Albright et al. v. Griffin.

the pleadings, but the questions thus presented seem to be all involved in the ruling upon the verdict. We therefore confine our consideration to that.

The verdict was as follows:

"1. We find that, on the 20th day of October, 1874, John Albright, with Silas Metzger and George Hartman as his sureties, gave a note, payable in the First National Bank of Shelbyville, Indiana, to plaintiff, Charles Griffin, due one year after date, without relief from valuation or appraisement laws, with ten per cent. interest after maturity, and attorney's fees if suit be instituted on the same, for the sum of $448, and that the amount of money loaned at the time by the plaintiff to John Albright was $400.

"2. We further find that, on the 20th day of October, 1875, John Albright, in the absence of the defendants Silas Metzger and George Hartman, went to the residence of the plaintiff, and paid plaintiff the sum of $96, and gave plaintiff a note, payable in the First National Bank of Shelbyville, Indiana, dated October 20th, 1875, for $400, due one year after date, with ten per cent. interest after maturity, and without relief from valuation or appraisement laws; and that the names of John Albright, Silas Metzger and George Hartman were signed to said note; and that, as to the defendants in this action, the names of Metzger and Hartman, upon said note, were forgeries, and had not been signed by them, or for them with their knowledge and consent; and that the plaintiff, without any knowledge of the forgery of said signatures, received the note from said John Albright, with his genuine signature thereto, and, on receipt of the $96 aforesaid, gave up to John Albright the note for $448, after tearing the signatures to the same almost off, so that there was but one-half inch of paper by which the names were attached to the note; and John Albright gave the note to Silas Metzger soon after the 20th of October, 1875, who has kept and still has it; and that said Metzger or Hartman had no knowledge of the execution of the $400 note, or the payment of the $96 by Al

Albright et al. v. Griffin.

bright to Griffin, until the 20th of October, 1876, when the $400 note was presented to them for payment, when they each notified the plaintiff that the note, as to each of them, was a forgery, and they would not pay it.

"3. There have been no payments on either note except the $96, paid by Albright October 20th, 1875, when the second note was delivered to the plaintiff.

"4. We find that on the 20th of October, 1875, without the knowledge or consent of either Metzger or Hartman, the plaintiff did extend the time of payment of the $400 loaned to Albright by the plaintiff, in which transaction Metzger and Hartman were the sureties of Albright only so far as the first note for $448 was concerned, on the payment of $48, the interest past,due, which was included in the $448 note, and the further sum of $48 as interest in advance on the $400; and that the time for the payment of the $400 note was fixed definitely between the plaintiff and Albright at the time, as one year, to wit, from October 20th, 1875, to October 20th, 1876..

"5. Before the commencement of this suit, to wit, March 29th, 1878, the plaintiff demanded of Silas Metzger the note of October 20th, 1874, which was refused by Metzger; and that at the time of the demand the plaintiff did not offer to return to Mr. Metzger, or to Hartman or Albright, the $96 in money which he had received, or the $400 note of October 20th, 1875, which he still retains in his possession.

"6. A reasonable attorney's fee in this case is $50. "7. This suit was commenced May 6th, 1878."

Upon these facts the jury found that the amount due the plaintiff, if anything, was $511.36, and for that sum the court rendered judgment on the 10th day of April, 1879.

The counsel for the appellants urge several reasons against the right of the plaintiff to a judgment on the verdict. They say that no fraud is shown on the part of Albright; that he made no representation that the signatures of Metzger and Hartman were genuine, and, so far as the verdict shows, did

Albright et al. v. Griffin.

not know that they were not genuine; and that the plaintiff therefore took the note at his own risk. But that, if fraud were conceded, the plaintiff, after notice of the facts, had kept the note and money paid him, and by so doing, and by delaying to bring his action, had lost the right, which otherwise he might have had, of resorting to the original obligation.

These propositions involve to some extent, as we conceive, a misapprehension both of the facts found and of the law applicable to the case.

As to the facts, the complaint shows that the first note in question, whose genuineness is not disputed, was negotiable according to the law merchant; but neither the complaint, answers nor verdict show that the second note was of that character. The statute is, that "notes payable to order or bearer in a bank in this State shall be negotiable as inland bills of exchange." While it appears from the verdict, that both notes were made payable in a bank in the State, neither contained the words of negotiability, "to order or bearer."

As to the question of fraud on the part of Albright, it is enough to say, that, if he knew that the names of Metzger and Hartman were forged to the second note, he perpetrated an actual fraud in procuring the plaintiff to accept it and to surrender the original note; and, if he was ignorant of the fact that the names were forged, his presentation of the note to the plaintiff with those names upon it was, under the circumstances, equivalent to a representation by him that the signatures were genuine, and operated to the plaintiff's prejudice as much as if a wilful misrepresentation had been made. And even if it were conceded that Albright acted in good faith, believing the signatures all genuine, the result would be the same. In that case, the delivery and acceptance of the renewal note came about through the mutual mistake of Albright and the plaintiff, and the transaction was no more binding on the latter than if he had been drawn into it by fraud.

It necessarily follows that there was no such agreement for

Albright et al. v. Griffin.

the extension of time as operated to discharge the sureties. The receipt of the $96, to be applied one-half to the principal debt and the remainder as interest for the ensuing year, was not a separate transaction, unaffected by the fraud or mistake connected with the receipt of the note. The entire debt was due to the plaintiff, and, upon learning the deception practiced upon him, he had a right to disregard the terms of his agreement with Albright, and treat the whole sum received as a payment on the debt at the date when he received it, and was equally free to bring an action upon the original note. It is only a valid contract for the extension of time, which restricts the creditor's right to sue, that discharges the surety. Lemmon v. Whitman, 75 Ind. 315.

Moreover, it is not found that the appellee had notice that the appellants were sureties, and, without such notice, his agreement to extend the time did not discharge the sureties. Davenport v. King, 63 Ind. 64; Arms v. Beitman, 73 Ind. 85.

The case of Wilkins v. Reed, 6 Greenl. 220, is much in point. It was an action of assumpsit against the makers of a promissory note, with the common money counts. The opinion of the court is as follows: "The note declared on is, in form, a joint one, and the case finds that it was never signed by Libby, or by his authority, and, therefore, the action is not maintainable on the first count; and the only question is, whether it is on either of the general counts upon the original cause of action. The note being negotiable, is said to have merged all implied promises, and that, therefore, the remedy of the plaintiffs exists only against Reed upon the note, on which he may sustain a several action against him. There is no doubt as to the principle relied on by the defendants, where the parties to the implied and the express promise are the same. Nor is there any doubt that, when a creditor of two persons knowingly and intentionally takes the security of one of them only, which security is valid in law, the other original debtor is considered as discharged. But, in the present case, there is no pretence for supposing that the plaintiffs ever intended to extin

Albrightiet al. v. Griffin.

guish the liability of Libby. The very form of the signature of the note proves the contrary. Libby never could be sued on the original account, except by the present plaintiffs; and, in such an action, the verdict and judgment in this action would be pleadable in bar. He can not, therefore, be endangered, as the note is void in respect to him. Perfect justice has been done by the verdict, and both defendants are safe.”

The same doctrine is declared in Perrin v. Keene, 19 Me. 355, which arose upon a note given for a partnership liability, executed after dissolution of the firm, by one member of the firm. It is said: "This note, given without authority, does not extinguish the account. If it did, it would be a new cause of action. If not, then the account remains the same subsisting demand and may be brought in by way of amendment. 5 Pick. 303. If the notes were given without authority, they were not a payment of the debt, and the account remains undischarged. It may be said, that the note binds the agent or partner who made it, even if he undertakes to use the copartnership name without authority. The answer is, it can bind him alone, and the plaintiffs did not intend to take the note of Weston alone. They meant to have the security of the copartnership. The note, then, being the note of Weston alone, the presumption of payment is rebutted." See also 2 Daniels Neg. Inst. (2d ed.), sec. 1369.

The taking of the second note, and surrender of the first, even if there had been no fraud or mistake, did not operate as a payment or extinguishment of the original obligation, and, upon default in the payment of the latter, the plaintiff was remitted to his right of action on the former instrument. This is the well settled rule in this State, as well as elsewhere. Tyner v. Stoops, 11 Ind. 22; Stevens v. Anderson, 30 Ind. 391; Maxwell v. Day, 45 Ind. 509; Alford v. Baker, 53 Ind. 279; Hill v. Sleeper, 58 Ind. 221; Bristol M. & M. Co. v. Probasco, 64 Ind. 406; Smith v. Bettger, 68 Ind. 254.

These cases all recognize the doctrine as stated in Muldon v. Whitlock, 1 Cowen, 290, that "no principle of law is better