Brown v. Latham

The issue is on the replication of a new promise by the defendant within six years from the date of the writ. Such promise need not be express; it may be implied. The inference that the defendant, within six years prior to the date of the writ, made such new promise, may be drawn from such declarations made, or acts done (including silence under some circumstances), at a particular time within the six years, as show his acknowledgment at that time that the debt was unpaid; that he was liable to pay it, and that he was then willing to pay it. Mere payment is not such an acknowledgment. It must appear that the payment was a partial one, leaving a part of the debt unpaid, and that the debtor so understood it. If this does not appear, the payment does not show his acknowledgment of his liability and willingness to make another payment. U.S. v. Wilder, 13 Wall. 254; Tippetts v. Heane, 1 C. M. R. 252. Payment of a part is not enough, unless it is made under such circumstances that a promise to pay the remainder may be reasonably inferred from it. Livermore v. Rand, 26 N.H. 85-90; Morgan v. Rowlands, L. R., 7 Q. B. 493.

In this case, the defendant, within six years of the date of the writ, neither made a partial payment, nor assented to any being made for his benefit. Within that time he has neither done nor said, nor omitted to do or to say, anything from which a new promise can be implied. Assuming, for the purposes of this case, that the plaintiff's receipt of the proceeds of the collateral security, and his application of them in part payment of the debt, were in every sense legal and right, there are many cases in which the creditor's legal receipt and application of a payment do not show a new promise of the debtor. Mills v. Fowkes, 5 Bing. N.C. 455; Nash v. Hodgson, 6 DeG. M. G. 474; 31 Eng. L. and Eq. 555; Burn v. Boulton, 2 C. B. 476; Bank v. Wooddy, 6 Eng. 638; Wood v. Wylds, 6 Eng. 754; Pond v. Williams, 1 Gray 630; 3 Par. Con. 76, and note; Walker v. Butler, 6 El. Bl. 506.

But such payment need not be made by the party himself. It may be made by an agent duly authorized for that purpose, and payment so made will be as effectual as if made by the principal. But it is not enough that the agent is authorized to make the payment; his authority must enable him to bind the principal by a promise to pay, and such authority cannot be implied from the bare authority to make the payment. Winchell v. Hicks,18 N. Y. 558.

So it is settled by numerous authorities that a payment by assignees in bankruptcy or insolvency does not take a case out of the statute. Roscoe v. Hale, 7 Gray 274; Stoddard v. Doane, ib. 387; Pickett v. Leonard,34 N.Y. 175; Roosevelt v. Mark, 6 Johns. Ch. 292; Davies v. Edwards, 7 Exch. 22; 1 Sm. Lead. Cas. 869, 890. And this is upon the ground, not that the payment was not authorized, but that the authority did not extend to binding the party by an acknowledgment of the debt and a promise to pay it.

What was the contract between these parties, and what was its legal effect? The defendant placed in the plaintiffs hands the notes, accounts, and chattels, as collateral security for the note in suit. He authorized the plaintiff to collect and convert them into money, and apply the proceeds in payment of the note. He, in fact, made an assignment of that part of his property for the payment of the plaintiff's debt. He was the assignor, the plaintiff the assignee; and it is the same in principle as if he had made an assignment of all his property for the benefit of all his creditors. This was the whole extent of his contract, and the limit of the plaintiff's authority. The plaintiff's right, in this case, to receive the proceeds and to apply them in part payment, and his exercise of that right within six years of the date of the writ, were neither a promise made by the defendant within that time to pay the residue of the debt, nor an acknowledgment made by the defendant within that time of his liability and willingness to pay the residue, nor evidence from which it can be inferred that within that time the defendant made, or intended to make, or was understood to make, such promise or acknowledgment. What the defendant did in 1862 was an acknowledgment of a liability and a promise to pay at that time, but it has no tendency to prove that he afterwards made such promise and acknowledgment, or authorized them to be made. The placing of the security in the plaintiff's hands was of no greater force or effect than the giving of the note itself. It was not understood or intended to be a future promise, or a future acknowledgment of a future liability and a future willingness to pay; nor is there any evidence of knowledge on the part of the defendant of the collection or application of the money upon the note, or of any information in regard to it, from the date of the note in suit until this suit was brought, so that the defendant's assent to the indorsement cannot be presumed. How, then, can it be said that the indorsement relied on by the plaintiff is evidence of an acknowledgment and a willingness to pay, from which a promise to pay the balance can be implied? How can the assent of the defendant be presumed, when he had no knowledge? How can such payment be treated as part payment of a greater debt? What is there to show that the defendant did not understand, when the collateral was placed in the plaintiff's hands, that it was not sufficient to satisfy the principal debt? If no promise can be implied from a payment by assignees in bankruptcy, or in insolvency, or in case of a voluntary assignment, certainly none can be implied from the facts disclosed in this case. When the defendant placed the collateral in the plaintiff's hands, he conferred upon him authority only to collect and apply the proceeds upon his note. He made the plaintiff his agent for that purpose alone. He set apart so much of his property, and placed it in the plaintiff's hands as security for his debt. The plaintiff can stand no better than if the collateral had been placed in the hands of a third party, with authority only to collect and apply the proceeds on the plaintiff's debt. Under such circumstances the application could not be treated as a payment from which a new promise could be implied, for the obvious reason that the agent's authority did not go to that extent. If the payment by the agent under such circumstances is such that a new promise may be implied from it, then the principal is bound by the act of the agent beyond the scope of his authority.

If, then, the agent would have no power to bind his principal by a new promise, unless specially authorized for that purpose, much less would the plaintiff who makes the application of the defendant's property. Smith v. Coon, 22 La. An. 445; Lincoln v. Johnson, 43 Vt. 74; Graham v. Selover, 59 Barb. 313; Harper v. Fairley, 53 N.Y. 442; Read v. Hurd, 7 Wend. 408; Lyon v. State Bank, 12 Ala. 508; Smith v. Ryan, 39 N.Y. 484; S.C.,66 N. Y. 352; 10 Bos. 122.

The plaintiff relies upon some authorities which recognize the doctrine that a debtor's giving collateral security, and the creditor's application of the proceeds of it within a reasonable time, are evidence of a new promise made at the time of the application. The qualification of a reasonable time relieves the doctrine of a degree of injustice, but furnishes no sound foundation. It signifies that the doctrine is based upon the creditor's authority to receive the proceeds of the security in payment of the debt within a reasonable time; but the creditor's lien upon the pledged property, and his authority to appropriate the proceeds, are not restricted in that way. He is authorized to receive the proceeds after the lapse of a reasonable time, and apply them to the debt; but what he receives after the expiration of a reasonable time is as much a payment as what he receives before, and his authority in: the former case is as clear as in the latter. His authority, in both cases, is to receive payment out of the proceeds. The foundation of the doctrine of a new promise of the debtor within a reasonable time, supposed to exist in a limited authority of the creditor to receive payment derived from collateral security within a reasonable time, wholly fails.

There is a material difference between receiving a payment, and making one. The plaintiff's authority was not to make a payment of the proceeds, but to receive them in payment; and, whether what he did was receiving a payment or making one, it was not done by the defendant, or by his authority, within six years of the date of the writ, and it is immaterial whether it was done by the plaintiff within a reasonable time.

Authority given the plaintiff by the defendant, to receive the proceeds of the security within or beyond a reasonable time, is no evidence of authority given him to bind the defendant at any time by a new promise or acknowledgment. If the plaintiff's receipt of payment of part of the debt from the security within the six years was, for some purposes, a payment made by the defendant, it was not made under such circumstances that his promise to pay the remainder can reasonably be inferred from it.

Exception sustained. Motion for nonsuit granted.