Devlin v. Chamblin , 6 Minn. 468 ( 1861 )

By the Court —

Atwatee, J.

— This was an action brought by Plaintiffs below (here Appellants,) to recover a balance due for goods and merchandise sold the Defendants, amounting to $271.04. The Defendants pleaded payment by an accepted draft on Caldwell & Co. of. St. Paul. The Plaintiffs replied that the same was taken only as collateral security, and not as payment. This was the principal issue raised, and the only one which it is deemed material to notice.

There was a jury trial, and a verdict for the Plaintiffs. The Defendants move for a new trial on a case, which motion was granted, and from that order the Plaintiffs appeal.

The Defendants, among .other things, requested the Court to charge the jury that the onus of proof was upon the Plaintiffs to show that the accepted draft so received by them was not received in payment. The Judge refused so to charge, .and on the contrary then instructed and charged the jury that the delivery to and acceptance by the Plaintiffs of the draft accepted by Caldwell & Co. was no evidence of payment, and that the onus of proof rested upon the Defendants to prove affirmatively, by other evidence, that the Plaintiffs received it as payment. The Judge who tried the cause thinks the case as settled shows an error in fact, and that the instruction to the jury was not as above stated. But that as he cannot be positive, be grants a new trial, as if tbe charge was, as above stated, it was in bis opinion erroneous.

Tbe question has been very much discussed as to what constitutes presumptive evidence of payment in this and analogous cases, and tbe whole question is very fully examined in Am. leading Gases, p. 170, et seg. It will be seen that tbe authorities are somewhat at variance, but without entering upon any discussion, of the question here, I thinlc the weight of authority is to the effect that the taking tbe note or security of a person other than the debtor, is not prima faeie evidence that the same was taken in payment of a precedent debt. There must be evidence of an express agreement to take such note in payment, in order to give it that effect, and the burden of proof is upon the debtor to show such agreement.

But the rule seems to be different where a commercial instrument is given in payment of a contemporaneous sale, and the vendee is not liable on the instrument. In such case the presumption of law is that the vendee is not liable on the original indebtedness. In the case at bar, the vendees have made themselves parties to the instrument given to the vendor, the draft on Caldwell & Co. having been drawn by Capt. Western, President of the Pioneer- Guards, and in his evidence he swears that he had authority to draw the drafts as Captain of the company. I have examined the authorities with care to ascertain whether in sxich case there is any legal presumption that the instrument was taken in payment, and although there is some uncertainty in the language used in some of the cases, I think the weight of authority is clearly against such presumption.

The case of Whitbeck vs. Van Ness, 11 John., 409, is cited by Nespondents’ counsel, and is a leading one in this class of cases. By reference to that case it will be seen that the ven-dee not only was not a party to the note given in payment for the horse, but the evidence showed that he did not intend to render himself liable on the note or in any other manner. Spencer, J., in reviewing the English authorities cited in that case, refers to the Bank of England vs. Newman, 1 Lord Raymond, 442, and 12 Madison, 241, in which Lord Holt ruled, “that if a man has a bill payable to him, or bearer, and he delivers it over for money received, without endorsement, this is a plain sale of the bill; and he who sells it does not become a new security ; otherwise, if he had; endorsed it.” In Fydell vs. Clark, 1 Fsp. Cases, 448, it was held, that “ if a man in the discount of notes, fakes bills without endorsement, he must be considered as having taken the risk of payment on himself; that by not endorsing them, the Defendant refused to pledge their credit.” And in Emly vs. Lye, 15 East., 12, it was held that “ if a person buy goods of another, who agrees to receive a certain bill in payment, the buyer’s name not being upon it, and that bill be afterwards dishonored, the person who took it cannot recover the price of his goods from the buyer, for the bill is considered as a satisfaction.” And the Justice further remarks in the case of Whitbeck vs. Van Ness, that “ the intrinsic circumstances of the case plainly show that the Plaintiff considered himself, as taking Deane’s note at his own risk. It was made payable to the Plaintiff himself, and the Defendant, by not endorsing it, or guaranteeing the payment, clearly declined pledging his own responsibility.” Erom all which I think it is manifest that the Court not only did not decide that where the debtor’s name is on the instrument, he cannot be held for the original consideration, but the inference is strongly to the contrary.

In Olcott vs. Rathbone, 5 Wend., 490, it is claimed that the Court decided that “ the general principle is that a bill or note is no satisfaction of any demand tor which it has been given ; it is only jprima facie evidence of payment.” This language it is true appears in the opinion of the Court in that case as a quotation from some author, (Bayley on Bills I think,) but neither from the syllabus nor the opinion does any such point appear to be decided in that case, but that where a creditor had received the check of a third person in payment of a precedent debt, which check was dishonored, the creditor might recover on the original consideration.

The case' which most strongly supports the view taken by the counsel for the respondents, is that of Frisbie vs. Larned, 21 Wend., 450, in which it is stated in the syllabus, that “ the acceptance of the note of a third person from one of the members of a firm, endorsed by him, together with the payment of the balance of the account against the firm in cash, is an accord and satisfaction of the demand against the firm ; there being no* agreement that such note was received merely as collateral security.” In that case the note of the third party was endorsed bj one of the members of' the firm only, so that it presents.a somewhat different state of facts from the case-■at bar;- But the-Court say that “where the note of a third person is transferred by the debtor to and taken by the creditor, and credit is given for it as a payment, the effect is the-same as the acceptance of a horse, or other chattel on the same terms. The simple contract of sale or claim on one side, and a promise to pay by the vendee or debtor, is departed from; a new and distinct contract is made and new relations arise out of it-. True the security may still be collateral, but independent of proof affirmative that it is so, I think the intendment should be that the security was received in satisfaction.” But that these remarks are mere dieta, not necessarily called- for in the decision, is manifest from the very next sentence, in which the Court says that “ it is not necessary, however, to go so far in this case ; for here is express proof that the note was intended to operate as a satisfaction ; there was an endorsement credited as in full, and afterwards extinguished by a bond and judgment.” And further, “above all, the evidence is quite too strong for the presiding judge to say, as he did virtually in this case, that there was not evidence even to go to the jury.” And those of the authorities cited in that case, (to which I have had access,) to show that the transfer of the note operated as payment, clearly do not hold that the giving of a draft, drawn by the debtor himself, is presumptive evidence' of payment for goods purchased, so that the vendor must rebut the presumption in order to recover on the original consideration.

Edwards on Bills, p. 195, states that “ when a vendor, on a sale and delivery of goods, receives from the vendee the note of a third person for the price, the presumption is, that he takes it in payment; especially is this so where he gives a receipt for the note in full for his bill.” But he also states on the following page, that “any act, such as indorsing or guaranteeing tbe note wbicb shows that tbe purchase was not made on the faith of the note delivered, will rebut the presumption of payment.” It would seem that the drawing of a draft should be regarded at least as strong evidence to rebut the presumption that the same was taken in payment, as an endorsement.

In Booth vs. Smith, 3 Wend., 66, it was held “ that the acceptance in full satisfaction by a creditor, of a note of a third person for the whole amount due on a previous note given by his debtor, is an extinguishment of the original consideration.” The difference between that case and the present, is apparent without comment. And in Noel vs. Murray, 3 Ker., 168, a note of a third person was given on sale of goods, on which the vendee’s name did not appear, and a receipt in full was given for the goods sold. And in St. Johns vs. Purdy, 1 Sand., 9, the note of a third person given by the debtor, was held as payment, on the ground that there was explicit evidence to show that the creditor had so agreed to receive it.

In none of the cases cited, therefore, (save those from Massachusetts Reports) do I think the doctrine can fairly be deduced, that the acceptance of a draft by the vendor of goods at the time of sale, drawn by the vendee upon a stranger and accepted by him, is to be deemed prima facie evidence that the same was taken in absolute payment of the purchase money. On the contrary, there are several authorities where the opposite doctrine is held, and I think supported by the better reason. In Johnson vs. Weed, 9 John., 310, where the vendor of goods took the note of a third p erson in payment and gave a receipt in full for the debt, but remarked that it should have been endorsed by the vendee, to which the latter replied that it made no difference, the Court held that it was a question of fact for the jury to determine at whose risk the note was to be. And in 2 Amer. L. C., 187, after discussing the effect of taking bank bills as payment, it is stated that there is much less reason for supposing that payment for a contemporaneous sale in the bills or notes of an individual is absolute, than where it is made in bank notes; and it would seem that this effect cannot be ascribed to it as a matter of law, and apart from the agreement of parties. The cases fully establish that in the absence of such an agreement, the vendor may sue for goods sold and delivered', when the name of the vendee is on the instrument, and it is dishonored by the party primarily liable for its payment; citing Hickling vs. Hardy, 7 Taunton, 313; Brower vs. Keewly, 2 Bos. & Pul., 318; Wright vs. The First Crockery Ware Co., 1 N. H., 281; Jones vs. Savage, 6 Wen., 658. And in Monroe vs. Hoff, 5 Denio, 369, the guaranty of the purchaser was held to rebut a presumption which otherwise would have arisen, that the note guaranteed had been taken as absolute payment of the purchase money. In such cases the debt is suspended, not satisfied ; and the only difference between them and those in which the paper given in payment does not bear the name of the vendee, is that the absence of the right of recourse on the instrument may justify an inference that it was not intended to arise on the consideration. Put the whole question would appear to be one of fact for the determination of the jury, rather than oí law for the Court; and as the ordinary understanding in contracts of sale is, that the vendor shall, in some, way or other, get his money, the burden of proof ought to lie on those who seek to show that he agreed to be satisfied with something less. 10 Vesey, 204; Exparte Blackburne; and Ward vs. Evans, 2 Ld. Raymond, 928.

A further argument in support of this doctrine is derived from the construction wjdch is put on an agreement to take commercial securities in payment for a contemporaneous sale, in cases where the securities are not delivered. In such circumstances it is well settled that indebitatus assumpsit will lie for the purchase money, at the period when the bill would have reached maturity had it been delivered. It is difficult to see on what principle this is allowed in such cases, and not permitted where the bill has been delivered. The presumption is as strong in the one case as in the other, that it was the intention to take the bill in payment.

Erom the foregoing authorities it will be seen.that, upon a contemporaneous sale of goods, where the vendor receives commercial paper upon which the vendee’s name appears in form that may render him liable, the law raises no presumption that the same was received in payment, but the question is solely one of fact for tbe determination of the jury. In such cases the presumption is at least equally as strong that the paper was only intended as collateral security as that it was taken in absolute payment. And if this be true there was no error in the charge of the judge to the jury. When the Court charged that the acceptance of the drafts by the Plaintiffs was no evidence of payment, he must have meant, and the jury must have understood him to mean, that from that fact no legal presumption could be drawn that the draft was received in payment — that it was not prima facie evidence of payment. The Court was instructing the jury solely as to the law of the case ; with the facts the Court had nothing to do. In my opinion the Court might have even gone farther than it did, and held that the delivery of a receipted bill for the goods would have formed no legal presumption of payment. But limited as the charge was to the simple question of whether the acceptance of the draft by the Plaintiffs formed any evidence that the same was taken in payment, we do not think that the learned judge mis-stated the law, nor that the jury could have been misled by the language used. Almost the sole issue formed by the pleadings is as to whether this draft was received in full payment, or only as collateral security. This was the question submitted to the jury, and it is scarcely possible to conceive that they did not understand that they were to consider every fact bearing upon this issue, and that the language of the judge meant offly that the law raised no presumption that the draft was received in payment, from the naked fact of its delivery. Although it may be true that the jury could not have found that there was payment by draft, unless the same had been delivered, yet it does not follow that the delivery in lavt constituted any evidence one way or another, as to how the same was received by Plaintiffs.

We have treated this subject as though the draft was given on a contemporaneous sale of goods, though as a matter of fact it is claimed by the appellants that it was given for a precedent debt, and that question would perhaps be a proper one for the determination of the jury. But the charge would be still less open to objection .if the draft were given for a pre. cedent debt, and the respondents at least cannot complain that this view has been adopted.

The order granting a new trial is reversed, and judgment ordered in favor of the Plaintiffs.