Rumberger versus Golden

Supreme Court of Pennsylvania1881-11-14

99 Pa. 34

Summary · law.co

Holding. The defendant's affidavits failed to establish a valid legal defense, and the court directed entry of judgment against the defendant for the appropriate amount unless other lawful grounds were presented to prevent such judgment.

A creditor and debtor agreed to extend a loan's maturity date by ten years, with the debt continuing to bear interest at the same six percent rate as before. The debtor sought to pay off the note, but the creditor preferred that he retain the money since she could not reinvest it elsewhere at that rate. The court examined whether this agreement to extend the payment deadline had legal validity by analyzing what, if anything, served as consideration for the extension.

The court concluded that the agreement lacked sufficient consideration to be enforceable. Merely continuing the same interest rate on an already-existing debt, or payment of legally owed interest after maturity, does not constitute new consideration that would support a contract to extend time. The court distinguished cases involving goods, leases, and other contracts where changes in performance terms create mutual advantages and disadvantages; those changes can support new agreements. However, extension agreements for money obligations stand on different footing—a promise to accept the same interest rate previously agreed upon provides no new benefit or detriment to justify enforcing the extension.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether an agreement to extend a loan's maturity date has valid consideration
Whether continuation of the same interest rate constitutes sufficient consideration for a time extension
Distinction between extension agreements for money obligations versus other types of contracts

Procedural posture

The case was appealed from a lower court, and the appellate court reviewed the defendant's affidavits to determine whether they presented a valid legal defense.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Mr. Justice Trunkey

delivered the opinion of the court, November 14th 1881.

Shortly after the note became due the parties agreed that the maker should have the money for ten years from the date of the original loan, June 1st, 1877, at six per centum interest. The note had been and was bearing the same rate. The maker wanted to pay it; the holder wanted him to keep the money, because she could not loan it to the bank or commissioners at that rate, and their negotiations resulted in the agreement for extension of time for payment. What was the consideration in this arrangement? It has been decided, none at all. Partridge v. Partridge, 2 Wr. 78. In that case, before the debt became due, the parties agreed that the time of payment should be extended to certain dates, the money to bear interest at the rate of six per centum per annum, and when due the debtor was to deposit it in specie, in a bank in Pittsburgh, and send the certificate to the creditor, who resided in Ohio. This was held to be nudum pactum, for it was already the contract relation of the parties. Having been made before the debt was due, it was deemed of like effect as if made after, though in many cases a contract m ade before, would be binding, which would not, if made after; as where a creditor, in consideration of the payment of interest in advance, agrees, before the debt has become due, to extend the time for payment.

Payment of usury, after the maturity of a note, is a payment which may be applied on the debt, which payment the debtor was under obligation to make, and therefore is not a consideration for a contract; but payment of part of a debt, before due, is a consideration sufficient to support a contract to give time: Hartman v. Danner, 24 P. F. S. 36. Where lawful interest, together with usurious, was paid on a debt past due, it was not a consideration for a new contract as to time of payment of the debt: Shaffer v. Clark, 9 Nor. 94. These cases rest on a similar principle as Partridge v. Partridge, supra, namely, that a promise to pay the legal rate of interest made before a debt becomes due, or after, or a part payment of an overdue debt, is not a good consideration for a contract to forbear to sue.

The cases relied on by the defendant do not apply to a loan or obligation for the payment of money. When the time in a contract for the delivery and purchase of goods, before breach, is extended, the mutual promises to deliver and accept and pay, are sufficient consideration for a new contract: Carrier v. Dilworth, 9 P. F. S. 406; McNish v. Reynolds, 10 W. N. C. 26. So, when there is a lease by the year, and before the end of the year the lessor and lessee agree to change the time of payment of tiie rent from the beginning to the end of the month for the next year, the new agreement is valid: Wilgus v. Whitehead, 8 Nor. 131. In these and similar cases the change involves some advantage to one party or disadvantage to the other; and often, if such new agreement were void, one party could mislead the other into a breach of his contract, greatly to his injury.

Wo are of opinion that the defendant’s affidavits set out no legal defence and are insufficient.

The record is remitted with directions to the court below to enter judgment against the defendant for such sum as to right and justice may belong, unless other legal or equitable cause be shown to the court why such judgment should not be entered.