Ford v. Stewart

43 Ky. 326, 4 B. Mon. 326, 1843 Ky. LEXIS 141

• Court: Court of Appeals of Kentucky
• Decided: September 14, 1843
• Status: Published

Opinions

Judge Bkeck

delivered the opinion of the Court.

In October, 1839, Taylor, as the administrator of Pollock, held a note upon N. W. & J. C. Ford for 12160 47, which had been due since the March preceding. J. C. Ford was the surety of N. W. Ford upon said note.

With a view to raise the money for the payment of this note, and to obtain further time, N. W. Ford proposed drawing a bill at sixty days, upon the house of E. Ford & Co. of New Orleans. Taylor refused to give further time without the consent of J. C. Ford, and refused to consent to any arrangement in reference to the bill proposed, if it were in any way to affect the liability of the Fords, or either of them, upon the note. To obviate the objections of Taylor, N. W. Ford procured his bill to be indorsed by J. C. Ford, anda memorandum at the same time was signed by both the Fords as follows :

“I have this day indorsed a draft, drawn by Nicholas W. Ford, which is passed to Dabney Taylor, the object of which is, with the proceeds of the draft at maturity, to pay a note which said Taylor, as the administrator of William Pollock, holds against the said N. W. Ford, and to which I am secuiity, dated, April 21, 1837, and payable on the 20th March, 1839, for $2150 47; and it is distinctly agreed, that the said draft shall in no wise affect our liability on said note; and if paid at maturity, the proceeds are to be applied to its payment, including all interest which may be due, and any exchange which may be paid in converting the proceeds into par funds at Louisville, Kentucky. The said draft is drawn upon Edward Ford & Co. of New Orleans at sixty days, and dated 1st October, 1839, and is for the sum of $2260.

N. W. Ford,

October 16, 1839. J. C. Ford.”

The draft was drawn, payable to N. W. Ford’s own order. On the same day of the date of the foregoing memorandum, N; W. Ford and Taylor called on Willis Stewart, a Commission Merchant in Louisville, and made an arrangement with him to forward the draft to New Orleans for collection, and pay over the proceeds, when received by him, to Taylor, in discharge of his note upon the Fords. They left with Stewart the draft, memorandum aforesaid, and the note, and also a memorandum signed by N. W. Ford and Taylor as follows:

The object of the bill of N. W. Ford. Stewart’s answer to N. W. Ford’s bill.

“We leave with you N. W. Ford’s draft on E. Ford &. Co. New Orleans, for $2260, sixty days from the 1st instant, which forward for payment, and when paid, have the proceeds teturned to Kentucky in best form you can for the interest of the drawee, and when the funds are received, please pay over to Dabney Taylor the amount of a note of N. W. Ford & J.. O. Ford to William Pollock for $2150 47, and interest since due to time of payment. This note is also left with you, and when payment is made to Mr. Taylor, retain the note receipted, for N. W. Ford. . N. W. Ford,

Wm. D. S. Taylor.”

October 16, 1839.”

Stewart forwarded the draft to Shannon & Brothers, New Orleans, for collection, with directions to remit the proceeds in checks upon Philadelphia or New York. The bill was paid but the fuhds not remitted.

The house of Shannon & Brothers failed in the spring 1840, and in April, 1840, N. W. Ford exhibited bis bill in chancery against Stewart, Taylor, J. C. Ford and Myerie, Stewart & Bland, a house with which Stewart was connected. Ford charges in his bill, that the house of Shannon & Brothers, to whom Stewart had sent the bill, was not, at the time, a house of good standing and credit ; that Stewart and the firm of Myerie, Stewart & Bland were each indebted to Shannon & Brothers when his draft was paid, in a sum exceeding the amount thereof, and that Shannon & Brothers had passed the proceeds of said draft to the credit of Stewart or to the credit of said firm, and that the conduct of Stewart had, throughout, in relation to the transaction, been grossly negligent and fraudulent ; that Stewart had refused to deliver up to him his note to Pollock or Taylor, and prays that the Chancellor would compel a surrender thereof, and ibat it might be cancelled.

Stewart, in his answer, denies all the allegations of fraud and negligence. He denies that he acted as the agent of complainant and Taylor to collect the draft and apply the proceeds; that he accepted no trust as charged, but merely agreed, at the special instance and request of complainant and Taylor, without fee or charge, to forward the draft to his agents, Shannon & Brothers, for collection, and if collected and the proceeds received by him, to apply them as requested. He denies having received any portion of the proceeds of said draft, and also denies any indebtedness by him or by the firm of Myerle, Stewart & Bland, to Shannon & Brothers, when the draft was paid or since.

Taylor’s answer to N. W. Ford’s bill made a cross bill vs NW. & J. O. Ford, and the prayer thereof, and the answers of J. C. Ford. The decree of the Chancellor on the original bill. ■ — And upon-Taylor’s cross bill.

Taylor, in his answer, denies that he had any interest in the transaction, and insists that it was for the sole benefit and accommodation of N. W. & J. C. Ford. He makes his answer a cross bill against them, and prays a decree for the amount of his note. J. C. Ford answers, denying that he was, in any way, connected with the arrangement between N. W. Ford and Taylor and Stewart; insists it was made without his knowledge or consent; that he was unwilling to indorse the draft of N. W. Ford, without an assurance that the proceeds were to be applied in discharge of the note upon which he was security to Taylor; and as this draft was paid, submits to the consideration of the Court, whether he is not discharged from further liability upon said note.

The Chancellor decreed that Stewart should pay to N. W. Ford and Taylor, the whole amount of the draft of said Ford upon Edward Ford & Co. with interest from the time it was paid.

That upon the cross bill of Taylor against the Fords, Taylor was entitled to receive of N- W. Ford the amount of- the note of said Ford and J. C. Ford, to W-illiam Pollock, with interest, and so decreed.

That upon the original bill of N. W. Ford, and upon the cross bill of Taylor, as to J. C. Ford, it was decreed that he be discharged and released from all liability upon the note upon which he was surety for N. W. Ford to Pollock. Of this decree Stewart and Taylor both complain, and by several writs of error, have brought'the case before this- Court for its revision.

The decree as against Stewart will be first considered.

The decree of the Chancellor is preceded by a very interesting and learned opinion, in which, so far as relates to the legal positions assumed by him, we very generally concur. We are, however, constrained to differ with him somewhat in the analysis of the facts of the case, and as to the effect and weight of the testimony.

A delay of an agent of only three days in forwarding a bill to the place ofpayment, (and that delay the result of sickness,! was not such gross negligence as to render the agent responsible, especially as the bill -was paid wthin three days of the time of payment. Nor would the fact that the firm to which the bill was forwarded, failed immediately thereafter, render the agent liable asforgross neglect, provided its credit was • good at the time, and more especially as the principal knew that the bill was to be forwarded to that house for collection.

We concur in the legal position, that if Stewart, in the execution of the trust or commission in sending, for N. W. Ford and Taylor, the draft in question to New Orleans for collection, and in view of receiving the proceeds thereof, to be paid over to Taylor, was guilty of gross negligence or bad faith, he should be held responsible for the loss and damage thereby sustained. But we are not satisfied that he stands, by the record, thus convicted.

The first item in the charges against him is, that he did not start the bill from Louisville in time for it to reach New Orleans at maturity. It appears that it matured on the third and reached New Orleans in time to be paid on the 6th December. The cause of the delay in starting it is, we think, satisfactorily explained. It resulted from Stewart’s indisposition, and the. bill being mislaid. But as the draft reached its destination and was paid on the 6th of December instead of the 3d, no injury resulted, and the delay furnishes no just cause of complaint.

2d. That he sent the draft to a tottering and irresponsible house or agent. In answer to this charge, it is replied, that Shannon & Brothers had been his agent and the agent of the firm with which he was connected, for years, and was then his agent and the agent of said firm.

Besides, it appears that the reputation of the house was then good, and the house somewhat noted for its promptness and dispatch in the transaction of business, and so continued till a very few days before it failed. But this charge is conclusively answered and disposed of by the fact, as we think, satisfactorily established by the testimony, that when Stewart received the draft he told N. W. Ford and Taylor that he would forward it to Shannon & Brothers for collection.

3d. It is urged that he was guilty of negligence in not advising Shannon & Brothers that he was not the owner of the bill, but the mere Trustee. It appears that the bill was forwarded precisely as it was delivered to Stewart, indorsed by N. W. Ford and J. C. Ford", in blank. It is apparent from the proof and from the memorandum of fí.'W. Ford and Taylor, that it was contemplated by them that the business should be transacted in Stewart’s name and the funds remitted to him in his name, otherwise it would have been impracticable for him to pay them over to Taylor. It was no part of the request or of the instructions of Ford and Taylor, that he should advise Shannon & Brothers to whom the bill belonged or how the funds were to be appropriated when they reached Louisville. Besides, who was, at the time, the actual proprietor of the bill, was a question of some doubt. He directed the proceeds of the draft, if paid, to be remitted to him, and the mode, to which no objection is made. It is true, he might have stated in his letter covering the draft, that it did not belong to him, and therefore, that there must be no failure in forwarding the proceeds without delay. . Such a suggestion would very clearly have implied distrust as to the promptness and integrity of the house or person to whom it was made, and to a merchant of correct sensibility as to his character, would have been offensive.

It does not appear that Stewart had any reason to apprehend or believe that Shannon & Brothers would be more prompt in remitting the funds, if advised that they belonged to Ford or Ford and Taylor, than upon the supposition that they belonged to him. Shannon & Brothers had no pretext for withholding the fund, Stewart denies that he was indebted to them, either on his own account or on account of the firm of Myerle, Stewart & Bland, and the fact of such indebtedness is not, in our opinion, established by the testimony; nor does it appear that the Shannons ever claimed or pretended that their failure to remit the money resulted from that cause. In view of the charge under consideration, therefore, we are not satisfied that it was the duty or at all incumbent upon Stewart to have apprised the Shannons that he was not the owner of the draft; and we are, consequently, of the opinion that the omission to do it did not amount to negligence or bad faith.

But 4th. Much reliance is placed upon two letters purporting to have been written by Stewart to N. W. Ford, one under date of the 24th December, 1839, and the other of the 5th January, 1840, as containing evidence of falsehood and deceit. The first purports to be in answer to a letter from N. W. Ford, at Paris, and states in substance', that he, Stewart, had received a letter from his agent in New Orleans; that the draft, for some cause, did not reach there in time, but was-presented on Saturday evening and would be paid the next Monday, and as soon as paid the proceeds would be sent to him, and when received would be applied as directed.

Papers and letters copied into the records of a Chancery cause and not exhibited in the proceedings should not canstitute the basis of a decree. — Ab0u.

The other letter of the 5th January, states that he had received no further information from New Orleans; that the river was closed and no mails, &c.

In reference to t-he first letter, it is insisted that the draft reached New Orleans after the 3d, and was paid on the 6th, which was Friday, and of course, that no Saturday intervened between the arrival of the draft and its payment. The Clerk states in the record, that these letters are found ip the cause, but when filed or by whom it does not appear.

There is no proof in relation to them, nor are they referred to in any way in the pleadings. Upon papers thus appearing in a- cause, we should hesitate to base a decree. But regarding them even as exhibits in the case, what do they prove? Do they prove that Stewart did not receive information as therein stated? It does not appear that Stewart had any interest or motive in deceiving Fojd upon the subject. The presumption, we think, should rather be indulged, that he was deceived by the Shannons, and we are not of the opinion that these letters furnish sufficient evidence, more especially appearing in the record as they do, of gross negligence or bad faith on the part of Stewart, as charged.

On the 12th January, 1840, Shannon & Brothers write to Stewart, that he “must draw on them at sixty days, for amount of Ford’s bill; that they did not collect the amount at the time promised.” .Stewart, in answer to the allegations in the bill of Ford, that he had refused to draw at a short time, says that he was unwilling to render himself responsible for the money; that he was under no obligation to do so; that he had urged its remittance and continued so to do.

A creditor -who merely delays suit to await the result of arrangement carried on by his debtor to procure means for payment, without consideration, ha3 thereby done no act to release the surety of his debtor, especially when it is so expressly agreed.

The result of the investigation which we have given to the case, in reference to the liability of Stewart is, that the decree as to him, for the whole amount of the draft of N. W. Ford, and interest, is erroneous: but as it appears that P. Shannon & Brothers had passed, exactly when is not very certain, nor indeed important, the proceeds of said draft to the credit of Stewart, and that upon their failure, the whole amount placed to his credit, upon the schedule of their affairs, was $1542 04, it follows, that but for the credit of the draft, he would have been indebted to them $717 96, and that he has, in effect, therefore, received that much of said draft, and to that extent,with the interest, that said Stewart is responsible to N. W. Fordj and that he is also responsible for what he may have received of the $1552 04, and that as to the residue thereof, that he should transfer the same to said N. W. Ford.

As to so much of the decree as discharges and releases J. C. Ford from the note to Pollock, upon which he was surety for N. W. Ford, and withholds relief from Taylor, upon his cross bill, it remains to be considered.

The Chancellor, in his opinion, shows or refers to no precedent for the discharge of J. C. Ford, and we are not aware of any adjudged case or authority directly applicable to that question. Cases of this kind must rest and be determined, each according to its particular facts and circumstances, upon the general principles of equity, and in that way we are disposed to consider the case before us.

It is obvious that the arrangement for drawing the bill by N. W. Ford upon E. Ford & Co. did not originate with Taylor, but with the Fords — more probably with N. W. Ford. Taylor had nothing to gain by it; he realized no money in hand by it, but delayed, thereby the payment of his note. He was to receive no pecuniary consideration for it, nor was he to obtain any additional indemnity or security for the payment of his demand upon the Fords. It is,- therefore, not to be presumed that it was contemplated by him or the Fords, that he was to be at any risk, hazard or expense, in the business; hence, the memorandum of the Fords was prepared and signed for Taylor’s security and not for the security of the Fords. Taylor was unwilling to say or do any thing which should affect the liability of the Fords to him upon their note. The assurance upon that point is direct and express. The memorandum says that the bill is passed to Taylor, but it would seem that in fact it did not pass to Taylor, and J. O. Ford, in his answer, says it was to be passed to Taylor.

The arrangement could not, in itself, that is, the indorsing of the bill and signing the memorandum by J. C. Ford, have the effect of- releasing him from the note — he expressly stipulates that it shall not.

Was any thing done or omitted to be done by Taylor afterwards, which discharges and releases J. C. Ford? We are inclined to the opinion there was not. He made no agreement with N. W. Ford to collect the bill, nor is there any evidence of any undertaking with J. C. Ford except what may be inferred from the memorandum signed by the Fords. The arrangement seems to have been incomplete, to have been in fieri, till N. W. Ford and Taylor left the papers with Stewart. But even upon the ground that Taylor had undertaken, with J. C. Ford, to collect the bill, we are not satisfied that he acted with such negligence or bad faith in the matter as to release J. C. Ford from the note.

The presumption is, that the bill was paid with the funds of N. W. Ford, and it was distinctly understood by him, and, we think, throughout, by Taylor and J. C. Ford, that the receipt of the money alone by Taylor was to discharge the note or affect the liability of the parties to it.

We come, therefore, to the conclusion, that so much of the decree herein as discharges J. C. Ford from the note before us is erroneous; and we are further of the opinion, that Taylor, upon his cross bill, is entitled to a decree against the Folds for the amount of sa.id note with interest.

It is, therefore, the opinion of the Court, that the decree herein be reversed and the cause remanded, with directions to render a decree upon the original bill of N. W. Ford against the defendant, Stewart, for $716 96, with interest from the 6th December, 1839; and as to the residue of the cause, as between said Fords and Stewart, that the Chancellor retain the same with a view to ascertain, by reference to the Master or otherwise, what portion, if any, of the $1542 04 to the credit of Stewart upon the schedule of P. Shannon & Brothers has been received by him, and to that extent he be decreed to pay the same to said N. W. Ford with interest; and as to the residue of said amount, that said Stewart be decreed to transfer the same to said Ford; and to the extent of the decree against Stewart, in favor of N. W. Ford, that the Chancellor retain control over the same, with a view to transfer the same, or apply the proceeds thereof 'to the benefit'of J. C. Ford, should he be made responsible upon the decree to be rendered against him and N. W. Ford in favor of Taylor upon his cross bill.

And it is further the opinion of the Court, that upon the cross bill of Taylor, that a decree be rendered in his favor, as the administrator of Pollock, against s^id N. W. Ford and J. C. Ford for the amount of their note to said' Pollock, with interest.

Decree reversed and cause remanded, &c.

Guthrie for Stewart: Loughborough for Taylor: Duncan for'Fords.