84 Mich. 168 | Mich. | 1890
This is a suit in equity to enjoin the defendant the Ypsilanti Savings Bank from enforcing the collection of two promissory notes for $2,500 and $4,000, respectively. They were executed by Samuel Earp and complainant, the latter signing only as surety for Mr. Earp, and were payable to the order R. W. Hemphill, cashier of the defendant bank. Mr. Earp was at the
On April- 19, 1889, the bank held'a note for $6,500, executed by Mr. Earp and Victoria O. Morris, which was then two months past due. This note was discounted for the sole benefit of Mr. Earp. Mrs. Morris, a married woman, was merely a surety, and received no benefit or consideration. When it became due, she declined to renew it. The bank sent Mr. Batchelder, its president, to Ann Arbor, to see Mr. Earp jn regard to the matter. On his return, he directed Mr. Hemphill to send to Mr. Earp two notes, one for ■ $2,500, payable- in 10 days, and one for $4,000, payable in 30 days, which were the notes now in dispute. The notes, dated April 15, were sent, and on April 19 were returned to the bank, signed by Mr. Earp and complainant, and accompanied by the following letter:
“ St. Andrew’s Rectory, Ann Arbor, Mich.,
“April 19, 1889.
“My Dear Friend: I went to see Mrs. M., as Mr. B. requested yesterday afternoon, but found that she had promised her husband during his sickness that she would not sign any more papers for any one. This was occasioned by a loss sustained through another party. She feels that her promise is sacred, and she is so completely crushed anyhow that I could not press the matter any further. I return two notes signed by Miss Henriques, who is just as responsible, and whose funds, perhaps, are in a more available shape. You can retain the other papers as a sort of collateral, Mrs M. having no objection to them as they are, and to her responsibility until they are paid. I hope this will remove your immediate difficulty. I have word this morning that the funds will be on hand within a few days, and all settled. I regret the inconvenience to Mr. B. of coming up here twice. If there is any expense attached to it, please charge it to me. ' Yours very truly,
“S. Earp.”
“As a sort of collateral to the balance of interest that was due on this [the Morris note] and some other little matters that he owed me.”
The instructions in the letter are:
“You can retain the other papers [meaning the Morris note] as a sort of collateral, Mrs. M. [meaning Mrs. Morris] having no objection to them as they are, and to her responsibility until they are paid.”
Mr. Earp was at this time indebted to the bank, aside from the Morris note, to the amount of several hundred dollars. Mr. Hemphill says that he held the Morris note/ expecting to squeeze him on the other matters if he could.
“I told Mr. Hemphill that I came to see if I was involved in any way through Mr. Earp’s transactions. Mr. Hemphill told me that there was a note which I had signed in his favor, but that, since my note had been signed, Miss Henriques had also signed a note, which he held as additional security. * * * Mr. Hemphill told me that he held me jointly responsible with Miss Henriques for the payment of the note.’’
Mr. ■ Hemphill admits informing her that he still held her note as collateral, but says:
<fMrs. Morris is mistaken in the notes that I held. That is all. I told her that I held them according to Dr. Earp’s letter; her note, under his instructions, as collateral security for anything that he owed.’’
The complainant is a maiden lady, upwards of 50 years of age, and possessed of considerable property. She had had considerable experience in loaning' her money, and had received notes, bonds, and mortgages. She had never signed a note before the ones now in suit. Previously to this, Mr. Earp had so secured her confidence that he had borrowed from her at one time $1,000, at another, $250. On the morning of April 19, 1889, being Good Friday, he called at complainant’s home. Her statement of what there took place is as follows:
“He said he had a little matter, a little investment, I think, in Ypsilanti. He would like to ask a favor of me. He said he knew I was a pretty good friend of his. I said I hoped so, and he wished me to sign these papers. He asked me if I would sign a paper. I said, ‘ Yes.’ Then I went up stairs to get pen and ink, and he put the paper on the table, near the end of the room, that stood at the right hand of me, and I commenced to sign the paper, and it was a very uncomfortable position, and I sat down on the sofa, close by the table, with the paper on a book, and he immediately came over in a very quick manner, and seated himself right beside me in a very flurried, quick manner, and I signed the paper. When I had signed that paper, he put another one on the book, with the left part of it turned over, the left corner of it turned over, and his hand around in this fashion [witness shows], and said that there was another one to sign; one was to send away, and the other was to keep. He was sitting at the right of me. He put his hand in this way over the paper.”
The first paper signed was evidently the note for $2,500; for she says she saw upon that the words “twenty-five,”
“ I took the papers to her, and asked her to sign them, and she signed them. I did not tell her what they were. I said I had some papers that I wanted her to sign, and she signed them. I don’t remember that she ever signed any other papers with me. I told her that I had a little persona] matter at Ypsilanti. I cannot swear, or state positively, what I said to her.”
It is unnecessary to detail his testimony; for, in my judgment, his character, as shown by the record, is such as to forbid any confidence in it. He was produced as a witness by the bank, and Mr. Hemphill testifies that the money, obtained by him from the bank, was obtained under false pretenses. The learned circuit judge, who heard the case in open court, and saw the witnesses, says, in his opinion:
“It is incontestable that this maiden lady reposed the fullest confidence in the Rev. Samuel Earp, and, as her rector and spiritual adviser, trusted him most implicitly. To have doubted his honesty, or questioned the rectitude of his intentions, was as foreign to her thoughts as to have denied the sacredness of his high office. To her, he was the embodiment and 'representative of holiness in human conduct. * * * It is clear that, as between the complainant and Mr. Earp, this transaction cannot stand for a moment in a court of equity.”
Mr. Hemphill was acquainted with Mr. Earp, and knew that he was rector of St. Andrew’s Church, at Ann Arbor, the only Episcopal Church in the city. He knew Mrs. Morris, who lived in Ann Arbor, and that she was a married woman. Under his direction, the bank had, for some months, been discounting paper for Mr. Earp with Mrs. Morris as surety, which finally resulted in the $6,500 note, which she declined to renew. He had known complainant for 30 years, and knew that the relation of priest and parishioner, if not communicant,, existed between her and Mr. Earp. Whether or not these circumstances were sufficient to put the defendant upon inquiry, as to the bona fides of the transaction between complainant and Mr. Earp, qucBre. It is not necessary now to pass upon the question.
I concur fully in the opinion of the circuit judge that the transaction between complainant and Mr. Earp was fraudulent. These notes cannot be enforced, except in the hands of an innocent holder. He who has not parted with value is not such a holder. If these notes were received by defendant in payment of the Morris note, then the defendant parted with value; otherwise not. If $6,500 was paid by them upon the Morris note, then that note was worthless pro tanto, and could not be used by the defendant for any purpose whatever, except to the
The decree is affirmed, with the costs of both courts.