There is no doubt that an agreement by the creditor to forbear the collection of a debt presently due is a good consideration for an absolute or conditional promise of a third person to pay the debt, or for any obligation he may assume in respect thereto.
Defendant endorsed a promissory note made between her husband and payee plaintiff as security for a preexisting debt. The promissory note, though not actually presented for two years, was due upon demand. The trial court ruled in favor of plaintiff. On appeal, judgment was affirmed because a promissory note must be supported by consideration where the suit is between the original parties to the agreement.
Did the evidence sufficiently establish any consideration for the endorsement?
The court held that a contract must be supported by consideration, and defendant did not receive any consideration in exchange for her endorsement of the promissory note, because plaintiff did not promise to forego collection of the note for any period of time. The court also held that when the suit is between the endorser and the payee of a promissory note, the payee does not qualify as a bona fide holder of the note, and inquiry into adequate consideration in such a case can be made.