Lawrence v. Baker , 8 N.Y. St. Rep. 563 ( 1887 )

Learned, P. J.:

Tbe giving by a debtor of a note of a third person to apply on his debt is a payment under the statute of limitations (Smith v. Ryan, 66 N. Y., 352; Code Civ. Pro., § 395), because it is immaterial, so far as the effect of payment goes, whether the debtor pays in cash or in chattels, or in the obligation of another. In either case he parts with something of value and transfers it to the creditor to apply on the debt. But when he gives his own note he parts with nothing of value. He only makes a new promise in a new form. He makes a written acknowledgment or promise under the section above cited. (Kincaid v. Archibald, 13 N. Y., 189.)

Whether he makes any written acknowledgment or promise except to the extent of the note which he gives, seems to be doubtful. A man who makes a note promising to pay $300 does not thereby acknowledge that he owes, nor does he promise to pay $460. If there be any presumption, it is that the amount of the note is all that he owes. At any rate, the time when the acknowledgment or promise is actually delivered is the time when it takes effect, in respect to the statute of limitations, as a written promise or acknowledgment. (Kincaid v. Archibald, ut supra.) If, then, the giving of the $300 note was an acknowledgment or pi’omise under section 395, in respect to the alleged residue of the debt, it was such at delivery; and the statute of limitations began again to run from that time as to the alleged residue. As to the $300 the statute did not begin to run until maturity of the note, three months later. Assuming, then (which I doubt), that the giving of the $300 note was an acknowledgment or promise as to the alleged balance of $162, its effect was to make the statute of limitations run as to the $162 from July 1, 1878, the time of the giving of the note; while as to the note itself the statute would begin to run only from maturity, viz., October 4, 1878. The plaintiff at once had the note discounted at the bank. No direct proof is given of the payment of the note; but it may be inferred that it was paid by defendant at some time, whether before or after maturity is not shown. This action was commenced September 29, 1884. If, then, the defendant paid that note a week before it was payable, all the plaintiff’s argument falls. And if the plaintiff tries to take a case oat of the statute of limitations on. the ground of a payment, he should show positively when that payment was made.

But even assuming that payment was made on the exact day of maturity, the plaintiff is no better off. The defendant could not avoid the payment. The note had passed into the hands of the bank and was evidently negotiable. The defendant had no alternative but to pay. He could not have defended on the ground that he owed plaintiff nothing. Now there is no mysterious virtue in a payment. It is held to avoid the statute of limitations, because, by making a partial payment the debtor admits the debt. The courts say: “ Why did he make a partial payment if he did not owe the debt.” (Harper v. Fairley, 53 N. Y., 412.) Now when the debtor is in such a position that he has to make the so-called payment, whether he owes the whole debt or not, then there is no longer any admission. This defendant was obliged to pay his note at the bank whether he owed plaintiff any balance or not; or even whether he had ever owed plaintiff an'ything. Therefore, the payment of the note was no admission by the defendant of any indebtedness to the plaintiff. The bank was not plaintiff’s agent, but held the note in its own right. Defendant’s money, when he paid, did not go to the plaintiff but to the bank. The payment was no admission of any facts except such as might have served as a defense to the note if the defendant had refused to pay. And that he did not owe the plaintiff would not have been such a fact. Therefore, he did not admit his indebtedness to the plaintiff by paying this note. Judgment should be granted for defendant on the nonsuit, with costs, and motion for new trial denied.