1842. Russell the note a larger sum than the amount of the note, at the ADDISON, January, time of the making of the guaranty, the execution of the guaranty, by the defendant, must be viewed as a waiver of the right to contest the indorsement, at all events so far as to throw the burden of proof on the defendant to show that such indebtedness, constituting a fund to pay such note, or guaranty, had been, by force of law, drawn out of the hands of Buck & Bailey. The county court did not charge the jury as requested by the plaintiff, but did charge them, in substance, as follows: that the plaintiff must, in order to entitle himself to recover, establish the fact that the contract declared upon, and which had been given in evidence, was made upon good and sufficient consideration, and this must depend upon the question, whether the evidence in this case showed a legal liability upon the defendant, as one of the indorsers of the note, to pay the same to the plaintiff; and that as it appeared by the evidence that the note was, on the 29th day of June, 1829, duly presented at the place where payable, and payment demanded, which had been refused, and a protest, containing notice of the dishonor of the note, had been inclosed in the next mail directed to the several indorsers, the notice was sufficient to charge them, and that this furnished evidence, prima facie, to charge the defendant as one of the indorsers of said note, with the payment thereof, and also, that the guaranty itself furnished evidence, prima facie, as to Buck, of such liability. But the jury were further told that if they found, from the evidence, that the note which Buck had guarantied the payment of, was indorsed by Bailey in the name of the firm of Buck & Bailey, on a blank paper at the request of Amasa B. Gibson, under an agreement between him and Bailey that it should be filled up only for one thousand dollars, and that the makers of the note, afterwards, without the consent of Buck & Bailey, filled it up for a much larger sum, and put it into circulation, it was a fraud upon Buck & Bailey, and that they could not be charged as indorsers of said note, unless it had passed into the hands of the plaintiff, as indorsee of the note, in the due course of business, for a valuable consideration, and, in that event, though the note was put into circulation in the manner it was claimed to have been, by the defendant, still, the de v. Buck. January, 1842. Russell v. Buck. ADDISON, fendant would, notwithstanding this objection, be liable to the plaintiff as one of the indorsers thereof and that this furnished a sufficient basis for a consideration of the defendants special contract to pay the note in case the plaintiff would delay the collection of it against Buck until the time stipulated in the contract, and had delayed accordingly to call upon defendant for payment thereof. The jury were also told, that if the note was put into circulation in fraud of Buck & Bailey and was passed and indorsed by the Gibsons to the plaintiff in payment of, or as security for, a precedent debt due from the Gibsons to Russell, this was not in due course of business; and that, in that event, the plaintiff could not recover in this action, but their verdict should be for defendant. They, however, were told if they found from the evidence, that Buck, at the time he gave the guaranty to pay the note to the plaintiff, knew all the facts relative to the manner in which the note was made and got into circulation, he could not now object to the payment of the note on that account, but would be bound by his contract, though the note was passed to the plaintiff in payment of, or as security for, a precedent debt. The jury were also told that, in general, one partner may bind his co-partner in making and indorsing a promissory note in the name and in the behalf of the firm, and that third persons were not bound to inquire whether the partner was acting on the partnership account, or his own, and that the presumption was that it was on the partnership account, and that this was sufficient, unless the contrary was proved, or unless the person to whom the paper was passed had notice, or reason to believe, that the partner who signed the partnership security was acting on his own private account; that the guaranty, by one partner, in the name of the firm, not in the regular course of their business, would not bind the firm, unless adopted and acted upon by the other partner, and, in that event, it would bind the firm; and that in this case the fact that the note was in the hands of the makers and by them passed to the plaintiff, was not evidence to the plaintiff that the indorsers of the note were but accomodation indorsers, though it might be sufficient to invite inquiry; yet, as Buck, with a full knowledge that Bailey had indorsed this note in the name of the firm, had subsequently promised the plaintiff to pay the note, it was a recognition of the binding effect of the act of other partner upon the firm, and that the defendant cannot object that the firm are not bound by the indorsement of Bailey, simply on the ground that it was without the scope of the partnership business. The jury were also told that they were to regard this contract of the defendant as a conditional undertaking, and that it was incumbent upon the plaintiff to use reasonable diligence to collect the note of the makers, and that if he failed to collect the note for the want of such diligence, he could not recover against the defendant; but they were told that if they were satisfied that the makers of the note were bankrupt at the time the note became due, and that a suit, proceeding to judgment and execution, against them would have been inoperative towards producing any satisfaction of the note, and that the defendant had sustained no injury by reason of such omission, it was not necessary that there should have been any legal proceeding on the note against the makers, to entitle the plaintiff to recover, but that such bankruptcy would excuse the want of such proceedings. Under these instructions the jury found a verdict for the defendant. The plaintiff excepted to the charge of the county court. C. Linsley, for plaintiff. I. If the defendant made the agreement, declared on, in ignorance of the circumstances under which the signature of the firm was obtained, it was his duty, on learning the facts, to give the plaintiff timely notice, if he intended to avoid his agreement. The information, in contemplation of law, would have been of the highest importance to the plaintiff. It was known only to the defendant and his partner, and the plaintiff could have no means of learning the facts except through them. Here they were silent about the facts, now relied on as a defence, until they had obtained all the forbearance contempated by this contract, and now to insist upon this defence for the first time, after suit brought, and after taking the benefit of the delay, is a gross and glaring fraud upon the plaintiff who reposed in security on the faith of the defendant's positive undertaking and promise. ADDISON, January, 1842. Russell Ο. Buck. II. It appearing that Buck & Bailey were indebted to Gibson, at the time when the contract in question was made, it would seem that nothing short of proof that that indebtedness had been satisfied under due course of law would be sufficient to enable them to set up the present defence against an innocent holder. Fenton v. Pocock, 1 Com. Law R. 72. We think the charge erroneous in directing the jury that there was no consideration for this contract, unless the defendant was legally holden on the note. Now the defendant was not holden, if he determined to give the present contract as a settlement of plaintiff's claim. In that case he would be bound by it, for the settlement of a doubtful claim binds the promissor. And here the jury might well presume that, in consideration of the delay, and inasmuch as Buck & Bailey were then indebted to Gibson, Buck determined to come to a compromise and in his pretended defence to gain time. This note having been drawn and indorsed blank by Buck & Bailey, while they were largely indebted to the drawers, to enable the drawers to go into the market and raise money on it, or purchase property, we insist that they cannot be allowed, after they have induced business men to act on the faith of this fictitious paper, by parting with their property or extinguishing a precedent debt, to come into court and set up this fictitious transaction as a ground of defence. This kind of paper is entitled to no favor. It is injurious to the business and morals of the community, and to treat it with favor is to reward the bold and reckless at the expense of the cautious and prudent. The doctrine that if a bill is not capable of being enforced between the original parties, it does not become so by being taken for a precedent debt, may perhaps be reasonable in a certain class of cases, and would be upheld by a strong equity. But can it with reason, safety, or equity, be applied to accommodation paper, which is sent forth into the world to delude that it may betray? Especially is the doctrine unjust and monstrous when an innocent holder has received such a bill and reposes upon it until, upon suit, he is met and prostrated by this secret poison. At the time this paper was passed, the makers, Gibsons, were good; and the plaintiff having delayed his debt for this paper, and further delayed it on the defendant's recognition and express promises to pay; to permit the defendant now to defeat the plaintiff by this concealed defence, is neither good morality nor good law. New York Digest, 148. Brown v. Mott, 7 Johns. 361. We insist that the contract was an absolute undertaking to pay the note, if it remained unpaid at the time stipulated in the contract. 12 East, 227. 8 Id. 245. 7 Peters, 122. Allen v. Rightman, 20 Johns. 364. Manning v. King, 7 Com. Law R. 57. As to the notes being nudum pactum, I do do not see the force of the reasoning on this point. Forbearance alone is a good ground for a promise, and is it any the less obligatory that the defendant was before bound? The fact that Buck & Bailey were already holden on the bill, did not exhaust the power to contract. If holden at all they were holden jointly, but, by this contract, Buck became severally liable, and it is no answer to say that he still remained liable on the note, if it was so. That did not preclude him from making another contract and binding himself in a different way and at a different time. H. Seymour and A. C. Hand for defendant. The neglect of defendant to inform the plaintiff, as soon as he learned the facts, respecting the note, in no way precludes him. It is not one of those cases where a party is bound to give notiece. The cases where notice is necessary are where the paper is forged, and immediate notice is necessary to enable a party, to fix other parties, to look farther. As in the cases, 1 Hill, R. 287, 295. 12 Wheat. 333, 354. 9 B. & C. 902. 3 Burr. 1354. 3 Burr. 1354. 6 Taunt. 76. 5 Taunt, 488, 495, n. But, again, it is an estoppel, or nothing, and the party is not estopped in such cases unless the "other party has been induced to alter his condition." Heane v. Rogers, 9 B. & C. 577. (17 C. L. R. 449.) 13 Wend. 208. 6 Vt. R. 529. Here, so far from delaying proceedings against the other parties, the paper was calculated to quicken the plaintiff in proceeding against them, being, as this court already very properly decided, conditional by its very terms; diligence being necessary to hold defendant, even if the contract was valid in other respects. This point of the learned counsel is wholly unsupported ADDISON, January, 1842. Russell v. Buck. |