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Gaylord and Others v. Dodge.

need not decide that question. As stated above, the payment of the purchase money by Nathan B. Dodge did not raise a resulting trust in his favor; and in the absence of a declaration of trust by Joshua C. Dodge, or an agreement by him to hold the land in trust, the conveyance by White to him would invest him with an absolute estate in fee simple. We must therefore look to the letter of Nathan B. to Joshua C. Dodge and the response of the latter thereto, to ascertain the nature of the trust created thereby as well as the beneficiaries.

It is insisted by the appellee, that the letters referred to show that Joshua C. Dodge held but a naked title to the property, whilst Nathan B. Dodge, Sr. was the beneficiary and entitled to its exclusive use, control, and disposition. We find nothing in the letters to warrant such a conclusion; nor do we see how it is possible to place such a construction upon them. .

In his letter, Nathan B. Dodge, after describing the property purchased of White, and the terms of the purchase, says: “I have had a deed made out to you for the property where he” (White) “lives, that is, the cottage and the large house, 145 feet on Columbia street.” *** “The property

, that is deeded to you is worth about $8,500, and that I shall want a deed from you in a few days to Mrs. Gaylord's children and Mrs. Chadwick's. I shall send on a deed for .you to sign in a few days. The property is now in your name, and I wish you would tell your wife how it is situated now, that she would know all about it if you should be taken away; and if I should, I want that property that is deeded to you to be made over to the four children, the rents and profits to be paid them yearly for their support, and when they become twenty-one years of age to have the property in fee simple, to dispose of as they please. I think I have bought the White property very low. It cost him sixteen thousand dollars, and as property is all the time advancing, it must bring that again; but I shall not sell it, as it is in a good location, and will let the children have it.To this

Gaylord and Others v. Dodge.

Joshua C. Dodge responded, accepting the trust as declared in the letter to him.

There is certainly nothing in these letters creating a trust in favor of Nathan B. Dodge, the decedent, or conferring on him the right to the use, control, or disposition of the property. We think they did create a trust in favor of the children of Mrs. Gaylord and Mrs. Chadwick, which a court of equity would have enforced.

It is true, that Joshua C. Dodge did not execute the trust according to the terms of the agreement, but, at the request of the decedent, conveyed the property to him for life and then in separate parcels to Mrs. Gaylord and Mrs. Chadwick for life, with remainders to their children in fee. This variation, however, did not in any wise affect the rights of the appellee, and therefore affords to her no cause of complaint.

From the view thus taken of the case, we conclude that Nathan B. Dodge was not, at any time during the coverture, seized in fee simple of the premises in controversy, nor had he any equitable interest therein at the time of his death, and hence, that no interest therein descended from the decedent to the appellee, under the statute.

We think the evidence did not sustain the finding of the court, and for that reason a new trial should have been granted.

The judgment is reversed, with costs, and the cause remanded for a new trial, and for further proceedings in accordance with this opinion.

GREGORY, J., was absent.

R. Jones, S. A. Huf, B. W. Langdon, and R. P. Ranney, for appellants.

J. A. Stein, W. C. Wilson, and Z. Baird, for appellee.

Pierce v. Goldsberry.

PIERCE V. GOLDSBERRY.

PRINCIPAL AND SURETY.-Extension of Time.- Contract.-An oral agreement by the payee of a promisory note with the principal maker, without the knowledge or consent of the surety whose suretyship is known to the payee, to extend the time of payment during a definite period beyond the maturity of the paper, is valid, and releases the surety, if founded upon a sufficient consideration.

SAME.

Consideration.-Interest.-The oral agreement of the principal debtor to pay merely the same interest that the note would have borne if the indulgence had been given voluntarily, is a sufficient consideration for such a promise of forbearance.

APPEAL from the Tippecanoe Common Pleas.

FRAZER, J.-This was a suit upon a promissory note against the appellant and another. The principal question before us is whether the second and third paragraphs of the answer were sufficient. The court below held them bad on demurrer. This ruling involved but a single question, to wit, whether an oral agreement by the payee with the principal maker of the note, to extend the time of payment during a definite period beyond the maturity of the paper is valid, the consideration for such further indulgence being a similar agreement by the principal to pay interest at the rate of ten per cent. per annum during the time of extension of payment after maturity, the defendant being merely a surety, which was known to the payee, and the agreement having been made without his knowledge or

consent.

At the time of the contract, February 21st, 1866, no greater rate of interest than six per cent. per annum was permitted by law, though that rate was recoverable when the contract was for more. In the case before us, then, the legal effect of the agreement was for precisely the same interest that the note would have borne without the new contract.

It is well settled, that such a contract will, if valid, discharge the surety. It deprives him of the right to pay the

Pierce v. Goldsberry.

debt at maturity, and then to proceed at once to recover from the principal debtor the amount so paid—and thereby it increases his hazard, in view of the fact that the principal may become insolvent before the lapse of the additional time given for payment. It takes from the surety a right which he had under the contract into which he entered, the exercise of which may be essential to his indemnity.

In the case before us the validity of the contract pleaded seems unquestioned, unless it is not founded upon a sufficient consideration. Is the agreement of the principal debtor to pay merely the interest which the note would bave borne, and as might have been required by its terms, if indulgence had been given voluntarily, such sufficient consideration? This inquiry, upon which the highest courts of the several states are not in harmony, is presented for our consideration without the aid of any argument whatever on behalf of the appellee.

This precise question has been determined in the affirmative by the highest courts of New Hampshire, Maine, and Ohio (Wheat v. Kendall, 6 N. II. 504; Bailey v. Adams, 10 id. 162; Chute v. Pattee, 37 Maine, 102; McCombv. Kittridge, 14 0.348); and in the negative in New York (Gahn v. Niemcewicz's Exrs, 11 Wend. 312). It was also probably intended to decide the question in the negative in Harter v. Moore, 5 Blackf. 367, though, as will be seen, that case did not necessarily call for a solution of the question.

A little consideration of the history of the law upon this subject and an examination of the question in the light of elementary principles has satisfied a majority of tlie court that the doctrine as held in New IIampshire, Maine, and Ohio, is correct.

The whole doctrine as to the discharge of sureties by giving time to the principal debtor had its origin in the courts of equity, whence it was finally transplanted into the common law. Sureties are favorites, and will not be held beyond the strict scope of their engagements. In the exigencies of business, men are frequently liable to be called

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Pierce v. Goldsberry.

upon, as an act of neighborly kindness, and without any motive of personal advantage, to become sureties in various ways; and when, in such cases, the principal debtor is overtaken by insolvency, it becomes a question which of two innocent parties shall suffer loss. The utmost good faith is therefore required of the creditor, and the liability of the surety is strictissimi juris.

The original doctrine upon the question in hand was declared by Chancellor STILLINGTON, as early as the reign of Edward IV., that when the creditor, without the consent of the surety, gave time to the principal debtor, by agreement, the surety was discharged; nor was it required that such agreement should be supported by a consideration. And this seems to have been well settled as the rule in England for ages. 1 Spence Eq. Jurisd. 638. But in times quite mod

. crn the doctrine sprung up, as it is now established, that to discharge the surety the agreement to give time must be supported by a consideration. Spence, supra; Chit. Bills, 413.

This brief reference to the history of the law, showing its origin and growth, is made for the purpose of exhibiting it as it existed when our ancestors brought it with them to this continent, that it may distinctly appear that nothing of its ancient condition gives any support whatever to the doctrine of the anomalous cases mentioned, which, as we must think, without a very full consideration of the subject, substantially rule, that an agreement to pay interest for the forbearance of money for a definite time is not a sufficient consideration for a promise to forbear, when the original debt bears the same rate of interest. It is true, that if the time had been voluntarily given, the note would have drawn the same rate of interest promised to be paid. But if this be an argument, it assumes that the principal debtor and surety would, in any event, have failed to pay until the lapse of the period of indulgence given by the agreement. It assumes that men will never discharge an interest bearing obligation to avoid the payment of interest, and that it

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