Williams v. National Bank

Yellott, J., delivered the opinion of the Court. The suit instituted in the Court below was on a promissory note signed by Eebecca A. Williams as maker. The declaration avers “that the defendant, on the 13th day of December, 1884, by her promissory note, now over-due, promised to pay, four months after date, to the order of I. Parker Yeazey, twelve thousand dollars, and the said I. Parker Yeazey, before its maturity, endorsed said note to the plaintiff, but the defendant did not pay the same.” It is shown by evidence in the cause, not disputed or contradicted, that this note was deposited with the appellee by I. Parker Veazey as collateral to a note of Graddess Bros, dated December 12th, 1884, for $12,000, at four months payable to the order of said Yeazey and endorsed by by him. Yeazey distinctly states in his testimony ³⁴⁸ that this note of Gaddess Bros, was paid by him on April 14th, 1885, by his check on the Bank of Baltimore to the order of the cashier; the check stating on its face that it was for note due April 12th, 1885. • Simultaneously with the giving of this check his account was credited with the proceeds of a new note of Gaddess Bros, which he says he also paid at maturity by his check on said Bank.

Several other notes of Gaddess Bros, were endorsed by Yeazey and discounted by the Bank. The last note discounted is signed by Yeazey as maker, and dated 16th December, 1885. It reads as follows: “Pour months after date I promise to pay to the order of the National Bank of Baltimore $12,000, with a collateral note of Gaddess Bros, for $12,246.00, with legal interest from date.” This note was not paid at maturity and the firm of Gaddess Bros, having failed and made an assignment for the benefit of creditors, the appellee seeks to hold the ap2>ellant resjjonsible on the note dated December 13th, 1884. The question involved in controversy is whether the note sued on is to be considered and treated as collateral security only for the jjayment of the first note of Gaddess Bros, endorsed by Yeazey, or, as collateral security for all the notes given in the subsequent transactions between Yeazey and the Bank.

This was a question of fact to be determined by the jury from the proof in the cause. It has been decided in a number of cases that it depends on the intention of the parties whether the giving of a new note extinguishes the existing debt and creates another obligation, or is to be considered as a mere renewal of the old note for which it is substituted. If the old debt is extinguished, the collateral security ceases to operate. If the old debt continues to exist there is no extinguishment of the collateral security. ³⁴⁹ This Court has said in Flanagin vs. Hambleton, 44, Md., 227, that “there can he no doubt, that ordinarily the effect of a renewal is to pay the note, even though the old note remains in the Bank untaken up and uncancelled in fact, as is often the case. * * * * It is the intent of the parties and their understanding of it which makes it a renewal.

The word renewal has no legal or strictly technical signification. Whether a note is a renewal of another note, adjudged cases say depends entirely upon the intention of the parties.” And in Haines & Eppley vs. Pearce, 41 Md., 231 , it has been decided that an agreement by the creditor to receive the note or bill absolutely as payment, need not be expressed in terms, hut “may he established by the facts and circumstances attending the transaction.” There can be no doubt that if Yeazey really paid the notes at maturity, by checks drawn on funds belonging to him and deposited in the bank these checks operated as an absolute payment and extinguishment of an existing indebtedness. Chambers vs. Miller, 13 C. B. N. S. 132. If the checks received by the Bank were received