Massie v. Byrd , 87 Ala. 672 ( 1888 )

CLOPTON, J.

The suit, which is brought by appellant, is founded on a promissory note made by the testator of appellee, of which the following is a copy:

“$4,500. One day after date I promise to pay Sarah Massie forty-five hundred dollars, and will pay the interest annually, punctually, and the principal on thirty days notice.

“April 20, 1866. W. M. Byrd.”

The seventh and eighth special pleas allege, that in 1863 and 1864 defendant’s testator, as the agent of the plaintiff, collected about forty-five hundred dollars, in Confederate treasury-notes, and on April 20, 1866, paid her three hundred dollars, and executed the noté sued on, for and in consideration of the Confederate treasury-notes so collected, without any other consideration. The pleas further aver, that the real value of the treasury-notes when collected, was one thousand dollars, and that payments exceeding that amount were made on the note during the life-time of the testator. The defense thus set us is, want of consideration as to a part, and payment of the balance of the note.

In general, the consideration of a note is open to inquiry, and parol evidence of the actual consideration may be received for the purpose of determining its legality or sufficiency to support the contract. The note is evidence that it was made on sufficient consideration, but it may be impeached by plea. — Code, 1886, § 2769. When the consideration of a contract in writing is divisible — when two or more distinct things or matters enter into and constitute the consideration'— inquiry may be made as to either one of such things or matters, for the purpose of determining its sufficiency, and a recovery may be had for the part of the contract supported by sufficient consideration, and defeated as to the balance. Holland v. Adams, 21 Ala. 680, and Dickerson v. Lewis, 34 Ala. 638, afford illustrations of this rule. Inadequacy of consideration is not, of itself, a ground of relief against a contract, unless it is so gross as to amount to fraud or undue advantage. Parties sui juris may determine, in making contracts, the adequacy of the consideration, and, if of real value, it need not be adequate in order to support a contract deliberately made with knowledge of the facts. In the absence of circumstances of fraud, imposition, or undue advantage or influence, there can be no inquiry into, and no adjustment of the value of the consideration, if valuable. When such circumstances are wanting, and the consideration is entire and indivisible, its extent and value are not subjects of inquiry in an action at law to enforce the contract, for the purpose of determining its partial sufficiency, and to defeat a proportional recovery. — Bolling v. Munchus, 65 Ala. 558; 1 Pars. Contr. 436.

But appellee invokes the rule as to a past or executed consideration. The general rule is, that an executed consideration will not support an express promise, unless induced at the instance or request of the party promising, or the past transaction is of such a nature that the law will imply a promise. When the promise is implied from the character of the executed transaction, a subsequent promise is supported, and will be enforced, only so far as co-extensive with the amount or value of the past consideration. If the prior promise, whether express or implied, is to pay a determinate sum, or value, for the definite ascertainment of which the contract or the law furnished the standard, a subsequent promise to pay a larger sum is unsupported by a sufficient consideration as to the excess. But, when the amount of a past unliquidated demand is ascertained and agreed on by the parties, a new promise to pay the amount so ascertained is supported by a sufficient consideration.

The pleas show that the consideration of the note is valuable, and entire and indivisible, consisting of a liablility or indebtedness on account of Confederate treasury-notes collected by the maker as agent of the plaintiff, which he had failed to pay over, or to account for, until the execution of the note. The duty and obligation of an agent, who collected Confederate treasury-notes during the war, was to pay them over to his principal. On his failure to do so, and their appropriation to h'is own use, the law did not. imply a promise to pay only their value in the currency of the United States. There was neither an express nor an implied promise to pay any determinate sum or value other than their face amount. The demand was unliquidated in respect to the amount that should be paid after the close of the war. It is true that, since then, the courts generally have enforced such contracts only to the extent of their just obligation, and that the measure of recovery is the value in lawful money of the United States, at the time of making the contract, of the Confederate dollars agreed to be paid.—Whitfield v. Riddle, 52 Ala. 467; Wyatt v. Evans, 52 Ala. 285; Thorington v. Smith, 8 Wall. 1. But, these and similar decisions rest, not on a partial want of consideration, but on an agreement or understanding of the parties, that the note was to be paid in Confederate dollars. If no such agreement or understanding was proved, the amount of the note was collectible. —Cook v. Lillo, 103 U. S. 792; Confed. Note Case, 19 Wall. 548. It may be, had the present action been founded on the original indebtedness of the defendant’s testator, the plaintiff could have recovered only the value of the Confederate money collected. But when, after the restoration of peace, he deliberately, and with knowledge of the facts and his rights, executed the note sued on, payable in lawful money of the United States, he waived the right to limit plaintiff’s recovery to the value of Confederate money in a suit on the note. This may often work a hardship, and probably the ends of justice would be better accomplished, if, on any sound principle, the recovery could be measured by tbe value of tbe consideration. But a different rule would open tbe consideration of every contract in writing to investigation and adjustment in exact proportion to its real value. Trustees of How. Coll. v. Turner, 71 Ala. 429.

The sixth plea of defendant sets up the statute of limitations, and raises the question, at what time did the statute begin to run against the note. The language of the statute is: “Civil suits must be commenced after the cause of action has accrued, within the period prescribed in this chapter, and not afterwards.” — Code, 1876, § 3223. Under the statute, the question is, when did the cause of action accrue on the note ? Counsel for the appellee insist, that the note became due and payable, by its terms, one day after date, and that plaintiff could then have commenced an action, without any demand being previously made. In the construction of all written cpntracts, the fundamental rule is the ascertainment of the intention and mutual understanding of the parties. Their condition, the terms and nature of the contract, and the objects in view, all are to be regarded. The substantial purpose and purport, as collected from the entire instrument, will control the separate parts, intended as the means of its accomplishment. The note consists of two promises — one to pay one day after date; the other, to pay the interest annually, and the principal on thirty days notice. It was given about a year after the restoration of peace, in consideration of an antecedent indebtedness, created by the collection of Confederate notes, without claiming any reduction. Considering the circumstances and the language of the note, it is evident that the parties intended and contemplated delay, probably long delay, in the payment of the principal, but annual payment of the interest. In construing the note, some effect should be given to each word and phrase. Looking to all the provisions of the note and the circumstances, the words “one day after date,” it seems, were intended and used to fix the time from Avhich interest should begin to run, and after which the payee might, at any time, give notice to pay the principal; and the other provisions were intended to qualify the general operation of these words, and fix the times when the interest and principal should be payable respectively. It is not an unconditional and absolute promise to pay the principal and interest one day after date. This construction accomplishes the evident purpose of the parties, and gives effect to each part of the note. — Jameson v. Jameson, 72 Mo. 640. As to the principal, the note has the same effect and operation as a note payable thirty days after demand or notice.

The authorities all concur, that a note for the payment of money on demand becomes due instanter, and a cause of action accrues thereon at once, and that the statute of limitations begins to run from that date. — Owen v. Henderson, 7 Ala. 641; Mobile Sav. Bank v. McDonald, 83 Ala. 595. But they somewhat conflict as to the time when the limitation begins to run against a note payable a given number of days after demand. In Palmer v. Palmer, 36 Mich. 487, it was held, that a cause of action accrues, for the purpose of setting the statute of limitations in motion, as soon as the creditor, by his own act, and in spite of the debtor, can make the demand payable; and that a note, payable thirty days after demand, is barred in six years after the expiration of thirty days from its date. This case has been severely criticised, as abrogating the contract of the parties, and incorporating a provision in the statute not intended by the legislature. "Without reviewing them, we may remark generally, that the great weight of authority supports the doctrine that on such note a cause of action does not accrue, and the statute of limitations does not begin to run, until demand is made. Wood on Lim. § 118; Angell on Lim. 95; Rhind v. Hyndman, 54 Md. 527, where the authorities are cited. In McDonnell v. Br. Bank at Mont., 20 Ala. 313, the rule, that the statute begins to run against a note, payable so many days after demand, from the demand, is stated with seeming approval ; the reason assigned being, that until that time the action does not accrue. We, therefore, hold, that by the contract of the parties, a cause of action did not accrue as to the principal of the note, until notice was given as provided therein.

Counsel for the appellee further insist, that if it be held that notice is essential to the accrual of a cause of action, it should have been given, and suit brought, within six years from the date of the note. In McDonnell v. Br. Bank of Montgomery, supra, the suit was against a clerk, for money collected on a judgment. It was held that, in the absence of a conversion, no action could be maintained until the clerk was in default by refusal to pay on demand, and that the statute dates its commencement from the demand; but it was also held that the demand must be made within a reasonable time after the collection of the money. In Wright v. Paine, 62 Ala. 340, which was a suit to recover money deposited, it was held that a demand was a condition precedent to the action; but it is said: “When a demand is essential, as a condition precedent to an action, it must be made in a reasonable time. . . . The demand was made, and nearly six years is permitted to elapse, the death of Winston intervening, before suit is brought, and no explanation of this delay is afforded. It would be a dangerous precedent; it would endanger the estates of the dead; it would render the rights of the living uncertain and insecure; it would open the door for the introduction of stale demands, which, it has been well said, have often more cruelty than justice in them; and it would be violative of the policy of the statute of limitations, and defeat the purposes it was intended to accomplish, if, without an explanation of the long delay in making demand, and the unwarrantable delay in bringing suit, after the fruitless demand, until Winston [the bailee] was dead, the statute was held not a bar.”

From these cases, the following principles maybe deduced: (1.) When a demand is a condition precedent to a cause of action, the statute of limitations does not begin to run until demand is made. (2.) But, in such case, the demand must be made in a reasonable time. (3.) Belay in making the demand, and bringing suit within such period, may be explained and excused. It will be observed that, in none of these cases, was a delay in making the demand contemplated or intended; and in Palmer v. Palmer, supra, where it was held that the limitation begins to .run at the expiration of thirty days from the date of the note, it is said: “It may be otherwise, possibly, where delay is contemplated by the express terms of the contract, and where a speedy demand would manifestly violate its intent.” In Glenn v. Semple, 80 Ala. 159, the rule was applied, that when money is to be paid, or a thing is to be done, on the happening of a contingency or uncertain event, no cause of action accrues, and the limitation does not run, until the contingency happens, or the event takes place. It was held, that when the terms of subscription to the capital stock of a corporation bind the subscribers to pay “in such installments as may be called for by said company,” a cause of action does not accrue, and the statute does not commence to run, until a call is made by the company, or an assessment and call is made by the decree of a court having jurisdiction. Parties may make their own contracts, and may agree upon a long or short credit, or upon a given number of days or months after demand. The statute of limitations was not intended to abrogate these rights, or to prevent parties from agreeing upon a term of credit however long. The decisions of this court recognize an obvious distinction between cases where a demand is essential to a cause of action, and no delay in making the demand is contemplated, and where delay is contemplated and intended. In none of them is it held, that when a demand is a condition precedent to bringing an action, it must be made and suit brought within the period prescribed by the statute of limitations. Whether or not the action is barred, is made dependent on the particular circumstances of the case, without attempting to define or declare, inflexibly, what is a reasonable time, in which the demand must be made. In a court of law, this is a question for the jury.

Fully appreciating the beneficial policy of the statute of limitations, having for its purpose the discouragement of stale demands, the security of repose and quiet, and the protection of parties from unjust and oppressive litigation, when the circumstances of the transaction and the injustice of the claim can not be shown because of the lapse of time, we realize the importance and necessity of some rule, which will avail, even in cases where long delay may be contemplated or intended, to accomplish the purposes of the statute, and promote its policy, without infringing the contract of the parties, or extending the statute beyond its terms liberally construed. While the rule in equity, in respect to stale demands and the assertion of claims, which is applied in the cases cited, may not be strictly applicable in a court of law, which is governed alone by the provisions of the statute of limitations; “courts of law will presume a demand from the lapse of time, especially when the circumstances render it improbable that it should be neglected.” — Wood on Lina. § 125. On this presumption a consistent rule may be predicated.

The note sued on was made in April, 1866, and it is averred in the replications to the plea of the statute of limitations, that notice was not given until December, 1886, after the lapse of more than twenty years. .The maker died in 1874; but partial payments were made by him to 1873. The note was filed as a claim against the estate, within the time the statute requires claims against the estates of deceased persons to be presented. The purpose of this is to require and promote the speedy settlement of estates. The delay of giving notice, contemplated by the parties, evidently terminated with the death of the maker. The circumstances render it improbable that giving tbe notice would be thereafter neglected. Considering the long period the note was permitted to run, the termination of the contemplated delay by the intervening death of the maker, the policy of the statute of limitations, and the purpose of requiring the presentation of claims, and the actual presentation of the note as a claim against the estate of the deceased paaker, we are of opinion, without attempting to establish an inflexible rule, applicable to all cases, that under the circumstances of this case, a court of law will presume that a demand was made within the statutory period for the presentation of claims against the estates of deceased persons. An analogous rule was held in Keithler v. Foster, 22 Ohio St. 27. It is said: “Since then it is settled in this State, that the statute begins to run in cases like this from the time of demand, it would be but reasonable to hold, in the absence of other special circumstances, where no demand is shown to have been made within the statutory period for bringing the action, that for the purpose of setting the statute in operation, a demand will be presumed at the expiration of that period from which the statute will begin to run.” This seems to be- a reasonable and logical rule, which meets the requirements of the law in both classes of cases, where delay is and is not contemplated or intended, and does no violence to the contract of the parties, nor unduly extends the statute of limitations. On this presumption, the application of the rule in equity, as made in Wright v. Paine, supra, may be rested, and all the cases harmonized, without disturbing the former rulings. The presumption may be overcome; but, in order to overcome its force, and arrest the running of the statute, circumstances must be shown sufficient to explain and excuse delay in the assertion of claims, that would otherwise be deemed stale. Mere proof that demand was made in fact at a time later than that at which the law presumes a demand, is of itself insufficient. -

The second replication of plaintiff, as amended, alleges facts which are intended as an explanation or excuse for the delay in giving notice. The court overruled a demurrer to this replication, and hence its sufficiency is not a question for our consideration. There was no error in sustaining the demurrer to the fourth and fifth replications. Plaintiff’s demurrer to defendant’s second and third rejoinder to the second replication should have been sustained. The third replication alleges that partial payments were made on the note by tbe defendant’s testator to November, 1873, and by tbe defendant, as executrix, to December, 1885. Tbe defendant joined issue on this replication, and for a special rejoinder averred that she did not make any payments on the note at any time within six years next before the commencement of the suit. As the replication alleges that such payments were made, and the rejoinder that they were not made, there was a sufficient joinder on an issue of fact. Under our system of pleading, as provided and regulated by the Code, and the forms of pleas established, a formal similiter in such case is unnecessary. These conclusions render unnecessary a decision of the other questions argued by counsel.

Reversed and remanded.

McClellan, J., not sitting, having been of counsel.