Lee's Adm'rs v. Fontaine

10 Ala. 755

• Court: Supreme Court of Alabama
• Decided: June 15, 1846
• Status: Published

Opinion

COLLIER, C. J.

The first charge given to the jury, merely affirms that if A., L. & Co. received the assets of A. &, T. under an agreement with T., to pay their debts, “it was a sufficient undertaking, and not within the statute of frauds, as to any thing involved in this case.” Such a contract is not obnoxious to that provision of the statute of frauds which declares, to “no action shall be brought whereby to charge the defendant upon any special promise to answer for the debt, default, or miscarriage of another person.” The testimony which induced this charge is thus stated in the bill of exceptions: “ The terms on which said Terry went out, and said Lee & Yarborough came in, were, that said new firm of Abrahams, Lee & Co. should have all the assets of the firm of Abrahams & Terry, of every kind, and should assume to pay all its debts; and in pursuance of this arrangement, said new firm received the assets of said firm of Abra-hams & Terry, to pay its debts, and said Terry went out.” Here was clearly a sufficient consideration moving from Terry to Lee, to support the undertaking of the latter, and this is quite enough to relieve the agreement from the influence of the statute of frauds, whether we consider the promise of Lee as enuring to Terry, or to the creditors of A. & T. Its validity is conceded if T. be regarded as the promissee, and if the plaintiffs may avil themselves of its previous adjudications conclusively show the same result. In McKenzie v. Jackson, 4 Ala. Rep. 230, it was said, “ where the promise to pay the debt of another then subsisting, arises out of some new consideration of benefit to the promissor, or harm to the promissee, it is not within the statute.” See also, 3 Stewt. & P. Rep. 54; 4 Cow. Rep. 432 ; 1 Wilson’s Rep. 305; 3 Burr. Rep. 1886; 7 Johns. Rep. 463; 8 Id. 39; 10 Johns. Rep. 412.] The only difference in the facts of the case first cited, and that now before us, is this, there the partnership was dissolved, and one of the partners, together with a third person, received the goods, and all the debts and effects of the firm, and undertook with the other to pay all the debts of the firm, and what he owed individually; afterwards, the parties receiving the goods, &c. promised a creditor of the firm to pay his debt: Held, that the promise made to the withdrawing partner was not within the statute of frauds, and the receipt of the goods was a sufficient consideration for the promise to the creditor. Let this view of the law suffice to show that the circuit judge rightly ruled in the first charge to the jury.

The second instruction seems to us to assert a legal truism, viz: that it does not come within the scope of the business of one partnership $o pay the debts of another, but where the former receives the assets of the latter, under an agreement thus to appropriate them, then the payment of such debts becomes a legal duty.

It is equally clear that the note which was taken by the plaintiffs’ agent of Abrahams, must have been received in payment of their account, or the plaintiffs may prosecute an action on the account, as if the note had never been made, unless something subsequently occurring makes a different rule applicable. It has been often held, that a debt is not extinguished by the acceptance of an obligation of equal dignity. [Bowers v. State, 7 H. & Johns. 32; Clopper v. Union Bank, Id. 92; Hart v. Boller, 15 Sergt. & R. Rep. 162.] But a specialty is an extinguishment of the account for which jt is substituted. [Mills v. Starr, 2 Bailey’s Rep. 359.] Whcr ther a note is taken absolutely, as a payment, is a question of fact for a jury. [Johnson v. Weed, 9 Johns. Rep. 310; McGuire v. Gadsby, 3 Call’s Rep. 234.] In Sheehy v. Mandeville, 6 Cranch’s Rep. 253, it was said, to make a promissory note a payment of an account, it must have been received in discharge. And it has been held, that receiving a note is pri-ma facie a payment. [Hutchins v. Olcutt, 4 Verm. R. 555; Plankinhorn v. Cave, 2 Yeate’s R. 370; Cornwall v. Gould, 4 Pick. R. 444.]

It has been decided, that a substituted note does not constitute a payment of an original one, which was valid, where the new note is avoided on the ground of usury. [Johnson v. Johnson, 11 Mass. R. 359; 1 Pick. Rep. 415; Stebbins v. Smith, 4 Id. 97, 100; Watkins v. Hill, 8 Id. 522; Ramsdell v. Soule, 12 Id. 126.] So it has been repeatedly adjudged, that a bill or note of a debtor, or any other person, is not a payment of a precedent debt, unless it be expressly so agreed. [Kennell v. Mungey, Peck’s Rep. 273; Murray v. Gouverneur, 2 Johns. Cases, 438; Tobey v. Barbour, 5 Johns. Rep. 68; Johnson v. Weed, 9 Id. 310; Herring v. Sanger, 3 Johns. Cases, 71; Bill v. Porter, 9 Conn. Rep. 23; Higgins v. Packard, 2 Hall’s Rep. 547; Chastain v. Johnson, 2 Bail. R. 574; McGinn v. Holmes, 2 Watt’s Rep. 121; Gilmore v. Bussey, 3 Fair. R. 418.] A promissory note given to a creditor, if it is not intended by the parties as a payment, shall not operate as such. [Maneely v. McGee, 6 Mass. Rep. 358; Goodenow v. Tyler, 7 Mass. 36; Emerson v. Prov. Hat Man. Co. 12 Mass. R. 237; Vancleef v. Therasson, 3 Pick. R. 12.] But it has been held that when a debtor gives his negotiable note to his creditor, for a debt due by simple contract, the presumption is that it was received in payment; this presumption may be controlled by evidence that such was not the intent of of the parties. [Baker v. Briggs, 8 Pick. Rep. 122; Reed v. Upton, 10 Id. 522; Jones v. Kennedy, 11 Id. 125; Wood v. Bodwell, 12 Id. 268; Hoar v. Clute, 15 Johns. R. 224; Harrison v. Hicks, 1 Porter’s Rep. 423.] The mere giving of a promissory note is not the payment of a pre-exist-ing book debt, and upon default of the payment of the note, the creditor may recover upon the original consideration. [Putnam v. Lewis, 8 Johns. Rep. 389; see Hays v. McClung, 4 Watts R. 452; Porter v. Talcott, 1 Cow. R. 359. Ayres v. Vanlien, 2 South. R. 765; Crockett v. Trotter, 1 S. & P. Rep, 446; Cromwell v. Lovett, 1 Hall’s Rep. 56; Franklin v. Vanderpoel, Id. 78; Sneed v. Wiester, 2 A. K. Marsh. R. 277.] Giving a note which proves to be an insufficient security, does not discharge the original debt. Nor will a check or note which is merely colorable, or founded upon a void consideration, have that effect. [Dennie v. Hart, 2 Pick. R. 204; People v. Howell, 4 Johns. Rep. 296; Patton v. Ash, 7 Serg. & R. Rep. 116; Beard v. Brandon, 2 N. & McC. Rep. 102.] In Emerson v. Providence Hat Man. Co. 12 Mass. R. 237, it was decided, that if a new security be received in payment of a previous liability, which the creditor cannot collect on account of a want of authority in the agent who gave it, the original liability is not discharged. So a creditor taking a note which he indorses, and has discounted at bank, but is afterwards obliged to pay does not thereby discharge the antecedent liability. [Kean v. Dufresne, 3 Sergt. & R. Rep. 233.]

In The Bank of the Commonwealth v. Ray, 7 J. J. Marsh. R. 272, a new note was given at a bank as a renewal of a former note, including one new obligor, and dropping two of the former, and the bank, after notice that the signature of one of the sureties to the second note was a forgery, brought a suit thereon, obtained judgment against one of the obligors, issued execution, and made part of the money out of one of the parties to the second note: Held, that these facts showed a state of things amounting to a payment and discharge of the first note.

It is conceded, that although the third instruction may be correct, as the assertion of a legal proposition, yet it was not adapted to the evidence in the cause, and was calculated to mislead the jury, to the prejudice of defendants. The mere fact that the note was indorsed with the names of the plaintiffs, the payees, does not warrant the inference that that they had made some third person, the proprietor of it. We know that according to the usual course of business notes in the form of that now in question, are indorsed by the holder when they are delivered to the officers of the bank for collection ; and it is not an unfair inference to presume that the plaintiffs indorsed the note in compliance with such usage. But be this as it may, there was no evidence to show that the plaintiff ever negotiated it, so as to divest themselves at any time of the title to it. Suppose however, it had been shown, that by their indorsement the plaintiffs made a third person the holder of the note, would this make the reception of the note more absolutely a payment than it otherwise would be? We think not. The note was doubtless taken under an impression by the plaintiffs, their agent, and Abra-hams, that it was a valid security, and their mistake in this respect should not work harm to them. We have seen that it has been decided, if a creditor receives a substituted security, which he indorses and has discounted, but afterwards pays the same, he may sue upon the antecedent liability. So it has been held, as several of the citations we have made show, that if the creditor cannot collect the new security, in consequence of the want of authority in the party giving it, he may resort to the original cause of action ; especially if he was ignorant of the invalidity of the substituted demand when he instituted his action upon it. There is no evidence in the record, indicating that the plaintiffs were aware that Abrahams had transcended his legitimate powers, in subscribing the names of A., L. & Co. to the note, when they sued, or recovered a judgnent thereon. The argument then, that the third charge was calculated to mislead the jury, is not well taken. But if such is its character, it is perhaps worthy of consideration, whether, as it is correct in the abstract, it was not incumbent upon the defendant to have asked additional or explanatory instructions.

In instructing the jury, that to make the note a satisfaction of the account, there should have been an express agrément to that effect, it is clearly true that the court followed some adjudged cases. Whether these decisions lay down the law in terms too stringent, we will not stop to inquire, since it is clear, (no matter how this may be,) if the defendant’s intestate was ever liable on the account, the liability is undischarged b}r any thing shown at the trial.

The agreement between Terry and Lee upon the withdrawal of the one and the coming in of the other, enured to T. and not to the creditors of the firm of which he had been a partner, and he alone could sue for its breach.

To entitle a party to maintain an action upon a contract;, it must have been made with him, or he shouldhave beenle-gaily and really interested in it when made. [Dawes v. Peck, 8 T. Rep. 332; Anderson v. Martindale, 1 East’s Rep. 497; Skinner v. Stocks, 4 B. & A. Rep. 437.] It is not enough that he have an equitable interest. [Shaw v. Sherwood, Cro. Eliz. Rep. 729; Allen v. Jeulett, Holt’s Cases, 641; Carnezie v. Waugh, 2 D. & R. Rep. 277; Phillips v. Bateman, 16 Easts Rep. 370.] There can be no question that a party may not only sue upon a contract made by an agent, previously appointed, but he may in some cases adopt a contract made for his benefit. [Ker v. Osborne, 9 East’s Rep. 378; Owen v. Bowen, 4 Carr. & P. Rep. 93.] It should appear that the plaintiff is the only person with whom the contract was made, or in whom the legal interest was vested at the time it was made; for all parties in whom the joint legal interest in a contract is vested, must sue for its breach; and this though it was made with several, or was in terms joint and several. [Withers v. Bricham, 3 B. & C. Rep. 254; 6 D. & R. Rep. 106; Eccleston v. Clipsham, 1 Saund. R. 153.] If however, the cause of action and legal interest of the plaintiff in the contract be joint, he need not join any other party, though the words of the contract made another person jointly interested.

It has been held that there may have been a change of credit between the parties which will entitle the plaintiff to recover, though he was not the original contractor with the defendant ; thus, “suppose A owes B $100, andB owesC$100) and the three meet, and it is agreed between them, .that A shall pay C the $100, B’s debt is extinguished, and C may recover that sum against A.” [Tatlock v. Harris, 3 T. Rep. 180; Hodgson v. Anderson, 3 B. & C. Rep. 855; 5 D. & R. Rep. 735.] But it is said to be necessary that B’s debt should be extinguished by the arrangement. [Wharton v. Walker, 4 B. § C. Rep. 163 ; Wilson v. Coupland, 5 B. & A. Rep. 228; Spratt v. Hobhouse, 4 Bing. R. 173.] And this it is said, can only be done by a communication between all the parties, and ail express agreement by the plaintiff to accept the defendant as his debtor. [Wharton v. Walker, supra.] These citations famish principles so direct and explicit to show, that the plaintiffs could not have maintained an action upon the contract between Terry and the defendant’s intestate, that it is needless to amplify the point.

This conclusion is by no means decisive of the present case, if the intestate, after his initiation into the firm, became liable to the plaintiffs. The intestate, it will be observed, authorized Abrahams to obtain a loan of money from the plaintiffs, upon the faith of his crop of cotton, growed in 1836, to be shipped to them. A loan could not be thus obtained, but the plaintiffs accepted the drafts of A., L. & Co.-, and thus the identical object proposed to be effected by the loan was answered. Now it is clear, that this transaction was not consummated according to the authority which L. conferred upon A.; but it was done in a manner to subserve the same purpose, without, so far as the record informs us, imposing a heavier burthen upon L., who, when informed by A. (shortly afterwards,) what he had done, made no objection. The question isj whether his silence shall be construed into an assent to what A. did.

It is stated to be a well established rule, that where a man srands by, knowingly, and suffers another person to do acts in his name, without any opposition, or objection, he is presumed to have given an authority to do those acts. [Story on Agen. 82-3.] It is competent for a principal to ratify the unauthorized acts or omissions of his agent; especially if the rights of third persons are not thereby prejudiced. If, therefore, “ the principal, upon a full knowledge of all the circurfistances of the case, deliberately ratifies the acts, doings or omissions of his agent, he will be bound thereby, as fully to all intents and purposes, as if he had originally given him direct authority in the premises, to the extent which such acts, doings or omissions reach.” [Story on Agen. 234 to 253.] “ Slight circumstances and small matters will sometimes suffice to raise the presumption of a ratification. But whenever the acts and conduct of the principal are inconsistent with any other supposition, the presumption becomes of course far more violent and conclusive.” [Id. 247.] Long acquiescence, without objection, and oven the silence of the principal, will in many cases amount to a conclusive presumption of the ratification of an unauthorized act; especially where such acquiescence is not otherwise accounted for; or such silence is either contrary to the duty of the principal,.or it has a tendency to mislead the other sido. As an example it is said, “ where an agent, without authority, had compromised a debt of his principal, who after knowledge of the fact, made no objection, and acquiesced for a length of time in the act he was held bound by it. Where an agency actually exists, the more acquiescence may well give rise to the presumption of an intentional ratification of the act.” [Id. 248-9.] “If the principal having received information by a letter from his agent, of his acts -touching the business of his principal, does not in a reasonable time express his dissent to the agent, he is deemed to have approved his acts, and his .silence amounts to a ratification of them.” [Id. 250-1; 1: Liv. on Agen. 50; Wood v. McCain, 7 Ala. Rep. 800, and citations there made; Vianna v. Barclay, 3 Cow. Rep. 281; Bell v. Cunningham, 3 Peters’ 69, 81; 4 Wash. C. C. Rep. 559; Erick v. Johnson, 6 Mass. Rep. 193; Amory v. Hamilton, 17 Id. 103; Richmond Man. Co. v. Starks, 4 Mason’s R. 296; Terril v. Flower, 6 Marsh. Rep. 584; Rogers v. Kneeland, 13 Wend. R. 114; Paley on Agen. 171-2; Prince v. Clarke. 1 B. & C. Rep. 186.] This view of the law, as sanctioned by the highest authority, is quite satisfactory to show, -that the jury might have inferred thai the intestate ratified the act of A. as his agent, in obtaining the acceptance of the plaintiffs upon the drafts of A., L. & Co. This being .the case, and the note which was given by A. upon liquidating .the plaintiffs’ account for advances, &c., not being obligatory upon the intestate, or accepted by the -plaintiffs .as an cfbs.o-lute paymentx we can conceive of no objection to .the maintenance of the present action.

In respect to the items in the plaintiffs’ account, with which the intestate was chargeable, but for which A. individually, or in connection with the other members of his firm, was liable, it may be remarked that they do not amount to as large a sum as was collected upon the judgment against A. In addition to the costs, A. testifies that f 1701 was made by the sale of his property to satisfy that judgment. This is too clear to warrant the inference that the estate of A., L. & Co. was thus seized and sold; if such were the case, the defendants in the case at bar, could claim a deduction pro tan-to, from so much of the account as A., L. & Co. were jointly liable to pay. But as the judgment was against A. individually, who was responsible for the entire account, and his separate property was devoted to its payment, it was competent for the plaintiffs so to apply the credit as to extinguish first the items of the account with which A. or A. & T. were chargeable.

It is difficult to perceive of any reason why the neglect of the plaintiffs to sue A. more promptly, should affect the liability of L. They were both primary debtors, and if L. had desired a more speedy collection, he should have paid the plaintiffs to the extent of his responsibility, and have sought reimbursement from A of his proportion of the debt.

The admission by the plaintiffs, that the plea which denied that the note declared on in the three first counts of the declaration, was made by the intestate, or by his authority, was true would have barred another action thereon against his representative. The judgment upon this plea being matter of record, would itself have been conclusive in their favor. It is equivalent to a cancellation, and if this be necessary, where the party insisting on it is not liable on the note, it may be regarded as a substitute; especially where a judgment has been recovered upon it against the party chargeable, so as to merge it, and make a part of the file in that suit.

We have gone quite beyond the questions arising upon the charges given and refused. But we have done so in deference to the arguments of counsel. The result of what we have paid is, the judgment must be affirmed.