruments by parol. But when the note
expresses no consideration or a merely formal or general considei*a-
tion, as by the usual words, value received, or by similar general or
formal expressions, it is evident that if the true consideration of
the note rests in an agreement, written or oral, between the parties,
the proof of such agreement does not necessarily tend to change the
terms of the note, although by showing the true consideration upon
which it was given it may control the recovery upon the note.

Barnes v. Shelion, Harp. 33. In that case it was held that the
maker of a promissory note could set up by way of discount or a
breach of a parol contract what was the consideration of a note in
suit. This decision was put upon the right of discount and not
upon the broad principle of a failure of consideration.

Oazoway y. Moore, Harp. 401. In that case the note stated that it
was given '^ for the hire of his negro man Abraham," and it was held
that it could not be shown by parol evidence that a different rate
of hiring was agreed upon conditionally. Here the note expressed
the contract of the parties as it regarded the Consideration for which
it was given, and its expressed terms could not be contradicted by
oral proof.

Blaheley v. Hamptony 3 McC. 469. The promissory note here was
alleged to have been given for the balance due on a settlement of
sundry accounts. The Circuit judge excluded the proof of the
consideration of the note, and the decision was reversed on appeal.
It would seem that the court were of opinion that the production of
the written accounts by which it would appear that the sum stated
in the note was entered by mistake, would not involve the objection
of varying written instruments by parol proof. The principle upon
which this view depended was, that in effect the note and the written
accounts on which it was based constituted one written instrument
80 that one part could be corrected by reference to another. Al-
though this case involved merely a qnestion of the oorreotion of a
Vol. XXXVI— 87

Digitized by



McGratU v. Barnes.

mistake, yet it recognizes the rule that this note, and the agreement
in virtue of which it is given, constitute in view of the law a sin-
gle transaction. It may be that it was material for the purpose
of correcting, at law, a mistake in the written instrument, that the
means of such correction should be in writing also ; but where the
question is, was there a consideration, and what was the considera-
tion, when it leaves untouched the terms of the instrument, no such
necessity for exclusively written testimony could exist.

Hagood v. Swords, 2 Bail. 305. Here the court went a step fur-
ther than in Barnes v. ISheltoUy and allowed as a defense to a prom-
issory note proof that it was to be surrendered upon a certain con-
tingency. Had the agreement to surrender the note been made
subsequent to the making of tlie note, it would have been a
clear case of discharge in the nature of payment that might have
been proved by oral testimony alone. But the fact was that
the agreement to surrender was part of the original agreement that
formed tiie consideration of the note. Although Judge O'Neall,
lays stress on the fact that the parol proof offered related to matter
of discharge alone in the nature of payment, yet as the agreement
was contemporaneous with the note, the case really involves the
whole question, whether the recovery on the note could be affected
by the discovery, through parol testimony, of the fact that the con-
sideration of the note depended upon a contingency. McClenaghan
v. Hines, 2 Strobh. 122, has already been alluded to as a case where
the note assumed to express the specific consideration on which it
was founded. Clearly, in that case, parol proof of a different consid-
eration would tend to vary the express declarations of the note itself,
and therefore was inadmissible.

Knight v. KnottSj 8 Rich. 35, finally settled the question by plac-
ing the defense upon the true ground, namely, as involving the
consideration of the note. The verbal agreement accompanying the
note was held to be the consideration of the note, the two consti-
tuting but one agreement, and when the contract failed to give sup-
port to the note the latter could not justify a recovery.

xr. the present case the evidence admitted under objection tended
to show that the parties had agreed at the time of the making of
the note, that if the demand for which the note was given was re-
jected by the ordinary, the note should not be paid. This was very
different from placing the liability of the executor upon the aotoal
validity of the debt, for the debt might be afterward established.

Digitized by


NOVEMBER TERM, 1879. 691

McQrath V. Barnes.

notwithstanding the decision of the ordinary. The evidence was
therefore an attempt to show that a different agreement was made
from that which is expressed in the note, and one that would place
the claim on a different footing from that on which the law placed
it. It is therefore like McClenaghan v. Ilines and Gazoway v.
Moore, a case where parol evidence was resorted to to vary the terms
of a written instrument. The evidence was improperly received.

The next question to be considered is, is the binding force
and effect of the promise of the executor expressed in the note in
suit? Like other promises and engagements, it must be upon ade-
quate considerations to be capable of legal enforcement. We have
hero to inquire — 1st, whether an executor can bind himself by his
agreement or promise to pay a debt of his testator, so that an ac-
tion can be maintained at law upon such promise; 2d, what consid-
eration is necessary to support such a promise; and 3d, wMat is the
effect of such a promise?

Tiie cases uniformly hold that a promise to pay a debt or legacy
made by an executor is nudum pactum, unless supported by an ade-
quate consideration. It is agreed that if such executor derives any
benefit individually, or for the estate of his testator, or subject the
promisee to disadvantage, the promise made upon sucli considera-
tion binds him individually, and that an action at law can be main-
tained upon such promise and judgment obtained against such
executor individually. It would seem also that in such a case the
action may be brought against the defendant as executor, and
judgment de bonis propriis will follow; and that in such case the
executor cannot plead plene admtnistravit, at least to defeat such
judgment de bonis propriis. It is also held that if there be no such
consideration as that just stated, yet if there be assets sufScient to
pay such debt or legacy at the time of making such promise, it is
obligatory, and may be enforced by an action at law against such
executor individually or as executor, and the judgment as affecting
such executor will be de bonis propriis.

The ground upon which the promise is held to be binding in law,
when there are assets sufficient to pay the debt or legacy, is that
the executor, having sufficient assets for the purpose, is bound,
both morally and by virtue of his office, to pay the debt or legacy*
and such duty is a sufficient consideration to support a promise to
pay, 80 that indebitatus assumpsit will lie upon it The rale, so&r
as it regardf the payment of the debts of an intestate, applies

Digitized by



McOntth ▼. BarneB.

dqaally to administrators. Nor does it make any difEerence
whether the promise was made individually or as executor or ad-

The consideration of forbearance generally appears in the cases
where the executor has been held bound by his promise^independently
of there being assets sufficient to pay at the time of making the
promise. If the executor induces forbearance to sue on the part of
the creditor of his testator by means of his promise, such considera-
tion is sufficient and the executor is bound. There may be other
instances of an adequate consideration than that of forbearance,
but that is the consideration illustrated in the cases.

The authorities will be next considered. Bann t. Hughes, 7 T.
K.^ note 350, is a leading case, and holds that a promise of an ad-
ministrator to pay a debt of his intestate is nudum pactum, unless
supported by a consideration. That although the promises must,
under the statute of frauds, be in writing, still a consideration is
necessary to support it. The only kind of consideration discussed
in the case is that of forbearance, which is recognized as sufficient,
upon the ground that '*if a person indebted in one right, in con-
tsideration of forbearance for a particular time, promises to pay in
imother right, the convenience will be a sufficient consideration to
warrant an action against him or her in the latter right."

Childs V. MoninSy 2 B. & B. 460. The action was upon a prom-
issory note made by the defendants as executors, by which they
severally and jointly promised to pay a certain sum on demand, to-
gether with lawful interest It was held that the agreement to pay
interest implied that the promise to pay was upon an agreement to
forbear. This was based upon the idea that as the executor could
not, by law, pay interest on the debts of his testator, the agreement
to pay interest was to be regarded as something engaged on the
part of the executor individually, and that it could only be ascribed
to the motive of securing delay on the part of the creditor of the
testator. It was also held that though the promise was made as
executor, yet from the nature of the transaction, it must be con-
sidered an individual obligation.

Atkins V. Hilly 1 Cowp. 284 This was an action of assumpsU
against an executor, brought by a legatee upon a promise to pay a
legacy, made at a time when there were assets sufficient for its pay-
ment. It was held that such an action could be maintained at
law. The sufficiency of the consideration to support the promise,.

Digitized by


NOVEMBER TERM, 1879. 69^

McGrath v. Barnes.

was placed on the ground that the executor, having assets sufiScient
to pay the legacy, was bound in consequence so to do, and such an
obligation would support the promise to pay.

Hawkes v. Saunders^ 1 Oowp. 289. That action was against the
executor individually for a legacy, alleging suflBciency of assets and
liability to pay at the time when the promise was made ; also a
promise of the executor. It was hold that the action lay. Lord
Mansfield held that the possession of assets and liability to pby was
a sufficient consideration to support the promise.

Trevenian v. Howell^ Gro. Eliz. 98, holds that a promise by an
executor to pay, when he has sufficient assets therefor is good to
support a judgment de bonis propriis.

Bank v. Topping, 9 Wend. 273, was an action against an admin-
istrator, on a promissory not« payable at sixty days. It was held
that the delay of payment for sixty days could not be construed as
an agreement to forbear, and that the promise was nudum pactum,
unless there were assets at the time it was made.

Walker v. Patterson, 36 Me. 273. The same doctrine was held in
that case as in the cases already referred to.

It must be conceded that had the defendant offered to prove that
there were not assets sufficient to pay the debt at the time the
promise to pay was made, such evidence could not have been ex-
cluded. It is true that if there had been some other consideration,
such as forbearance, the question of assets would not have been
material, but no such consideration is presented in the evidence.
There is no agreement to pay interest as in Childs v. Monins, The
payment was not deferred for any particular time as it was in
Bank v. Topping, while in that case such delay was not regarded as
evidence of an agreement to forbear. Under such circumstances
it was clearly competent for defendant to have shown that there
were no assets applicable to the payment of the note at the time
the promise was made. If, then, such fact could be shown, could
it not also be shown that there was nothing due to the plaintiff, or
that less was due than the amount demanded ?

It is the duty of the executor, coupled with his promise, which
gives legal validity to such promise. If nothing was due to the
plaintiff, no such duty existed to support a promise to pay. If less
than the amount promised was due, the amount actually due was
the measure of the duty of the executor and must be the measure
of the recovery under his promise.

Digitized by



Carolina National Bank t. Wallace.

The Circuit judge was clearly in error in holding, in an action
against the executor individually, as this must be considered, in
which judgment was not sought de bonis testatoris (Ashby v.
Ashby, 7 B. & C. 444), that the promise of the executor could not
stand, for want of consideration on the ground that the debt had
been barred by the statute of limitations. A debt which becomes
barred after the executor has qualified is a good consideration for a
promise to pay, and there was nothing to prevent the executor
from binding himself by a written promise to pay. Whether thr
executor could obtain remuneration out of the assets of the estate
where he has failed to interpose the bar of the statute, is a question
not presented by this record. He could bind himself by his direct
promise, as well as indirectly by failing to plead the statute in an
action seeking to charge the assets.

There must he a new trial.

Mclver, J., concurred*

Cabouna National Bank v. Wallace.

(18 S. C. 847.)

Negotiable instruments — notice of protest — usage of bank — maker becoming
executor of indorsers.

Where a note is payable at a bank whose usage it is to give notice of protest
to indoreers residing in the place where the bank is located, throagh the
post-office, such notice will bind such indorsers.

Where an indorser dies before maturity of the note, and the maker becomes
his executor, notice of protest to him is reqoiflite to bind the estate.

ACTION on a promissory note. The opinion states the oaee.
The defendant had judgment below.

Melton and Clark, for appellants.

William Wallace, contra.

McIvER, A. J. This was an action against the defendants aa
executors of Jacob Geiger, indorser of a note drawn by the said
Wm. P. Geiger, and made payable at the Carolina National Bank
of Columbia. The defense interposed was an alleged failure to
give due notice of the non-payment of the note, so as to charge

Digitized by


NOVEMBER TERM, 1879. 695

Carolina National Bank ▼. Wallace.

the estate of the indorser. The testimony adduced tended to show
that the bank authorities learned of the death of the indorser only
a few days before the maturity of the note, and supposing that
Wm. P. Geiger, the maker of the note, was the only executor, on
the day the note became payab' », after demand and refusal of pay-
ment, deposited a notice of non-payment in the post-office, in
Columbia, addressed to " Wm. P. Geiger, executor of the estate of
Jacob Geiger, Columbia, S. C," ho being, at the time, a resident
of Columbia. Testimony was also adduced tending to show that
on the back of the envelope, in which the notice was inclosed, was
the usual printed notice " Return to the Carolina National Bank,
of Columbia, if not delivered in five days;" that it was the rule of
the post-oflSce, when a letter, with a notice indorsed upon it, was
not delivered within the time specified to return it to the sender;
that the bank was in the habit of receiving its mail from the post-
office at least three times a day (Sundays excepted), and that the
envcloi>e above-mentioned had never been returned to the bank.
It was also in evidence that it was the custom of this bank, as well
as all the other banks in the city of Columbia, to give notices of
the dishonor of notes through the post-office, us well as persons
residing in the city as to those residing elsewhere, and that such
had been the usage of this bank from the time of its establishment
up to and after the time of the maturity of the note in question.

Upon this evidence a motion for a nonsuit was made upon the
ground that a notice deposited in the post-office, addressed to the
indorser, where both parties lived in the sanje city, was not suf-
ficient. The motion was granted and exceptions duly taken. No
question seems to have been raised in the court below, and certainly
none in the argument here, as to whether a notice to one of two
executors would be sufficient. But as the defense rested upon the
general ground of want of due notice, and as the grounds upon
which the Circuit judge based his judgment are not stated, it may
be proper for us to say that notice to one of two executors would
be sufficient. Dan. on Neg. Inst, § 1000.

The questions raised by the exceptions are: 1. Whether the
general rule, where both parties reside in the same town or city,
requiring notice of the dishonor of a note to be delivered person-
ally to the indorser, or in case of his absence^ to be left at his place
of residence or place of business, was not so modified by the evi-
dence as to the usage of this bank to give such notices through the

Digitized by



CaioliDa National Bank v. Wallace.

post-offioe as to reuder that mode of giving notice sufficient. 2.
Whether the Circuit judge was not bound, under the evidence
adduced, to submit the question of fact to the jury as to whether
Wm. P. Oeiger had actually received the notice in due season. 3.
Whether any notice at all was necessary under the circumstances,
Wm. P. Geiger, the maker of the note, having become one of the
executors of the indorser before the note became payable, and
therefore necessarily cognizant of the fact of the non-payment of
the note.

As to the first question, it cannot be denied that the general rule
is that where the parties reside in the same town or city, the notice
must be given to the person entitled to it, either personally, or in
case of his absence, it must be left at his residence or place of
business. Story on Prom. Notes, § 312; 2 Dan. on Neg. Inst, §
1005, and this rule has been recognized in this State. Foster v.
Sttieath, 2 Bich. 338. And although it has been suggested that
this rule " has lost its reasonable force and exists only by authority,**
and therefore should be abrogated rather than undermined, as it
has been, by exceptions (1 Am. Lead. Cas. 403; 2 Dan. on Neg.
Inst., § 1010), yet we do not regard it as within our province to
adopt the remedy proposed, and therefore leave the suggestion to
be considered by that department of the government to which it
properly belongs. To this rule there are however exceptions, one
of which is that where a note is made payable at a particular bank,
and it is proved to be the usage of such bank to give notices
through the post-office to persons residing in the same town or
city, that mode of giving notice will be sufficient. This is upon
the ground that persons who become parties to such a note are
presumed to have knowledge of the usages of the bank at which
they have chosen to make the note payable, and have agreed to be
bound by such notice as it is the usage of the bank to give. In the
American notes to the case of Wigglesworth v. Dallison, 1 Smith
Lead. Cas. 416-17, it is said :

"It has been repeatedly decided in relation to the contract of
indorsement that an established usage of particular banks as to the
time of demanding payment and giving notice differing from the
time fixed by the general law-merchant, with which banks the par-
ties deal, is evidence of intention and consent that the contract of
the indorser shall be modified according to this usage, and that
therefore the indorser is bound by such demand and notice as the

Digitized by



Carolina National Bank v. Wallace.

usage prescribes; * * * and the same principle has been ap«
plied to the manner of making the demand/' citing the cases to
sustain both propositions.

It would seem necessarily to follow from this that the same prin-
ciple would apply to the manner of giving notice, and a recent
writer, Daniel, in his work on Negotiable Instruments, states that
it has been so held in several cases which he cites, but to which we
have not access. Nor is it necessary that knowledge of such usage
should be brought home to the person sought to be affected by it,
for, as is said by Marshall, 0. J., in Bank of Washington v. Trip-
letty 1 Pet 33, adopting the language which had been previously
used by Story, J., in Mills v. Bank of XJ. S., 11 Wheat 438:

'' When a note is made payable at a bank whose invariable usage
it is to demand payment and give notice on the fourth day of
grace, the parties arc bound by that usage, whether they have a
personal knowledge of it or not In the case of such a note the
parties are presumed by implication to agree to be governed by the
usage of the bank at which they have chosen to make the security
itself negotiable."

These remarks will apply as well to the manner of giving notice
as to the time when the demand of payment should be made and
the notice of non-payment should be given. This view was plainly
recognized in the case of Bowling v. Harrison, 6 How. 248, where
a charge to the jury that in order to fix the liability of the indorser,
who resided in the same town where the note was payable, " the
notice must be personal, unless he had agreed to receive it else-
where, or unless by custom and usage of the bank at which the
note is payable the notice of non-payment was left at the post-
oflBce,'* was approved, although it seems to have been held in that
case that there was no sufScient proof of such a custom or usage as
would dispense with the notice — the proof in fact being exactly
the other way, and that it was the usage to give notice personally,
unless there was a memorandum on the note providing for a differ-
ent mode of notice. But to make such usage effectual it must of
course be properly proved. As is said in the case just cited: " A
usage to be binding should be definite, uniform and well known.
It should be established by clear and satisfactory evidence, so that
it may bo justly presumed that the parties had reference to it in
making their contract" To this we may add that the usage should
be reasonable. The question therefore should have been left to the
Vol. XXXVI— 88

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Carolina NatioDal Bank v. Wallace.

jury to determine whether there was sufficient proof of such a usage

Online LibraryIrving Browne Isaac Grant ThompsonThe American reports: containing all decisions of general ..., Volume 36 → online text (page 77 of 123)