Evans v. Wells & Spring

22 Wend. 324 | Court for the Trial of Impeachments and Correction of Errors | 1839

After advisement, the following opinions were delivered :

By the Chancellor.

It was conceded upon the trial that the plaintiffs were the bona fide holders of the note in question, for a valuable consideration ; having received the same from Hill, the payee, in the due course of business, in payment for gpods delivered to him at the same time. Therefore it was no defence whatever to the suit, that Hill had received the note for a special purpose, or that one of the partners had lent the credit of the firm without the knowledge and consent of his copartners, as there was nothing in the nature of the transaction to apprize the plaintiffs that it was not a note given by the defendants to Hill, for a copartnership debt. It cannot be denied that the judge at the trial gave to the defendants the utmost latitude of proving the payment of any money to the plaintiffs, or to their agents, or any land or other thing as a credit or payment, either by Hill or by any other person ; and that he only meant to exclude the proof offered as legal evidence of a release, or as a good accord and satisfaction of the whole debt. The decision, too, was made in terms which it was impossible for the counsel for the defendants to misunderstand. It is evident, therefore, that the defendants were unwilling to have a share of the $9000 applied on this note: either because they wished to retain a right to proceed in the name of Hill against Granniss & Meade, upon the supposition that they had rendered themselves personally liable under their agreement of the ] 2th of December, 1835; or, which is more probable, that they were conscious that no part of the $9000 was received on account of this particular debt due to thejplaintiffs. The only real question for consideration, therefore, is whether the evidence offered was sufficient to establish a technical release of the debt, or an -accord and satisfaction thereof.

As a release, it certainly was not valid, either in form or in substance. I am inclined to think the learned judge who delivered the opinion of the supreme court, is right in supposing that one of two copartners can execute a power under his own seal, authorizing his attorney to release a debt due to the firm. But there was no evidence offered in this case to show that the power of attorney executed by Spring, for himself and his copartner,- was intended to apply to this note ; which, at the time of the execution of that power, was not a debt due, owing and payable to the firm, of Samuel S. Hill, and to such debts alone the power applies. There was not even an offer to show that Spring, at the time he gave that power, knew that this was an accommodation note, so that Hill would in equity be bound to pay the note to relieve the drawers although he might not be charged as endorser. Besides : as a power to execute a release under seal, which will discharge a debt without actual satisfaction, must itself be under seal, a release which was not authorized by the power under which it was intended to be executed, cannot be made good by a subsequent parol ratification thereof. Story on Agency, 237, § 242.

Again: The instrument offered in evidence in this case as a release of the debt was not executed in the names of the plaintiffs, or of either of them, or by Granniss & Meade as their agents or attorneys ; nor were the plaintiffs named, or even alluded to in that instrument. Where a contract is not necessary to be in writing to give it validity, the constituent may be bound by an agreement of his agent which is in fact made for his benefit, although he is not named at the time, and sometimes where he is not known to the party with whom his agent contracts; and even where it is necessary for» the contract to be in writing to give it validity, the constituent may be bound by it, if it appear in any part of the instrument that it was intended to be executed by his agent for him, in the character of agent merely. Story on Agency, 143, § 154, and cases there cited. But where it is necessary that the instrument to be executed by an attorney under a power should operate as the deed of the constituent, under seal, to convey an estate or interest, or to release a right, without a full compensation received or secured to be paid, it must not only appear to have been executed by the agent for the principal, but it must be executed in his name, so as to make it his deed, ^(a) Though, if the deed is actually made in the name of the principal and purports upon its face to be his deed, and not the deed of the attorney or agents for the principal merely, it is not necessary that a particular form of words should be used in the execution thereof. Wilkes v. Back, 2 East’s R. 142. Appleton v. Burks, 5 id. 148. A parol agreement for the release of a debt without satisfaction, or upon receiving a part thereof only, from the debtor, is not valid, either at law or in equity, without a release under seal; and parol evidence to show that an instrument which is not a release was intended to be such, is inadmissible. Harrison v. Wilcox, 2 Johns. R. 448. Acker v. Phoenix, 4 Paige’s R. 305. The offer in this case, therefore, to prove by parol that the instrument executed by Granniss & Meade was intended to be something different from what, upon its face, it purported to be, was entirely inadmisssible for the purpose for which it was offered; and the evidence was properly rejected by the judge.

Nor was all or any of the testimony offered in this case sufficient to show an accord and satisfaction of the debt for which the suit was brought. If the deed from Hill to Mather, when taken in connection with the declaration of trust executed at the same time, was not absolutely void, as made upon trusts not authorized by the revised statutes, so as to convey no interest whatever to the trustee, Mather was not bound to convey the land to these plaintiffs or to any other persons for their benefit. Neither had he any right to do so, as it would have been a direct violation of his trust. By the terms of that trust, he was to convey to the holders of this note of Thomas Evans & Sons, the four parcels of land described in the declaration of trust, only in case such holders would receive the lands in full payment. If they should decline taking the same in full payment and discharge, then they were to be offered to Evans & Sons, upon their taking them in full satisfaction of their liability ; and if they declined taking the lands, and releasing Hill from his liability on the note, the trustee was to sell or mortgage such lands for the benefit of the class of creditors named therein, with a further trust as to the surplus, to indemnify Sanford and pay all Hill’s other creditors. Hill, therefore, had no right to change the nature of these trusts afterwards, especially by parol, so as to authorize a transfer to these plaintiffs or to their agents in part payment of this note; or rather as security for the new note, which he was to give for the balance of the debt when this note was given up. The verbal agreement, therefore, which this instrument was probably intended to be evidence of, even if it had not been void, so far as related to the conveyance of the lands under the statute of frauds, was a mere executory agreement amounting to an attempted accord, but no satisfaction of the debt. The law is well settled, that an accord without satisfaction is no bar to the recovery of the debt. Fitch v. Suttton, 5 East’s R. 230. 1 Rolle’s Abr. tit. Accord, pl. 11, 12, 13. 9 Coke’s R. by Thomas & Fraser, 79, b., note E. If the conveyance to Mather was valid, there will probably be no difficulty in the plaintiffs in error getting the lands, or the proceeds thereof for their indemnity, in conformity with the provisions of the trust; and if any part of the $9000 was intended to apply towards this debt, they would have had the full benefit thereof, if they had not declined to avail themselves of the offer which was made to them upon the trial.

1 think, therefore, that the judgment of the court below was not erroneous, and that it should be affirmed.

By Senator Edwards.

The principal question in this case is, was the instrument executed by Granniss Meade, admissible in evidence for the purposes for which it was offered by the defendants’ counsel ? I have no doubt that the power of attorney to Granniss & Meade was sufficient to enable them to make the compromise and to release the note; for they were authorized by it to do and perform every thing proper and necessary in the premises, as fully and amply to all intents and purposes as the parties themselves could do were they personally present, or as they might, if the same required more special authority ; but the question is, did they execute the release in due form, to discharge the note in controversy ? The counsel wished to introduce the release to show they were acting in the capacity of agents, or attorneys, and thereby bound their principals, but the release shows no such thing. It shows they were acting in their individual capacity, and their principals are no where even named in the release. The agent, to bind the principal by deed in writing, must execute the deed in the name of the principal. There is no law better settled, or more uniformly declared in the whole code of jurisprudence than this, and none that has so uniformly received, the sanction and approbation of the various judicial tribunals of this country. Combs’ case, 3 Coke, 76, pt. 9, is the first case upon this point, and has been quoted with approbation by almost every judicial tribunal to which this subject has since been presented. In that case it was resolved by the court, “ That where any one has an authority as attorney to do any act, he ought to do it in his name who gives the authority ; for he appoints the attorney to be in his place, and to represent his person, and, therefore, the attorney cannot do it in his own name, nor as his proper act, but in the name and as the act of him who gave the authority.” In Elwood v. Shaw, 16 Mass. R. 46, the court say the authority of Comb’s case is not at all shaken by modern decisions ; all concur in laying it down as an indispensable requisite to give validity to- a deed, executed by an attorney, that it should be made in the name of the principal. In Welsh v. Parish, 1 Hill’s R. 161, the court say, Comb’s case seems to have laid the foundation for the rule which has been followed ever since. See also Stone v. Wood, 7 Cowen, 453; Spencer v. Field, 10 Wendell, 87; Colburn v. Elwood, 4 N. Hamp. R. 102; Harper v. Hampton, 1 Har. & John. 710; Lock v. Alexanders, 1 Hawk’s R. 412; Comyn’s Dig. tit. Attorneys, C. 14; Frontin v. Small, 1 Ld. Raym. 14, 18, Wilkes v. Back, 2 East, 142; Story on Agency, 137; 2 Kent’s Comm. 631, n. c. Numerous other cases and authorities might be referred- to, but it is needless to multiply them in support of a principle of law, so well settled and universally known..

As-the instrument itself, therefore, was not admissible as Ifegal evidence to bind-the principals, ought the parol testimony which-was offerred- to-explain it, to have been received? Th i was a written instrument under seal, a deed, one of the most sacred instruments known to the law! What was the object of the parol testimony ?. It was to show that a deed which did not purport to be executed by Granniss &, Meade as agents,-was. so executed by them ; that a-deed which did not profess to bind their principals, did bind them ; and thereby convert the instrument under seal into a totally different one, and thus contravene one of the most sound and salutary rules of evidence. There is no rule better settled than that which declares that parol evidence is inadmissible to contradict or substantially vary the legal import of a written agreement, and especially one under seal. In the case of Stephens v. Cooper, 1 Johns. Ch. R. 429, Chancellor Kent says: “ This general rule is certainly not to be questioned or disturbed. It ought not to be a subject of discussion.” Stackpole v. Arnold, 11 Mass. R. 28. Kellogg v. Richardson, 14 Wendell, 116. Again: it is said in Comyn’s Dig. tit. Attorneys, C. 14, n. 3, that “ since a bill or note may be concluded by agent, such instruments, when so concluded, if they express to be made for the principal, will bind him; but otherwise not, because no evidence will be admitted to control their purport.” For these reasons it clearly appears to me that the court was right in excluding the parol testimony offered to explain the release, or instrument, executed by Granniss & Meade.

From the view I have taken of this case, as I do not consider Hill discharged by the instrument executed by Granniss & Meade, it is unnecessary to consider the first point raised by the counsel -for the plaintiffs in error; nor is it necessary to consider the third point raised by him under his offer to prove that the note was an accommodation note, lent to Hill without consideration, inasmuch as the note was transferred to bona, fide purchasers for-a valuable consideration.

I am for affirming the judgment of the supreme court.

By Senator Yerplanck.

I think the judge at the trial, and the supreme court on the motion to set aside the verdict, were right in considering the sealed instrument executed by Granniss and Meade, as insufficient in itself, as a release of the debt binding upon those whom they are alleged to have represented as principals. It ivas executed in their own names and without any mention of the plaintiffs below as their principals. The doctrine is well settled that every written contract made by an agent, should, in order to be binding upon the principal, purport on its face to be made by him, and should be executed in his name and not in the name of his agent; this is held most strictly as to all instruments under seal. The decisions carry this rule to a greater length than would now be deemed necessary or expedient. If the question were now within the discretion of the courts, greater latitude would doubtless be allowed, but as the law stands, this strictness as to sealed instruments can only be relieved by legislative interference, as has been done in some of the states of the union.

If from the circumstances of the case this transaction requires for its validity the legal and technical operation of a sealed instrument, so that this release, (supposing it had been made in the name of the presumed principals,) could have been good only under seal, then this rule unquestionably applies in ail its rigor; and it would require the solemnity of a deed to give it efficacy, if the facts were that the undertaking ón the part of the party to be discharged had not been executed, or if it was meant as a release of a larger sum upon payment of a smaller. 20 Johns. R. 78. But it has been urged that the seal and formality of a deed were here mere surplusage, and that rejecting the seal, the instrument was merely a paper in the nature of a receipt, and entitled to be more leniently construed. The courts, whilst they have adhered with little relaxation to the literal rule of the old law, in respect to bonds, conveyances, or other instruments to the legal operation of which the formality of a deed is essential, have given a much more liberal exposition of less formal writings, and more especially to those intended as the evidence of ordinary commercial transactions. “In such cases in furtherance of the public policy of encouraging trade, if it can upon the whole instrument be collected, that the true object and intent are to bind the principal, and not merely the agent, courts of justice will adopt that construction of it, however informally it may be expressed.” I state the rule as it has been deduced by Judge Story, in his Treatise on Agency, ch. 7, § 154, from numerous cases decided within the present century, since the beginning of which this more liberal interpretation has been forced upon courts by the necessities of trade and the gross hardship of the old doctrine when applied to informal and hastily written papers. On examining these authorities it will indeed be found, as the learned commentator says, by no means “ easy to reconcile all the cases in the books on this subject.” Nevertheless, I believe he has stated the true principle to be deduced from them, and I would willing aid in lending the authority of this court to establish so salutary a rule.

Nor should I hesitate to apply the same useful rule of interpretation of sealed instruments, whenever the seal was .not absolutely essential to their legal efficacy, that is to say, whenever that was undertaken to be done by deed, which could as well be done by any written evidence of a simple contract. But the difficulty of the present case is, that allowing this rule otherwise to apply, the stipulation or release is so drawn, that it cannot be inferred, from the instrument alone, that its intent was to compromise on behalf .of the plaintiffs below, and that it was not merely a special undertaking of Granniss and Meade, to arrange the affairs. Nor is this made more clear by comparing the instrument -with the power of attorney, under which they were authorized to compromise with Hill, for it is by no means apparent there, that such a contract as this was within the power granted. It is even possible that other facts might show this to have been an independent contract on the part of these agents. As a release, therefore, obligatory in inself upon the plaintiffs below, I think the instrument invalid. It is binding personally on the agents who signed it, not upon the principals who can be known only from conjecture or circumstantial inference.

It strikes me, however, that there is another and different view to be taken of this case. So far as we can judge from the evidence offered and excluded as well as that admitted, it may have been that there was an actual compromise made by these attornies with Hill, and a stipulation to discharge and return all the notes endorsed and used by him -for his own accommodation, of which the note on which the suit was brought was one. This compromise, whether within the authority given and power confided to the agents or not; whether appearing on the face of it to be made by the principals or not, if afterwards assumed and ratified by the principals, would be good. Such ratification would be proved by accepting from Hill the several proportions of the money paid by him, with knowledge of the stipulation entered into by their agents. Whenever the principal with knowledge of the facts ratifies the acts of his agent, he will be bound as fully by his contract, as if he had originally given him direct authority for that very purpose. The ratification relates back to the very beginning of the transatcion. “ A subsequent sanction,” says Chief Justice Best, " is considered the same thing in effect, as an assent at the time.'” 4 Bing. 722. Now this ratification may be evidenced by acts as well as by words. Thus, if an agent employed to purchase goods at a limited price, exceeds his instructions, and the principal with full knowledge of the facts, receives the merchandize, it is presumed that he intends to ratify the transaction. Story on Agency, <§> 253 and cases cited in note 4. So if an agent sells goods below his limits and send an account to his principal who draws for the amount of sales; this amounts to a ratification of the sale. 4 Mason 296. See also Soames v. Spencer, 1 Dowl. & Ryl. 32. If then the plaintiffs below received their share of payment on their agent’s contract, or compromise, knowing what it was, they affirmed the whole, and made it their own ; for it has been held in repeated decisions ever since the old case of Wilson v. Poulter, 2 Str. 859, that the principals cannot affirm the acts of their agent in part and avoid the remainder. I am therefore of opinion, that it was competent for the defendants below to introduce evidence to prove that the plaintiffs had received their proportion of the monies paid by Hill, with such probable knowledge of the terms on which they were paid, as would ratify the accord made by Granniss and Meade ; that it was next competent for them to show that these terms had been complied with by Hill; and the release, as it is called, would then be good evidence of what these terms were.

I am aware that it can be objected to this view of the ratification of the compromise by the acts of the parties, in receiving partial payments or otherwise, that it is questionable whether a deed can be ratified by any mere acquiescence or act short of a similar deed. But I apply to the present case the distinction already mentioned, and which is pointed out by the high authority I have cited, that the strict rule as to-sealed instruments applies only when the seal and formality of a deed are essential to the legal effect of the writing. When it is not so, the instrument is to be treated as any other written stipulation. But if this should be doubted, there is yet another view which is sanctioned by much and strong authority. The ratification is not of the mere instrument itself, but of the agreement of which the instrument is the evidence. This distinction between the effect of deeds, notes, bonds and other written instruments in themselves, and as evidence of contracts,,is familiar to our law. They may be void in themselves and yet good to prove a loan or a contract. The distinction was originally taken by Lord Mansfield and his associates, in Robinson v. Bland, 2 Burr. 1080, and has since been often adopted in our own courts. Thus it was held in the supreme court and-in this court, in the Utica Insurance Co. v. Kip, 8 Cowen, 25, that certain notes were void as negotiable paper, yet that the loan of which they were evidence was not void. So again, in 4 Wendell, 654, the court say, “ A note, though illegal and incapable of being the foundation of an action, may still be used in evidence. It is void only as a security, but competent evidence under the money counts.” On the same ground, in a late English case, Bayley, J. said, “ if there be a debt independent of the deed, the amount of which is to be ascertained by the deed, the existence of the deed will not prevent the party recovering that debt upon the common money counts.” Here the contract itself is ratified, not the deed as such, though the terms of the contract are ascertained by the instrument under seal.

This view of the law, without contradicting former decisions, appears to me calculated to produce a just and equitable result, not only in the present instance but in many similar cases. There is but one objection to it of much weight, and that, though apparently supported by authority, will, I think, upon examination, prove unsound. It is said by Judge Cowen, “ The legal effect of the instrument was to bind Granniss & Meade personally, and evidence that it was intended to'bind others would violate the rule which forbids the varying of a written instrument by proof aliunde.” The general rule unquestionably is, that “ parol evidence is inadmissible to contradict or substantially vary the legal import of a written agreement.” 1 Johns. Ch. R. 425. Or to use the language of a more recent decision,- “ A written contract, with or without a seal, cannot be contradicted or varied by oral testimony.” This is certainly true, and yet the inference of Judge Cowen does not follow. As respects the parties to-the written contract, it is invariably true that oral testimony shall not be admitted to discharge the liability so incurred, or to vary the terms or conditions of the bargain. All prior negotiations between the parties are presumed, and reasonably so, to be merged in the written stipulations. But such written stipulations do not of necessity exclude parol testimony as to any rights of either party,- growing- out of the same transaction but against a third party. There are many cases arising in every day’s affairs' where- justice and policy as well as judicial authority require that principals should be charged on parol evidence, if the creditor elect so to do, although a contract had been written and signed by an agent so as to make himself personally- liable to the same creditor- and in the same transaction. Thus an agent who exceeds his powers and in that transaction draws a bill of exchange, is liable on his personal undertaking, yet parol testimony is admissible to show that the principal ratified such transaction, and he too becomes liable on the contract. Shiras v. Morris, 8 Cowen, 61. See also Rossiter v. Rossiter, 8 Wendell, 494. Again : an agent, buying without disclosing his principal, and giving a bill of exchange upon which his principal’s name does not appear, is liable himself on his bill, but the principal may still be liable also for the goods bought, if on parol proof the jury are warranted to say that the goods were not sold on the exclusive credit of the agent. 10 Wendell, 271. On the other hand, where the seller of goods has elected to give credit to an agent instead of the person for whom he bought, parol evidence has been allowed to show on whose credit the articles were bought, in the form of a written order from the principals, enumerating the articles and stating the terms of payment This was so held in a very leading case on the law of agency, Paterson v. Gandasequi, 15 East, 62. So also it is held, both in England and here, that if the master of a ship, by a written contract in his own name, contract for repairs, he is of course liable on his written undertaking, and parol proof of ownership will also make the owner liable. The same rule applies to a bottomry bond, to charter parties, and to bills of lading. Abbot on Shipping, part 2, ch. 2, 3. 3 Kent's Comm. 162, 163. In the common case of a charter party, executed by the master of a ship, it is not doubted that his owner is bound by the contract in some form or other; but it is a little doubted that the master may be sued on it as his own deed. Indeed nothing is more common than for a contract to be made by which the agent is personally bound, and which yet is, ex consequenti, binding on the principal also, although not a direct party to the instrument. Story on agency, § 278. In these and numerous other cases, oral proof of interest, of ownership or of ratification, which would not be admitted to explain away the written agreements or negotiable paper of an agent thus binding himself, will yet be admitted to charge some other person with a similar liability. The written instrument is held to merge all former conversations, negotiations and explanations between the parties privy to it, but it should not and does not control the rights of either party against another person responsible on the same account, with whom no written agreement has been directly made. The writing is to such third person a negotiation inter alios, and can only be received as inferential evidence touching his liabilities, not as exclusive of all other testimony. The law will not permit parties to contradict, by external evidence, their own written contract. This is a sound principle of legal policy, but surely it does not follow from this that the written contract between A. and B., which is conclusive as to them, must be of necessity so, as to the proof of any rights or claims of A. against C., merely because they grow out of the same business. Numerous as are the authorities and decisions for the exclusion of parol evidence offered in order to discharge the liability of persons bound by their own written agreement, I have found but one, 11 Mass. R. 27, which extends the doctrine so as to make the written evidence of one man’s liability on a contract, exclusive of all parol testimony of the liability of another on the same matter. This, as I have already shown, is contradicted by many well settled decisions, and I conceive that the equity of the present cause demands that;it should be added to the number.

On the whole of. the matter, my opinion is, that if the defendants below could show by parol proof that the plaintiffs had ratified,.or assumed by their acts or assent, the bargain, of which the release under seal signed by the agents themselves- contained the terms, such proof should have been admitted ; that the release itself should be admitted in evidence of the terms of the compromise so ratified or assumed; and that it was then competent to show the performance of those terms by part payments, making a new note or security, or by conveyance of lands.

As the judge at the trial refused to admit the release in evidence, or. to-allow proof of the payments as made under it for any other purpose than as a credit or partial payment, and regarded the conveyance of the lands as admissible only for the same purpose, I think the judgment of the supreme court sustaining his opinion should- be reversed, and a new trial granted.

After reading the above opinion,. Senator Verplanck added,.in substance as follows :

The opinion just read by me was prepared without anticipating a difficulty as to the effect and validity of the compromise, which has just been stated by the chancellor : it is, that the conveyance of the lands in trust by Hill is a nullity, being to convey to certain creditors in satisfaction of debts ; and in case of their refusal to- accept, then to sell or mortgage for their general benefit—which is not among the trusts enumerated in the revised statutes, as valid. This objection was not taken in argument before us, nor is it noticed in the opinion of the supreme court. I have therefore great reluctance to enter into the discussion of the point, even had I given it greater attention than I have done, as it would, in this indirect way and without argument, perhaps, affect other and greater questions of our yet unsettled law of trusts under the revised statutes.

I can therefore only express my opinion, as at present ad» vised, that the conveyance in trust to sell or mortgage in certain alternatives, does pass a legal estate to the grantee ; that, independently of that estate, the trust to convey in satisfaction of prior debts, though in itself probably void as a trust, is yet good as a special power in trust. It falls within the definition of the statute. “ It is an authority to do some act in relation to lands in the creation of estates, which the owner granting such power might himself lawfully perform.” 1 R. S. 732, § 74. It is special, because te the persons to whom the disposition of the lands under the power is to be made are designated; and according to the 95th <§>, it is aiso'a special power in trust. If so, the instrument is valid and effectual for all the purposes of the compromise, especially 'when the grantee of the power tendered its full and legal execution.

As, however, the consideration of the legal effect and character of the instrument, as well as of the conditions of the compromise and of their actual or tendered performance were excluded by the judge, I think, that independently of the correctness of my view of the legal character of the instrument, a new trial should be granted.

On the question being put, Shall this judgment he reversed ? the members of the court divided as follows ;

In the affirmative: Senators Furman, Hawkins, Hull, Hunt, Huntington, Maynard, Nicholas, Peck, Powers, Skinner, Sterling, Verplanck, Works'—13.

In the negative : The President of the Senate. The Chancellor, and Senators Edwards, H. A. Livingston, Paige, Wager—6.

Whereupon the judgment of the supreme court was reversed, and a venire de novo awarded.

(a) See The Bank of the Metropolis v. Grettseplick, 14 Peters R. 10.