Dulles v. De Forest

19 Conn. 190

• Court: Supreme Court of Connecticut
• Decided: July 15, 1848
• Status: Published

Opinion

Stores, J.

The liability of the defendants to the plaintiffs on the note in question, by reason of the acceptance or payment, by the latter, of the drafts drawn on them, by the former, depends entirely on the terms of the original agreement between the defendants and the firm composed of Dulles Fisher, when said note was executed. Whatever agreement was subsequently made between the firm of Wm. De Forest Co. and Dulles Fisher, or the plaintiffs, as to the purpose for which the note should be held or used, by either of them, was not binding on the defendants, because, as must be assumed on this motion, Lewis, one of the defendants, signed the note merely as a surety for Wm. De Forest <f' Co., and was not a party, and did not assent, to such subsequent agreement. Although the note is absolute in its terms, it is competent for the defendants, in an action brought on it, either by the payees, or by their indorsees, with notice of the original agreement under which it was made, to avail themselves of any defence growing out of such agreement, and consequently, to show what were the terms of that agreement; and as the plaintiffs, who here claim as indorsees of the note, consist in part of two of those payees, Dulles ⅜ Fisher, they must be deemed to have had such notice, when the latter endorsed it to them.

If, as was claimed by the defendants, on the trial, the agreement between the defendants and Dulles ⅜ Fisher, when the note was made, was, that it should be held as a security only for a loan or advancement to the firm of Win. De Forest Co., whether in cash or by acceptances, to be made by Dulles Fisher alone, it could not be made available by the latter, or any other persons to whom they might indorse it, with notice of such agreement, as a security for a loan or advancement by any other persons, for the plain reason, that it would be contrary to the original understanding and intention of the parties, which could not be subsequently varied, without their assent. And, for the same reason, if, as the defendants further claimed, it was also a part of that agreement, that the note should be held as security for only a single loan, or advancement of a particular sum, it could not be made available as security for any successive loans ; and, in this case, a payment by Wm. De Forest <f- Co. of the first, would extinguish all liability on the note. These principles, which are undisputed, were, as requested by the defendants, sanctioned in the charge of the court below to the jury.

The plaintiffs, however, claimed, that the agreement was, that the note should be held by Dulles Fisher, as a security to them for any advancement of money, to the amount of two thousand dollars, to Wm. De Forest Co., to aid them in their India-rubber business, and also as a security to any other person or persons to whom Dulles <§• Fisher might indorse said note, for any advance of that sum, which the persons to whom they should indorse it might make to Wm. De Forest cf- Co., in that business ; that Dulles <$• Fisher never made any such advancement on the note, but that they indorsed it to the plaintiffs, after the formation of the partnership between the plaintiffs ; and that thereupon the latter advanced said sum to Wm. De Forest <§• Co., in said business, which had never been repaid. The court instructed the jury, that under these circumstances, the plaintiffs had a right to recover, and submitted the facts to them on the respective claims of the parties. The facts were found as claimed by the plaintiffs.

This charge appears to us to be entirely unexceptionable ; and, indeed, we do not understand that the principle embraced in it is controverted, by the defendants. The note was payable to Dulles Fisher, or their order, and was delivered to them, expressly for the purpose of being held by them, or negotiated to other persons, as a security to whichever of them should make the contemplated advance to Wm. De Forest Co. ; and such advance having been made by the plaintiffs, the note was thereupon properly indorsed to them, by Dulles <§• Fisher, for the very purpose for which it was originally executed. That a promissory note or other instrument, executed to a person, for the purpose of securing a particular loan or advancement, to be made by him or another person by his procurement, is available by either of them making such loan or advancement, cannot admit of doubt. It is equally clear, that if such note is negotiable, an action on it is sustainable against the maker, by the person from whom the payee has procured such loan or advancement, and to whom he has indorsed it; or by the payee, for the benefit of such person, if it has not been indorsed. The authorities on this point are decisive. Pease & al. v. Hirst & al. 10 B. & C. 122. (21 E. C. L. 38.)

The defendants, on the trial, requested the court to instruct the jury as to the effect of the renewal, by Dulles <§• Fisher, of their two first acceptances of the drafts drawn on them, by the firm of Wm. De Forest <f- Co. ; and of the subsequent acceptances, by the plaintiffs, of the drafts drawn on them, by the same firm ; and of the transfer, by Dulles Sf Fisher, of the balance of their account against Wm. De Forest Co. (which included the acceptances by the former, for the latter,) to the plaintiffs, with the assent of Wm. De Forest C'o. The omission of the court to notice these points specifically in the charge, constitutes no ground for a new trial, because they were unimportant, excepting on the supposition that an advance or loan had been made, by Dulles 6f Fisher, to Wm. De Forest <Sf Co., as claimed by the defendants ; and the jury found, that no such advance or loan was made. It appears, therefore, that the state of facts did not exist, upon which those questions could arise. Hence, it becomes unnecessary for us to examine them. .It is a sufficient reason for not disturbing the verdict, on this ground, that it conclusively shows that the defendants have sustained no injury, in consequence of these points not being particularly presented to the jury.

The remaining enquiry involves the correctness of that or the charge below, which respected the application ot the moneys arising from the sales of the goods of Wm. De Forest <f- Co., in the hands of the plaintiff's. And the question here is, as to the effect of the plaintiffs having blended in one general account upon their books the amount loaned by them to Wm. De Forest Co., for which the note in question was given as a security, with the avails of the goods of the latter sold and cash received on their account, by the plaintiffs, after the payment by them of the acceptances by

them, which constituted that loan, in connexion with the fact that such account was, from time to time, rendered by the plaintiffs, to Wm. De Forest fy Co. In point of fact, however, it appears, that the amount of those acceptances was not debited, by the plaintiffs, in their account, to Wm. De Forest <$f Co., after they were paid by the plaintiffs ; but that the acceptances themselves were charged at the time when they were given. It is obvious that the entry, in the account of the acceptances and their amounts, when such acceptances took place, and consequently before any payment had been made by the plaintiffs, by reason of their liability thereon, amounted only to a mere memorandum of the transaction, and constituted, of itself, no charge or evidence of indebtedness, by Wm. De Forest Co., to the plaintiffs; since the latter, until they had paid those acceptances, could have no claim or right of action against the former. But, in accordance with the course of the argument before us, we put the case, so far as the present question is concerned, on the ground that the effect of thus charging these acceptances, is substantially the same as if the moneys paid on them, by the plaintiffs, had been actually charged thereafter. Still the circumstance, that the charge was made in the manner that has been mentioned, is one which might properly be considered by the jury, in coming to their result, as to the intention with which such entry or charge was made, provided the court below was correct in submitting to them the question of such intention.

It has not been, nor do we think that it successfully could be, claimed, that, if the moneys advanced on the acceptances, and the avails of the goods sold and cash received, by the plaintiffs, had been entered in distinct accounts, instead of being blended together in one, the law would, in the absence of any particular evidence to show how those avails and that cash were intended to be applied, appropriate them in payment of the moneys so advanced. The two accounts were entirely different in their nature; one growing out of a special contract respecting a single, isolated transaction. — • a loan of'a particular sum of money, — and in no wise connected with the other; in which the object of the persons obtaining such loan, was, to carry on, by means of it, the India-rubber business, a branch different from, unconnected with, and wholly independent of that (the satinet business,) which gave rise to the other account, and to which it related ; and where therefore, it would be highly improbable to suppose, that it was expected, that they would reimburse that loan from the avails of the latter business; since the very necessity of resorting to a loan, in order to enable them to pursue the former branch of business, would indicate that they had not funds to spare for that purpose from the other. For one of those debts the plaintiffs also had specific collateral security, the note in question, signed by a surety, and for the other only the personal responsibility of W tn. De Forest <J- Co. The nature of the connexion existing between the plaintiffs and Wm. De Forest & Co. in respect to the satinet business, (and they were not connected in the other,) would, furthermore, seem to require, that the account of the moneys received by the plaintiffs, in the course of their agency, should not be disconnected from that business. And the further fact, that the plaintiffs credited said moneys so received to Wm. De Forest £y Co., in the satinet account, would be strong evidence of an election, by the plaintiffs, to appropriate them to the indebtedness growing out of that particular business, by which they would, unless under some peculiar circumstances, not existing here, be precluded from appropriating them in any other manner. Under these circumstances, it would be contrary to the presumed intention oí the parties, and therefore, opposed to the principles of justice and equity, by which the law, in the absence of any specific application by the parties, will always be governed, to apply the moneys received by the plaintiffs for the goods, to the payment of the loan, for the security of which the note in question was given.

We are brought then to consider the effect of blending these matters together in one account. The defendants rely on the general principle, that where there is a general account, or separate accounts are treated as an entire account, by the parties, payments made generally, that is, without any specific appropriation of them, are considered as having been made in discharge of the earlier items ; and they insist, that the jury should have been instructed to adopt that, rule, in the present case. The court instructed them, that the presumption of law in such a case, is, that the payments were intended to be applied to the oldest items of the whole account ; but further informed them, that they had a right to find or imply, from all the circumstances of the case, what application was intended by the parties, and should render their verdict on this point accordingly. This, we think, was correct. It was certainly so, unless the rule relied on by the defendants, is invariable. This, however, is not the case. The rule, although general, is, by no means, universal. It is not an artificial or arbitrary principle, but one founded merely on the presumed intention of the parties; and is applicable only where there is no evidence sufficient to show a different intention. But where there is such evidence, the presumption fails. And such evidence may consist of any facts or circumstances from which the intention of the parties may properly be inferred. It is obvious, that all the transactions between individuals may be, and often are, entered together in the form of one general account, for the purpose of more readily showing the state of all the affairs between them, or for some other purpose of mere personal convenience; and it would be unreasonable, indeed, if an inflexible rule of inference should be adopted, which would preclude them from showing, in such a case, what was their real object and intention. The plaintiffs, therefore, notwithstanding they kept and rendered to Wrn. De Forest fy Co. an account, in a general form, embracing their acceptances for that firm ; and although the latter received that account, without expressing any objection to it; are not estopped, as the defendants claim, from showing their real object in keeping or rendering their account in that manner. These circumstances constituted evidence, but not conclusive evidence, in favour of the claim of the defendants. And the fact that Lewis was only a surety in the note in question, does not, in our opinion, furnish any reason for varying the principles which should be adopted, in this respect, if it was a tion only between the plaintiffs and Win De Forest ⅜ Co.

The views expressed by us, on this point, are fully sustained, by the cases. In addition to those cited by the plaintiffs, we would refer to Pease & al. v. Hirst & al. 10 B. & C. 122. (21 E. C. L. 38.) and Lysought v. Walker, 5 Bligh, N. S. 1.; the first of which is directly in point. We think, therefore, that this part of the charge, was also unexceptionable.

The result is, that a new trial should not be advised.

In this opinion the other Judges concurred, except Ells-worth, J., who was absent.

New trial not to be granted.