Wayman v. Torreyson

4 Nev. 124

• Court: Nevada Supreme Court
• Decided: July 1, 1868
• Status: Published

Opinions

By the Court,

Beatty, C. J.

The facts of this case, so far as material to the points at issue on appeal, are as follows: On the fourth day of March, 1866, defendant executed his promissory note to Mrs. Margaret A. Way-man, or order, for $500 payable one day after date. This note when executed had no stamp attached to it. In July, 1866, Mrs. Wayman departed this life. Subsequently, John H. Wayman administered on the estate of Margaret A. Wayman, and whilst he was acting as such requested the defendant, Torreyson, to affix the proper stamps to the note. This Torreyson did in the month of November, 1866. Afterwards, J. H. Wayman brought suit on the note, and upon his death and the appointment of the present plaintiff as administrator de bonis non, the suit was revived in his name.

Several defenses were set up by Torreyson against the note. But the Court below held that the note'sued on was invalid, because of its not having been properly stamped when executed, and because the defect of the stamp had not been properly supplied as the statute requires. Under this ruling the defendant was precluded from going into his proofs on other defenses, and the sole question now is whether the lower Court ruled correctly in regard to the stamps.

Appellant raises several questions as to the character, sufficiency, etc., of the answer of defendant, which it is not necessary to notice here. All the facts necessary for a decision of this case are- set out in the complaint itself. The next point raised by appellant is that the insufficiency of the stamp to be available as a defense must appear on the face of the note. The authorities he quotes to this point held exactly the reverse. Chitty on Bills, page 189, 12 American, 9 English edition, marginal page 119, lays down the rule that an innocent indorser may recover on a note which appears on its face to be properly'stamped, notwithstanding the stamp may have been improperly put on the note after its execution. But no such ruling is pretended to have been made between the original parties to paper thus improperly stamped. On the contrary, Chitty says that it has been held thai inquiry as to when the instrument was stamped is admissible. It is, however, not worth while to waste time in the examination of authorities so totally irrelevant.

Appellant insists that under the law of the United States no note is void for the mere want of a stamp being properly affixed to it, but only so when the stamp is omitted with the fraudulent intent to evade the revenue law. This very point was before us in the case of Maynard v. Johnson, 2 Nevada, 16.

After a rehearing, and a very patient investigation of the whole subject, we came to the conclusion that under the provisions of the law as it stood in 1864 the note was invalid from the simple omission to stamp it. That to render the note invalid it was not necessary that the stamp should have been omitted with a fraudulent intent. We are now asked to reverse that decision on what are claimed to be authorities directly in point ruling the other way. The first authority referred to on this point is Beebe v. Hutton, 47 Barbour, 188. That was decided by a Court which was not the Court of last resort in New York. Three Judge’s sat in that case. One of the three coincided with the views of this Court as held in the final opinion in Maynard v. Johnson. The other two held that the note is not invalid unless the stamp is fraudulently omitted. The case in 10 Allen, 250, decides that the omission to properly cancel a stamp is not fatal to the note. The distinction between the failure .to stamp an instrument •and the failure to cancel the stamp is too apparent to- need comment. The case in 12 Allen, 397, involved the question as to the sufficiency of a demurrer, and did not necessarily raise the question as to what would be the effect of omitting a stamp from a note. The point was whether in pleading a note and setting it out in the pleading it was necessary to set forth the fact that it was stamped. The Court held the stamp was not a part of the contract, and therefore need not be set out. That there is a dictum in this case, to the effect that to make the note invalid the Stamp must have been fraudulently omitted, is true. And 10 Allen, 250, is referred to in support of the dictum. But 10 Allen is not in point.

We have, then, but the ruling of two out of three Judges in one of the New York Courts, and a loose dictum of the Massachusetts Court in opposition to our former decision. Upon such authority we should not be disposed to depart from our former rulings.

But even if we were disposed to yield our own judgment, and conform to the views expressed by the majority of the New York Court, it would not avail the appellant. Both our decision in Maynard v. Johnson and the case reported in 47 Barbour are upon the construction of the law.as it stood in the fall of 1864. In the spring of 1865 there was an amendment, which, we think, disposes of this controverted point. Although the language of this amend- ■ ment is not as clear as it might be, we think it was the intention to make all instruments not properly stamped invalid in the first place, but to allow any person interested to give validity to them by having the proper stamps affixed by a revenue officer, and a note made by such officer of the fact of his having stamped the instrument. It certainly was not the intention of the law to allow the parties thenu selves to make an invalid instrument valid by their affixing the stamp.

The complaint in this case shows the note was not stamped at the time of making, but subsequently stamped by the maker, and not the proper revenue officer. We have then no difficulty in saying that this note is invalid, treated as a note given in March, 1866, to Mrs. M. A. Wayman. But that does not dispose of the question whether that piece of writing, which was perfectly invalid when delivered to Mrs. Wayman, in March, 1866, might not become a perfectly good note when properly stamped, and redelivered in November, 1866.

A note does not, as between the parties thereto, become of any force or validity by merely writing and signing the form of a promissory note. Before our statute requiring stamps to be affixed to notes, their validity depended upon the fact of their having been delivered upon a sufficient consideration. As the law now stands they must be properly stamped — be founded on a sufficient consideration and delivered. If this note was not properly stamped in March, 1866, the delivery amounted to nothing more than the delivery of a blank piece of paper, or printed form of a promissory note. The whole thing then being a nullity, might not Torreyson have taken it back, stamped it, and delivered it so as to make it a new and good note from the date of the last delivery. Such would appear upon principle to be the correct doctrine. Mr. Parsons, a very able lawyer, in his work on notes and bills, (Vol. 2, p. 17 of Appendix) expresses this view. There is a dictum also to the same effect in the case of Robbins v. Deverill, (20 Wis. 148).

On the other hand the Act of Congress provides specially how a note or other instrument .which is not stamped when delivered may be subsequently stamped and rendered valid. Does not this in effect prohibit its subsequent stamping in any other way ? Would it not be contravening the policy of the law, and opening the door to frauds on the revenue to allow the parties themselves to put stamps on notes and bills, and cancel them at a date subsequent to the writing and first delivery of such instruments. In deeds, mortgages, etc., there would, perhaps, be little opportunity or temptation to commit fraud, for a party wishes such instruments to take effect as valid deeds from the day of delivery. If they were subsequent to the day of execution and first delivery stamped and redelivered, they would only take - effect from the last delivery, and intervening conveyances might cut them out. Not so, however, with notes and bills. The facilities for collecting them does not depend at all on their date. If parties dealing together were desirous of avoiding the revenue law, they might systematically, on an understanding between themselves, leave the stamps off of all notes and bills. If such instruments were paid within the year no stamps need be put on them. If likely to run longer than one year, the maker might then, as per agreement, attach the proper stamp and redeliver. Thus, by agreement of parties, the revenue law might be continually evaded. Nor would there be a very great risk in such an arrangement. If the maker refused to stamp and redeliver, the payee would take the paper within one year of its delivery to the proper revenue officer and have it stamped, by paying the penalty which the law requires.

This question is one which will certainly admit of a plausible argument on either side, and is not without difficulties in its solution. In this case we think it unnecessary to determine the point. Even admitting that Torreyson by stamping and redelivering this note to Mrs. Wayman during her life might have made it a valid note, it by no means follows that his stamping and delivering the note to John A. Wayman made it a good note. To use a homely, expressive phrase, it takes two to make a bargain. There must be two parties to every promissory note, a maker and a payee. When this note was written there were two persons, W. D.' Torreyson and M. A. Wayman, who were intended to be parties thereto. The note at that time failed of becoming a valid instrument for want of the proper stamp. Afterwards when the note was stamped Mrs. M. A. Wayman had ceased to exist, .and the note as worded was between Torreyson and a person not in esse. Such a note we hold to be absolutely void.

Before leaving this point we will notice such authorities as we have found bearing on the question. In the case of Minnot et al., v. Gibson et al., decided in the Court of King’s Bench, (3d Term, 481) it was. held “ if a bill of exchange be drawn in favor of a fictitious payee, and that circumstance be Tcnown as well to the acceptor as the drawer, .and the name of such payee be indorsed on . the bill, an innocent indorser for a valuable consideration may recover on it against the acceptor, as on a bill payable to bearer.” This case was afterwards affirmed in Parliament, but against the opinion of Eyre, 0. B., Lord Chancellor Thurlow, and Heath, J. We can well understand the correctness of the decision in this case, though, perhaps, not of the language used in the opinions of some of the judges. The drawer and acceptor having made a piece of negotiable paper, with the name of a fictitious payee in the face of the bill, and also indorsed thereon, might well be estopped as against an innocent holder from saying such payee was fictitious. Their conduct amounts to a guarantee that the payee was a real personage and the indorsement genuine. It would be against good conscience to allow them to deny or contradict their implied guarantee.

Since the case just referred to, it has been held that if the acceptor was ignorant of the fact that the payee named in the bill was fictitious, be would not be bound by his acceptance, even in favor of a bona fide holder. (See Barrett v. Farrell, 1 Camp. 130, 180c.) So if the holder had the same knowledge that the drawer and acceptor had, that the payee was fictitious, the acceptor would not be bound. (See Hunter v. Jeffrey, Peake Add. 146.)z

These cases seem clearly to establish the rule that if one of the three parties to a bill of exchange is fictitious — that is, a party having no real existence, the bill will be utterly void. Such a rule would seem to apply with greater force to promissory notes. A bill of exchange is a peculiar sort of an instrument, requiring three distinct parties to the contract, before it becomes a perfected instrument. Yet two of the parties thereto may contract certain liabilities towards each other before the third party becomes bound by the bill. But in the case of notes there are but two original parties, and we cannot conceive how the instrument can have any effect of legal validity without two living parties thereto — the one who promises to pay and the other who is entitled to recover.

In the case of Murray, Administrator of W. Hope, v. The East India Company, (6 Barnwell & Alderson, 204) suit was brought on four bills of exchange. As to three of them they have no connection with the subject under discussion. The fourth bill was drawn under the following circumstances: W. Hope left India for England in January, 1809, and was lost at sea in a storm the following March. When he left India he left a note in the hands of his agent, to be collected and the proceeds transmitted to England. His agents (it would seem after the death of Hope) collected the note and purchased a bill in their own favor, drawn on the East India Company in London, indorsed it to W. Hope (who was then dead) and transmitted it to England. The Court held that the administrator might recover. The whole of the decision referring to this bill is in this language:

“ There was a fourth bill of exchange, to which the statute was not pleaded, and which.gave occasion to another'point. Mr. Hope-, at his departure from India, had left some property under the man: agement of an agent. For the value of this, and for the purpose of transmitting the value to England, the agent obtained this bill of exchange, and being ignorant of the death of Hope, indorsed it specially to him. It was urged that no property in this bill could pass to the administrator, and consequently that he could not sue upon it. But we are of opinion, that as the money for which the bill was remitted belonged to Hope’s estate, it was competent to the administrator to elect to take the bill as the mode of payment, and that thereby the property did vest in him, and he acquired a right to sue upon it.”

From the language used in this case, upon mature reflection, we conclude that the Court did not intend to hold that an indorsement to a dead man conferred any right on the administrator, but rather that the administrator, under the circumstances of the case, was entitled to recover the money on the bill, regardless of the irregularity of the indorsement. The former agents of Hope had collected the money after their agency had been terminated by Hope’s death. A presidency of the East India Company in Asia had received the money belonging to Hope’s estate, and to which the administrator of course had title. The London agency of the same Company had accepted a bill for the amount received by their presidency in the East, and this seemed by the Court to have been held sufficient to entitle the administrator to recover.

In one case in the United States, Foster v. Shattuck et al., (2 New Hampshire, 446) it is held that a note made to a fictitious payee or order, may be sued on by the person to whom it was delivered as a note made payable to hearer. This decision, we think, is not borne out by the cases cited in support, and is hardly correct in principle. It is in fact making for the parties a new and different contract from the one made by themselves. The Court in making this decision seem to have doubted, and only to have come to the determination to prevent a failure of justice. There are other cases which seem partially to recognize the same rule, but they all refer back to the case of Minott v. Gibson. That does not go to thfe extent of holding a note or bill made payable to fictitious persons as good between the original parties or those cognizant of the fact that the payee was fictitious.

It has several times been held that a note payable to an estate of a deceased person is not a good note. (See Lyon v. Marshall, 11 Barbour, 241; Kittle v. Thomas, 30 Miss. 122).

A note to the administrator of an estate (when there is an existing administrator) is good because then the payee is properly designated, not by his name it is true, but still by his office. Just so a note payable to the man who lives in a certain house (describing it) would be good if the description of the house were sufficient and but one man lived in that house. But a -note payable to a dead person, or to an estate, is not payable to any particular person, and therefore lacks one of the essential elements of a promissory note, to wit: a payee.

Finally, it is suggested by counsel for appellant that the Court below erred in striking out the evidence of Clayton, because if the note was void the plaintiff might recover on the consideration for which the note was intended to have been given. The latter part of this proposition is true. But the plaintiff could not recover on the original consideration passing between the parties without set- ’ ting out that consideration in his complaint. There is not a word of the kind in the complaint. Besides, Clayton in his evidence did not pretend to know or say a word about the original consideration for the note. He only testified as to promises of defendant in relation to the note, and general declarations that the note was good. Judgment affirmed.