the others.15 Neither can the assignee of an insolvent debtor by making a partial payment toll the statute as to such debtor, since the debtor has no control over the assignee who is a trustee for both the debtor and creditor on whom the law imposes the duty of making the proper appropriation of the assets of the assignor to the payment of existing debts.16 A second class of cases treat the new promise or part payment as an acknowledgment of the debt by the party making it. According to courts holding this view, one joint contractor has no authority to make a new acknowledgment of a debt, either before or after the statute of limitations has become a bar, so as to bind his coobligor." By this reasoning, the promise to pay an old obligation is not the continuation of the old contract, but it constitutes a new contract supported by the old consideration. The new promise is not a mere mark by which time is counted, but a new 'causa litis." 918 15. Slater v. Lawson (1830) 1 B. & A. 396; Atkins v. Tredgold, supra note 13; Root v. Bradley (1863) 1 Kansas 437; Angell "Limitations" supra note 14, sec. 251. Contra, Fendley v. Shults (1920) 142 Ark. 180, 218 S. W. 197. Williston "Contracts" (1920) Sec. 193, says: "But it certainly cannot be admitted, and it is not and never was the law that where a principal and surety are severally bound for the same debt, the principal can in any way extend the statutory period as to the surety without the assent of the latter given either in his original contract or subsequently." But see Waughop v. Bartlett (1897) 165 Ill. 124, 46 N. E. 197, where payment was made by an executor, who was also surety, on a note. The will under which he acted, directed him to pay the indebtedness. His payment was held to create a new promise which bound the estate, and prevented the statute of limitations from becoming a bar. 16. Marienthal v. Mosler (1866) 16 O. S. 566, 572; Stoddard v. Doane (1856) 7 Gray (Mass.) 387, 388. 17. In Pickett v. Leonard (1866) 34 N. Y. 175, 176, these propositions were stated to be established in prior New York cases: "3. That the existence of a joint indebtedness does not constitute an authority for one joint debtor so to act in this respect for the other. "6. That whether such payment is made before or after the statute has attached, is immaterial." See also Winchell v. Hicks (1859) 18 N. Y. 558; Shoemaker v. Benedict, supra note 13; as recently as 1911, the Court of Appeals reaffirmed its prior position with emphasis in Hoover v. Hubbard (1911) 202 N. Y. 289, 95 N. E. 702. States which have a substantial re-enactment of Lord Tenterden's Act, adhering to this view, hold that a partial payment by one joint obligor, and a subsequent verbal promise by another joint promisor to pay, do not make the latter liable: Pfenninger v. Kokesch (1897) 68 Minn. 81, 70 N. W. 867. See also Bottles v. Miller (1887) 112 Ind. 584; Mozingo v. Ross supra note 5; Koontz v. Hammond (1898) 21 Ind. App. 76; Homewood v. People's Bank (1920) 266 Pa. 116, 109 Atl. 873; White v. Pittsburgh Vein Coal Co. (1920) 266 Pa. 145, 109 Atl. 873; Dwire v. Gentry (1914) 95 Neb. 150, 145 N. W. 350; Hance v. Hair (1874) 25 Oh. St. 349. 18. Bell v. Morrison supra note 10; Copeland v. Collins (1898) 122 N. C. 619, 30 S. E. 315; Willoughby v. Irish (1886) 35 Minn. 63, 67, 27 N. W. 379. In an action against a surety who had never acknowledged the debt, though the principal had done so by making part payment, the Illinois Supreme Court adhered to this second view, holding the surety was not liable after the statute of limitations had become effective. Its opinion presents splendid reasoning, part of which reads: "Whitcomb v. Whiting infers a new promise from the mere admission of the existence of a past contract, which doctrine this court repudiates. "It is, doubtless, the law that joint debtors, in matters respecting their joint indebtedness, may, to a certain extent, bind each other by their admissions; but this can only be as to facts affecting rights or remedies then existing. The admissions must relate to matters showing what are the terms of a contract already made, or whether it has been performed or otherwise discharged. . . . Each may, doubtless, affect the other by making admissions that would be competent evidence against him to the purport that the debt had not been paid or discharged, etc., but we are aware of no principle of law which sanctions the idea that a co-debtor, merely because he is such, has authority to bind his associates to a new contract, although it may be in regard to the old debt."19 Whether the new promise by the co-obligor is made before or after the statute has become a bar is immaterial, for in the latter part of the opinion in the same case it is said: "The point is made in argument that payment before the bar is complete and payment afterwards, rest upon different principles. In either case, if the running of the statute is arrested, it is because of the new promise, express or implied; and it is that new promise, i. e., contract, resting upon the consideration of the old debt, in either case, where the statute is pleaded, that is replied to take the case out of the statute. The elements of contract must exist in either case." Even knowledge that the principal has made a payment will not toll the statute against the surety. The rule was thus stated by the New York Court of Appeals: "But it is the settled law of this state that payments made by one joint contractor cannot save from the statute of limitations a claim against another joint contractor, and that payments made by the principal debtor cannot save from the statute a claim against the surety; and it makes no difference that the payments were made with the knowledge of the other party liable for the same debt. To make payments effective against a party to save a claim from the statute, they 19. Kallenbach v. Dickinson (1881) 100 Ill. 427, 435; see also Aetna Life Ins. Co. v. McNeely (1897) 166 Ill. 540, 46 N. E. 1130. But if one joint obligor keeps the note alive by payments, it will operate to continue the mortgage as a lien so long as any joint debtor is liable. Ritzmuller v. Neuer (1906) 130 Ill. App. 380, 383; see also Deaton v. Deaton (1902) 109 Ill. App. 7. must have been made by him, or for him by his authorized agent. . But in all cases to make the payments effective they must by previous authorization or subsequent ratification be the payments of the party sought to be affected by them."20 The true doctrine would seem to be to recognize no acknowledgment unless the promisor expressly made it of a debt due at the time, or expressly promised to pay it.21 However, if the promise to pay is made in the belief that the promisor is legally liable on the obligation, though in fact he is not, he is bound nevertheless, for ignorance of the law will not furnish a defense.22 Even though the surety should urge the principal to pay the obligation, and the principal should make partial payment of it, it will have no binding effect on the surety.23 20. McMullen v. Rafferty (1892) 89 N. Y. 456, 459-460. See Coleman v. Forbes (1853) 22 Pr. St. 156; Clark v. Burn (1876) 86 Pa. St. 502; Lawther v. Chappell (1845) 8 Ala. 279. Williston "Contracts" (1920) Sec. 193, says: "Even though a payment on account of the debt be made in the surety's presence or at his request, or is made by the surety himself, but with his principal's money, and on behalf of his principal, the facts have been held insufficient to warrant the inference of a promise by the surety to pay the remainder of the debt. Nor will a new promise or part payment by a surety revive or enlarge the period of limitations against the principal." Consent of the surety that the principal may pay before the statute becomes a bar, agreeing that by so doing the creditor "shall not prejudice your claim upon me for the same debt" does not prevent the bar of the statute. It is not an acknowledgment of the debt: Cockrill v. Sparkes (1863) 1 H. & C. 699. 21. Bell v. Rowland's Admrs. (1808) 3 Ky. 309, 311. As Chief Justice Agnew said in Clark v. Burn supra note 20: "It (the statute) can be tolled only by an express promise or an acknowledgment, so certain and unequivocal, that not only the debt, but the debtor is made certain." Very apt is this language used in the early opinion of Exeter Bank v. Sullivan supra note 10 p. 135-136: "It seems to be now becoming the general opinion, that an acknowledgment of the debt, that will warrant the finding of a new promise, must be an unqualified and direct admission of a present existing debt, which the party is liable and willing to pay. If the debt be admitted, but the debtor at the same time refuses to pay, no promise can be raised by implication. The acknowledgment or new promise is not deemed to be a continuance of the original promise, but a new contract, supported by the original consideration, or evidence of such a contract "If then, the admission of a debt does not, of itself, take the case out of the statute, but is only evidence of a promise which may have that effect, the principle, that an acknowledgment by one joint debtor will take a case out of the statute as to another, falls to the ground. There is nothing left to support it "The admission may prove against all that there is a just debt that has not been paid. But it can go on further. This is not enough. Before a new promise can arise, it must appear, not only that there is a subsisting debt, but that there is such a debt, which the party, to be charged, is willing to pay. The admission of a debt by one does not furnish any ground to presume that another is willing to pay." 22. Langston, Admr. v. Aderhold (1878) 60 Ga. 376. 23. Lash v. Bosarth (1898) 78 Ill. App. 196. The third view was clearly expressed by Mr. Justice Lamar for the Supreme Court of the United States, as follows: "At common law a payment made upon a note by the principal debtor before the completion of the bar of the statute, served to keep the debt alive, both as to himself and the surety. "That is the rule in many of the states of this Union-in all, in fact, where it has not been changed by statute. At common law and in those of the states where the common law rule prevails, a distinction is made between those cases in which a part payment is made by one of several promisors of a note before the statute of limitations has attached and those in which the payment is made after the completion of the bar of the statute; it being held in the former that the debt or demand is kept alive as to all, and in the latter, that it is revived only as to the party making the payment. . . The reason of this distinction lies in the principle that, by withdrawing from a joint debtor the protection of the statute, he is subjected to a new liability not created by the original contract of indebtedness." ""24 However, the courts have disagreed where principal and surety are concerned, they are in accord that a payment or promise by a maker of a note will not affect the running of the statute of limitations as against either an indorser25 or a guarantor.26 The reason is 24. Cross v. Allen (1891) 141 U. S. 528, 535; see Cox v. Bailey (1851) 9 Ga. 467; Slagle v. Box (1916) 124 Ark. 43, 186 S. W. 299; Hooper v. Hooper (1895) 81 Md. 155, 173. In Bergman v. Bly (1895) 66 Fed. 40, 42, the Court of Appeals, in a case coming to it on error from the United States Circuit Court for the District of Wyoming, followed the Supreme Court of Wyoming in Cowhick v. Shingle (1894) 5 Wyo. 87, 37 Pac. 689, in holding that a payment "made on a promissory note by one of two makers jointly and severally liable thereon, does not suspend the running of the statute in favor of the other maker, be he principal or surety." While resting its decision on its obligation to follow the statute as construed by the highest court of the state, the court added, obiter (p. 43): "We think the construction placed upon the Wyoming statute by the Supreme Court of the state a sound one Williston "Contracts" (1920) Vol. I, in a note to Sec. 193, p. 391, says of Cross v. Allen, supra: "In this case the court made the remarkable blunder of confusing the question of payment by a joint debtor with payment by a principal debtor. In all the cases which the court cites of extension of debts by payment made by a principal debtor, the principal and surety were joint debtors and this was the ratio decidendi in those cases. In Cross v. Allen, however, the surety was not a joint debtor." 25. Highland Investment Co. v. K. C. Computing Scales Co. (1919) 277 Mo. 365, 378, 209 S. W. 895, 899; Maddox v. Duncan (1898) 143 Mo. 613, 45 S. W. 688; Hunter v. Robertson (1860) 30 Ga. 479; Mason v. Kilcourse 71 N. J. L. 472, 59 Atl. 21; Smith v. Dowden (1919) 92 N. J. L. 317, 105 Atl. 720. 26. Said the Rhode Island Supreme Court in Browning v. Tucker (1870) 9 R. I. 500, a court which follows the first view: "A new promise made by the maker of a promissory note, after the statute of limitations has once commenced to run against it, does not revive the note as against the guarantor, nor does the absence of the maker from the state bar the operation of the statute in favor of a guarantor who remains that the obligation in these cases is not joint with that of the maker. The contract either of an indorser or a guarantor is independent and collateral. Conversely, payments by the guarantor will not arrest the running of the statute in favor of the maker.27 The true view would seem to be that the statute of limitations bars the remedy but does not extinguish the contract;28 therefore, it may be waived by the debtor, but only as it affects himself. Those opinions which are based upon the reasoning that the statute raises the presumption of payment which may be rebutted do not represent modern thought. Those which hold that, although the old contract is gone, the new promise based upon the old consideration forms an entirely new contract, disregard the prevailing view that past consideration is insufficient to support a contract.29 The true view, which will escape the pitfalls of other well-established principles, is that the statute of limitations is a remedial provision, which may be waived, but only by the party affected or his duly authorized agent. Running of the Statute between Principal and Surety. The statute of limitations may prevent an action by the creditor against the principal, although permitting action against the surety, or vice versa. In such case, the creditor may recover from the one against whom the statute has not yet become a bar.30 If a surety holds assets of the principal as security, they may be reached by the creditor in equity, although action against the surety on the note is barred. If the surety is compelled to pay, he may in turn recover as indemnity from the principal the amount he paid the creditor or be subrogated to the creditor's rights, though the statute would have prevented the creditor from bringing such action against the principal. This he may do even though he pays before action has been therein, and against whom there exists a separate cause of action." See Gardiner v. Nutting (1827) 5 Me. 140. The general rule announced by the Supreme Court of North Carolina in relation of the statute of that state is as follows: "To give this effect to the act of one, there must be a community of interest and a common obligation among them. They must be obligors in a bond, makers of a promissory note, drawers or acceptors of a bill, or joint endorsers of either. An admission, direct or involved in the act of payment by one of either class, under the same measure of responsibility, becomes the legal act of all that class, but does not revive the liability of others of a different class." Wood v. Barber (1884) 90 N. C. 76, 80; Barber v. Absher Co. (1918) 175 N. C. 602, 96 S. E. 43. 27. Thompson v. Brown (1906) 121 Mo. App. 524, 97 S. W. 242. 28. Miles v. Linnell (1867) 97 Mass. 298, 301. 29. Stearns "Suretyship" supra note 1 sec. 16; Williston "Contracts" supra note 24 Secs. 143-144. 30. Reid v. Flippen (1872) 47 Ga. 273. 31. Eastman v. Foster (1844) 8 Met. (Mass.) 19, 24. |