Susquehanna Fertilizer Co. v. Thomas H. White & Co. ( 1887 )

Yellott, J.,

delivered the opinion of the Court.

The appellant, who was plaintiff below, was a body corporate, having been duly incorporated under the laws of Maryland; and the defendant below was doing business under the name of Thomas H. White & Company. The plaintiff was engaged in the manufacture and sale of fertilizers, and one Passmore was its manager and treasurer. On the 13th of June, 1885, Thomas H. White stated to Passmore that he had in his possession a promissory note drawn hy the Rialto Guano Company, payable to their own order, and endorsed by Lippman Seldner. He informed Passmore -that this note was the property of a western party, a customer of his firm, who had instructed him to purchase acid phosphate to the amount of said note. He said that the standing of the Rialto Guano Company was good and that the note was “all right.” On the 15th of June, 1885, the transaction was closed by the delivery of the phosphate to the defendant from whom the plaintiff received the said promissory note, which was not, however, endorsed by Thomas H. White and Company.

As evidence in the record is what is termed a sale note, which is a memorandum or account of the sale and delivery of one hundred and sixty tons of phosphate, and appended thereto is a receipt signed by Thomas H. White & Co., and containing the following words:

“ Terms: Settlement herewith by note' of the Rialto Guano Co. due Sept. 23rd, 26th, ’85, payable to their own order and endorsed by L. Seldner.”

The promissory note of the Rialto Guano Co. presented for payment at maturity, and not being paid, was protested ; and subsequently an action of assumpsit was brought against Thomas H. White & Co. for the price of the goods thus sold and delivered. The verdict and judgment being for the defendant, the plaintiff has brought the questions involved in controversy into this Court by an appeal.

The appellee contends that the promissory note was taken by the plaintiff as absolute payment for the fertilizers, and .that the transaction was simply an exchange of the goods for the note. There is a mass of conflicting testimony; the plaintiff endeavoring to prove that the note was not received as payment, unless it was paid at maturity; and the defendant seeking to show that the transaction was fully consummated hy the transfer of the note or, in other words, that there was simply an exchange of paper for goods without further liability on the part of said defendant. The questions for determination, on this appeal, are presented, by the exceptions taken by the plaintiff to the refusal of the Court below,to permit the introduction of testimony tending to prove that by a certain usage among the merchants of Baltimore, a peculiar meaning is attached to the word settlement, and to the rejection of its first and third prayers, and to the granting of the defendant’s first and fifth prayers. It is conceded that the note of the Rialto Guano Co. was not endorsed by defendant, and has never been paid; both its maker and endorser having become insolvent before its maturity.

The plaintiff offered to prove by a witness that the word “ settlement,” as used in contracts for the sale of merchandise, has a recognized meaning in commercial usage in the City of Baltimore. He also offered to .prove what such meaning is. The Court refused to admit the proof as offered; and its refusal forms the foundation for the appellant’s first bill of exception.

It cannot be controverted that the principle has been established by adjudication that, “ in commercial instruments and written contracts, the usage of a particular trade, profession or place” may be proved for the purpose of ascertaining the meaning of certain words, the signification of which may be doubtful. It is not to be denied that if a word has acquired a peculiar meaning in a certain trade or business, either local or' general, that meaning will be applied to it in the construction of written instruments affecting the transactions growing out of that trade or business ; but the fact that the word has acquired such meaning must be distinctly proved by the adduction of satisfactory evidence. Allegre’s Adm’rs vs. Md. Ins. Co., 2 G. & J., 137; Taylor vs. Briggs, 2 Carr. & P., 525; Murray vs. Hatch, 6 Mass., 465; Coit & Pierpont vs. Commercial Ins. Co., 7 John., 385.

And it is apparent that the tendency of the American decisions is to restrict, rather than to extend, the application of the principle first established by the sanction of judicial authority in England, and subsequently recognized and adopted in this country. In Allen vs. Dykers, 3 Hill, 597, Nelson, C. J., in delivering the opinion of the Court, said: “We are especially bound to refuse effect to any general or particular usage, when in direct contradiction to the fair and legal import of a written contract.”

And in Bolton vs. Colder & Wilson, 1 Watts, 360, Chief Justice GIibson of the Supreme Court of Pennsylvania, said: “Nothing should be more pertinaciously resisted, than these attempts to transfer the functions of the Judge to the witness’ stand, by evidence of customs in derogation of the general law, that would involve the responsibilities of the parties in rules, whose existence, perhaps, they had no reason to suspect before they came to be applied to their rights. If the existence of a law be so obscure, as to be known to the constitutional expounders of it, only through the evidence of witnesses, it is no extravagant assumption, to take for granted, that the party to be affected was ignorant at the timé when the knowledge •of it would have been most material to him.”

Many of the highest Courts in this country have decided that when the meaning of words is not ambiguous, proof of usage will not be received in the interpretation of contracts. Macomber vs. Parker, 3 Pick., 170; The Schooner Reeside, 2 Sumner, 568; McArthur & Hubbert vs. Sears, 21 Wend., 190; Gage vs. Myers, 26 N. W. Reporter, 525.

The citation of these cases has been introduced for the purpose of showing the tendency of American decisions in the direction already indicated.

In Foley & Woodside vs. Mason, 6 Md., 50, it is said “ that usages in general have fallen in later years, much into disfavor with the Courts, as they have been disliked and discountenanced in all times by the ablest of Judges." In that case it was proposed to show that there existed among the merchants of Baltimore a usage to deliver-merchandise sold for cash without receiving the cash at. the time of delivery, but this Court determined that evidence of such usage was inadmissible. It has been repeatedly decided that a usage must not be in restraint of trade; that it must not conflict with public policy and the law of the land, and that it must be reasonable and not productive of injustice in its practical operation. Mitchell vs. Reynolds, 1 P. W., 181; Bowen vs. Stoddard, 10 Met., 381; Metcalf vs. Weld, 14 Gray, 210.

In the Court below the plaintiff offered to prove the existence of a usage. There was an objection to this offer and the duty then devolved on the party making the offer, to distinctly state what was the usage. This duty was not performed, and it was simply an offer to prove that among the merchants in Baltimore some peculiar meaning was attached to the word settlement. It was not stated what that peculiar meaning was. The Court below was, therefore, without information in relation to the-meaning intended to be proved as existing by usage; and a Court must know what a usage is before it can safely admit evidence of its existence; for if admitted without this information it might subsequently be discovered that it ought to have been excluded; the usage being in conflict with public policy, with the established law of the-land, or unreasonable and unjust in its operation. The-Court below was, therefore, right in rejecting the evidence as offered; but it must not be understood that we decide on this appeal that proof of usage is never admissible for the purpose of explaining the meaning of terms used in the formation of a contract. What we do decide is that such evidence should he admitted with extreme caution, and never until the party offering it has distinctly stated to the Court what he intends to prove.

The second prayer of the plaintiff which was granted by the Court, when taken in connection with the defendant’s first and fifth prayers, also granted, clearly and succinctly enunciates the law controlling this controversy. In the second prayer of the plaintiff the jury are told that the plaintiff is entitled to recover unless they find that the promissory note in question was taken in absolute payment; the plaintiff agreeing to incur the risk of non-payment at maturity, and that the burden of proof establishing such agreement is on the defendant. The plaintiff’s first prayer ignores the possibility of the jury believing from the evidence that the note was taken in absolute payment, and was therefore properly rejected. The plaintiff’s third prayer, which was rejected, tends to mislead the jury. It has been decided by this Court in Phelan vs. Crosby, 2 Gill, 462, that if the note of a third party is received in payment by the plaintiff from the defendant without recourse and is protested and not paid, the plaintiff is not entitled to recover unless the transfer was -fraudulently made. The exposition of legal principles, applicable to evidence in relation to a fraudulent transfer of the note, asked for in this prayer, was clearly enunciated in the plaintiff’s fourth prayer which was granted, and in the two granted prayers of the defendant. In one of these prayers the plaintiff asserts, and in the others the defendant concedes the right to recover in the action if the note was taken in consequence of the false and fraudulent representations of the defendant. These instructions were properly granted.

There is a special exception to the granting of the defendant’s first prayer on the ground that it leaves to the jury the construction of an agreement in writing for the sale of the acid phosphate. But this prayer does not submit any written agreement to the jury for construction. The existence of an agreement to exchange acid phosphate for-the promissory note is left for the finding of the jury on the evidence in the cause. The existence even of a written agreement is often dependent on genuineness of signatures and other facts which must be necessarily left for ascertainment by a jury. But an agreement entered into by parties may be valid or it may be nudum pactum, and its validity is a question to be determined by the Court. The proper functions of the Court have no relation to the finding of the facts upon which the formation of an agreement of this nature depends. It is its duty to determine whether it is binding on the parties and what are its legal operations on the interests involved in controversy. In this case the existence of an agreement to exchange phosphate for the promissory note was a fact conceded by the parties to the cause, and the Court simply instructed the jury upon the legal effect of such agreement upon the hypothesis of their finding certain facts really in dispute. It is clear that the Court, in granting the appellee’s first prayer, did not-disregard the line of demarcation which separates its functions from those of the jury, and require of the latter the performance of a duty which properly devolved on itself.

(Decided 5th January, 1887.)

There being no error in any of the rulings of the Court below its judgment should be affirmed.

Judgment affirmed.