Before MARIS, MAGRUDER and KALODNER, Circuit Judges.
Ralph and Isaac Paiewonsky were indorsers on a promissory note payable to the Government of the Virgin Islands. Having suffered summary judgment against them in a suit on the note in the District Court of the Virgin Islands, they have filed this appeal.
The facts may be summarized as follows:
Under Ordinance of the Municipality of St. Thomas and St. John, Virgin Islands, a government fund was created to help native industries and small businesses by advancing loans to them. Under the authority of this Ordinance,*fn1 Roy P. Gordon was loaned $3,000.He signed a note dated May 24, 1946, promising to pay to the Municipality sixty months after that date the amount of the loan. The note provided for ten installment payments of $300 each with interest at 4%, the first payment to be made on November 23, 1946, and the other payments semi-annually thereafter. The Paiewonskys signed the note as indorsers and expressly waived "presentment, demand, protest and notice of protest of this note at the time of maturity."
Payments were not made by Gordon in accordance with the terms of the note. On February 9, 1953, he signed a "Memorandum Agreement" in the Office of the District Attorney acknowledging the $3,000 indebtedness plus $680 interest, and further stating:
"The Undersigned, in consideration of the forbearance of the said Municipality to institute legal proceedings for the collection of the aforesaid sum of $3,680.00, hereby promises and agrees to pay the same [in specified installments].
"The Undersigned fully understands that this agreement is not in substitution of, but supplemental to any and all written obligations in connection with said indebtedness."
The agreement was witnessed and was "Approved" by Croxton Williams, the Assistant District Attorney. Thereafter, Gordon made several payments totalling $230.00, but no payment was made after June 15, 1953.
This action was brought by the Government of the Virgin Islands*fn2 against Gordon, as maker, and the Paiewonskys, as indorsers. Gordon filed no answer to the complaint. The Paiewonskys admitted the substance of the complaint, and further alleged that they were discharged from liability by virtue of the agreement of February 9, 1953. The Government moved for summary judgment and submitted for the District Court's consideration a copy of the "Memorandum Agreement" and the affidavit of Henry W. de Lagarde, Acting Director of the Virgin Islands Land Authority, deposing that he was in custody of the books recording the Gordon loan and that the amount due thereon was $3,864.89 computed to April 30, 1956.
The Government's motion for summary judgment was granted against Gordon and the Paiewonskys, and it is from the Order granting that motion that the Paiewonskys have appealed.
The Paiewonskys here contend: (1) as persons secondarily liable on the note, they were discharged from liability by the agreement to extend the time of payment; (2) since there were disputed questions of fact raised on the pleadings, summary judgment should not have been granted.
In Government of Virgin Islands v. Brown, 3 Cir., 1955, 221 F.2d 402, this Court ruled on a similar note given to the Municipality of St. Thomas and St. John. In so doing, it was held that the failure of the Government to collect payments on the note as they became due did not, under the Negotiable Instruments Law*fn3 § 120, discharge persons secondarily liable. That section provides:
"A person secondarily liable on the instrument is discharged * * * (6) by any agreement binding upon he holder to extend the time of payment, or to postpone the holder's right to enforce the instrument, unless made with the assent of the party secondarily liable, or ...