Moorehead v. West Branch Bank , 3 Watts & Serg. 550 ( 1842 )

The opinion of the Court was delivered by

Htjston, J.

T. Moorehead was sued as the endorser of D. Musselman. Musselman had in bank two notes of $800; one endorsed by W. Donaldson, dated 25th of January 1839, payable at 90 days; another dated 29th January 1839, also payable at 90 days, endorsed by the defendant. (Here the learned judge states the substance of the cashier’s testimony). There was also given in evidence a letter from the cashier to Musselman, dated 29th of January 1839, informing him that the note endorsed by Moorehead must be paid when due.

The defendant called William Johnson, Esq., who said, “ after this note was protested, I was in bank, and observed to the cashier that Moorehead was very much displeased at the way he had been treated about that draft. Mr. Corryell, the cashier, said he had no doubt but that Musselman intended the draft to be applied to pay the Moorehead note, but Musselman had another note in bank, and they examined and found that note was first due, and the draft was appropriated to pay that other note.”

The defendant offered W. Donaldson to prove that the note of 25th of January was given in renewal of a former note drawn by Musselman for the accommodation of Donaldson, and endorsed by Donaldson, for the purpose of showing a motive in Musselman in applying the proceeds of the draft to the Moorehead note, and in explanation and support of his conduct. This was rejected,because the bank could not be affected by any acts or declarations of the endorser to invalidate the note he endorsed; and because the bank was not to be affected by the private transactions of Musselman, and because it was irrelevant.

In the hurry of a trial, it seems to have been misunderstood by the court. Donaldson was not offered to affect the note endorsed by himself, and his having endorsed one note was no reason .why • he should not give evidence respecting another, on which. he was not endorser. I do not know that it was very material, but it might be of some effect, to prove that what Mus-, selman told the cashier of Donaldson’s being bound to discharge one note, was true. It explained the conduct and declarations of Musselman, and might be a strong reason for his wishing the Moorehead note to be paid by the proceeds of the draft; and if in any way Musselman believed Donaldson was bound to discharge the note on which he was endorser, and Musselman told the bank so, how could they suppose that Musselman intended himself to discharge the note which he repeatedly said he would compel Donaldson to pay 1 If, then, the fact was that Donaldson had pro-, mised, or was in any way bound to meet the payment of the note on which he was endorser, it ought to have been permitted to go to the jury. Proof of this kind, in this case, would in no way affect the liability of the parties-to the bank in a suit on the Donaldson note. That will stand on evidence given in that suit, if ever there is a suit on that note. The proof offered here is in a suit on the Moorehead note, and is adduced to show how a sum of money in the bank was to be applied.

The counsel of each party submitted to the court points to be answered, and, as is too common, subdivided them so as to answer any other purpose' than that intended by the law which introduced this practice.

There was but one question to be decided by the jury. Is it fairly to be collected from the testimony that Musselman intended, and expressed his intention in a way not easily misunderstood, that the proceeds of the Herr draft, should be applied to discharge the note on which Moorehead was endorser ? The court said correctly that Musselman had a right to direct the application. If a man gives to his creditor a draft for money, and directs that money, if received, to be applied to discharge a particular liability, the creditor is bound to apply it to that particular liability, as much as if the debtor had paid the amount of the draft in cash with the same directions. The answer to the sixth point of plaintiff was not, therefore, correct.

The court seem to have been of opinion that nothing short of naming the Moorehead note, and saying, “ apply the proceeds to it,” will avail; and the court further assume that the Board discounted the draft on the express condition that the proceeds would be applied to the note first due; and also that the Board without seeing or hearing Musselman, might make an arrangement different from that made between their cashier and him, and bind Musselman by it, though he never heard of it. I shall not dwell on the effect of testimony which may be different on the next trial. The cashier had the notes; he could, by a moment’s looking at a book, know certainly which would be due first. Musselman tells him, and he communicates, as he says, to the bank, that Mussel-man was angry that the draft before the Board was to be applied to discharge his liabilities; that Musselman believed the Moore-head note would be due first, and had repeatedly said Donaldson was bound to pay the other, and he would make him pay it. The jury must judge whether this was a direction as to how the proceeds of Herr’s draft was to be applied—and such direction as in sense and reason could not be misunderstood. When the Board rose, and the cashier informed Musselman his draft was discounted, were not he and the bank bound to inform him, if they intended to apply the proceeds in a way contrary to his direction and understanding ? He said more than once the Moorehead note would fall due first. The cashier does not correct his mistake, but says the draft will be applied to pay the note first due. Musselman’s direction must govern. What was its fair, plain meaning?

Judgment reversed, and venire de novo awarded.