Goodman v. Simonds , 19 Mo. 106 ( 1853 )

Ryland, Judge,

delivered the opinion of the court.

From the statement of the facts in this case, several important questions arise, which it becomes necessary for this court to notice. There is no doubt that the bill of exchange on which the suit is brought, was negotiated between Wallace Sigerson and Timothy S. Goodman & Co., brokers at Cincinnati, sometime in 1847, as collateral security, and the present plaintiff being one of that firm, is affected with all the notice of the transaction that the firm could be; for it is to be seen, that the firm of T. S. Goodman & Co. sent the bill out to E. W. Clark & Bros., at St. Louis, for sale, and one of the firm of Clark & Bros, was informed by Simonds, the acceptor, that the bill was a forgery ; that Wallace Sigerson bad no authority or right to draw such a bill; that Clark & Bros, sent the bill back with this information to Goodman & Co., who sent it to Nesbit & Co., of St. Louis, for collection, and that Nesbit & Co., without recourse and without value, endorsed it to T. S. Goodman, the plaintiff, and this was done by the advice of the attorney, who brought the suit. Therefore it is to be considered, as it would have been, had it remained in the hands of T. S. Goodman & Co. It appears that this bill of exchange was passed to T. S. Goodman & Co. by Wallace Sigerson, on the 18th day of October, 1847; that it was negotiated with Goodman & Co. on that day, as collateral security, for the purpose of securing the payment of two notes discounted by Goodman & Co. for Wallace Sigerson — these notes bearing date 12th October, 1847 — one due in sixty days for $2836 64, the other due in seventy-five days, for $2830 45. These notes were given to take up other notes which had been lying over. It is in proof that, previous to Goodman & Co.’s taking these last notes, Goodman had used every exertion to get Wallace Sigerson to give collateral security, and a witness, the clerk of Goodman k Co., states that it was only on Wallace Sigerson’s being able to produce such satisfactory security that the notes were taken. This collateral security was the bill of exchange drawn by Wallace Sigerson on John Simonds, of St. Louis, which was payable to John Sigerson for $5000, at four months, accepted by Simonds and endorsed by John Sigerson. This same witness states that, upon inquiry made by Goodman, and finding the ability of Simonds, he (Goodman) took -the bill for five thousand dollars as collateral security, and in the discount book of the house of T. S. Goodman & Co., the bill of John Simonds is inserted as collateral security. This transaction, then, between Wallace Sigerson and Goodman & •Co. took place on the 18th October, 1847. At that day, this bill was negotiated. It appears that the bill was originally ■drawn in blank, as to the date and the name of the drawer; it was drawn for $5000; it was payable at four months from date; it was accepted by Simonds, endorsed by John Sigerson, the payee, and was forwarded by Simonds to Wallace Sigerson, with another bill in the same condition,' in order to raise money to enable John Sigerson and John Simonds to carry on the pork business at St. Louis. It was sent to Wallace. Sigerson, with instructions and directions what and how to do with it, in the month of June, 1847. It was in proof that Wallace Sigerson left the bill of exchange with Goodman & Co. some time after he received it; that when he left it, it was not complete— it lacked the date; that Wallace Sigerson left with Goodman & Co. an instrument of writing authorizing them to date the bill, but it was not dated until Sigerson dated it himself upon the settlement, when he gave his notes. Nothing was paid to Wallace Sigerson by Goodman & Co. for the bill: nothing to Jno. Sigerson or to Jno. Simonds, on account of it, but it was merely left as collateral security for the two notes, which were given for previously existing indebtedness by Wallace Sigerson to Goodman & Co. Wallace Sigerson remarked to Mr. Goodman that he did not wish the bill to go to St. Louis, under any circumstances, for collection ; that he wished to pay the amount here (at Cincinnati,) and the notes were given so that they would mature long enough before the bill matured, for the holders to send it out for collection.

Here, then, is a creditor extremely anxious to get his debt either paid or secured : he urges the debtor by every possible exertion to secure it. His debtor is known to be much embarrassed, utterly unable to pay his debts. This debtor leaves a bill of exchange for five thousand dollars, payable in four months, with blank date, with this creditor ; leaves an instrument in writing, authorizing the creditor to fill up the date ; it is not done however. Afterwards, this same debtor leaves the bill of exchange, then with the blank date filled up, as collateral security for a pre-existing debt. Can it be said that the holder has given value for this bill under such circumstances ? Can it be said that there are not circumstances here sufficient to put a prudent man upon inquiry ? What was the blank bill doing in the hands of a man so much harassed, so urgently importuned by his creditor, for so long a time? Why was it left with the same creditor still incomplete as to date ? And why, at last, was it used as collateral security, with the request not to send it out for collection? A plain answer may be given. This creditor saw, from the utter inability of Wallace Sigerson to pay his debt, that he must lose it, and in such a condition, any thing in the way of collateral security would be a fortunate occurrence. He would not be worse off by taking this bill: he paid nothing for it: it might turn out to his advantage : he ran no risk in getting it passed to him as collateral : he did not thereby increase his demand against Wallace, and possibly he might secure his debt. In my view then of the law in this case, such circumstances would charge a creditor, who takes a bill as collateral security for a previous debt, without any additional advance upon it, with notice of the rights and defences of other parties to it.

There is another ground of defence in this ease, which destroys the plaintiff’s right to recover, if it be true. That is the ante-dating of the bill. There can be no doubt that the bill was passed as collateral security only to Goodman & Co. either on the 12th or on the 18th of October, 1847. The 18th is the date of the entry in the bank book of the firm of Goodman & Co., made by the clerk ; that then is the day the bill is perfected and negotiated, and by the terms of the bill it has four months to run. Now it is not competent to shorten this time by ante-dating. This must have been well known to Goodman & Co. ; they knew the day the bill was passed to them; they could see from its face the purport of credit, four months from date, and the date must, from necessity, be when the bill is negotiated. Now, though it may have been in their hands a blank, long before it was passed to them as collateral, this does not authorize the date to be put some thirty days back, to give it the effect in their hands of a three and not a four months’ bill. They cannot but know the time when they thus obtained the bill as collateral security; they could then see whether it was dated or not. It means “ four months” from date of negotiation ; it authorizes the person to whom it was sent to date at the time of negotiation. There can be no doubt that it was negotiated on the 12th or on the 18th of October, 1847. The book-keeper says on the 18th. Sigerson says, when he settled and gave the two notes, he left the bill with Goodman & Co., and then he dated it; or it was dated in his presence. It bears date the 12th of September, 1847, one month earlier than the notes — one month before it was negotiated. This is very suspicious, nay, it is fatal to the bill.

In 17 Wend. 221, it is said by the court, that the holder may put the blank paper in any form which shall accord with the intent of the names, either as makers, drawers, payees or endorsers. It is the intent of the parties, manifested by the face of the blank bill, which must control the holder. He cannot do violence to this intent.

In 5 Dana, 259, it is said by the court of appeals of Kentucky, if a sum and date were written on the paper, when signed and delivered, with the intention that it shall be filled up with that sum and that date, and with no other sum or date, and if, without authority, that sum and date be torn off, and a larger sum and earlier date inserted, the note, “ as sued on,” is not, in judgment of law, obligatory as the act of the apparent obligors.

Story, on Promissory Notes, says : “ But it is very common for persons to sign their names in blank to a paper for the purpose of having a promissory note written over it, and in such a ease, the note, when written, will bind the party, if done by a person properly authorized, in the same manner and to the same extent and from the same time, as if it had been originally filled up before the signature wras made.” Story on Promissory Notes, p. 13, sec. 10.

In the case of Montague v. Perkins, cited by the plaintiff’s counsel, from the Law Reporter for October, 1853, Jervis, C. J., says: “ A person by handing over to another his blank acceptance, gives him the opportunity of filling it up to the amount and date limited by the stamp.” Maulé, J., said: u the defendant, by writing his name on the blank bill stamp, and issuing his blank acceptance, must be taken to have known that he put it in the power of any person who got hold of the paper, to make him appear to the public as the acceptor to any amount of which the stamp admitted. Why does the stamp have the effect of restraining the amount ? Because the authority is presumed to be limited by the stamp, as to amount, and that appears on the face of the instrument.”

Apply this doctrine to the bill in this case, and it will be seen that the time of u four months” appearing on the face of the bill, the authority to fill it up must be restrained as to time. It cannot be construed into power to make a four months’ bill on its face, though blank as to date, become a bill of less time, by ante-dating it. The intention of the acceptor is plain, that he accepts only a bill at four months, when negotiation is completed, and this four months on its face is notice of this intention to all persons who see it in its blank form. The testimony shows that, in this case, this bill was in the hands of Goodman & Go., with its blank date ; that the bill was afterwards filled up. Now, if it was filled by ante-dating, when the plaintiffs, that is, Goodman & Co., received it as collateral security, it must have been known to them, and they must be held to be conniving at this imposition on the acceptor.

In the nature of things, it is impossible for a prudent, careful man to shut his eyes to the circumstances surrounding this whole transaction with Wallace Sigerson and the bill, make no inquiries, and take the bill in the fair and usual course of business. But a man catching at every chance to save himself never inquires, so he can obtain collateral security, about the fairness of the transaction; he gives nothing for it: he risks nothing for it: then, common sense and common honesty unite in saying he shall take it, with the defences the other parties have against it in the hands of the original holder and party. We do not say that a bill of exchange, passed to a person in the payment of a pre-existing debt, would be liable in his hands, without notice, to the equities or defences of the original parties ; but that the holder of a bill merely as collateral security for a pre-existing debt, having given no value for it, no consideration for it, holds it liable to such equities. We know that there are authorities whose phraseology may be considered against this view, but we also know that there are authorities in its favor, and we think reason and justice unite in supporting it. See Coddington v. Bay, 20 Johns. Rep. 637. Stalker v. McDonald and others, as late as 1843, 6 Hill, 93. This last case is a very elaborate one, in which the opinion of Mr. Justice Story, in Swift v. Tyson, 16 Peters, is ably reviewed.

In regard to the ante-dating of the bill, see Tate & Hopkins v. Evans et al., 7 Mo. 419. Authority was given by letter signed by Evans & Dougherty to J. S. Arnold to draw on them for an amount not exceeding $1500, at four months. This was dated 28th November, 1839. The bill of exchange was drawn on 23d December, 1839, and ante-dated 28th November, 1839, and the plaintiffs took the bill on the faith of the letter of Evans & Dougherty. The court below, from this statement of facts, found for defendants, and this court affirmed the judgment. Here the ante-dating rendered the bill void. Authority to draw at four months means four months from the time the bill is drawn. A bill at four months on its face, with blank date, is still to be four months from the time of its negotiation.

The instructions given by the court below did not put the law of this case before the jury. The court takes up a part of the case, and in effect says to the jury, these facts will not authorize a verdict for the defendant, and then the balance of the case is disposed of with similar effect. The instructions asked by the defendant in regard to the ante-dating of the bill, and in regard to the collateral security without consideration, ought to have been given.

The judgment of the court below is reversed, and the cause remanded,

Judge Scott concurring ; Judge Gamble not sitting.