Bacon v. Dahlgreen

7 La. Ann. 599 | La. | 1852

Lead Opinion

By the court:

Eustis, C. J.^*

This appeal is taken by the plaintiffs, who are trustees of the late Bank of the United States, from a judgment rendered against them in favor

of the defendant, John Routh, in the court of the Tenth District, sitting in the Parish of Tensas.

The suit was brought for a large balance, alleged to be due by Routh and others, on a written obligation to pay to the President, Directors and Company of the Planter’s Bank of Mississippi, the sum of $63,945, on the first of March after date, &c. The instrument was signed by all the parties, and bears date, Natchez, June 27th, 1839, and is there payable.

The objections taken by the counsel, for the defendant and appellee, against the right of action on the part of the plaintiffs, under the assignment of the obligation sued, we think untenable.

The judgment rendered in the court of chancery, in the State of Mississippi, on the demurrer of the defendants, Dahlgreen and wife, which is pleaded by the defendant, Routh, as res judicata in the present suit, we are of opinion, is no bar to the plaintiffs’ action ; because, beside other reasons, the case in which said judgment was rendered, is now pending on an appeal taken from said-judgment, by the plaintiffs.

The argument of the counsel for the defendant, has been directed to the discharge, under the statute of limitations of Mississippi, which is alleged to limit the right of action, on instruments of this kind, to the term of six years. It is said, that the action was barred, by lapse of time, against the principals contracting the obligation, and that no action can be maintained on it, against the defendant and appellee, who was a mere surety.

Under our laws, an instrument of this kind would be prescribed, by the lapse of ten years from its maturity, and this prescription is applied to contracts made out of the State, when sought to be enforced in our courts. Benton v. Lacoste. 3 Ann. 220. Young v. Crossgrove, 4 Ann. 234. Graves v. Routh, Ib. 127.

We have considered the objections made by counsel, to the character of the obligation sued on, in reference to our law of prescription. Most of them were presented on the argument of the cases of Lacoste v. Benton, and of Young v. Crossgrove, and we are confirmed in our original impression, of the correctness of the doctrine there established.

It seems to be conceded, that Routh bound himself as a surety only, the note having been given for the benefit of the succession of Ellis, with which Routh had no connection.

Although the judgment rendered in the court of chancery alluded to, is not technically res judicata between the parties, it is referred to by the counsel for the defendant, as a correct exposition of the effect of the statute of limitations of Mississippi, upon the obligations of the parties to the instrument sued on. It decides, in so many words, that the several payments made are not sufficient to prevent the operation of the statute, and that the plaintiffs’ claims are barred thereby. The demurrer of the defendants is accordingly sustained, and the plaintiffs’ bill dismissed.

But the counsel has failed to show that, by the law of Mississippi, all right of action against the defendant was extinguished, by the action of the plaintiffs on the note having been barred by the statute of limitations of that State, supposing the decision of the court appealed from to be a correct exposition of the law; and, as we are advised, such would not be the effect of the decision, supposing it to be final. Angelí on Limitations, § 22. Cone v. Colburn, 7 New Hampshire Reports, 368. Kerr v. Branden, 2 Howard, 910. Johnson v. The Planter's Bank, 4 Smedes and Marshall’s Report, 165. Cohen v. Commissioners of Sinking Fund, 7 Ib. 437. It must be borne in mind that Routh was not a party to the suit in chancery, he not having been served with process; the suit was against the principal debtors alone.

Nor is the advantage to the defendants cause perceived, in the establishment of the legal proposition, that the claim against the defendant must be governed by the statute of limitations of Mississippi, since the fact of the residence of Routh, in Louisiana, is not contested, nor is there any thing in the evidence which would subject the claim against him to the operation of that statute. Hutchinson’s Miss. Code, p. 827, § 12. The claim of the plaintiffs is, therefore, unimpaired, either by the judgment rendered in the court of chancery of Mississippi, in favor of the principal debtors, or by the statute of limitations of Mississippi.

As the question has been argued before us, as to the applicability of the laws of this State, and of Mississippi, to the right of the plaintiffs to recover, by reason of the lapse of time, we take occasion to state, that we think it settled, by the highest authority, that the prescription of the forum or place where the remedy is sought, must govern in all suits for the recovery of debts. It was so deter" mined in this State, after full argument, in the case of the Union Insurance Co. v. Lobdell, 11 Martin, N. S. 108. Such has been the established rule in the United States, and in the courts of Westminster Hall. 3 Johnson’s Rep. 267, Ruggles v. Keeler. 3 Johnson’s C. C. 218, Decouche v. Savetier. Williams v. Jones, 13 East. Rep. 439. 4 Cowan Rep. 530, Andrews v. Heriot, and cases there cited. 2 Mass. 84, Pearsall v. Devignt. McElmore v. Cohen, 13 Peters’ Rep. 327, and numerous other more recent decisions.

It is sufficient to cite, among the civilians, Huberus, Merlin, Boullenois, and VoSt, to the same effect. Huberus’ Jurispr. Univers. lib. 3, ch. 2, § 34. Merlin Rep. Verbo Prescription, sec. 1, § III, No. VII. Voét, Commentary on the Pandects, lib. 44, tit. 3, No. 12. Merlin, Questions de droit, Verbo Prescription. It is not only thus settled by authority, but expressly provided in the Code of Practice, art. 13.

We do not consider that this rule conflicts with the well recognized doctrine, that a title to movable property, complete in the party, acquired by prescription, resulting from possession or otherwise, will enable him to recover the same, in a State other than that in which the right of ownership has been acquired. Shelby v. Guy, 11 Wheaton, 373. Frierson v. Erwin, 5 Ann. 530.

It is further contended, that Routh, the defendant, is released from ail responsibility as a surety, in consequence of time having been given by the plaintiffs to the principal debtors. It appeal's that this note originally belonged to the Planter’s Bank of Mississippi, and was given by Mrs. Ellis, for a debt due by the succession of her husband. She afterwards' married Eahlgreen, who, under the laws of Mississippi, became responsible for the debts of his wife, by the fact of his marriage. The Bank of the United States being a large creditor of the Planter’s Bank, agreed to receive the amount of the indebtedness in bills receivable and notes owned by the latter. This note was among the number. Before it was taken by the plaintiffs, representing the Bank of the United States, Eahlgreen addressed a letter to their agent, in which he stated his wish to make arrangements for the payment of the note. He offered as security, a mortgage on one hundred and forty slaves. He states, “ I think the time ought not to be less than six annual installments. When I return to town I will see you again, as it will require some time to complete the arrangements.” The agent declined receiving the mortgage proposed by Eahlgreen, considering the note, as it then stood, made the debt more secure than it would be by changing it, and recinding the mortgage, but acceded to the proposition for the terms of payment. Eahlgreen made three payments; the last was in February, 1843, but none since, though repeatedly applied to. It appears, also, that in the agreement under which this note, with others, was received by the plaintiffs from the Planters’ Bank, it was stipulated, “that an extension of the time was to be granted to the parties to the paper transferred, of one to three years, from January, 1842, in equal annual payment, provided the security offered should be ample.”

There does not appear to be any other fact, which it is material to notice, which relates to the granting of time.

Does this granting of time operate a release of the surety from his suretyship, he having given no consent to any extension of the time of payment ?

By our laws, the prolongation of the term granted to the principal debtor, without the consent of the surety, operates a discharge of the latter. Code, 3032. The civil law was otherwise, and the principle has been preserved ill the article 2039 of the Napoleon Code, which provides, that the extension of the term of payment granted by the creditor, does not release the surety, who may, in such a case, himself sue the debtor, in order to compel him to make payment. Pothier on Obligations, No. —.

As the note sued on was made in the State of Mississippi, and is payable there, the obligations created by it must be tested by the laws of that State; and whatever acts of the parties which operate an extinguishment of the contract there, will undoubtedly prevent a recovery elsewhere. The act, from which it is said this discharge of the surety results, was done there, and in relation to persons there present. As to the effect of this act upon the right of the parties to the contract, those laws are alone to be considered.

As far as we are able to collect the rule of law on this subject, from the jurisprudence of that State, it seems to be uniformly settled, that there must be a positive and binding agreement, with the principal, for a definite time, based upon a valuable consideration, sufficient to tie up and restrain the creditor during the time for which the indulgence is given, or it will not discharge the surety. And the agreement for delay, which will discharge the surety, must be founded upon a sufficient consideration, and be such as can be enforced in a court of justice. Payne v. Commercial Bank of Natchez, 6 Smede and Marshall’s Reports, p. 24. Newell v. Hamor, 4 Howard’s (Miss.) Rep. 684. Wade v. Stanton, 5 Howard, 631. Wellington v. Gary, 7 Smede and Marshall’s Rep. 533.

In a case where the principal debtor urged the creditor not to sue, promising that, if he did not, he would pay the debt in a given time, and the holder did not sue, the surety was not held to be discharged. Nor will the mere voluntary promise to forbear, on a renewed assurance that the party will pay that which he is already bound to pay, where there is no other new consideration, discharge the surety. Montgomery v. Dillingham, 3 Smede and Marshall’s Rep 647.

There are several other cases referred to, in the brief of the counsel for the plaintiffs, to the same effect, which afford to us an established rule, which it only remains to apply to the facts of this ease.

Some explanation must be given of the law of Mississippi, relating to the subject of the consideration of agreement, which we assume to be in accordance with the elementary writers of the common law.

All contracts are, by the laws of England, distinguished into agreements by specialty, that is, under seal, and agreements by parol. If the agreement is merely written, and not a specialty, the consideration must be proved. To make a contract or agreement obligatory, the consideration must be either a benefit to the party promising, or some trouble or prejudice to the party to whom the promise is made ; otherwise the contract or agreement is considered as nudum pactum, and cannot be enforced.

It seems to us obvious, that there was no sufficient consideration, in this sense, in the consent of the plaintiffs’ agent to give Dahlgreen time for the payment of this debt, and that, there being no consideration proved, the plaintiffs were not prevented from enforcing the payment of the note immediately, by any thing that passed between their agent and Dahlgreen.

Since the preparation of this opinion, a decree of the Court of Errors and Appeals of Mississippi, has been submitted to us, which affirms that of the vice chancellor, in the case mentioned in this opinion ; but, under the view we have taken of the effect of such a decree on the rights of the appellee, it operates no change in the conclusions to which we have arrived.

In conclusion, we consider that there is no sufficient defence to the plaintiffs action, and that they are entitled to judgment.

For the reason assigned in the written opinion of the court, read on the 26th of April last, and on file, It is ordered, adjudged and decreed, that the judgment of the district court be reversed; and it is further ordered and decreed, that the plaintiffs recover from the defendant, John Routh, the sum of $47,185 24, with eight per cent interest thereon, till paid, since the thirty-first day of January 1843, and the costs in both courts.

* Judgment, in this case, delivered on the 26th of April — decree rendered on the 9th of November.

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Dissenting Opinion

Preston, J.,

dissenting. This suit was instituted on the 27th of December, 1849, against John Routh, residing in the State of Louisiana, on the following instrument assigned to the plaintiffs:

“ $63,945. Natchez, January 27th, 1839. On the first of March afterdate, we, or either -of us, promise to pay the President, Directors and Company of the Planters’ Bank of the State of Mississippi, for value received, sixty-three thousand nine hundred and forty-five dollars, payable and negotiable at the Planters’ Bank of the State of Mississippi, at Natchez. . Mart M. Ellis, Adm’x. of J. G. Ellis, deceased; John Routh; Elias Ogden.”

There are credits on the note. The last is endorsed the 25th of February, 1843. It is not pretended that there is any later acknowledgement of the defendant’s liability. There was suit instituted in the State of Mississippi, against parties to the note, in January, 1849. So that, neither suit nor acknowledgement interrupted the prescription of five years, which is plead under article 3505 of our code against the present action upon the note.

The note was given by the Administratrix of an estate, and it is supposed that Routh, the present defendant, is only a surety on the note. A suit in equity was instituted in the State of Mississippi, against the estate, in January, 1849, and it was decided by the chancellor that a recovery was barred by the statute of limitations. An appeal was taken, which remains undecided. This court having equitable powers, I do not think that judgment should be rendered in this case against the defendant, until the suit in the State of Mississippiis decided. Otherwise, it might be decided that the obligation is extinguished as to the principal, but in full force against the surety ; for the statute of limitations of the State of Mississippi, like prescription under our code, extinguishes the legal obligation of a contract. This would conflict with our principles and laws, providing that the suretyship cannot exceed what may be due by the debtor, nor be contracted under more onerous conditions, and that the surety may require the creditor to discuss the properly of the principal obligor. Civil Code, art. 3006, 3014.

I am, moreover, of opinion, that the note sued upon is prescribed by art. 3505 of the Civil Code. It prescribes, “ Actions on bills of exchange, notes payable to order, or bearer, except bank notes, those, on all effects negotiable, or transferable by endorsement or delivery, are prescribed by five years, reckoning from the day when these engagements were payable.” The action on the note is therefore prescribed, if it be a negotiable instrument.

An instrument is negotiable which can be transferred by an endorsement on the back, so as to enable the assignee to sue for its contents in his own name. It should, further, not be subject to the equitable assets of the obligor, a qualification, which will be noticed as to the note in controversy. A statute of the State of Mississippi prescribes, that “ All bonds, obligations, bills, single promisory notes, and all other writings for the payment of money, or any other things, shall and may be assigned by endorsement, whether the same be made payable to order, or assigns of the obligee, or payee, or not; and the assignee, or endorsee, shall and may sue in his own name, and maintain any action which the obligee, or payee might or could have sued or maintained thereon, previous to assignment.”

The note was thus made negotiable by statute, in the State where it was executed. It is said it was still not negotiable, because the obligor could plead any offset against the payee. He could, under this statute, to the time of assignment, but not afterwards.

It was held by the High Court of Errors and Appeals of the State of Mississippi, in the case of Oldham v. Ledbetter, 1 How. Rep. 46, that by this statute, “ promisory notes may be assigned by endorsement, though the same be not made payable to order ; and by the principles of the common law, they are transferable by bare delivery. In either case there has operated a complete divestment of all rights to the contents of the note, and of all authority to control their appropriation on the part of the payer. In one case, the assignee is clothed with authority to sue in his own name ; in the other, the transferee is empowered to use the name of the payee to consummate his equitable interest by a collection of the money. The service of garnishment will not after transfer, though without notice, subject the debt due, by the maker, to the demand of the attacking creditor; for, as by assignment or delivery, the party into whose hands the note may coiné, is instanter vested with an absolute right to control its contents; the payer from that moment becomes the debtor of the holder, and responsable to him alone. The process of attachment cannot restore a relation which has ceased to exist, or appropriate rights of one individual to a discharge of the obligation of another. If this position should require aid from authority, a decision of the Supreme Court, Walker’s Reports, 389, made in reference to the existing laws on this subject, will be found fully to sustain it.” Under this decision, the negotiability of the note, after its assignment, was substantially established as to the maker, free of his subsequent equities, and I do not find it reversed. It can never lie in the mouth of the assignor or endorser, to say the instrument was not negotiable, because the payer might have equitable offsets against him before he assigned the instrument, and it was negotiable as to the holders, because it is not pretended by them that, in point of fact, there were any offsets against the note when it was negociated to them. They also have the guarantee of the jurisprudence settled by the decision quoted.

The defendant pleads the negotiability of the instrument against the bank that negotiated it, and assignees to whom it was negotiated. They cannot deny its negotiability; the first, because the statute and their acts made it negotiable, and the last, because, in point of fact, the instrument had every negotiable quality. Besides, for the very purpose of negotiating it, the parties made it negotiable in terms.

It is the intention of the parties to an instrument which renders it negotiable, if expressed in terms which may have that effect. And any terms expressing the intent, will render the bill or note negotiable. Chitty, 181. 1 Pard. 360-361.

It is laid down by elementary writers, that no form of words is absolutely necessary, to-produce that effect. Making the instrument payable to order, is the usual form. But if the parties declare on its face that the instrument shall be negotiable, it should have that effect, ns clearly as it can be implied, from the use of the word “order,” Any words, from whence it can be inferred, that the pprson making the bill, or note, or any other party to it, intended to be negotiable, will give it a transferable quality against that person. Chitty, 219, ed. of 1836.

The bank required the defendants to give them a note “ negotiable at the Planters’ Bank of Mississippi, at Natchez,” for their debt, and the debtor did so. This was undoubtedly intended to enable the bank to transfer it by endorsement, if she' chose, so as to enable her assignees to sue in their own name; to do precisely what has been done. The instrument has been assigned, so as to enable the assignees to sue in their own name for the whole debt. That embraces every requisite to the definition of negotiability.

It is a principle of the interpretation of all instruments, to give every word in them effect, if possible. The term “ negotiable,” in the note under consideration, would have no meaning, if the note was not negotiable. But it can and has meaning and effect, because the note has been transferred by endorsement, and the endorsees have every right and power which belonged to the payees. That makes the negotiability of the instrument.

There has been but a single adverse decision, by this court, in the case of Young v. Crossgrove, 4 Ann. 234. It is a question of evidence, and of the construction of an instrument of writing, not a question of law, and, therefore, I do not feel bound by the precedent.

The instrument, in my opinion, was, in Mississippi, by express statute, and is, in Louisiana, by its tprms, negotiable, and the action on it is prescribed by our code, which prescribes actions on negotiable instruments, by the lapse of five years between their maturity and the commencement of a suit.

I think the judgment of the district court should be affirmed, with costs.

Application for a re-hearing refused.