Brahan & Atwood v. Ragland

| Ala. | Jul 15, 1830

Lead Opinion

By JUDGE COLLIER.

The appellants who had before been, and perhaps were at this time co-partners in trade, exhibited at different periods during the years 1823, ’25, and 26, five bills on the equity side of the Circuit Court of Madison, all proposing to enjoin perpetually the collection of a judgment recovered by the appellee, Ragland, against them as first indorsers of a note of one Henry C. Bradford, upon the allegations that the noté was indorsed for the accommodation of Bradford, and in violation of their mercantile association; that at the time the indorsement was made, the note was not drawn; the paper on which it was drawn was indorsed by Simon Turner, the appellee, and the figures indicating the amount were written on the left corner on the other side; that the consideration of the note was the loan of money by Ragland to Bradford, for which notes had been repeatedly renewed. On the renewed note last preceding, the name of Turner appeared as first indorser, though on some of the previous notes the appellants may have been first indorsers.

It further appears that Turner had paid to Ragland the amount of a judgment recovered against him on his in-dorsement, and that the collection was about to be coerced for Turner’s benefit, as appeared by an indorsement by Ragland’s attorney on the execution which had issued thereon.

Turner admits that he had paid Ragland with an agreement that he was to have the benefit of the judgment against the appellants, and to the third bill denies that he had in-dorscd, or authorised the indorsement of any of the notes of Bradford to Ragland, which the proof established so far as it is incumbent on him to adduce it.

The points we propose to examine as arising out of these facts, or presented by the arguments of counsel, are

Is Turner, as between the appellants and himself, to be considered an indorser of Bradford’s note?

2nd. Is he liable to contribute jointly with the appeU lants to its payment?

3rd. Is he entitled to the benefit of Ragland’s judg* ment against the appellants?

4th. Is the indorsement of the appellants good in favor-of a b.ona fide holder for a valuable consideration?

1st. It is conceded that Turner’s answer, so far as it de» nies the indorsement of Bradford’s note, is fully sustained, by proof. And.the question recurs, whether he can be permitted to deny it after having suffered a judgment against him upon it in favor of Ragland, without interpo-. sing as a defence a denial of his signature.

The record of the recovery by Ragland against Turner would be admissible if material, for the purpo.se of shew-, ing that a judgment was recovered. But when introduced by the appellants, they cannot claim the benefit of the legal consequences which result from it in favor of parties and privies; they are strangers, and it cannot according to the rules of evidence, naalte testimony for thepi. It is es* sential to the admissibility of judgments, that each party should be entitled tp their benefit as proof, and they cannot be used against a stranger, so neither should they ho used by them. The verdict may perhaps have been founded upon his testimony, when he had an interest in procuring it for the purposes of evidence; now as he cannot give evidence diiectly, he should not be permitted to do it circuitously. These views are sustained by Gilbert, ap ancient law writer of celebrity, in his treatise on evidence,^a and are adopted by more modern authors.^b Again, judgments operate by way of estoppel, and all estoppels are f°uncled on mutuality; for the want of this essential, the "judgment against Turner is inadmissible.^c

But let it be conceded that -tho judgment in favor of Ragland v. Turner is inadmissible, both for the purpose of shewing a recovery and the defence interposed, and we are then unprepared t.o yield an acquiescence to the conclusions which the appellants counsel have deduced from such premises. A denial in that- suit by Turner of his indorsement, could not have availed the appellants any thin#, even if such denial had prevented a recovery. The appellants would still have been liable to Ragland. And if Turner had given notice to the appellants before action brought, that his indorsement was a forgery, it would not have afforded to them a valid defence. In moral justice then, the appellants have no cause of complaint against Kim.

It is granted that the recovery by Ragland against Turner is conclusive between the parties, for the reason that it is evidenced by record. Against strangers, we think it has been made manifest that' it is no evidence.

Let us next inquire what influence the neglect of Turner to make known to the appellants the forgery of his name can have upon their title to relief. The record discloses no evidence of Turner ever having admitted his signature to be genuine, or contributed his aid to Bradford to impose upon the appellants. Perhaps he was in the habit of lending his name to Bradford by indorsing blanks, and he may not have acquired a knowledge that the in-dorsement of his name was spurious, at an earlier period than that at which be disclosed it in his answer. Be this ás it may, it does not appear that he ever adopted the in-dorsement as his own, so far as the appellants are con-, cerned, and the only deduction to be made in their favor from the inattention and neglect of Turner, is not a conclusion but a presumption Of fact, that his signature is genuine; this presumption is met and explained .away by proof.

2nd, Though it was conceded as well by the counsel for the appellants as the appellees, that authority was adverse to contribution-, we deem it' fitting to examine the question that the law may be ascertained and adjudged. Every indorsement is equivalent to the drawing of a new bill; the indorser undertakes with his indorsee, that if he will use due diligence to obtain payment of the maker, and if hte fail, advise him thereof in a reasonable time thereafter, then he, the indorser, will pay it. Every indorser is liable to those whose names appear on the paper after his, if the proper steps have been taken to charge him, and they are.required to respond severally and not jointly to the holder. This being the nature of an indorsement, and the liability imposed by it, it is obvious that indorsers cannot be viewed as sureties; the latter are liable at all events, . unless discharged by some past factum occurrence, while 'be 'former incur no engagement, and the liability of all or either, will depend upon the fact whether the proper stops have been taken to charge them.

In Hixon v. Reed.^a this question came before the Court of Appeals in Kentucky. In that case the first indorser paid the note at maturity, anti brought his action to recover of the second indorser, one moiety of the money paid. The Court ruled that had the defendant paid the note, he would have been entitled to recover the amount from the plaintiff, and “in such cases, the first indorser should be considered as saying to the subsequent indorser, I will stand behind you for the whole}” and consequently contribution 'cannot be coerced in his favor. In Brown v. Mott,^b it is held that a prior accommodation indorser is liable toa subsequent one, and in such cases “the indorser cannot setup that he indorsed the note without consideration, because by sending the note into circulation by a general indorsement, and making thereby a negotiable bill, a consideration is implied by the law merchant, and an inquiry into that fact is precluded.”

In the Farmers’ Bank v. Vanmeter,^c it was adjudged that the doctrine of contribution did not apply us between accommodation indorsers, unless there was an express or implied agreement to bear parts of the loss as joint sureties, in the event of the inability of the drawer to pay. The learned Judge in pronouncing the opinion of the Court, remarks with great perspicuity of diction, “Sureties may bind themselves severally in succession, so that each may be a supplemental surety in respect to another. Craythorne v. Swinbourne.^d In this case they have bound themselves by an instrument, the legal effect of which is to subject them in respect to each other in succession, in the order in which they indorsed, and they mi list be taken to be bound according to the legal effect of the instrument,, until the contrary appears.”

In Campbell v. Mesier and another,^e the doctrine of contribution at common law, is considered somewhat at. length. That was a suit in Chancery, brought for the recovery of a moiety of the money expended in the repairing of a party wall, which divided the premises of the complainant from thoso ofthe defendant. It appeared that the wall was in a dilapidated state, and that the enjoyment of their respective premises rendered its reparation necessary. The Chancellor remarked, that “the doctrine rests on the principle; that when the parties stand in cguali Jure, the law requires equality, which is equity, and one of them shall not be obliged to bear the burthen in ease of the rest. ” Again, “contribution depends rather upon the principle of equity than upon contract. The obligation arises not from agreement, but from the nature of the relation, or quasi ex contractu, and as far as Courts of law have in modern times assumed jurisdiction, it is as Lord Eldon said,^a upon the ground of an implied assumpsit.

The inference deducibie from these authorities is, that when the parties have made a contract, which by its legal interpretation, does not place them in equali Jure, but considers the undertaking of some of the promising parties os supplemental: neither law nor equity will expound the contract otherwise than according to its legal effect, unless the consent of the parties expressed or to be implied from circumstances authorizing the Courts to give a different exposition and operation; and will not therefore in such ease compel contribution. But when one of two parties have expended money in the performance of that which was beneficial to another, and in which that other was bound to aid, as in the case of Campbell v. Mesier and another, equity will compel him who has borne no part of the expense, to contribute his proportion. Considered with these distinctions in view, the doctrine of contribution stands on solid and discernable ground.

3rd. Though the doctrine of cession as applicable to a subsequent indorser who has paid a judgment in favor of the holder, against a prior indorser, offers a very interesting inquiry, the view which we take of the case so far as it has been sought to be applied, does not make its examination material. It cannot be important to answer the question, whether by the silent operation of law, without the aid of a Court, Turner has been subrogated to thd rights of Ragland. He declares in his answer that he paid Ragland, with an understanding that he was to have the benefit of his judgment against the appellants, and the testimony shews that Turner had received an assignment from the attorney of Ragland, to which assignment it does not appear that Ragland has ever objected. Nor does it appear whether the individual who made the assignment was the attorney at law or in fact; nor is it shewn that he transcended his authority; if he has, it forms no ground for relief in equity. The payment of the judgment to the officer authorized to coerce its' payment by execution, wo'uld be a sufficient discharge for the appellants.

It is too well settled upon authority to inquire now whether judgments are assignable in equity. Chancery will protect the assignment of a judgment in favor of one who has paid a valuable consideration for it, whether ihe assignment, has been made by parol or in writing. The facts which appear on the record, it is believed bring Turner within the operation of this rule and entitle him to its benefit.

4th. It is a rule of the English law merchant, in the ascertainment of which, there is no Variety of decision, that he who writes his name on a blank paper stamped fora bill or. note, gives an implied authority to the holder of it, to fill it up with any amount that the stamp will warrant. In this country we have no stamps, so that the security which they afford in England, to him who writes his name upon a blank paper, with a view to be made the drawer, maker, or endorser of a bill or note, afterwards to be filled up, is lost here. Yet by analogy it would seem, that he continues liable without limitation as' to amount in favor of a bona fide holder for a valuable consideration.

The appellants do not however complain that the note was filled up with a larger sum than they had authorized; in fact there were figures on the paper indicating its amount. But their complaint is that they are to be made first indor-sers instead of Turner, who they beli'eve-was to have been such. Let usexamine the grounds of their belief, and the benefit which would have resulted to them, had that belief been realised. Bradford did not inform them that Turner was to be the payee, and consequently the first indorser; and with neither Ragland or Turner did they have an interview. They concluded from the circumstance of Turner’s name appearing on the paper when they lent theirs, that he was to be the first indorser, and from the further reason that he had first indorsed the last renewed note; and this conclusion was superinduced, though on some of the previous notes, they may have been first indorsers. If Turner had been made the payee of the note, the facts shew that it would have been void as to himfapd that a recovery could not be coerced at law. Hence the appellants could have derived no advantage from the making and in-dorsement of the note agreeably to their expectation.

Let it be remarked that the liability of the appellants is founded rather upon the law merchant, than upon the principles of the common law proper, and that that law will Kot entertain such a defence as the one set tip against a mer-Cintile security, when in the [lands of a bona fide holder for a valuable consideration. Usury and forgery are knowlcdgcd grounds of defence as against all persons, but neither of these are pretended by the appellants to exist. It is then obvious that Ragland is entitled, to recover the appellants, unless he had contributed to their delusion, and that Turner as his assignee, is entitled in equity have execution of the judgment.

The limited powers of Atwood, as the copartner of Brahan, cannot render void his indorsement as to Brahan, unless their limitation, or the fact that he lent the names of the appellants without consideration was known to Rag-land, in either of which instances Ragland would have been chargeable with A fraud on Brahan, which is not pretended.

Many other topics have been discussed by the counsel in this cause, which we forbear to notice, either because they are unimportant to a decision upon the merits, Or are: not presented for an examination by the record.

The decree must be affirmed with costs; and such is the opinion of Judoss Chssshaw-, White and myself.

a Page 31.

b 1 Starkie 185.

c 4 Jh. & S. 479.

a 2 Littell’s Rep. 176.

b 7 Johns. 361" court="N.Y. Sup. Ct." date_filed="1811-02-15" href="https://app.midpage.ai/document/brown-v-mott-5472752?utm_source=webapp" opinion_id="5472752">7 John. 361.

c randolph'sRep. 553.

d 14 Ves. 160.

e 4 John. Ch. Rep. 334.

a 14. Ves.164.

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Concurrence Opinion

By JUDGE SAFFOLD.

Being unable to concur in 1he opinion of the majority of the Court., it will suffice to express my views on the main feature of the controversy, it being the one on which I dissent. It is in relation to the effect of the indorsement on the note in question, under the circumstances attending its execution.

The material facts on this point from the several bills, answers, exhibits and proofs appear to be, that previous to December, 1819, Bradford by original applications and the renewal of his debts, had procured several notes to be discounted in Bank and otherwise, with Simon Turner, one of the defendants, and these complainants as his securities-in the form of indorsers. After much negotiation in this way between Bradford and Ragland, with Turner, Rose and these complainants as sureties or indorsers, and chiefly or entirely for the accommodation of Bradford; a note was executed for about $2500 by Bradford in favor of Turner, having thereon indorsed the names of said Turner as first, these complainants second, and Rose third indorser; After the maturity of This note, the debt was paid except the sum of $1616 84, which, and, the interest thereon, is the debt now in contest, but in a new and modified form.

For the security of this residue, and to obtain further'1 time upon it, a blank for ai note was presented to Atwood,-. 0n.e of the complainants, for-indorsement.. It had at the-time the amount 84) marked in figures on the left corner, and Turner’s name written on the other side, in* the usual and proper position-of first indorser. On the-, presentation of the papen,-and: at the request of Bradford, Atwood signed the name of Braban-& Atwood, who were partners in trade, using this- title- below tfee name of Turner as second indorsers:, and: delivered it to Bradford. The latter of his own accord, for aught appearing-to- the> contrary, filled up the face- of the note; making it payable-to the complainants, and delivered it to- Ragland, who after-having it in Bank- for a time, put it ib suit against the com-,, plainants, as first indorsers, his counsel: having so filled the-indorsement as to place the complainants in the-attitude of first indorsers and Turner as second'.

The complainants attempted defence to the suit against, them in the Circuit Court, and being unsuccessful there, removed it into the Supreme Court, where perhaps on the-principle that whether first or second indorsers, they were alike responsible to a subsequent indorser, the judgment was affirmed. During this litigation, suit was also brought against Turner as indorser, a recovery had, and the judgr ment satisfied by himself before the affirmance of the judgment against the complainants. Ragland, by attorney,, after obtaining satisfaction out of Turner, sued out execution on the judgment against the complainants, and indorsed thereon that it was for Turner’s benefit, on the ground that he was second, and complainants first indorsers.

With a view to relief in Chancery against the judgment and execution thus obtained, and pressed against the complainants, they filed several bills in the nature of original, supplemental and amended bills, and a bill of review, embracing in their claims to relief, various other matters which are unimportant to the consideration of the question of liability between the indorsers themselves. They however obtained an injunction of the judgment against them, by means of which, and this writ of error, the collection of the money from them remains suspended. Re - specting the regularity of the complainants multiform proceedings in Chancery, it is only necessary to remark, that I cannot regard the original bill filed by Brahan alone, and the decree thereon, as a bar to relief subsequently sought by himself and partner; not only the parties, but the ¡grounds of relief are different, and what is more material, rise main grievance, the indorsement on'the execution, assigning the interest to Turner, and the ¡pressure of it lias subsequently arisen. Turner, who seeks indemnity'and remuneration as second indorser,'by'means of the assigned ■execution, does not appear at any time to bave denied, but that the note in question., and several prior notes for similar objects, and having the «ames of these complainants as iindorsers, contained also indorsements in his name. Nor does he appear in any form or manner to have denied the genuineness of his signatures to this or the preceding notes, until six or seven years after tlieir execution. ■ He remained profoundly silent for nearly the same lapse of time, after it was mutually known to him and the complainants, that the notes bore his signature, and that the latter were deeply interested in its genuineness and his responsibility; his silence was cautiously maintained until after Bradford had fled, the country. Moreover, at an early period after the execution of the note, it having been drawn payable only twenty days after its date, when sued as indorser, he simply pleaded non-assumpsit, and suffered judgment to be rendered against him, without presuming to deny his indorsement. It is true the record evidence of this recovery is-not in the transcript, but it was, as appears from the written opinion of the Circuit Court, offered as evidence there, and rejected as being matter inter alios acia. The complainants’ bill however charges the recovery to have been suffered in the manner stated, and Turner’s answer admits it in general terms. Therefore if the facts be material, and I think they are,, they must be assumed as true, or a certiorari should issue to bring up the record as a part of the evidence. There is not the slightest evidence or even averment, that the complainants ever consented to become first -indorsers to this note, or ever admitted themselves to be such. On the contrary, it manifestly appears that -Atwood, who signed the name of the firm, believed at the time, that be was binding them as second indorsers only; and that this was a reasonable and natural conclusion, from seeing the name of Turner previously indorsed, and from the prior transactions of a similar nature, between the same parties, and to which Turner had made no objection.

It has not escaped me, that Turner, by his answer to the complainants’ bill, denies generally that he knew any thing, of the previous notes mentioned as haying borne his signature'as indorser, or that he ever indorsed them, or the in contest, or that he authorized any one to indorse them for him, or that they were made with his knowledge or consent; or that he afterwards recognised them as valid indorsements. But it must be observed' that this answer was filed in October, 1827, and is ihe first intimation we have of any denial from him of the genuineness of his signatures, when the note in controversy fell due in December, 1819, and the suit thereon against him was instituted shortly thereafter. In aid of Turner’s answer, it is admitted that he had furnished sufficient other proof, that the indorsement on the note is not in his hand writing.

It is equally true, asan abstract proposition, that neither the appearance of a forged indorsement on the note, or any delusive expectations formed from the belief of its genuineness by another, at the time of giving his indorsement, can create any liability on the person whose name is thus indorsed, or affect t,he rights of a subsequent in-dorsee for a valuable consideration, and without notice of the fraud. Let it also be admitted that the judgment or verdict obtained by Ragland against Turner, is inadmissible as evidence in a suit between the latter and these complainants. Yet it by no means follows that any waiver by Turner of his defence against the indorsement, or any recognition either expressed or implied of his responsibility, whether in the defence of a Suit against him or otherwise, does not bind him. Nor dan I admit that the record shewing the nature of the suit against him and his plea, is not admissible evidence to shew his admission or recognition of his indorsement. Suppose instead of the plea of non-assumpsit, he had confessed judgment according to the note and indorsement, it would have been no less matter inter alios acta, yet doubtles the complainants would have been entitled to shew such admission of his liability as indorser, and that by the record. It fully appears from the complainants’ bill and Turner’s answer, and as it is understood by the record of the recovery against him by Ragland, thatTurnerin thatsuit declined availing himself of the only legal defence that could have been made, on the ground of the alleged forgery of his name, as either second or first indorser, and that then he had all Ike evidence of the fact, that he has had at any time since. If the indorsement was a forgery, and lie had plenary evidence of the fact, his defence would have been no less available against Ragland than these complainants. And as the responsibility of the latter, depended ultimately on the validity of Turner’s indorsement, together with solvency of Bradford, if the indorsement was spurious, it was important that they should have had the earliest notice of it, that they might have sought redress against Bradford. Who can say that with such notice, they would not have secured themselves? How is Turner’s mysterious silence, relative to the alleged forgery to be accounted for? Did he fear that a denial of his indorsement at the proper time, or at any time during the seven years, would elicit proof that he had lent the use of his name to his friend, and that it had been so used to his prejudice? Was he unwilling to deny his indorsement, lest it should subject some one to the peril of forgery? Or did he seek to favor the complainants decision, and promise himself the gratification of suffering a recovery against himself, that he might prosecute recourse against the complainants who he knew, or had the best reasons to believe were only accommodation indorsers? In any view of the subject, it was an extraordinary and highly criminal silence. I conceive the circumstances to amount to a full recognition and adoption of his indorsement, sufficient to estop him in relation to all persons, from a subsequent denial of the indorsement.

Then I must regard Turner as an indorser; and admitting that in equity, a subsequent indorsee for a valuable consideration, who has made satisfaction to his indorser, may have the benefit of cession of a judgment, obtained by the latter against a prior indorser; admitting also that the same may be done in the case of accommodation in-dorsers, where there is no agreement, express or implied to the contrary; yeti view this case as one essentially different from either. That these were accommodation in-dorsers is sufficiently evident. All the circumstances constituting Turner’s admission, recognition or adoption of his indorsement, apply equally to the peculiarities of the case; to the note with his indorsement in the position of first indorser, and doubtless with a knowledge that the in-dorsement in his name had been first written. But Turner relies, among other things, on thé fact that Bradford filled up the note, which had remained blank, till after the indorsement had been made, with the names of the complainants, instead of himself, as payee; whereby it became necessary, to secure the benefit of both indorsements, that they should be filled up as though the first had been made indorser to be the from them to him, and that Ragland’s attorney acted ác-Ocordingly. Prom these circumstances it cannot be inferred that the complainants ever consented to incur a sepa-i-ate liability as between the indorsers, or to be made first The exact reverse of these facts is fully shewn situation of the parties. The light most favorable to Turner, in which I think the subject can be viewed, is to regard him and the complainants as having strongly implied their consent to stand as co-sureties for Bradford, and that as between them the principle of contribution applies. I admit the true doctrine to be as held in 2 Littel^a and 4 Randolph,^b that in ordinary cases of indorsers, even for accommodation, where nothing is expressed or implied to the contrary, there is no right of contribution. That in signing as indorsers, they are presumed to know the law governing commercial transactions, and to have embarked their respective liabilities, subject-only to the common law responsibility in relation to in-dorsers, and which is so far different from that of co-sureties, that the former are held “to have only bound themselves severally in succession, so that each may be a supplemental surety in respect to another.” In support of this doctrine, the Supreme Court of Virginia and ISIew York, and most of the American tribunals which have adopted it, refer for authority to the case of Craythorne v. Swinburne.^c All the authorities however concur in the admission, that if from the particular circumstances of the transaction, an agreement among the indorsers can be inferred, that each should bear a. part of the loss if any, as joint sureties, then they are to be regarded as such, and contribution must be allowed, at least in equity. The case referred to of Craythorne v. Swinburne, which has been often treated as a leading one, strongly inculcates this doctrine, and maintains that the intrinsic equity of the case, as between the indorsers should ever be regarded. The facts of that case could not involve much difficulty, yet the Chancellor went at length into the doctrine of liability between co-sureties, and of contribution, and I think admitted the principle for which I contend, and which would award contribution in a case like the present.

He admitted the position that “equality is equity in respect to sureties.” In the case of Campbell v. Mesier & Demstan,^d it is ruled that the doctrine of contribution is not so much founded on contract as on the principles of equity and justice. That where the interest is common, the burden also should bo common, and that this principle, that equality of right requires equality of burden, has a more extensive and effectual operation in a court of equity than in a court of law.

Hence I am of opinion, the decree should award con-tribulion between Turner and the complainants.

Decree affirmed.

Judge Taylor, not sifting.

a Page 174.

b Page 562.

c 14 Vesey 160.

d 4 John. Ch. Rep. 334.