Wetter v. Kiley ( 1880 )

Mr. Justice Gordon

delivered the opinion of the court,

We cannot say that the court below did wrong in refusing to quash the appeal from the award of arbitrators. It is true, the defendant’s agreement, waiving the right of appeal, might have been enforced had an attempt in that direction been made at the proper time. But it is no less true, that the payee of the note, in which that agreement is found, might waive, by his laches, his right to enforce it. In the case of the Delaware and Hudson Canal Co. v. Loftus, 21 P. F. Smith 418, it was held, that acquiescence in an appeal may be inferred from an appearance by the plaintiff, acceptance of pleas and a delay in moving to quash until the third term. Substantially the same doctrine will be found in Heckert’s Appeal, 13 S. & R. 104. In Steck v. King, 3 Barr 211, a motion to quash an appeal was held to be too late after the plaintiff had filed his narr.; and in Brown v. Jones, 7 Watts 433, it was said, per curiam, that after a plea, the motion to quash is too late.

In the case under consideration, as to time, the plaintiff was sufficiently prompt, but some time before the motion to quash the attorneys of the plaintiff made application to the attorneys of the defendant, and obtained from them a plea, which was duly filed. This was a direct and unqualified recognition of the defendant’s right to be in court as an appellant, and was, certainly, as effectual as a waiver of the right to quash, as any mere delay could have been, and yet, as we have seen, delay of itself will bar such right. A rule such as this may be regarded as over strict and technical, but it has its foundation in the fact that courts are properly jealous of anything which tends to prevent trials by jury, and, hence, will take advantage of even mere technicalities in order to favor that right.

The remaining assignments of error may be discussed together, as they involve a single principle — the right of the maker of nonnegotiable paper to defeat a recovery on it, in the hands of a third party to whom it has been assigned, for a valuable consideration, by setting up the want of consideration or any equitable condition to which it was subject when in the hands of the payee. The note in suit was the third renewal of an original, executed by the defendant to Wetter, the legal plaintiff, on the 19th of May 1877. Admittedly, it was made for the accommodation of the plaintiff— the parties, at the time, no doubt thinking it was negotiable, since it was intended that Wetter should have it discounted for his own purposes. Wetter, at the time he received the note, agreed, which indeed, would follow as of course, that he would, in commercial parlance, take care of this paper.

Under these circumstances the court was asked to say to the jury, that if Kiley executed and delivered this note to Wetter for the express purpose of enabling him to negotiate and obtain money on it, the bank, to which it was passed, could recover. The court refused so to charge, and in this, we think, they did right. In the first place, the note was not negotiable; it could pass only by assignment, and that assignment would convey to the assignee only that which the payee was entitled to receive from the maker after settlement of all accounts and equities between them. Paper of this kind falls into the same class with bonds and other specialties, of which it is said, by Chief Justice Shippen, in a note to the case of Rousset v. The Ins. Co., 1 Binn. 433, if the obligor had, before the assignment, which was made under the terms of the Act of 28th of May 1715, any just demand against the obligee, which he might have set up against him had there been no assignment, he might, in like manner, set it off against the assignee, who takes the bond subject to all the equities existing between the parties before the assignment. This rule, he says, is, however, subject to one exception. “ If the assignee, when he is about to take the assignment, calls upon the obligor to know whether the whole money is due, and the obligor tells him it is a good bond, but is entirely silent as to any claim of his against the bond, he can never after-wards open his mouth against the demand of the assignee.”

So, in Rider v. Johnson, 8 Harris 190, it was held that the assignee of a chose in action, not negotiable, takes it subject to all the defences to which it was subject in the hands of the assignor, including set off of cross demands, legal or equitable. We also find it ruled in Weaver v. Lynch, 1 Casey 449, that in order to estop tho obligor of an assigned bond from setting up a defence, the assignee must show that he was induced to take the bond specially through the declarations of the obligor that he had no defence. Now, without multiplying authorities upon points about which there ought to be no dispute, we are at a loss to see how Kiley estopped himself from setting up a defence which was certainly good against Wetter. No declarations of his to the bank officers induced them to take this paper; on the other hand, if we consult the assignment, it was taken on the guaranty of Wetter that he would pay it when due. Let it be, then, that Kiley gave this note to Wetter for the express purpose of enabling Wetter to raise money upon it. This was, after all, but a private arrangement between the parties which was never communicated to the officers of the bank; they never acted upon any such understanding ; how then can they set up to estop the defendant, a transaction to which their corporation was not a party, and of which they, when they took the assignment, knew nothing. Besides this, the duty of inquiry rested upon them, and had they made that inquiry, they would have discovered just what was found by the jury, that not only was the note drawn to Wetter in order that he might raise, money on it, but that he, at the same time, had agreed to pay it when it fell due. Had the bank known this fact when it took the assignment, no one, we apprehend, will pretend to say that it could, nevertheless, hold Kiley, and yet, on all authority, it was its duty, through inquiry of Kiley, to have known this very fact, and if it did not have this knowledge, the fault was with its own officers and no one else.

Judgment affirmed.

Chief Justice Sharswood and Justice Paxson, dissented.