Newberry v. Trowbridge ( 1865 )

-Christianct J.:

This suit was brought in June, 1843, by the defendants in error, and Robert Stewart, since deceased, (who were assignees of the Bank of Michigan,) against Oliver Newberry and Benjamin B. Kercheval. The declaration charged them as indorsers of a promissory note made by S. T. Jamieson, dated May 13, 1837, for $3,736, payable to the order of the defendants, at the Bank of Michigan, sixty days after the date thereof. The declaration states the indorsement as having been made by the defendants directly to the plaintiffs.

. To this declaration the defendants pleaded the general issue, and gave a notice, which • is in no way material to ‘the present case.

In 1853, after the death of Stewart, one of the plaintiffs, whose death was suggested, an amended declaration was filed by Trowbridge and Owen, the surviving plaintiffs, which did not materially vary from the first} except that it contained a count against, the defendants, as joint and several makers, and the common counts. But neither of these additional counts become material, as it is admitted there was no evidence applicable to them.

To this amended declaration the defendants pleaded severally the general issue.

In this stage of the case, Kercheval died, and his death being properly suggested, Newberry, by leave of the Court, Sept. 18, 1855, gave notice of sot off under his plea of the general issue to the amended declaration.

The case was tried in 1855, and a judgment obtained by the plaintiffs, which was reversed by the Supremo Court, and a new trial ordered. — 4 Mich., 391.

Newberry, the surviving defendant, having died, the suit was revived against his executors, the j>resent de- . fendants, in March, 1861.

The case, was afterwards twice tried, resulting in a disagreement of the jury.

Upon the fourth trial, November, 1863, a verdict was obtained by the plaintiffs, and judgment rendered thereon, which is now brought to this Court by writ of error, ' upon exceptions to certain rulings of the Court lipón the admission and rejection of evidence, and the giving and refusing instructions to the jury.

The plaintiffs having, on the trial, given evidence tending to show the making of said note, its indorsement by said Newberry and' Kercheval, and that the same had been negotiated to and received by the Bank of Michigan, at or about the time of its date, in renewal of a note then held by the bank, made by said S. T. Jamieson, payable to the order of P. B. Schemer-horn, and indorsed by said Schemerhorn, one Tetterman, and said Oliver Newberry, and which last named note had been before that time discounted by said bank for said Newberry; then sought further to show, by E. P. Hastings, that the last named note, (payable to the order of Schemerhorn,) was discounted by the bank for said Oliver Newberry, and the money paid to him, or placed to his credit; that, not being paid at maturity, the bank, at the request of Newberry, received the note in suit in renewal of the former note. This evidence was objected to by the defendants, but admitted by the Court, and exception taken; and this presents the question raised by the first and second, assignments of error. It is manifest that this testimony was wholly unnecessary,, and -could have no legitimate tendency to alter or affect, the legal rights or relations of the parties.

Whether Newberry got the note discounted for his-own benefit, or he and Kercheval were mere accommodation indorsers for Jamieson, the liability of the indorsers to the bank would be the same, and the same steps by way of demand and notice would be necessary to hold, them to their liability as indorsers; for, by accepting the note of Jamieson thus indorsed, the bank consented to look to their legal liability as indorsers only. No moral obligation of these indorsers, or either of them, which did not create a legal liability as indorsers, could render them liable on this paper. A valid consideration was implied from the indorsement, and was not in dispute. The evidence could not, therefore, have been offered for .this purpose: it was useless and irrelevant for the establishment of any fact bearing upon Newberry’s legal liability, and its admission ' erroneous as matter of law. And as the case comes before us upon exceptions and writ of error, and Ave are not at liberty to weigh the evidence, the error will be fatal to the judgment, unless we can clearly see that it could not possibly have had any tendency to mislead the jury to the prejudice of the -defendants. We do not think, from the nature of the -ease, we are authorized to say it could have had no such tendency. The only tendency which it could 'have had was to induce in the minds of the jury a belief of a moral obligation on the part of Newberry beyond the obligation which Avas imposed by the indorsement. And the Court having admitted the evidence in the face of the defendant’s objection, the jury might very naturally infer that, in the opinion of the Court, they Avere at liberty to hold the defendants legally liable in this suit upon this moral obligation. It does not appear that the Judge, by his charge or otherwise, said anything to the jury calculated to counteract this inference; but, on the contrary, the action of the Court in admitting, against the defendant’s objection, the deposition of Bates, showing a purchase by Newberry of the first note of Jamieson at a discount did much to strengthen this erroneous inference in the minds of the jury. The admission of this last evidence, which forms the basis of the third and fourth assignments of error, was still more clearly erroneous. This was the same note which the testimony of Hastings had been allowed to shoAv was discounted for Newberry, and the money paid to him, and in renewal of which the note in suit was stated to have been received by the Bank. It is too clear to admit of argument, that the legal rights and relations of New-berry and the bank would be precisely, the same in respect to both these notes, whether he purchased the first note for the full amount appearing upon its face, or gave but a single dollar for it. This testimony was not merely irrelevant, as having no legal tendency to establish Newberry’s liability as indorser of the note in suit, blit its natural and only ■ tendency — when taken in connection witffi the irrelevant testimony of Hastings, already alluded to — was to produce in the minds of the jury the conviction that, in the opinion of the Court, they were at liberty to hold the defendants liable in this suit, upon a- supposed moral obligation of Newberry to take care of the paper, and of the note given upon its renewal, because he had purchased -it at less than its face; in other' words, that they were at liberty to base a verdict against the defendants upon a supposed moral •obligation, outside of and beyond his legal liability as indorser — thus substantially changing his liability from that •of a mere indorser to that of maker of the paper.

The grounds upon which the counsel for the defendants in error claim that the above evidence of Hastings and Bates was admissible are that, upon the evidence, there was a question whether the, notice of dishonor shown to have been given to . the indorsers was sufficient, and as the plaintiffs relied upon subsequent payment or acknowledgment of liability as proof that due notice had been • given or waived, the evidence was admissible, as tending to show the relations of New-berry to the whole transaction, and that his obligations of a moral character would,_tend to show that he would, and did, acknowledge his liability, and make payment thereon. But the only relation of Newberry to the transaction, which it was competent to show, were his legal relations, and if the proof of the moral obligations ■could have the tendency to. prove that he acknowledged his liability, or made payment, we do not see why — as suggested by the counsel for the plaintiffs in error — it would not be equally competent to go into proof off Newberry’s moral character, to show whether he was a conscientious man, or in the habit of recognizing merely moral obligations of this kind, or otherwise.

The fifth and sixth assignments of error are not relied upon.

We see no error in the rejection of the testimony off Conant, • offered by the defendants to prove that the amount due upon the note at the time of the receiver’s sale “was stated to be $3,064 ■&$,” as relied upon under the seventh assignment • of error. The proposition does not state that the offer was to show that this statement was made by the receiver; but, waiving this, we cannot see how it would be admissible, unless offered in connection with proof of some payment made to the receiver, -and for the purpose of showing such payments. The purchaser of a note at a receiver’s sale would not ordinarily be bound by the receiver’s calculation or statement of the amount due, but is entitled to recover whatever may be due upon it, whether it be more or less than estimated by the receiver. Here was no offer to show that anything had been paid to the receiver, and no pretence of ’ such payments.

The eighth assignment of error is not relied upon.

The ninth error is assigned upon the rejection by the Court of two certificates signed by C. C. Trowbridge, (one of the plaintiffs,) as “acting assignee” of the bank — one dated June 13, 1844, for $139, and the other June 14, 1845, for $200- — -stating that Newberry had deposited these sums with the assignees of the bank in evidence of debt against the bank, “which sum constitutes a claim in favor of himself, or order, against the assets of said bank, subject to the condition, of the assignment, and drawing interest from date.” The plaintiffs had already shown, by their own testimony, that the note on which the action was brought had been assigned by the bank, with, its other property, to all the original plaintiffs — Trowbridge, Stewart and Owen — which assignment seems to have been made about the 10th day of January, 1842, long after the note became due; and, therefore, though the note was declared upon as having been indorsed directly by Newberry and Kereheval to the plaintiffs, yet the plaintiffs ■ having' themselves shown that it was owned by the bank at maturity, and by the bank assigned to the plaintiffs, and the particular. provisions of. the assignment do not appear, the assignees must be regarded as standing only in the right of the bank; and the subsequent holders,, apparently claiming through them, and prosecuting the suit in their names, occupy no better position, and must be bound by their acts while the paper remained in their hands. We see no reason why these certificates, should not have been admitted • in set off, unless it is to be found in the fact that the amounts were not due to both the original defendants jointly, but to Newberry, the survivor, alone. We do not think they could be excluded on this ground. After the death of Kereheval, and its suggestion upon the record, Newberry’s liability was all that could be enforced' by the suit. The cause of action, originally joint, survived against him alone, and the suit, to all practical purposes, so far -became a several suit against him alone. The executors or administrators of Kereheval could not have been joined; and upon the death of Newberry, the cause of action survived only against his executors.— Comp. L., §4212 and §4213.

- In an action against a surviving partner, a debt which became due from himself separately, before or after the death of his partner, may be included. — 2 T. R., 476; 6 T. R., 582. And. when a survivor is sued for Ms own separate debt, he may set off a debt due Mm as surviving partner. — 5 T. R., 493; 1 Esp., 47; Hogg’s Executor’s v. Ashe, 1 Hayw., 477; Lewis v. Culbertson, 11 Serg. R., 48; 1 Chitty’s Pl., (7 Am. Ed.,) 57 and 603.

The remaining errors are assigned upon the charges of the Court, and refusals to charge. The tenth, eleventh and thirteenth assignments raise substantially the same .question. The charges and refusals, (to which these assignments relate,) go upon the admitted hypothesis that the notice of dishonor, (of the note,) given to Newberry was deficient both in form and the manner of service, and raise' the question of the effect of a tender "or offer of Newberry to pay the note in question, some years after its dishonor, in the bills' of the bank, which had in the meantime failed. The evidence of Bates tended to show that, after the failure of the bank, and not far from the time of the assignment, he, as the attorney of Newberry, and in pursuance of his ■advice to Newberry, tendered or offered to pay to the proper officers of the bank, or the person or persons representing the bank, the full amount of the note in the bills of the bank, which was refused. There appears to have been no express declaration accompanying the offer, whether it was intended to be by way of compromise or payment. There was evidence, however, tending to show that the bills of the bank were largely at a discount — how much does not appear — and this evidence was uncontradicted. It Avas not denied by the defendants below, nor has it been questioned here, that if Newberry, with knowledge of the laches of the holder in • giving notice, or of the defect in the notice and in its service, had unconditionally promised to pay, or tendered in. payment, the amount of the note in cash, such an acknowledgment of liability would have been binding Biit it was insisted that an unaccepted offer to pay in the bills of the bank after its failure, and when largely at a discount, could not, of itself, operate as a waiver of notice, or an unqualified acknowledgment of a liability to pay, but should rather be treated as an offer to compromise.

The effect of tho charge of the Court, and his refusal to' charge, was to instruct the jury not only that such an offer' might be considered ás a circumstance tending to show an intention of Newberry to acknowledge his liability, but that such an offer was, of itself, equivalent in legal effect to an unconditional offer to pay the full amount of the note in cash — which, under the circumstances, was neither more nor less than an instruction that such an offer, if found true, must be treated as an unconditional recognition of a liability to pay in cash the full amount of the note.

We have not been able to discover any principle upon which such a charge can be sustained. It does not appear what was the value of the bills offered or tendered. It may have been but one dollar on the hundred, or more or less. Newberry, without any intention of acknowledging any liability whatever, and with a determination to -resist - payment if not accepted, may have chosen to pay in these bills rather than go to the expense of defending a suit, or rather than incur the displeasure of the officers of the bank, or the men who represented the bank. Had the offer been accepted,, it would have been binding to the extent of 'the value of the bills offered; but not being accepted, it could, of itself, without reference to some particular circumstances under which, ' or some peculiar terms in which, it was made, have no legal effect whatever as an acknowledgment of any liability. — Standage v. Creighton, 5 C. & P., 406; Note to Taylor v. Jones, 2 Camp., 106; Crain v. Colwell, 8 John., 384; Agan v. McManus, 11 John., 180; Sice v. Cunningham, 1 Cow., 397; Barkalow v. Johnson, 1 Harrison, 397; 1 Parsons on Bills and Notes, 600.

The Court charged that there was no evidence tending to prove that the offer of the hills, as testified to by Bates, was intended to be by way of compromise. We think the only legal effect of a naked offer of this kind, standing alone, is that of an offer of compromise, and not of -payment; and if accepted, it would have operated as a compromise, by way rather of set off, or accord and satisfaction, than of payment. We 'do not mean to say that an offer of this kind might not be made under such special circumstances, or in such language, as might have a tendency to prove an intention to recognize a liability to pay the note; but there must be something beyond the naked offer — something from which the jury shall be satisfied that the party making the offer did, in fact, intend thereby to acknowledge Ms liability to pay the note in cash.

The twelfth assignment of error relates to the effect of part payment by Newberry in bills of the. bank after its failure. The plaintiffs had attempted to prove notice, and had succeeded only in showing that, at the proper time for giving a notice of dishonor, a notice had been made out by the notary in the form which was held insufficient, in Platt v. Drake, 1 Doug., (Mich.,) 296, and again in the present case, as decided in 4 Mich.) 391, to hold the indorser, (and having once been decided in this case, must continue to govern it, though we do not hold it to be law in other cases); and the evidence of the notary tended strongly to show that this notice, instead of being served personally upon Newberry, who resided in the city of Detroit, or left at his residence or place of business, had been inadvertently left at the post office, (a mode of service held to be insufficient in Nevins v. The Bank of Lansingburgh, 10 Mich., 547,) and no other notice was attempted to be shown. Sibley had testified to the payment by. Newberry of $1,250 in the bills of the bank after its failure, and after the assignment to the plaintiffs. The Court, at the request of the plaintiffs below, charged the jury that if they believed the testimony of Sibley as to the ,payment on the note, then the plaintiffs were entitled to recover. This was giving to the mere fact of part payment in the depreciated bills of the bank, the absolute legal effect of an, unconditional recognition of a liability to pay the whole note in cash, without any reference to the question whether Newberry thereby intended to recognize such liability. Nothing was left to the jury b.ut the single fact whether such payment had been made. This charge eonnot be sustained. The naked fact of part payment in the depreciated paper of the bank cannot, of itself, have any greater tendency to prove the intention of recognizing such liability than the offer to pay the whole in the same kind of paper. Both stand upon the same principle, so far as regards the acknowledgment of liability; and what we have already said upon this point, in reference to the offer to pay, is equally applicable to the payment of the part in the same kind of paper.

This might dispose of this assignment of error, but as there is to be a new trial, and there is another important ground upon which wo think this point of the charge erroneous, we think it best to indicate our opinion upon it. This is the question whether it was necessary to show that Newberry, at the time of the payment — if that should be found to have been intended as an acknowledgment of liability- — -knew the defects in the notice or its service, or the facts constituting the laches.

~We think- the law to be well settled upon sound principle, and by the general current of authority, (though there áre some cases, to the contrary,) that, -when there is ho evidence of any notice to the indorsers — whether the plaintiff has omitted all attempt to jorove it, or has made the attempt and failed — a subsequent recognition of liability is presumptive evidence, in the nature of an implied admission, that due notice had been given. This is upon the principle that the indorsér, looking to his own interest, would not be likely to acknowledge such liability unless satisfied that he had been duly notified, and was legally bound. But when it affirmatively appears that the notice which was given, or which the plaintiff claims to have been given, was defective and insufficient, this excludes all ground for the presumption of due notice, which, in the absence of any proof of notice, might otherwise have arisen from such subsequent recognition. And when, as in the present case, the plaintiff attempts to prove due notice, and dnly succeeds in proving a notice made at the proper time and by a proper party, but defective in form or the mode of service, and proves no other, this excludes the idea that another notice was given at the proper time, by the proper person, and served in a proper manner. Else why resort only to the proof of the defective one.

In such a ease, therefore, the evidence of part payment, or an offer to pay, in the bills of the bank — though the jury should be satisfied the indorser intended thereby to recognize his liability — would authorize no presumption that due notice had been given; and the evidence could only be admissible for the purpose of showing an intentional waiver by the indorser of Ms right to insist upon notice, and his consent to be bound without it. To hold the indorser liable on this ground, the plaintiff must not only show the subsequent acknowledgment of Ms liability, but he must • also, by proper evidence, satisfy the jury that it was made Avith a full knowledge thaf due notice had not been given, or of the facts constituting the laches. Positive or direct evidence of knowledge would not, of course, be necessary; but, like the fact of knowledge in other cases, it may be inferred from any circumstances ■ which fairly authorize the inference as one of fact. The charge of the Court in reference to the part payment entirely ignored this question of knowledge, and took it from the jury.

We think the Court properly refused to charge, as requested by defendants’ counsel, “That if the note had been sold, .and the legal title to the same, since the commencement of this suit, and before this trial, passed from the plaintiffs and vested in Cornelius O’Flynn, and by him transferred to Mrs. O’Flynn, the plaintiffs could not recover.”

The legal title to the note appears, to have been in the plaintiffs when the suit was commenced, and this being negotiable paper, we see no good reason 'why the suit might not be prosecuted by them for the benefit of the subsequent owner, or by such owner in the names of these plaintiffs, so long as the proceedings are in -good faith, and the defendants are thereby deprived of no just defence. — Austin v. Burchard, 31 Vt., 589; Guernsey v. Burns, 25 Wend., 411; Bradford v. Buckname, 8 Fair., (12 Me.,) 15; 2 Pars. on B. & N., 437 to 443.

The judgment must be reversed, with eostsj and a new -trial awarded.

Coolet J. concurred. Campbell J. did not sit in this case, having been counsel therein. Martin Ch. J. dissented.