Watson's Executors v. McLaren

19 Wend. 557

• Court: New York Supreme Court
• Decided: July 15, 1838
• Status: Published

Opinion

By the Court,

Cowen, J.

I am at a loss to conceive on what ground Frye could have been rejected as a witness interested to sustain the plaintiffs claim. The latter took the note and guaranty in question at his own risk without fraud ; and the guaranty of Frye had been delivered up and cancelled. This restored his competency. A transfer at the risk of the maker’s solvency, or, which means the same thing, to be collected at the holder’s own risk, still leaves the implied warranty that the note is genuine. Herrick v. Whitney, 15 Johns. R. 240, and vid. id. 241, note (a.) Shaver v. Ehle, 16 Johns. R. 201. Murray v. Judah, 6 Cowen, 484, 491. Where a man takes negotiable paper as cash at his own risk generally, and there is no fraud, all liability of the transferrer is cut off. Beside, Frye was not called to prove the genuineness of the defendant’s signature, nor was that contested. It was in fact admitted after the objection made to Frye had been overruled. Even where the implied warranty remains, or where there is an express warranty, if the defendant mean to exclude the witness upon the ground that the paper is forged, he should say so expressly; for that enables the plaintiff either to release the witness or remove the objection through full proof of the signature by other witnesses. When that is put beyond dispute it would be hypercritical and contrary to the principle which governs questions of competency, to say that the bare possibility of the witness still being made liable as upon simulated paper, should exclude him. Williams v. Matthews, 3 Cowen, 252, 260. Murray v. Judah, 6 id. 484, 491. It is said that a failure to collect this debt by the plaintiff will revive his claim against Frye. The answer has been already given; he took the paper as cash, and surrendered his notes. He took it as payment knowing all about the defence, and yet agreed to run all risk. He has surrendered Frye’s guaranty with the express intent to make him competent. Various circumstances conspire to show an intent that no liability should remain. Surely a release under seal could have done no more. Admit that the naked circumstance of receiving a worthless note as payment will not extinguish the debt, according to the case cited by the counsel for the plaintiff in error, Manufacturers & Mechanic's Bank v. Gore, 15 Mass. R. 75, and to which many of our own cases might be added, yet here is much more than that simple act. No doubt the record in this suit would be evidence against Frye to show the failure of the security on the defendant’s succeeding, according to the case cited to us of Brewster v. Countryman, 12 Wendell, 446, 450. But a warranty or some other ground of liability, must first be shown. We see that none was left.

Several particulars in which the proof is said to vary from those counts of the declaration upon which the cause was tried, are now for the first time pointed out: such as, that the fourth count supposes the guaranty to have been delivered to the plaintiff below ; that the fifth supposes it to be an endorsement; the sixth avers that the note was negotiable and delivered to the payee William Watson, and that the guaranty was payable to order, whereas the proof sustains none of these counts in the respects mentioned. Again : that the guaranty is a special contract, and therefore not within the general counts, and the admission,. value received, merely formal, &c. A single answer will suffice for these and the like objections, which come on the ground of variance. They were not raised at the trial. The objection was general, that the guaranty and note varied from each count. The objection stopped there. To be made available by exception, the particular discordances should have been pointed out, as they are now; for they were open to be obviated. Every conceivable objection which can be brought within the general one as made in the bill, of variances between the declaration and papers in evidence, are amendable by statute; and others now raised might perhaps have been obviated either on other principles of amendment, or the defect, on being pointed out, supplied by farther proof.

Upon the merits, the objection that no consideration is expressed in the guaranty, is not founded in fact. The words “ for value received” are a sufficient expression. Nor will the objection lie that no consideration was in fact paid; the credibility of the plaintiff’s testimony was submitted to the jury; and a part of it was the statement of Frye, that he took the note and advanced money, after he had apprized the defendant that such was his intention, and submitted the guaranty to him, he replying that it was good. Such a declaration, nay, even standing by in silence and seeing a chose in action assigned for consideration, is an estoppel in pais against a debtor. Buchanan v. Taylor, Addis. 155. Ludwick v. Croll, 2 Yates, 464. Carnes v. Field, id. 551. Weaver v. M'Corcle, 14 Serg. & Rawle, 304. M'Mullen v. Wenner, 16 id. 18. Morrison's Admr. v. Beckwith, 4 Monroe, 73. Even a defence that a bond was given to secure a gambling debt, was in one case held to be cut off by the obligors admission of its validity to a proposed assignee, no stronger in its terms than the one here proved by Frye. Davison v. Franklin, 1 Barn. & Adolph. 142. Thus being validated, it must stand good for its face, wh0ie note described in it; and for that it passed, if for any part, to the plaintiff.

The objection that there is a variance between the note as described in the guaranty and the one in proof, was not raised upon the trial; and can not, therefore, now be heard. But an answer appears on the bill. The defendant admitted the guaranty to be valid ; it is a contract perfect in itself to pay 300 dollars. Frye, perhaps the plaintiff, acted on the faith of the admission, and to allow an objection founded on a misdescription, would be to sanction a defence quite ungracious, not to say positively fraudulent. A man chooses to describe and agree to pay a note to another which has no existence, upon a valuable original consideration received. Is it to be endured that by his own misdescription, or the fact that no such note exists, he shall escape all liability on his contract ? In effect,, the defendant below did so agree and rather than he should escape on the ground that there was no note, the law will make the guaranty in legal effect a stipulation that there was such a note, and hold him in that form. But it is enough that this point is not, as a matter of variance, before us.

Another objection now raised, was not made at the trial, and therefore is not tangible on error. It is that the defendant was a surety for endorsers as well as makers ; that the plaintiff discharged the endorsers on the note by omitting the usual demand and notice; and therefore the defendant is discharged by the laches of the holder. Nothing is said of surety, or his protection against any omission by the plaintiff, in the bill of exceptions. Had it been, demand and notice might have been shown ; or it might have been proved that the defendant had waived it, or that he was principal in the transaction.

That Frye was an attorney and counsellor at law when he obtained the note from Tuthill, was made a distinct ■ objection at the trial. The statute of April 21, 1818, Sess.' Laws of that year, p. 278, §1,2, was in force at the time. Section 2 made the purchase of a chose in action by an attorney, &c. a ground of defence against a suit upon it.. People v. Walbridge, 3 Wendell, 120. The answering argument is, that here the note and guaranty were received bona fide in payment of an antecedent debt, which was allowed by a proviso in the statute. §1. I think the jury might so find, on the proof, and that the judge therefore properly refused to nonsuit. Allowing the object to have been the payment of Frye’s previous loan, unmixed with any intent to evade the statute, we think he stood, within the proviso, although, in order to attain the desired security, he was under the necessity of making the additional and, it is true, comparatively large advance of 200 dollars. We are to intend that the case was properly submitted to the jury in this respect, as nothing appears in the bill to the contrary.

' We now come to the remedy upon the guaranty, which was evidently intended by the defendant to travel with the promissory note, and secure whomsoever might take and hold it on the faith of the guaranty. It contains all the usual requisites of a guaranty except the name of the particular guarantee; and that it could not do, because as yet he was not known. Finally, however, with the privity of the guarantor, a guarantee comes, in the person of Frye. He advances the money, and takes the paper. Surely there can be no difficulty in saying that he acquired a right to sue in his own name under the circumstances detailed by him.

No name is necessary in the kind of guaranty with which these parties were dealing, at least as far as Frye was concerned. It was the obvious intent of the defendant below to indemnify any man of the whole community, who should advance money on the credit of the note, and especially on the credit of the guaranty. Frye did so with full notice to the defendant; and the previous floating promise then took that of a direct one to him, and might be declared on as having that legal effect. By making the guaranty with intent that the Blackneys should take it and obtain money upon it from such person as they pleased, the defendant made them his agent to go in person or by Tuthill to Frye or any other, and on procuring the money, the promise is deemed, in legal effect, to have been made to him. It was at first a proposition to him and all the world, made on a valuable consideration ; and on his accepting it, the contract became complete, and may be made good by averment. Watson v. Dodson, 3 Car. & Payne, 162, per Gazelee, J.; Bradly v. Cary, 8 Greenl. R. 234. In Phillips v. Bateman, 10 East, 355, it was not denied that a public promise by advertisement, to guaranty the notes of a bank upon which there was a run, would bind the promissor, and subject him to an action at the suit of those who should forbear to press the bank, provided a consideration had been duly expressed, and an intent had appeared so to pay, although no one could be named. The intent is the question ; and the payee may be indicated by extrinsic proof. Brown v. Gilman, 13 Mass. R. 158, and the cases there cited; Douglass v. Wilkeson, 6 Wendell, 637, 644, and the cases there cited.

The case might, at any rate, have been brought within the common counts at the suit of Frye, according to Trustees of Farmington Academy v. Allen, 14 Mass. R. 172. There, the defendant, without consideration, became a subscriber for 50 dollars to erect an academy, naming no one as payee, and there being no consideration. It was held that the plaintiffs having paid money for the building, with the defendant’s knowledge, might recover as for money paid.

Frye sold the note to the plaintiff below, with the guaranty, which was a separate instrument or contract made, as we have just seen, in legal effect with Frye ; and the great question is, whether it was negotiable. It is not denied that, as a general rule, one can not become a party to negotiable paper unless his name appear upon the paper itself; but it is said that in this dase the making of the guaranty intended to run with the note, was equivalent to an endorsement; and being absolute, it was equal to an endorsement with waiver of demand and notice. We are referred to Upham v. Prince, 12 Mass. Rep. 14. There the defendant Prince, to whose order the note was payable on demand, endorsed it thus: “ I guarantee the payment of this note within six months.” He delivered it thus endorsed, to one Faulkner, for value; and he transferred it to the plaintiffs. The court held that the note passed to Faulkner, who might transfer it to the plaintiff. Yet even in that case, they doubted whether the guaranty as such, would pass beyond Faulkner; and so express themselves. They say “ the defendant’s engagement amounts to a promise that the note should, at all events, be paid within six months. Now this promise may not be assignable in law, and yet the note itself may be assignable by the party to whom it was so transferred, so that, upon the non-payment of it by the promissor, the holder would have a right of action against Prince, as endorser.” But in that case, the guaranty was departed from; the defendant was sued as endorser, and the usual demand and notice were shown in order to charge him. That case shows that the endorser may stand in the double relation of an express gurantor and an implied endorser, being treated as the former by his immediate guarantee, and the latter by a remote transferree. In the case at bar, the defendant’s name was not on the note ; nor was he treated as a simple endorser. No demand or notice was shown, and this defect was objected at the trial, as a failure of proof on the merits. The guaranty here is indeed absolute, according to the cases cited of Allen v. Rightmere, 20 Johns. 365, and Breed v. Hillhouse, 7 Conn. Rep. 523; this however is only a farther departure from the character of a simple endorsement.

But if the guaranty stood on the note, and admitting that then we must allow- it to enure and be treated as an endorsement, and even an endorsement having the quality of negotiability with a waiver of demand and notice, the case is still short of the general rule. It is not on the note. Douglass v. Wilkeson, 6 Wendell, 639, per. Cur. Per Sewall, J. in Tyler v. Binney, 7 Mass. R. 481. Per Eyre, Ch. B. in Gibson v. Minet, 1 H. Black. 605, 6. Chit, on Bills, 30, Am. ed. of 1836, and the cases there cited. In the book last cited the law is thus stated : “ It is a general rule that no person can be considered as a party to a bill, unless his name, or the name of the firm of which he is a partner, appear on some part of it.” Again, “ If there be not room on the bill, others may be added on an annexed paper called un allongeThere are doubtless exceptions, such as a separate acceptance. Chit, on Bills Am. ed. of 1836, p. 326, and cases there cited. Nor is it necessary to deny that, in analogy to that, an endorsement, which is another bill of exchange, may be made in the same manner. “ Some times,” says Mr. Chitty, “ on a transfer of bills or notes, a party may object to endorse, but yet will collaterally guaranty the payment.” He then proceeds to give various forms of valid guaranties, absolute and qualified, and adds, that “ even in those cases where a valid engagement has been made that a bill or note shall be paid, it is effectual only between the original parties to it, and not transferrible at law or in equity, or in bankruptcy ; nor can the action or proof be upon it, as in the case of the endorsement of a bill or note; but it must be on the special agreement, or the consideration which existed before, or passed at the time of the transfer.” Id. 272, 3, and the cases there cited. Indeed the rule has been expressly held in nearly the same language by this court, even of an endorsed guaranty, Lamorieux v. Hewitt, 5 Wendell, 307; and previously by the supreme court of Massachusetts, Tyler v. Binney, 7 Mass. R. 479. We are furnished with no case, nor dictum to the contrary; and it seems to us that, by sustaining this judgment, we should confound all distinction between an endorsement and a guaranty. In so doing we should violate the law as long understood and acted upon by the mercantile community, and frustrate the intent of the defendant below. A separate guaranty of a negotiable note or bill does not, like an acceptance or endorsement, run with its principal, but must end where it began, like a bond or other like chose in action. The action therefore should have been in the name of Frye. In rendering judgment for M’Laren there was error, and it must be reversed.