Chapman v. . Brooks

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The exceptions to the decision of the court in overruling the objections of the defendants' counsel to the questions asked of Isaac L. Hunt and George M. Chapman in regard to a conversation between them in the summer of 1860, are not well taken. Hunt had been examined by the defendants, and in that examination he had stated that he had informed George M. Chapman of the settlement he had made with the defendants of the notes in suit, about the time the settlement was made, when he gave Chapman the two notes of Gordon, Brooks Backus, in 1858. After the defendants rested, the plaintiff recalled Hunt and asked him as to this conversation with Chapman in 1860. It was admissible to show that Hunt had made a different statement of this transaction at another time, and by this conversation in 1860, to show that his former statement was untrue.

The objections that the questions were leading, were not taken on the trial, and are no ground of objection here; and if the object was to contradict him, it was proper to put the question directly to the witness, before the contrary statements could be proved by another witness. The whole purport of the examination was to show a different account of the transaction, at that time, from what he gave on the direct examination, and to discredit Hunt's statement that he acted with the knowledge and assent of Chapman and with authority to collect the notes.

The witness Holt was asked what Chapman told him to do with other notes that Chapman left with him for Hunt. This was excluded. It was in regard to a matter foreign to the controversy in this action. What Chapman told him to do with other notes could not affect the plaintiff's claim to these notes.

Whether the plaintiff was or was not the owner and holder of the notes in suit was a question of fact for the jury. The plaintiff had the possession. In addition, George M. Chapman had testified that he loaned his mother's money to Hunt; that he and she were in partnership, and she advanced the capital.

If the money loaned belonged to the plaintiff, her right to collect the notes, which were collateral to the loan, is undoubted. If the money belonged to the firm, there is no doubt as to the right of the firm, in distributing the assets, to assign one portion of the debts to one member and another portion to the other. The securities pledged would follow the original loan in the hands of either of the partners. It would not be a transfer of the pledged securities vitiating the pledge. There can be but little doubt that the accounts were all kept together at the request of Hunt; Chapman so testified, and the note given on the settlement purported to be given to the firm, and appropriated the collaterals to pay all memorandum checks due the firm or either of the members. Under such an appropriation by Hunt, a third party can hardly be allowed to dispute the title of a member of the firm upon the ground that the pledge had been illegally transferred. These views dispose of the exception to the refusal of the judge to charge, that if the notes were pledged to the firm of G.M. Chapman Co., the action could not be maintained. The case of Wheeler v. Newbold (16 N.Y., 392) does not conflict with this note. That case only holds that a creditor has no right to sell a note pledged as security at a loss, but must wait till it becomes due; but it is by no means an authority for the position, that a creditor may not assign the principal debt to a third person and give him the benefit of the collateral securities to secure the payment of the principal debt. So long as nothing is done to deprive the pledgor of the right to redeem on payment of the amount due on the principal debt, the pledgor is not injured.

The evidence was sufficient to warrant the jury in finding that the original loan was the money of Mrs. Chapman; or, 2d. If the loan was to the firm, that, in the division of the assets, these securities were set off to Mrs. Chapman for moneys advanced by her to the firm. Or, if originally loaned by G.M. Chapman, he could assign to Mrs. Chapman the note for the principal debt, and the collateral securities would inure to her benefit and be applicable to the payment of the amount due until wholly paid.

There was no error in the ruling of the judge in his charge or refusal to charge.

The judgment should be affirmed.

DENIO, Ch. J.

The appeal in this case presents questions upon the ruling of the judge in admitting certain inquiries which were objected to by the defendants' counsel, and rejecting a question put by the defendants' counsel to a witness, which was objected to by the plaintiff's counsel, and in declining to charge in favor of a position of the defendants.

1. The action was brought to recover the amount of two promissory notes made by the defendants to the order of Isaac L. Hunt. The plaintiff sued as indorsee of Hunt, who had indorsed them in blank. The notes were at six months, and matured August 15th, 1857. There was no question but that Hunt negotiated both notes before their maturity. The defense was, that after such negotiation and after the maturity of the notes, the makers entered into a compromise with Hunt, the payee, paying a part in money, giving other notes with another name for a further part which had been paid, the residue being abated to effect the compromise. George M. Chapman, to whom Hunt had negotiated them, received them from him as collateral security for money loaned. The defendants attempted to show that Chapman was cognizant of and assented to the compromise, and that he received two of the new notes given upon that arrangement on account of or as a substitute pro tanto for the notes in suit. Hunt, who was examined as a witness on behalf of the defendants, swore that he informed Chapman of the settlement he had made with the defendants about the time of making it, and the witness then gave him the two notes which were received on the compromise, which were passed to the credit of the witness. It was also shown that Chapman about this time held a large number of notes, besides these sued on, which he had received from Hunt, which were business notes in his hands, and which he had delivered to Chapman as collateral security for other moneys loaned him, and moreover that there was a practice by which Hunt occasionally withdrew some of the collateral notes and substituted others with the assent of Chapman. The theory of the defense appears to have been, that the notes sued on were adjusted by Hunt with the makers, and that that adjustment was assented to by Chapman at the time, or soon after it took place, and that two of the notes received on the compromise, which have been subsequently paid to Chapman, were received by him on account of the notes in suit. Chapman, who was examined as a witness for the plaintiff, denied this, and testified that until the summer of 1860, he had no knowledge of the compromise, and that he did not assent to it. An issue was thus made between the two witnesses, on the point of Chapman's assent to the settlement which Hunt had made with the defendants. The plaintiff's counsel then undertook to show that at a certain place, during the summer of 1860, Hunt communicated to Chapman that he had arranged the notes with the defendant, the maker, in the manner stated, and had apologized for that act by saying that his necessities had driven him to it, and that Chapman reproached him severely for his conduct. A series of questions were addressed to Hunt by the plaintiff's counsel, with a view to show this state of facts, but Hunt answered negatively to all of them. The questions were objected to, and exceptions taken to the rulings by which they were admitted. The plaintiff's counsel recalled Chapman, who affirmed by his testimony the existence of the conversation, in substance, as mentioned; and another witness, who stated he was present at the time and place indicated, corroborated him. Exceptions were taken to the decisions by which this testimony was received against the objections of the defendants' counsel. It was competent for the plaintiff to discredit Hunt, by proving that he had made statements irreconcilable with his testimony, that Chapman had assented to the discharge of the notes sued on, soon after they were compromised. The whole conversation inquired of, in the questions addressed to Hunt, and afterwards proved by Chapman and the other witness, would tend to contradict the former on a point material to the case. If he mentioned the settlement to Chapman, for the first time, in 1860, which was long after the alleged ratification, and then apologized for his conduct, and if he made no answer to the reproachful language of Chapman, it could not well be true that the transaction had been long before made known to and been approved of by Chapman. The reproachful language used by Chapman on that occasion, had not of itself any relevancy except to show, by the omission of Hunt to justify himself by stating the fact, as he now alleged it to be, a tacit admission of his having, up to the time of the conversation, no authority or assent of Chapman to the transaction. Evidence of the declarations of a witness contrary to the testimony given by him upon a material point, may be given to impeach his credit, though the rule is otherwise as to questions put to a witness to impeach his general character. In that case the answer of the witness cannot be contradicted. (Patchin v. The Astor Mutual InsuranceCo., 3 Kern., 268.)

2. One Hatt was called as a witness, by the defendants' counsel, and testified, that he was in the business with Hunt in 1857, and that Chapman had, at same time, left with him collateral notes which he said he had received from Hunt. The witness was then asked to state what Chapman directed him to do with those collaterals, on the application of Hunt. The question was excluded on the objection of the plaintiff's counsel, and an exception was taken. Prima facie, what was said by Chapman, in connection with notes which had been transferred to him, as collateral security, other than the notes sued on, would have no bearing upon the present controversy, but would tend to raise an issue foreign to the one on trial. It is possible that it may have been intended to prove a course of dealing respecting notes which had been so taken, which would tend to show an authority in Hunt to settle the notes in suit with the makers; but such an intention could not, without explanation, be inferable from the questions put. It frequently happens on trials, that subjects apparently irrelevant to the issue may be shown to be material, by connecting some other facts with them, showing a relation between the apparently immaterial matter and the issue in the suit. Where such is the case, it is the duty of the counsel to state the proposition which he proposes to establish, or the fact which he expects to prove, that the judge may see its bearing, and determine as to its materiality. The counsel did not pursue that obvious course in the present case, but contented himself with excepting to a decision overruling a question which presumptively had nothing to do with the merits of the case. The exception was not well taken.

3. The remaining point relates to the refusal of the judge to charge as requested by the defendants' counsel — that if the notes sued on were pledged to G.M. Chapman Co., the plaintiff could not maintain the action. The notes were made payable to the order of Hunt, and were transferred by him under his indorsement in blank, which, of course, made them further negotiable by delivery without indorsement. The note was produced and given in evidence on the trial, by the plaintiff's counsel. This was sufficient presumptive evidence of a transfer to her. Whether, when it was negotiated by Hunt, the transfer was to G.M. Chapman Co., or G.M. Chapman alone, or to Eunice Chapman, the plaintiff, was unimportant. If it was to her, no further transfer was necessary. If to the firm, or to G.M. Chapman, her possession of the paper was evidence that she had become the holder. The other evidence did not raise any question which would have enabled the jury to find against the allegation of a transfer to her. The proof was, that the firm of G.M. Chapman Co. consisted of the plaintiff and the witness, G.M. Chapman. It was an importing house, but ceased doing business as importers in 1855, and the witness, Chapman, had the charge of settling up the business of the firm, and was collecting the large assets belonging to it, the whole capital belonging to the plaintiff, and half the profits to the witness. He swore that the loan to Hunt, for which the notes were pledged, was of money belonging to the plaintiff; though for convenience only one bank account was kept, which I infer was in the name of the firm, or of G.M. Chapman. But a private account, as he said, was kept between the partners. If this testimony was accurate, when the money was drawn to make the loan, it was charged to her in the separate account, and the security became hers. This evidence was wholly uncontradicted, and the jury could not legally have found against its effect. It must, therefore, have been erroneous to submit a question upon it to the jury. But suppose the loan was of moneys of the firm, and the security when taken from Hunt became the property of the two partners. It was sued in the name of one of them, but if the defendant would take advantage of that circumstance, he should have set up the non-joinder in abatement. This was not done by denying, as the defendants did, that the plaintiff was the lawful holder or owner of the notes. But if he had set up the non-joinder, the evidence above mentioned, and the further testimony which was given, that E.M. Chapman, who was the plaintiff's agent, as well as the managing partner, directed the suit to be brought in her name, would have overcome the defense.

I conclude that none of the positions taken on the appeal are sustainable, and that the judgment should be affirmed.

All the judges concurring,

Judgment affirmed.