Williams v. Riley Drug Co. , 34 Ga. App. 68 ( 1925 )

Jenkins, P. J.

The principle of law laid down in the second division of the syllabus does not appear to have been heretofore dealt with' either by the Supreme Court of this State or by this court, but the rule adopted appears to be supported by the great weight of general authority. The rule is stated in 32 Cye. 55, as follows: “Forbearance by the creditor or obligee is sufficient consideration for the contract of a surety, although a definite time is not agreed upon; and if, in reliance upon the agreement of the surety, the creditor forbears to bring suit against the principal, or grants him an extension of time within which to pay the debt, or note, the surety is bound.” In 6 Ruling Case Law, 661, it is said: “While it seems to have been thought at one time that the promise to forbear which would serve as a consideration for a guaranty by a third person must be for a definite time, or for a reasonable time, the conclusion reached in the later decisions is that, where there is an agreement to forbear, it will be presumed to be for a reasonable time, in the absence of any stipulation as to a specified time. Such is the legal construction of such a promise. The debtor, therefore, by such a promise, does obtain a right, not only to some delay, but to a reasonable delay, such as, under all the circumstances he is reasonably entitled to. Therefore a promise to forbear, although for an indefinite time, if followed by actual forbearance for a reasonable time, is a valid and sufficient consideration for a promise guaranteeing the payment of a debt.” In discussing this question the New Jersey Court of Errors and Appeals, in United Globe & Rubber Mfg. Co. v. Conrad, 80 N. J. L. 286 (78 Atl. 203, Ann. Cas. 1912 A, 412), speaks as follows: “We •entertain no doubt that an agreement to forbear action at law against the Standard Company for the existing account would furnish a sufficient and lawful consideration for the making of the bond. Such a promise where no period is fixed imports that the forbearance shall be for a reasonable time and (at least if followed by actual forbearance for a reasonable time) furnishes a sufficient consideration for the undertaking of a third party to pay the indebtedness.” To the same effect is a decision of the Supreme Court of Minnesota: “Where the promise to extend for an indefinite time is followed by delay for a reasonable time to enforce payment, it is a good consideration.” Security Nat. Bank' v. Pulver, 131 Minn. 454 (155 N. W. 641).

The difficulty we have encountered in determining the proper rule arises out of certain holdings of our courts in dealing with the question of the discharge of á surety, where, without his consent, the payee of the note has granted indefinite indulgence. In these cases, both the Supreme Court and this court have held that the surety is not discharged, even though such an indefinite promise of indulgence be founded upon a consideration. In Bunn v. Commercial Bank, 98 Ga. 647 (1) (26 S. E. 63), the Supreme Court said: ' “An agreement by the holder and owner of a promissory note with thé maker of the same to extend the time of its payment for an indefinite period, though based upon a valuable consideration, does not discharge a surety on such note from liability. As such an agreement would not prevent the immediate bringing of an action, the making of it really amounts to no more than ‘a mere failure by the creditor to sue as soon as the law allows, or negligence to prosecute with vigor his legal remedies,’ and it therefore stands upon an entirely different footing from an extension for a definite period.” It was held by this court in Ver Nooy v. Pitner, 17 Ga. App. 229 (3) (86 S. E. 456), that, “in order to discharge a surety by an extension of time to the principal, not only must there be an agreement for the extension, but the proof must show that the indulgence was extended for a definite period fixed by the agreement.” The basis of these decisions is that such a promise of indefinite indulgence does not “tie the hands” of the creditor, and therefore affords no basis for the surety’s discharge on account of a change in the nature of the risk which he had assumed. If the question we were called upon to determine, was whether or not .a mere unexecuted and indefinite promise to forbear is sufficient to support an indorsement, we are inclined to believe that the answer would have to be in the negative, on the theory that nothing had been done and nothing had been effectively promised by the payee. But, as was said by this court in Sylvania R. Co. v. Sylvania Lumber Co., 8 Ga. App. 656 (70 S. E. 51), “an indefinite or unilateral agreement is binding upon the parties .as to its terms so far as they have mutually acted upon themand, in accordance with this principle, where indulgence is. promised in consideration of an indorsement, and on the faith of the indorsement indulgence is actually extended-for a reasonable time, the indorser should not be allowed to obtain for his principal such definite benefits and then absolve himself from liability, on--the theory that the agreement, though rendered certain by being acted on, was originally too indefinite to be enforceable. Nor does it seem that'the underlying principles here involved are the- same as in those eases dealing with the question of a surety’s discharge. In a case of the character now before -us, there was, to begin -with, a potential but perhaps unenforceable benefit inuring to the indorser’s principal, which has subsequently ripened into an actual and definite benefit by virtue of the execution of the promise. We might, for illustration, suppose that the indefinite consideration promised by the payee on the faith of the indorsement had consisted of something other than indulgence. In such a case, had the consideration thus promised by the payee been actually bestowed, it could not be recovered back or reclaimed, on the theory that the nature of his promise prior to its execution was vague and indefinite. Neither should the indorser be allowed to disclaim his- contract of indorsement after his principal has actually' secured definite and certain benefits in accordance with the payee’s promise made to him. A surety is not discharged on account of an unauthorized but indefinite indulgence granted to his principal, for the reason that his risk has never been increased. In such a case it is not a question of whether -a consideration has gone to the principal. After the principal has actually received the indulgence, he has in fact received a contractual benefit, but the surety was not hurt. There was never a time when the principal could claim and demand future indulgence; and, as was said in the Bunn case (98 Ga. 647), the fact that it was actually granted could amount to nothing more than negligence on the part of the creditor to prosecute with -vigor his legal remedies. This does not ordinarily work a discharge. Here, however, it is not a question of a discharge being worked on account of the risk being increased, but the contract of indorsement is good if supported by a consideration moving to the principal debtor; and since the principal, on the faith of the indorser’s promise, has actually enjoyed the fruits and benefits made certain by such actual performance, the contract of indorsement can not be said to be a mere nudum pactum and consequently unenforceable.

Judgment affirmed.

Stephens and Bell, JJ., concur.