Richter v. Selin

M.&g. were indebted toC.&N.and also to D. who, held two promissory notes drawn by C. & N, On the 10th August, 1816, C. & N. made an assignment for the benefit of their creditors. On the 27th of the same month, D. made a similar assignment. On the 5th August, 1816,1). wrote from Philadelphia to M. & G. in Selin’s Grove, informing them of the desperate state of C. & N’s circumstances, that they would make an assignment in a few days, arid informed them that he held the two notes above mentioned, which he proposed to endorse to M. & G. to enable them to set them off against the debt they owed to C. & N. M. & G. received these notes, and gave to D. their note endorsed by S. for their amount, together with the amount of the debt they owed to Í). This note was dated 7th August, 1816, but there was some evidence to shew that it was not drawn until 1st January, 1817. An action was afterwards brought on this note, for the use of the assignees of D. against S. the indorser; and it was Ae/d,thaf the two notes drawn by Cf & N in favour of D, which had been transferred to S. after the commencement of the action, might be given in evidence by the defendant, not as a set-off, but for the purpose of shewing that the transaction was a contrivance to defraud the assignees of C. & N. A note may, for honest purposes, be dated as of a day antecedent to that on which it was really made. Where a suit has been marked to the use of another, notice to the plaintiff on the record, of the time and place of taking a deposition, is sufficient, where he has always appeared in the suit, either as party or agent. Where an action, brought in the name of one, is afterwards marked to the use of another, before the plaintiff on the record can give evidence, he should release all iwterest in the action, and the costs up to the time of marking it to the use of another, should at least be paid. In an action against the endorser of a promissory note, drawn by one partner in the name of the firm, the ledger of the firm is evidence to shew the existence of the partnership. A confession of judgment by the endorser of a promissory note, is evidence,hut not conclusive, of notice of demand on the drawer, and refusal by him to pay the note, or of waver of such notice ; but it may be explained and rebutted by the circuraslances under which the confession was made. A judgment binds lands, for the sale of which articles of agreement have been entered into before the judgment, but which have not been conveyed until afterwards. The rule that after purchased lands are not bound by a judgment, is to be strictly construed, and not extended beyond the letter.

In Error, ON a writ of error to the Court of Common Pleas of . , Union county, the case was as follows: On the 28th May, 1817, a suit was commenced by Peter Richter, the plaintiff in error, against Anthony C. Selin, the defendant in error, on a promissory note drawn by Marshall Goughler, dated August 7th, 1816, for 1688 dollars 58 cents, payable eight months after date to Anthony C. Selin or order, by whom it was endorsed in blank and delivered •to Nathan Dunn, who endorsed it specially to Peter Richter, the plaintiff. On the 16th of September, 1817, the defendant appeared and confessed judgment. The Court on the ■20th February, 1818, granted a rule to shew cause why the judgment should not be opened and the defendant let into a defence, and after argument the rule was made absolute. On the 31st January, 1820, the suit was marked to the use of Samuel G. Wright and William Newbold, assignees of Nathan Dunn. The evidence, so far as is now material, was as follows : — - Marshall Goughler, the makers of the note, who were merchants in Selin's Grove, purchased goods of Corlies £s? Na-glee, merchants in Philadelphia, to the amount of 1444 dollars 64 cents. They also purchased goods of Nathan Dunn to the amount of 367 dollars 58 cents. Corlies Ss? Naglee were' indebted to Nathan Dunn in two promissory notes, amounting together to the sum of 1321 dollars, and it was agreed by them, that Dunn should transfer these notes to Marshall &? Goughler, and that Corlies tí? Naglee should receive them in part payment of their demand against Alarshall Goughler. On the 5th August, 1816, Dunn wrote to Marshall £i? Goughler, informed them of the declining circumstances of Corlies Naglee, which would result in their making an assignment in a few days, and told them that he held these two notes, which he proposed to endorse to them, that they might set them off against the debt due by them to Corlies 8? Naglee, provided they would give him their note in lieu of them ; and for rendering this service he offered to give them one hundred dollars. In pursuance of this arrangement, Dunn transferred the two notes of Corlies Naglee to Marshall tí? Goughler, and took their note endorsed by the defendant, for the amount of those two notes, together with the amount of his account against Marshall fc? Goughler. This was the note on which the present suit was brought, Marshall ci? Goughler never presented the notes they had received from Dunn to Corlies <¿? Naglee, but after Marshall ei? Goughler had been sued and confessed judgment, and after Selin had confessed in this suit, they enclosed them in a letter, and sent them on to Selin. Marshall Goughler were insolvent.w Dunn made an assignment for the benefit of his creditors,on the 27th August, 1816, to Wright Sí Newbold. Corlies £i Naglee made an assignment for the benefit of their creditors, on the 10th August, 1816. In addition to the pleas of non assumpsit, and payment, the defendant pleaded specially,a set-off of the two notes given to Dunn by Corlies Si Naglee, and endorsed by him to Marshall £i Goughler. When these notes were offered in evidence, they were objected to by the plaintiff’s counsel, who offered to prove that they did not come to the hands of the defendant until after the commencement of the suit. The Court, however, overruled the objection, and the notes were given in evidence, upon which a bill of exceptions was tendered and sealed. The defendant then offered the deposition of Benjamin M. Hollingshead? after having proved that notice of the time and place of taking it, had been served on Peter Richter, the plaintiff on the record. An objection was made by the counsel for the plaintiff to the reading of this deposition, but the Court permitted it to be read, and sealed another bill of exceptions. It was proved by several witnesses, that Nathan Dunn was in Selin’s Grove about 1st January, 1817, when he was seen with Marshall and Goughler, but was not seen by the witnesses in that place, either before or since. A witness was produced by the plaintiff, who swore that Goughler and Selin came together to his house, and requested him to draw an assignment on a deed from the former to the latter, of a house and lot in Selin’s Grove, which he did. Se~ lin said that he had gone bail for Goughler, for 1200 or 1500 dollars, which he expected he should have to pay, and therefore he wished to make himself safe as well as he could. The assignment bore date 6th June, 1817. The defendant, for the purpose of shewing that the indemnity given by Goughler to Selin, to secure him in the event of his being obliged to pay the note in question, had failed, first read an article of agreement between Mathias Drumbaugh and Marshall Goughler, for the sale of the same property, dated December 27th, 1816, and then proved that the property had been sold under a judgment entered against Marshall Goughler on the 24th January, 1817, and all the proceeds of the sale appropriated to the discharge of liens existing at the time of the sale to Selin; that Selin had never been in possession, and had received no part of the money arising from the sale. The plaintiff produced the ledger of Marshall Goughler, proved by Goughler, and offered it in evidence without stating for what purpose it was offered. But the Court, on an objection being made by the counsel for the defendant, rejected the evidence, and an exception was taken to their opinion. Mr. Lachells, after having sworn that since Dunn had left the United States, he had corresponded with Wright, one of Dunn’s assignees, and had received information and instructions from him in relation to this suit; that he did not inform Wright that he had made him a party7 to the suit, nor how it was brought; that he had corresponded with him on the subject for more than a year, and had considered him, since the commencement of the correspondence, as interested in the suit, offered Peter Richter, the plaintiff on the record, as a witness. An objection was made to his admission by the defendant’s counsel, which the Court maintained. An exception was taken to their opinion. The evidence being closed, the President of the Court delivered a charge to the jury, in the course of which he instructed them to the following effect: •“ The law is well settled, that before the endorser becomes liable for the payment of a note to an endorsee, it is necessary that payment should be demanded of the makers, when the note becomes due. Notice within a reasonable time to the endorser, of the demand upon the makers, and their refusal to pay, are the conditions upon which the endorser can be made liable for the payment of the note. The endorser, by placing his name upon the note, does not thereby7 engage to pay it at all events. His engagement is conditional. The time of notice depends upon the distance the drawers and endorser reside from each other. The demand upon the makers, and their neglect or refusal to pay, and notice of these facts to the endorser, are conditions pre- « 1 cedent, and must be performed before a right of action accrues to the endorsee. In this case there, is no proof that the makers of the note were ever called upon to pay it before the acti.on was commenced; from which it clearly appears that at the institution of the suit, the plaintiff had no cause of action against the defendant, and could not recover unless the defendant has subsequently made himself liable for the payment of the money. To this general rule there ■ are some exceptions. In case notice be not given within a reasonable time, the endorser may become liable by a promise to pay, which would be considered a waiver of notice, and a new agreement. But that the endorsee may maintain the action against the endorser, the promise should be made before the commencement of the suit. In this case, the defendant, though not liable for the payment of the money at the commencement of the action, confessed judgment at the return of the writ, by which act he made himself liable, if the jury should believe that he was acquainted with his situation and had a knowledge of his rights, that no imposition was practised to induce him to confess a judgment, and that the note was not fraudulently obtained ; but if he was unacquainted with his rights, or any imposition was practised upon him to induce him to confess the judgment, he would not be liable. These are facts for the jury, but in determining them, the jury may take into their consideration, the situation of the defendant who is not a merchant, and consider whether it is probable he would have been willing to confess judgment for a debt which he was not bound to pay, if acquainted with his situation. The Court have also stated, that if the defendant was induced to confess judgment by an imposition practised upon him, he would not be bound by it. As to the circumstances which led to this confession ©f judgment, there is but little evidence. One circumstance however does appear in evidence. On the day and at the 'time this judgment was confessed, Goughler assigned to the defendant, a deed for a house and lot in Selin’s Grove to indemnify him, as was alleged, which house and lot have since been sold for the payment of Marshall & Goughler’s debts, upon a judgment obtained before the assignment, which, under the circumstances, was clearly a lien on the property. “ It has been contended for the defendant, that the note was fraudulently obtained by Dunn, and could not, under the circumstances, be recovered against Marshall Es? Goughler,the makers. Fraud poisons all contracts. Whether or not the note was fraudulently obtained is . a fact for the jury to determine from the evidence. Fraud cannot be presumed ; it must be proved. The principal circumstance relied upon, is the time when, and the purpose for which, the two notes drawn by Corlies & Naglee were delivered to Marshall & Goughler. If they were bona fide delivered to them before the assignment of Corlies Es? Naglee, for the use of their creditors, and not with a view to that assignment, they would have been a proper set-off against the demand which Gorlies Es? Naglee had against Marshall Es? Goughler ; and the transaction would have been a fair one. But if the jury believe that Dunn, instead of delivering these notes to his assignees, retained them in his own possession and in January, 1817, delivered them to Marshall Es? Goughler, and obtained the note in question, with a design that these notes should be set off against the account which the assignees of Corlies Es? Naglee held-against Marshall Es? Goughler, and that he should appropriate their note to his own use, this being after the assignment of Corlies Es? Naglee for the use of their creditors, would be a fraud on the creditors, and the assignees, upon discovering, the circumstances, would never permit these notes to be brought in by Marshall Es? Goughler as a set-off against their account; and it appears, by the production of those notes in Court, that the assignees of Corlies Es? Naglee have not as yet received them. If those notes were transferred to Marshall Es? Goughler after the assignment of Corlies Es? Naglee, the assignees of Corlies Es? Naglee could maintain an action for the whole amount of their demand against Marshall Si Goughler, who would not be entitled to set off the notes against it. If therefore the plaintiff or the assignees of Dunn, could recover upon the note on which this suit is brought, Marshall Es? Goughler, or their endorser, would be compelled to pay the money twice : first to the assignees of Corlies Es? Naglee, and again to the assignees of Dunn. But whether these notes could be made a set-off or not,, would depend not-altogether on the time they were delivered to Marshall Es? Goughler. If the money was bona jide due from Corlies Es? Naglee to Dunn, he or his endorsees would be entitled to receive of the assignees of Corlies Es? Naglee, such a proportion to the dollar, as they were able to pay their creditors. Cor lies fva his deposition, states, that it .was understood they were to receive the two notes given them by Dunn, from Marshall Es? Goughler, in part payment of their debt. Corlies Es? Naglee could make no such agreement after their assignment ; but if made before, it would be good, provided the notes were delivered to Marshall Es? Goughler before the assignment. The assignees of Corlies <§• Naglee would be liable to pay the assignees of Dunn those notes or their proportion of them, at any time before the expiration of six years, within which, by an Act of Assembly called the Act of Limitations, actions on promissory notes or book accounts must be commenced.” To the whole of the charge of the Court, the counsel for the plaintiff excepted, and also to the answers given by the Court, to the following points, on which their opinion was requested : 1st Point. “ The defendant having confessed judgment for the amount of the note on which this suit is brought, a previous demand upon the drawers and notice to the endorser, need not be proved, but will be presumed. And even if he confessed judgment under a mistake as to his liability, on account of a want of consideration, that will not destroy the legal presumption of his having had due ' notice of the non-payment by the drawers.” Anszuer. “A confession of judgment by the defendant, with full knowledge of his rights and situation, would be a waiver of his right of a previous demand on the makers of the note. But if the confession of judgment was obtained from him when ignorant of his rights and by imposition, it would not be a waiver of his right to notice of a demand upon and non-payment by the drawers.” 2d Point. “ If the two notes given by Corlies §* Naglee to Nathan Dunn were received by Marshall 8$ Goughler before Cor lies Sf Naglee made an assignment, Marshall Sf Goughler were entitled to set them off against the debt due from them to Corlies Naglee; and if Marshall <|* Goughler received them before they had notice of the assignment, they were entitled to set them off. Answer. “ If the jury believe that Marshall <$* Goughler received these notes before the assignment, they could set them off against the account which the assignees of Corlies Naglee had against them, unless they received them zvith a view to that assignment. But if they received them after that assignment, and after they had notice of it, with a fraudulent intention, they could not set them off.” 3d Point. The answer to this point being favourable to the plaintiff, it is unnecessary to state it. 4th Point. “ If the jury believe that Marshall fy Goughler purchased the two notes of Corlies Naglee from Nathan Dunn at a discount, with full notice of their anticipated insolvency, they could not set up want of consideration as a defence ; they having taken the notes at their own risk; particularly if at that time Marshall & Goughler were indebted to Corlies Naglee to an equal or larger amount than the notes.” Answer. “ If Marshall <§• Goughler took the notes of Cor-lies <$• Naglee at their own risk, and could make no defence against them, the defendant could make no defence. But if they received them to make a set-off, and not at their own risk, not being able by law to make a set-off, there would be a failure of the consideration of this note to the amount of the loss on Corlies <Sf Naglee's notes.” 5th Point. “ If there was a good consideration for part of the note on which this suit is brought, the plaintiff is entitled to recover for such part.” Answer. “ The plaintiff would be entitled to recover the balance, after deducting the amount of the notes of Corlies Naglee, provided the defendant has, by his acts, dispensed with a demand upon the makers of the note, and provided the whole transaction was not fraudulent, with a view to defraud the creditors of Corlies <ff Naglee.” . 6th Point. w If the notes of Corlies fy Naglee came to the hands of the defendant after the commencement of this suit, he cannpt give them in evidence under thp plea, of set-off.” Answer. “ He could not; and they have not been so offered by the defendant.” 7th Point. “ There being no evidence that Corlies Na-glee or their assignees, were ever called upon for payment of these two notes, nor any evidence of notice having been given to Nathan Dunn, the endorser, of non-payment, the defendant cannot make them a set-off.” Answer. “ They have not been offered as a set-off, nor could they be so offered,” 8th Point. “ If the assignees of Dunn have agreed to the transfer of the note on which this suit is brought, by Dunn to Richter, the transfer is valid, even if made after Dunn’s assignment for the use of his creditors.” Answer. “ The transfer would be valid, if authorised by Dunn’s assignees.” 9th Point. “ If the jury should believe that the note on which this suit is brought, was not signed by the drawers and endorsed until January, 1817, yet if the drawers had received a good consideration therefor at the time it bears date, and the endorser knew the contents of the note, it is, a valid contract, and the note would take effect from the time it bears date.” Answer. “ It Would,, if a bona fide transaction and the defendant had dispensed with a demand upon the makers of the note. The antedating alone Would not destroy the note.” 10th Point. “ If, at the time the defendant purchased the house and lot in Selin’s Grove, he had no notice of the articles of agreement made between Matthias Drumbaugh and William Goughler, he would hold the same discharged from the judgments entered against William Goughler, before the deed from Drumbaugh to Goughler was executed; there being, no execution issued on these judgments until after the de« fendant purchased.” . Answer. “ The Court are of opinion that the judgment against Marshall 8? Goughler was a lien upon the house and lot; and whether the defendant had notice of the articles of. agreement or not, they could be sold, and a good title made to the purchaser. The articles were part of the defendant’s title. Pie derived his title from Goughler and was bound to take notice of the articles.” In this Court seventeen errors were assignéd, in the admis»' sion and rejection of evidence, and in the opinions delivered by the Court of Common Pleas to the jury, upon the questions arising in the case. who cited Browne v. Weir, 5 Serg. & Rawle, 403. Wilt v. Franklin, 1 Binn. 514. M'Allister v. Marshall, 6 Binn. 347. M'Menomy & Townsend v. Ferrers, 3 Johns. 71. Colhoun v. Snider, 6 Binn. 135; and by by whom Heylyn v. Adamson, 2 Burr. 676. 4 Bac. Abr. 730; Levy v. Gadsby, 3 Cranch. 180. 185. Donaldson v. Means, 4 Dall, 109, 110. 4 Bac. Ab. 727. Barrow v. Paxton, 5 Johns. 258. 8 Johns. 384, were referred to.