Opinion
(February Term, 1896.)
ACTION ON NOTE — NEGOTIABLE INSTRUMENT — DELAY IN DELIVERY — LIABILITY OF SURETIES.
1. Where a note made payable to a bank was executed and delivered by the principal maker to the president, who received it individually and not as president, and advanced the money thereon, but did not discount it immediately at the bank, as he intended to do, and forgot to do so until two years thereafter: Held, that the note being eventually discounted by the bank, the delay did not vitiate it nor render the delivery to the bank invalid, there being no evidence that the sureties were prejudiced by such delay.
2. Where a note made payable to a bank contained a provision that the sureties should remain bound, notwithstanding any extension of time to the principal, and notice of extension was waived, the fact that the note was not delivered to the bank for two years will not release the sureties.
(437) APPEAL from a judgment of a justice of the peace, heard by Starbuck, J., at January, 1896, Special Term of PERSON.
W. W. Kitchin and A. L. Brooks for plaintiff.
Boone, Merritt Bryant for defendants.
The action was on a note, signed by R. E. Couch as principal and J. T. Walker and C. B. Brooks as sureties. The defendant Couch did not appeal from the justice's judgment.
By consent, his Honor found the facts as follows:
That the defendants Walker and Brooks signed the note sued on, which was as follows:
"$75. ROXBORO, 20 December, 1892.
"Thirty days after date, I, R. E. Couch, principal, and J. T. Walker and C. B. Brooks, the other subscriber's sureties, promise to pay the Farmers Bank of Roxboro, or order, $75, negotiable and payable at the office of the Farmers Bank of Roxboro, with interest at the rate of 8 per cent annum, after maturity, until paid, for value received, being for money borrowed; the said sureties hereby agreeing to continue and remain bound for the payment of this note and interest, notwithstanding any extension of time granted from time to time to the principal debtor, waiving all notice of such extension of time from either payor or payee; and I do hereby appoint E. G. Thompson, cashier, my true and lawful attorney, to sell any or all collateral he may have in his hands to pay this claim, if I should fail to do so when said claim falls due, after giving ten days' notice of his intention to sell the same, and pay any surplus that may remain to me. "R. E. COUCH, "J. T. WALKER, "C. B. BROOKS."
Upon the back of said note is the following endorsement: "Received in part payment of within $18, 6 February, 1893." That they signed said note as sureties of Couch, believing the note was to be delivered to and discounted at the Farmers Bank of Roxboro; that Couch handed the note to C. S. Winstead on 20 December, (438) 1892; that said Winstead, as an attorney, held certain claims for collection against said Couch and received the note from Couch in satisfaction of said claims, and thereupon paid said claims out of his own pocket; that Winstead was the president of the bank; that in receiving the note Winstead acted not for the bank, but for himself; that he considered the note as his individual property, but intended to immediately discount it at the bank; that he forgot to do so, and did not discount it at said bank until December, 1894; that until that time none of the bank officials and officers, other than Winstead, had ever heard of the note; that the said defendant sureties never made any inquiry as to the whereabouts of the note; that the defendant Couch left the State in September, 1894; that when the note was executed and when Couch left the State he had from $500 to $1,000 worth of personal property."
Upon the foregoing facts the court was of the opinion that no valid delivery of the note was made, so as to bind defendant sureties. It was therefore adjudged that the defendants J. T. Walker and C. B. Brooks go without day and recover their costs.
The plaintiffs excepted and appealed.
The note was signed in December, 1892, and was made payable to the plaintiff bank. It was handed to the president of the bank, who received it individually and not as president, and advanced the money for the amount of the note, paying therewith certain claims in his hands, which he held as a lawyer against the principal in the note. The president intended to discount the (439) note immediately at the bank, but forgot to do so till December, 1894. This, though delayed, was a valid delivery. Parker v. McDowell, 95 N.C. 219, and similar authorities relied on by the defendants do not apply, because here the note was eventually discounted by the payee bank, and suit is brought by it as a bona fide holder; nor did the temporary holding of the paper by Winstead and his advancing money on it vitiate it. 1 Daniel Neg. Inst., sec. 792. There is no evidence that the defendants, the sureties, were in anywise prejudiced by the delay; besides, the note contains the following express stipulation: "The said sureties hereby agreeing to continue and remain bound for the payment of this note and interest, notwithstanding any extension of time granted from time to time to the principal debtor, waiving all notice of such extension of time from either payor or payee." No agreement to extend time is shown, and certainly a mere delay (not amounting to the bar of the statute of limitations) cannot release the sureties, when they have contracted that an express extension, though made without notice, shall not discharge them. Upon the facts found judgment should be entered below in favor of the plaintiff.
Reversed.
Cited: Rouss v. Krauss, 126 N.C. 668; Fitts v. Grocery Co., 144 N.C. 469.
(440)