Darnall v. Morehouse

36 How. Pr. 511

• Court: Superior Court of Buffalo
• Decided: July 1, 1869
• Status: Published

Opinion

By the court, Masten, J.:

This case is before us upon exceptions taken by the defendant at the trial, and directed to be heard in the first instance at a general term.

The certificate of a notary public was offered in evidence to show that payment of the bill drawn by Shuttleworth upon Fisk & Hatch attached to it, had been demanded and refused. At commn law, the bill being inland, the notarial certificate was not evidence, but by the statute is made evidence of the facts stated in it.

Its admission was objected to on the ground stated in the case, which, to my mind, are too clearly untenable to admit of discussion.

The exceptions, also, present the following questions :

1. Was the receiving by Johnson, under the circumstances, of Shuttleworth’s bill upon Fisk & Hatch, an actual satisfaction or payment of the price for which the cattle were sold to the defendant ?

There is no evidence of an express agreement that it should be payment.

The extinguishment of one cause of action by the substitution of another, of the same degree, can at the common law, only be by way of accord and satisfaction, which cannot be implied by law, but is the effect of an agreement between the parties. (3 American Leading cases, 162-196.

By the civil law novation can only be established by an express declaration to that effect by the creditor, or by acts which are tantamount to such declaration; and the delegation, by which the debtor gives to the creditor another debtor, is not a novation, unless there be an express declaration to that effect, or what is tantamount to it.

And hence it is has been repeatedly ruled in this state, and is settled law, that if a creditor receives from his debtor, the check, note, or bill of a third person, upon a preexisting debt, the presumption is, that it was. received as additional security, and not as an accord and satisfaction.

The learned counsel for the defendant contends that if, at the time of sale, the seller receives from the purchaser the note or bill of a third person for the price, the presumption cf law is that it is received in absolute payment.

There are dicta to that effect, but I know of no case in which the question being directly up, was so decided.

In all the cases I have seen in which it was held that the vendee was not liable for the price of the goods by reason of the vendor having received the note or bill of a third person at the time of the sale, the decision is put upon the agreement of the parties, either express or found as the result of a mutual understanding, or meeting of the minds of of the parties, in contra distinction to an agreement implied by law.

In some of the cases, the question was whether there was ever any debt or obligation on the part of the vendee; and in others, whether there was an accord and satisfaction.

A sale is the transmutation of property for a pecuniary consideration. (Williamson agt. Barry, 8 How. U. S. R., 544.)

Where A sells certain goods to B, for a note'which B holds against a third person, and delivers it to A, and for the payment of which note B does not undertake to be responsible, B is not, in any event, under any liability to A for the price of the goods. It is an exchange of the goods for the note, and is in legal effect as though one chattel had been exchanged for another.

Of such a transaction it is not accurate to say that the note was received in or as payment, no more than it would be in a horse trade to say that the one horse was received in payment for the other.

I think it may be laid down upon principle, that whenever there is an engagement to pay money, and the person to whom it is to be, paid receives from .him who has undertaken to pay it, his note or bill, or that of a third person, by which it is expected that the money will be received by him who is entitled to it, such note or bill is not a satisfaction of the engagement to pay, unless it be agreed that such shall be its effect, the onus, of showing which rests upon the debtor.

And this is the case, whether the obligation to pay money .is a precedent one, or is created simultaneously with the receipt of the note or bill.

The fact being ascertained, or conceded that there was an undertaking on the part oí him who delivered the note or bill, to pay money to him who received it, the taking óf the note or bill is not a satisfaction of the undertaking, or an extinguishment of the cause of action, as has already been stated, unless there be an accord.

“ When the terms of sale are agreed on and the bargain is struck, the con tract of sale becomes absolute as between the parties, without actual payment or delivery.” (2 Kent Com., 492.)

The price is an essential ingredient in a contract of sale, and there is an undertaking on the part of the buyer to pay it to the seller; and when the terms are cash down, the seller, being ready to deliver the goods sold, can immediately maintain an action against the buyer for the price.

Now, when the terms of sale are agreed on by the parties, and the bargain is struck, and the contract of sale has become absolute between the parties, and the price is to be paid down in cash, and the seller delivers the goods sold to the buyer, who, at the close, instead of the money, delivers to the vendor the check of a third person on a bank, payable presently, which is duly presented for payment and is dishonored, and the buyer notified, is there any presumption of reason, and therefore of law, that the check was received in absolute payment of the price and in discharge of the buyer?

I think it follows from what I have said, that there is no such presumption.'

The same result would follow, if, instead of a check pay- - able presently, it was a time note or bill, except that in such case, the debt would be suspended until the note or bill matured.

The Bank of England agt. Newman, (1 Ld. Raymond R., 442), was a sale of notes. Holt, Chief Justice, said, “This is a plain sale of the bill without indorsement.” Fydell agt. Clark, (1 Esp. Cases, 447), was the same. Ward agt. Evans, (2 Ld Raymond R., 928), was the case of a pre-existing debt. In delivering his opinion Chief Justice Holt said, “I agree with my brother, Darnall, (the plaintiff’s counsel), that taking a note for goods sold is a payment because it was part of the original contract.”

The case did not call for the remark. Clark agt. Mundal, (1 Salkeld R., 124), was also the case of a precedent debt.

Holt, Chief Justice, said, “If A sells goods to B, and B is give a bill in satisfaction, B is discharged though the bill is never paid, for the bill is payment.”

In Johnson agt. Weed, (9 Johnson R., 310), there was a contrariety in the evidence.

The defendant’s proof went to show that it was part of the bargain that Townsend’s note should be taken in payment of the goods; whilst the evidence of the plaintiff showed that they were to be paid for in cash; and that when Townsend’s note made payable to the plaintiff was produced, the plaintiff observed that the note ought to have been made payable to and indorsed by the defendants, to which one of the defendants replied, that it would make no difference.

The plaintiff then took the note and .gave defendants a bill of the goods and a receipt in full at the bottom.

Chief Justice Kent charged the jury, that unless the plaintiff agreed to receive the note as payment and to run the risk of its being paid, the mere taking of the note would not amount to a payment. The jury found for the plaintiff and a new trial was denied. Whitbeck agt. Van Ness, (11 John. R., 409), was for the price of a horse. The case was not disposed of upon any legal presumption, but upon the agreement in fact between the parties. Spencer, J., in delivering the opinion of the court said, “The single point for our determination in this case is whether the note' of a third person agreed to be taken in payment for goods sold at the same time is taken at the risk of the vendor of the goods, or of the vendee.* * * *

Nothing can be more manifest than that both parties perfectly understood that the plaintiff should take Deane’s note at Ms own hazard.* * * * The intrinsic circumstances of this case plainly show that the plaintiff considered himself as taking Deane’s note at his own risk. It was made payable to the plaintiff himself, and the defendant by not indorsing it or guaranteeing the payment of it, clearly declined pledging his own responsibility. The offer was made by the defendant of Deane’s note for the horse; the plaintiff took time to consider whether it was advisable to take Deane’s note, and after deliberation and we must presume, too, after inquiry, agreed to sell the horse for the note.* * * * To my mind the nature and proof of the transaction furnish as decisive proof that the plaintiff was to take the note at his own peril as if it had been stipulated in express terms.”

Breed agt. Cook, (15 John. R., 241), was for the price of a horse, and arose in a justice’s court. The case states that the price of the horse was $65, in part payment of which the defendant gave to the plaintiff the note of one Fillmore. for $23. That it was proved by the defendant that at the time of the sale of the horse, the plaintiff requested Mm to indorse the note; this he refused to .do, and stated that the maker of the note was as well known to the plaintiff as to him ; thát the plaintiff) after inquiring into the solvency of the maker, finally agreed to take the note without indorsement. The justice decided, that the plaintiff, not having made any special contract to take the note at his own risk, the defendant was liable.

Per Curiam.

“The justice erred, admitting the rule of law to be as he apprehended, yet he clearly mis-applied it; for the evidence showed satisfactorily that the vendors agreed

to take the note at their own risk. The decision in Whitbeck agt. Van Ness, (11 John. R., 409), gives the true rule on this point, which is, that if the vendor of goods receive from the purchaser the note of a third person at the time of the sale, it is deemed to have been accepted by the vendor in payment and satisfaction unless the contrary be expressly proved.”

Now it is quite plain, that the enunciation of the rule, supposed to have been laid down in Whitbeck agt. Van Ness was not necessary to the decision of the case before the court.

Upon examination of Whitkeck agt. Van Ness, is is equally plain that no such rule was laid d own in that case as stated. In delivering the opinion in Johnson agt. Weed, supra, it was said that, “there must be a clear and special agreement that the vendor shall take the paper absolutely as payment, or it will be no payment.”

It would seem that the justice of the peace in Breed agt. Cook, put his decision upon this remark.

In Whitbeck agt. Van Ness, Spencer, J., in the course of his opinion, said, “I am compelled to say, that although I assented to the decision in Johnson agt. Weed, and yet believe it to be correct, the reasoning of the judge, who gave the, opinion, went further than I intended; and, as I understand those of my brethren who assented to the decision, further than they meant to go.” The learned judge then goes on to show that a special, express agreement is not necessary, but that from the nature of the transaction and the proofs, it may be found, as a fact, that such was the mutual understanding of the parties.

From the facts in Whitbeck agt. Van Ness, as, by the statement of Judge Spencer which I have given, they appear to have been understood by the court, it would seem that the case was not strictly one of sale, but of exchange.

It is possible that the dicta, that if, at the time of the sale the seller receives from the buyer, the note, or bill, or check of a third person for the price, there is a presumption of law that it was taken in absolute payment and at the risk of the seller, may have their origin in the cases I have cited.

It is claimed that in Rew agt. Barber (3 Cowens, R., 272), this dictum became a decision. But this is not so. The action was to recover back the price paid by the plaintiff to the defendant on the purchase of a horse, the title of which had failed. It came before court on a special verdict by which it was found that the plaintiff paid the defendant for the horse in a note against a third person, and the question was, whether proof of such payment, sustained the common money counts.

The case of Noel agt. Murray was for the price of some looking-glass plates ; it originated in the superior court of New York.

Upon the trial it appeared that at the time of the sale and delivery of the plates, the defendant delivered to the plaintiff the note of a third person on time, and paid the balance of the price in money; and the plaintiff gave to the defendant a receipt in full for the plates.

There was also other evidence tending to show that the note was received in payment and at the risk of the plaintiff. There was a verdict for the defendant.

The case was taken to the general term of that court, where it was held that the evidence proved that it was the understanding of the parties that the note should be received by the plaintiff in payment for the plates and at his own risk.

The decision was not placed upon any presumption of law, but upon established facts. ( 1 Duer R., 385.)

Upon appeal to the court of appeals the judgment was affirmed. (13 N. Y. R., 167.)

The case came before the court upon an exception to the refusal of the judge to decide as matter of law that there was no payment, and on an- exception to his charge, which was that if, from the evidence, the jury found that it was part of the agreement between the parties at the time of the sale and delivery of the plates, that the note should be received in payment, they should find for the defendant. It does not appear that any thing was said in the charge about presumptions. Opinions were delivered by Judges Marvin and Dean. In the course of his opinion Judge Marvin indulges in the dictum under consideration, and cites the cases upon which I have commented. But the decision of the case is put by both of the judges upon the ground that there was sufficient evidence of an agreement, in fact that the note was received in payment and- at the risk of the plaintiff, to carry the case to the jury. Indeed that was the only question presented by the bill of exceptions for the judgment of the court.

The case leaves the dictum, still an obiter dictum.

In the case before us the terms of the sale of cattle were agreed on, the bargain struck and the cattle delivered.

The sale was for cash. While it is true that if the defendant had refused to pay for the cattle, the plaintiff might have retaken possession of them, yet the plaintiff had the election in such case not to retake them. The statute of frauds was satisfied, and the plaintiff could have brought action against the purchaser for the price.

There was then, a debt or liability on the part of the defendant for the price.

All that remained to be done to close up the matter, was the payment of the price. If, when the parties met a couple of hours after for that purpose, the defendant had handed to the plaintiff’s agent the Shuttleworth draft, and he had received it without a word being said as to whether or not it should be accepted as actual payment, I maintain upon principle it would not have been a payment.

Again, in the case before us the plaintiff’s agent refused to rceive the Shuttleworth draft or bill, unless the defendant would indorse it, and the defendant thereupon indorsed it.

The question before us, is not in what form the defendant would be liable if there was in fact an agreement that the draft should be absolute payment; but whether there was such an agreement or sufficient evidence thereof, to carry the question to the jury.

Reason and authority I think, justify us, even if there is such a presumption as that contended for by the defendant, in saying, that where the liability of the buyer is continued in any form, that fact rebuts the presumption, and shows that the note was not taken at the risk of the vendor and in absolute payment.

In Butler agt. Haight, (8 Wend. R., 535), the buyer of goods at the time of the sale gave to the seller the note of a third person for the price and guaranteed its payment, and the seller gave to the buyer a bill of the goods, signed by the seller in which he acknowledged that the note was turned out to him in payment for the goods.

It was held that the guarantee was conclusive evidence, that the note was not taken in payment, and that the plaintiff could recover for goods sold and delivered.

In Monroe agt. Hoff, (5 Denio R., 360), the defendant applied to the plaintiff to sell him some goods, and offered the plaintiff the note of a third person upon which the defendant indorsed a guarantee of collection; the plaintiff received the note and delivered goods to the defendant to the amount of it; the guarantee was void under the statute, because it did not express the consideration. It was held that the guarantee, though void, afforded evidence that the transaction was a sale, and that the note was not taken in payment, and that the plaintiff could recover for goods sold the defendant.

Reference is also made to the following cases: (Forden agt. Jones, 2 E. D. Smith R., 106; Soffe agt. Gallagher, 3 E. D. Smith R., 507 ; Whitney agt. Goin, 20 N. Hampshire, 354; Gardner agt, Gorham, 1 Doug., (Mich.)R., 507; Dodge agt. Stanton, 12 Mich., 408; 2 American Leading cases, 187; Camidge agt. Allenby (6 B. and C. 373) 15 E. C. L., 201.)

The bill of Shuttleworth upon Fisk & Hatch, was drawn to the order of Shuttleworth’s teller, and was by him indorsed to the order of Johnson, the plaintiff’s agent. It is contended for that reason, that the defendant did not continue his liability to the plaintiff.

The position is not sound.

It is very evident that Johnson required the defendant to indorse the bill and that the defendant did indorse it to give the bill credit with Johnson.

The defendant therefore, by his indorsement of the bill, made himself liable to the plaintiff as indorser of the bill (Moore agt. Cross, 19 N. Y. R., 227.)

2. Was there error in the refusal to submit it to the jury to say whether Shuttleworth’s bill or draft was taken in payment for the cattle ?

With the conceded fact, that Johnson required the defendant to indorse the draft, and that the defendant did thereupon indorse it,- there was nothing for the jury. They could have given to.that question but one answer that would have been allowed to stand. There was nothing in the circumstances or in the conduct of the parties that would authorize but the one conclusion.

Indeed, if the defendant had not indorsed the draft, and nothing had been said about his indorsing it,. there would have been nothing for the jury. The defense of payment rests upon a presumption of law claimed to exist, which it has been shown does not exist.

The only testimony that could carry the question to the jury, is the testimony of the defendant, that “Burke, the teller, asked Johnson how he would have it; he (Johnson) said he would have it in drafts to order of W. Johnson, one for $2,100, the other for the balance. Burke handed him the drafts; Johnson said to me, I want you to put your name on them; I did put my name on.” It is contended that the meaning of this question was, whether he (Johnson) would have it in money or in drafts.

In the connection in which the defendant states this inquiry by Burke, the meaning contended for, can only be given to it, upon the assumption that Burke proceeded to pay Johnson for the cattle, without any request or suggestion from either Johnson or the defendant.

When considered in connection with the statement of J ohnson on the witness stand, that the defendant spoke to Burke, who began to make out a draft, and which the defendant, when he took the stand, did not deny, it is evident that the meaning of the question was, how will you have the draft.

From the facts disclosed in the case, I think Burke must be regarded as between Johnson and the defendant, as having acted upon that occasion for the defendant.

3. Was the plaintiff guilty of laches in presenting the bill or draft for payment?

This turns entirely upon the fact, whether the defendant consented that Johnson, the plaintiff’s agent, might take the draft home with him to Greencastle.

Upon this question of fact, there was some conflict in the evidence, and the jury to whom it was submitted, found that ■such consent was given.

It was contended upon the argument, that there was no 'evidence to justify the submission of the question to the jury.

A perusal of the case satisfies me that there was, and ¡brings my mind to the conclusion at which the jury arrived.

It was also- contended on the argument, that there were laches in giving notice to the defendant of the dishonor of the bill.

There is no exception presenting the question. But there were no laches in that respect.

The case shows that the bill, with the notarial certificate attached to it, was presented to the defendant and payment demanded, before notice of its dishonor could have reached him by due course of mail.

It was also contended on the argument, that the bill should have been surrendered up to the defendant.

The case shows it was read in evidence, but does not show that it was not surrendered up.

There is no exception presenting the point, and the case is before us on the exceptions taken at the trial.

The remaining exceptions present the question, whether there was error in the refusal to submit it to the jury to say, whether the bill drawn by the defendant upon his partner, Miller, and delivered to Shuttleworth, was payment for the cattle.

There is no evidence calling for, or justifying its submission. Indeed, it was not urged on the argument.

There must be judgment for the plaintiff on the verdict.