Fant v. Sprigg ( 1879 )

Robinson, J.,

delivered the opinion of the Court.

This bill is filed by William O. Sprigg, to enjoin a suit at law, brought by the Bank of the Yalley, in Virginia, on a single hill for $3000, signed by him and others as sureties for the firm of Grill, Hardman & Stephens.

It appears that in September, 1855, Gill representing the firm of Gill, Hardman & Stephens, in company with Sprigg the complainant, went to Romney, Virginia, for the purpose of adjusting an indebtedness due by said firm to the bank

After a conference between Gill and the officers of the bank, an agreement was executed between Gill, Hardman & Stephens and the hank, whereby the former were to give to the bank, four single hills of $3000 each, payable in one, two, three and four years, one of the single hills to be signed by Sprigg, the complainant, and Samuel A. Pancoast and George Keiter as sureties; and the remaining three by Pancoast and Keiter. Certain collaterals enumerated in the written agreement were also pledged by Gill & Co., with the proviso, that “in case of failure to pay the several bonds to be given for the annual payments as they shall become due, or the failure to pay the interest on the whole debt semi-annually, the hank shall he at liberty to sell the collaterals thus pledged, so that the whole of the debt and interest due to said hank he paid.”

The single bill signed by Sprigg, the complainant, being due and unpaid, the collaterals were sold at public auction for the sum of $2911.20; and the hank claims the right under the written agreement, to apply the same at its discretion to the several single bills mentioned in said agreement.

The complainant on the other hand claims, that the entire proceeds shall he applied primarily, to the payment of the single hill signed by him as surety of Gill & Co. in pursuance of an agreement between the bank and himself, and upon the faith of which he was induced to sign the same.

Conceding then, that according to the legal construction of the written agreement, the hank would have the right to apply the proceeds from the collaterals to the payment of either, or to all the single hills, the question is, whether it is competent for the complainant to set up a parol agreement between the hank and himself in regard to the application of such proceeds, inconsistent with the written agreement? As between the parties to a written agreement, parol evidence as a general rule is inadmissible to contradict or vary the terms of the instrument. Here however, it is admitted that the complainant was not originally a party to the agreement of September 19th; hut the argument is, that having been read in his presence, if he afterwards signed the single bill, he must he presumed to have assented to the application of the proceeds from the collaterals, according to the terms and stipulations of said agreement. One, it is true, may assent to and he hound by the terms of a written agreement, although the same may not he signed by him. But if it is proposed to make the complainant a party to the written agreement between the hank and Grill & Co., on the ground that he signed the single hill with knowledge of the contents of the agreement, it is surely competent for him to prove that although the agreement was read in his presence, he refused to sign the single hill, unless the hank would agree to apply the collaterals primarily to the payment of said single hill. Such an agreement it is true, may he inconsistent with the written agreement between the hank and Grill & Co., hut then the complainant was not a party to that agreement, and the evidence offered by him shows that he never assented to it. In no sense can it he said that such evidence is liable to objection on the ground that it contradicts the terms of a written agreement, because such an objection could apply only to the parties to the agreement.

But then again it is argued that the sureties on the three other single hills may have the right to insist upon the application of the proceeds of the collaterals according to the terms of the written agreement. We are not to he understood as expressing any opinion in regard to their rights. As between them and the banh, it may be true, that no parol agreement between the bank and the complainant could affect their rights under the written agreement by which the collaterals were pledged. They, however, are not parties to this suit. The controversy here is between the bank and the complainant, and the question is, whether as between them, the complainant is precluded from showing that he was induced to sign the single bill on which the suit was brought, upon the faith of an agreement with the bank that certain collaterals held by it should be applied primarily to the payment of said single bill, even though such parol agreement may be inconsistent with the terms of a written agreement made between the bank and other parties ? And we are of opinion that he is not.

Such evidence proves a distinct and independent agreement between the bank and the complainant, and it is by this agreement that the rights of the parties to this suit are to be determined.

If so, the only question is, whether this parol agreement is satisfactorily established ? .

And in regard to this, Mr. Gill says:

“That although Mr. Sprigg was requested to sign one of the three other notes, he refused to do so, stating as a reason that if the collaterals were forced to a sale they might be exhausted before such notes were reached.”

The witness, Pancoast, states : “ That Sprigg refused to sign any other than the first note maturing, saying at the time that the collaterals might be exhausted and leave him in the lurch.”

Mr. Sprigg, the complainant, testifies, that:

“ In the afternoon he was sent for to come to the bank; he went and was somewhat surprised to find upon hearing the written agreement read, that he was again asked to become liable for Gill, Hardman & Stephens. That he was indignant and spoke of the manner in which he had been treated. The note handed to him by the president of the bank was the one drawn at four years after date. After a good deal of discussion he wás persuaded to sign the note drawn at one year, upon the assurance that the securities were ample under any circumstances to cover that. He refused to sign the note at four years because the collaterals might be exhausted before it would become due; and it was distinctly understood that the collaterals should he first applied to the note which he signed.”

(Decided 26th February, 1879.)

Upon this testimony we are of opinion that the agreement relied on by the complainant is satisfactorily established ; and that under it the hank is bound to apply the proceeds from the collaterals to the payment of the single bill signed by him.

As thus applied, the complainant is indebted to the bank in the sum of $364.78, with interest from August 13th, 1857.

For these reasons the decree below ascertaining this sum to he due by the appellee, and enjoining the appellant from prosecuting a suit at law to recover any greater sum, will he affirmed.

Decree affirmed, and cause remanded.