generally understood between the parties, unless there is some express reservation, that the creditor has no right to call for the principal, until the expiration of the time. The payment of the interest is the consideration of such an agreement, implied from the transaction itself, if not distinctly expressed. The sum 139 received is a payment, not of a part of the principal, or generally, but, specially, of interest, for a certain period. And why is this payment made? Clearly to obtain the delay, and for nothing else. The very idea of a payment of interest in advance presupposes that delay of payment of the principal is to be given for the time. The interest thus paid is not expected to be applied afterward to the principal, or paid back on any contingency, unless there is some agreement of the parties to that effect. Nor are we aware of any principle upon which the maker, after such a payment of interest in advance could before the expiration of the time, on offering to pay the balance, require the creditor to apply any portion of the interest so paid, in discharge of the principal. . . . . The general rule, of course, does not apply where, on the payment of interest in advance, liberty to sue is reserved." Upon similar facts in Wakefield Bank v. Truesdell, 55 Barb. 604, Justice Foster, speaking for the supreme court of New York, says: "He [the cashier of the bank] should have declined to receive the interest at all, or have informed Thompson that he should reserve the right to collect the note at any time. He, however, took the money and indorsed it as interest on the note; not as principal, nor generally, but as interest up to the 26th of February, 1856. And is it not clear that he intended to wait till that time for the principal?" In Woodburn v. Carter, 50 Ind. 376, it is said: "The inference is irresistible that where a creditor receives a payment of interest in advance on his note from the debtor, there is a contract to extend the time of payment during the period for which the interest is paid." The case of Preston v. Henning, 6 Bush, 557, presents facts very similar to those in the present case. In that case the holder of the note, in receiving the interest, gave a receipt for it as general payment. The court say: 140 "Although it appears from the testimony of Speed that he did not intend in accepting it to release the appellant, and that he gave the credit and receipt for it as a general payment, under the advice of his counsel, in order that the transaction might not have that legal effect, he, in fact, received the money as interest paid in advance; while, therefore, it appears that the appellees did not intend that their receipt of the three hundred dollars, nor any of the other payments, should have the legal effect of releasing the appellant, we cannot resist the conclusion that all the payments made were of interest in advance; and it is equally clear that these payments were made by John Preston in consideration of forbearance which, if not expressly promised, it was understood by him would be given. . The prepayments of interest being made as the price of indulgence, and received by the appellees with knowledge of that fact, and without notice to the payer that the forbearance thus paid for would not be given, they were bound by an implied promise to forbear to sue until the expiration of the time for which the interest was paid." In People's Bank v. Pearsons, 30 Vt. 711, the supreme court of Vermont say: "To the question, Why was this interest paid in advance? there can be but one reply. It was to obtain the delay, and for nothing else, and the payment of interest in advance necessarily presupposes that a delay of payment of the principal for the time is to be given.” In Hamilton v. Winterrowd, 43 Ind. 393, it is said: "The payment of interest in advance by a debtor to the creditor, the latter receiving it as such, implies an agreement for forbearance during the time for which such interest is paid, unless there is some agreement or understanding to the contrary." In the present case, no part of the sum paid was intended to be applied on the principal-no part of it was so applied-it was accepted by the appellant as interest to a future date, so indorsed on the note, and there is not a word or line 141 of testimony indicating that the right to sue or otherwise enforce payment prior to the expiration of the time for which interest had been received was reserved by the bank. The present case may be, and we think is, an extreme one. The prepayment was for a period of six days only, but that can make no difference; it rests on principle, and the result is the same, whether the extension is for a day or a year. It was argued by the very able and distinguished counsel for appellant, both at the bar and in the brief, that the receipt of the interest was merely prima facie evidence of a contract to extend, which may be overcome by the circumstances surrounding the cause. But to hold that the mere silence of the parties, the absence of any request to extend, and the like, are circumstances which overthrow the presumption, would be equivalent to holding that the prima facie case must fail unless proof is made of an express agreement to extend. The judgment appealed from will be affirmed. Scott, C. J., and Dunbar, Anders, and Reavis, JJ., concur. INTEREST-PREPAYMENT-FORBEARANCE TO SUE.-The taking of interest in advance on a note is, in the absence of any agreement to the contrary, prima facie evidence of an agreement to forbear collection of the note during the period for which interest has been paid: Skelly v. Bristol Sav. Bank, 63 Conn. 83; 38 Am. St. Rep. 340. But the cases in which payments of either principal or interest have been made before they were due are comparatively few, unless there has been an express stipulation by which the debtor was to derive some special benefit: Monographic note to Hart v. Dorman, 50 Am. Dec. 289. SHUEY V. ADAIR. [18 WASHINGTON, 188.] AGENCY - UNDISCLOSED PRINCIPAL PAROL EVIDENCE TO ESTABLISH AGENCY.-A maker of a note, with nothing on its face to disclose that he is an agent cannot, when sued thereon, introduce parol evidence to exonerate himself from liability by showing that in executing the note he acted only as agent and signed it under an agreement with the payee that the principal alone should be bound. AGENCY-UNDISCLOSED PRINCIPAL-PARTIES.-The sole maker of a note, with nothing on its face disclosing his agency, is not entitled, when sued thereon, to have his alleged principal made a party defendant on the ground that he signed the note as an agent only. NEGOTIABLE INSTRUMENTS - SUBSTITUTION OF NOTE AS DEFENSE.-The maker of a note is not released from liability thereon by an agreement, made after its maturity, between the payee and a third person for the substitution of the latter's note for it, when such agreement is without consideration and remains unexecuted. NEGOTIABLE INSTRUMENTS-PLEADING.-The plea of a maker of a note that its execution is without consideration is insufficient, when such defense can only be established by parol evidence showing that such maker executed the note as agent. McCutcheon & Gilliam, for the appellant. Clise & King, for the respondent. 189 DUNBAR, J. The appellant executed to the Seattle Savings Bank the following note: "$2000.00. Seattle, Wash., May 6th, 1892. "One year after date, without grace, for value received, I promise to pay to the order of the Seattle Savings Bank, at the banking-house of said bank, in the city of Seattle, the sum of two thousand dollars, with interest at the rate of ten per cent per annum payable semi-annually from date hereof until paid. And if suit shall be commenced for the recovery of any amount due upon this note, I agree to pay an attorney's fee of fifty dollars. "No. 230. GEO. B. ADAIR, P. O. Address, City." "Due May 6th, 1893. This note was discounted by the bank to Ballard, Rinehart, Holmes, and Robertson, and the proceeds thereof, the sum of two thousand dollars, was paid by the bank to the above-named parties. In course of time, after the maturity of the note, the bank sued the appellant, the maker of the note. The essential parts of the amended answer were as follows: "3. That at the time said note was so discounted as aforesaid, and in consideration thereof, and of the payment of the said proceeds to them, said Ballard, Rinehart, Holmes, and Robertson agreed to and with said bank and this defendant that they, the said Ballard, Rinehart, Holmes, and Robertson, would, within a few days thereafter, take up the said note and pay the amount thereof to said bank. 190 "4. That at and before the discount of said note as aforesaid, said bank well knew that the same was made and executed by the defendant so as aforesaid for and in behalf of said Ballard, Rinehart, Holmes, and Robertson, and not otherwise, and that the proceeds thereof were to be used by, and for the sole benefit of the said Ballard, Rinehart, Holmes, and Robertson, and that it was discounting the same for, and for the sole benefit of, the said Ballard, Rinehart, Holmes, and Robertson, and the said defendant received no part of the consideration thereof. And the said bank then and there agreed to and with defendant and said Ballard, Rinehart, Holmes, and Robertson that it, the said bank, would look to the said Ballard, Rinehart, Holmes, and Robertson for the payment of said note, and that this defendant should never at any time be held by said bank liable upon or for the note so made by him as aforesaid nor be called upon to pay the same. And the said bank, pursuant to said agreement, has never asked said defendant to pay said note or any part thereof, but on the contrary has at all times held the said Ballard, Rinehart, Holmes, and Robertson liable and responsible to it to pay the same pursuant to the said agreement so made as aforesaid when said note was discounted by it. "5. That there was no other consideration for the note upon which this action is brought, and no part thereof was received by defendant or any other person for him, as is hereinabove stated, all of which was well known to said bank at and before it discounted said note. "6. Defendant, further answering, says, that since he so made and executed said note he has frequently demanded of said Ballard, Rinehart, Holmes, and Robertson, that they pay and take up the said note so made by the defendant as aforesaid, and that they frequently promised him they would do so, but have neglected to carry out their said promise and agreement to and with defendant and said bank. 191 "7. Defendant, further answering, says that about two years after said bank had so discounted said note as aforesaid, it, said bank, entered into an agreement to and with the said Ballard, Rinehart, Holmes, and Robertson that it would accept the note of said Ballard, Rinehart, Holmes, and Robertson for the amount of and in place of the said note so discounted by it for the said Ballard, Rinehart, Holmes, and Robertson as aforesaid, and that the said Ballard, Rinehart, Holmes, and Robertson thereupon agreed to and with said bank that they would make, execute and deliver to said bank their note for the said amount and take up and deliver to defendant said note so discounted for them." The plaintiff interposed a general demurrer to the said. affirmative defense, which demurrer was sustained by the court. Appellant, standing upon his answer, moved the court for an order to bring in the said Ballard, Rinehart, Holmes, and Robertson as necessary and proper parties to this action, which motion was overruled by the court, and judgment was entered, as prayed, for plaintiff and against defendant. From such judg ment an appeal is taken to this court. So that it will be seen that this case involves the question whether an agent who executes a promissory note for his principal can introduce parol evidence to exonerate himself from responsibility; for it may be conceded that paragraph 4 of the answer is sufficient to raise this question. It is contended by the appellant that the authorities sustain this rule, while the respondent contends that the case falls squarely within the rule that the terms of a written contract cannot be contradicted by parol evidence. Many cases have been cited by the counsel for appellant, all of which we have carefully examined, and it must be said that upon this important question there is at least an apparent conflict of authority, and the expressions of different courts are somewhat bewildering. But while there were expressions used by the courts in AM. St. REP., VOL. LXIII.-56 192 |