Lyman v. President of the Bank of the United States

53 U.S. 225 (1851) 12 How. 225

WYLLYS LYMAN, GEORGE P. MARSH, JOHN PECK, AND JOHN H. PECK, PLAINTIFFS IN ERROR,
v.
THE PRESIDENT, DIRECTORS, AND COMPANY OF THE BANK OF THE UNITED STATES.

Supreme Court of United States.

It was argued by Mr. Phelps, for the defendants in error, no counsel appearing for the plaintiffs in error.

Mr. Justice NELSON delivered the opinion of the court.

This is a writ of error to the Circuit Court of the United States for the District of Vermont.

The suit was brought in the court below by the bank against the defendants to recover a balance claimed to be due, of the purchase-money agreed to be given for the property and assets of their branch at Burlington. The amount of the purchase money was a fraction under one hundred and forty-two thousand dollars, ($142,000,) payable in instalments; and for securing payment of which four notes of thirty-five thousand five hundred dollars ($35,500) each, were executed and delivered at the time. These notes were payable to "Samuel Jaudon, Esq., cashier, or order," and had not been indorsed by him to the plaintiffs, nor in blank.

The declaration contained the usual money counts, an account stated, and also counts for the original consideration of the notes.

On the trial the plaintiffs offered in evidence the last of the series of notes, the previous ones having been paid, for the purpose of sustaining the action, which was objected to on the ground that no title was shown in the bank, the note not having been indorsed. This objection was sustained and the note excluded, but the plaintiffs were permitted to recover under the count for the original consideration.

The question, therefore, whether or not it was competent to connect the plaintiffs with the note by parol evidence, that it had been given to their cashier, and was their property, is not in the case, and need not be passed upon.

It was objected at the trial that the plaintiffs could not recover under the counts for the original consideration, on the ground that the notes had been received in payment and satisfaction of the indebtedness; and hence the recovery must be upon the notes themselves if at all. But the court held that the mere acceptance of the notes by the bank did not necessarily operate as a satisfaction; and that, whether or not there was an agreement at the time to receive them in satisfaction, or whether the circumstances attending the transactions warranted such an inference, were questions for the jury; and submitted the questions accordingly.

It was also objected, that, in order to entitle the plaintiffs to recover under the counts for the original consideration, they must first produce all the previous notes given for the purchase-money, and surrender them in court. And, further, that before there could be a recovery for that portion of the consideration, consisting of the real estate, the plaintiffs were bound to prove the execution, and delivery of the conveyances of the same to the defendants. But the court held, as to the first objection, that, as it was conceded on both sides that the previous notes had been paid, the presumption of law was, they had been given up by the holder at the time of payment, as the party was not bound as a general rule to make the payment, without receiving the note as his voucher; and, that, if the fact was otherwise, the burden lay upon the defendants to show it. And as to the second objection, inasmuch as the contract had been executed, and the defendants had given their notes for the purchase-money, the court was bound to presume that they were satisfied with the execution on the part of the plaintiffs, and, of course, that the proper conveyances had been made and delivered, and that, if the fact was otherwise, it was incumbent upon the defendants to show it.

This court is of opinion that no error was committed in either of the various rulings at the Circuit to which we have referred, nor, indeed, as it respects either of the other questions in the case, not thus far particularly noticed; but which appear upon the record.

Those remaining that bear upon the merits of the defence, and which we propose to notice, relate to two items of indebtedness upon the books of the branch bank at Burlington — the debt of Truesdell & Son of $4,884.48, and of Silas E. Burrows of $2,538.86. These items were among those on the list of suspended debts made out by the cashier of the branch preparatory to the negotiation for a purchase by the defendants of its assets, and to the settlement of the terms of sale by the parent bank. They were of considerable standing at the branch, and had been previously returned by the directors to the parent bank in several semi-annual returns as not only bad but desperate, and were inserted in what was called the list of suspended debts, amounting in the aggregate to a fraction short of $27,000 preparatory to the sale, and for which the defendants offered and the plaintiffs accepted five thousand dollars ($5000).

These two items, it was insisted, should be credited to the account of the defendants, inasmuch as they had been compromised, as was contended, and settled by the plaintiffs before or after the time of purchase; and, that as they had been inserted in the list of suspended debts, the defendants had reason to believe, when they made the purchase, they were outstanding existing demands, though of doubtful value.

It was admitted by the counsel for the plaintiffs, that, if his clients had compromised either of these debts, or had received any portion of them since the sale, they would be responsible for the fair value of the demands or the money received, at the election of the defendants. But, that if these demands, or either of them, had been compromised, and closed previously to the sale to the defendants, by the board of directors of the branch at Burlington, inasmuch as there was no warranty of the debts, and two of the purchasers were members of the board, and, of course, cognizant of the compromise, and settlement, all the defendants being joint purchasers, were chargeable with knowledge, and, therefore, there was no ground for an implied fraudulent representation on account of these two items having been inadvertently placed on the suspended list.

It was also urged by the counsel for the plaintiffs, that the condition of the debts on the books at the Burlington branch must have been well known to the board of directors there — much better known to them, than to the board of the parent bank; and, that the latter must necessarily have relied mainly upon information derived from the former as to the condition of the assets, with a view to make an estimate of their value.

The court took this view of the case at the trial, and left the facts to the jury. And, upon a review here, it is the opinion of this court, that no error was committed in the direction.

The facts were, that the Truesdell debt had been compromised by the directors of the branch at Burlington, with the assent of the parent bank, more than a year previous to the sale to the defendants, and the original debt discharged; and the better opinion from the evidence is, that the amount for which the debt was compromised was paid at the Burlington branch previous to the sale. At all events, there is no evidence whatever that any part of it has been received by the parent bank since that time. If it has been paid since, it must have been paid to the defendants who held the substituted paper under the transfer of the assets of the branch.

Under these circumstances, we think, the defendants were bound to show, in order to entitle themselves to the credit for this item of the suspended debts, that the parent bank had either received the money on it or had appropriated the securities so as to make them their own since the sale. And, as there was no evidence warranting either conclusion, it follows, the direction of the court below was right.

As it respects the Silas E. Burrows debt — it appears that this debt was compromised at 33 1/3 per cent. as early as May, 1835; and the original securities surrendered on taking the new security for $922.17. This security has never been interfered with by the parent bank; and if unpaid at the time of the sale, remained in full force at that time, and since, in the hands of the defendants.

The parent bank subsequently, in December, 1840, compromised a large indebtedness of Burrows, but in this, and all other subsequent negotiations with him, they expressly excluded the debt at the Burlington branch, as no longer under their control.

For these reasons we are satisfied the judgment of the court below is right, and should be affirmed.

Order.

This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the District of Vermont, and was argued by counsel. On consideration whereof, it is now here ordered and adjudged by this court, that the judgment of the said Circuit Court in this cause be, and the same is hereby affirmed with costs and damages at the rate of six per centum per annum.