author: By the Court. Slosson, J.

text:
    Thomas Price v. John McClave, and others.
    In an action upon a promissory note, which is set forth in the complaint the word “ signed” prefixed to the signature of the maker, is a sufficient averment that . the note was made by him, and the word "indorsed” prefixed to the signature of the payee is a sufficient averment of bis indorsement. Where the action is against an individual as the maker of the note, and it is signed in the name of a partnership, and there is no averment that it was so signed by the defendant, the complaint is bad upon demurrur, as not showing upon its face an individual liability.
    As against an indorser, an averment in the complaint that the note was "protested for non-payment," is not equivalent to an averment that the note was presented to the maker and payment refused; since a protest 1003-, in fact, have been made, and 3’et the note not have been presented for pa3-ment to the maker. The complaint, therefore, as not showing the facts neeessaiy to be proved to charge an indorser, is bad upon demurrer.
    Judgment for defendants affirmed.
    (Before Hoffman and Slosson, J.J.)
    January 8;
    March 21, 1857.
    Appeal by plaintiff from a judgment at Special Term sustaining a demurrer to the complaint.

      The pleadings and the grounds of demurrer are set forth sufficiently in the opinion of the court.

      D. J. Walden, for the plaintiff.

      W. Silliman, for the defendants.
   By the Court. Slosson, J.

This is an appeal from a judgment at Special Term sustaining a demurrer to the complaint.

The complaint alleges that the “ defendants are indebted to the plaintiff in a promissory note written in the words and figures following.” A copy of the note here follows. It is subscribed, “John McClave & Co.,” with the prefix “signed,” and is made payable to the order of Henry McClave, and the names Henry McClave and James Cain are subjoined as part of the copy of the instrument, with the prefix “ indorsed.” The complaint then alleges, “that before the note became due and payable, it was passed to the plaintiff for a good and valuable consideration; that he is the holder and owner of the note, and only person interested therein ; that the whole amount thereof is justly due and owing to him from the defendants; and that when the note became due, it was protested for non-payment, of which the defendants, McClave and Cain had due notice,” and therefore demands judgment.

The Judge, at Special Term, held, that the complaint was bad in not averring that the note was made by McClave, and made by him in the name of McClave & Co.; also, in not averring that the note had been indorsed by the defendants, McClave and Cain, and also in not averring that it had been duly presented to the maker for payment, and payment refused; and relied for his judgment on the cases of Lord v. Cheeseborough, (4 Sand. 696,) and Alder v. Bloomingdale, (1 Duer, 601.)

In the first of these cases there was an allegation that the note was “ indorsed,” but none that it was indorsed and delivered to the plaintiff, or that the plaintiff was the holder or owner of the note.

In Griswold v. Laverty, (12 Legal Ob. 316,) this court decided that an allegation that a note was indorsed, coupled with an allegation of actual possession by the plaintiff before the maturity of the note, was equivalent to an allegation of an indorsement to the plaintiff.

In the present case there is no allegation of an indorsement, unless the prefix “indorsed,” may be considered as an averment of the fact, either by itself or in connection with the words “written” or “passed,” underscored in the complaint. It is true that a promissory note, as to the indorser, may not strictly be an instrument for the payment of money only within the meaning of section 162, his engagement being a conditional one, (Alder v. Bloomingdale, supra,) and that the names of the indorsers in the copy of the note in this complaint, may not, as respects them, be the copy of any instrument within the meaning of that section, but it does not follow, that the word “indorsed,” has, therefore, no meaniqg in the complaint. The word is certainly no part of the note, nor is it thus written as a part of it. In fair interpretation, however, it can only mean, that the instrument of which the copy is given, was indorsed by the payee and the other indorser Cain.

In The Bank of Geneva v. Gulich, (8 Howard, Pr. R. 51,) the court seemed to admit that the word “signed” prefixed to the name of the makers, and the abbreviation “ ind’d,” to that of the indorsers might be regarded as allegations of the making and indorsing of the note. If, however, the word indorsed” would not alone amount to this, though we think it does, it may, without any violation of the sense pf the pleading, be well coupled with the word “passed,” which follows almost immediately after, and read together, the two can hardly fail to be understood as an allegation or an intended allegation of the transfer of the note to the plaintiff by indorsement.

This, in connection with the averment, that the plaintiff is the holder and owner of the note, is sufficient, so far as this question is concerned, to make the pleading a good one within the case of Lord v. Cheeseborough, and to establish that the title to the note is in the plaintiff.

Then as to the want of an averment, that the note was made by McOlave, and in the name of John McOlave & Co., the word “signed” prefixed to the name of the makers must certainly have as much significance as the word “indorsed” prefixed to the names of the indorsers.

In the case of Andrews v. The Astor Bank, (2 Duer, 629,) the defendants were sought to be charged as acceptors of a bill of exchange. As there could be no doubt that the instrument, as respected the acceptor, was one for the payment of money only, within § 162 of the Code, the pleader seemed, in framing his complaint, to have studied how literally he could come within the very words of the statute, and accordingly all he averred was, that he was the holder and owner of the bill, a copy of which he set out ; that no part of it had been paid, and that the whole account was due to him from the defendant. The bill was addressed “To John Lloyd, Esq., President of the Astor Bank,” and was accepted in the name of “John Lloyd, president,” and it was made a ground of demurrer that there was no allegation that the bank accepted, or that Lloyd was its president, or had authority to accept, or did accept, as its president, and that, therefore, the complaint did not state facts sufficient to constitute a cause of action; but the court (at Special Term) held, that “ any ordinary man of common understanding, holding, or being offered, such a bill, would read it as being a bill drawn on the Astor Bank, and accepted by the bank, by its president,” and decided that the complaint contained all that was required by § 162 of the Code. As the contract of the maker of a promissory note is equally with that of an acceptor of a bill of exchange, one for the payment of money absolutely, the allegation of the making of the note, in the present case, must be held as well made as was that of the acceptance of the bill in the Astor Bank case; indeed, in the latter, there was no averment of an acceptance at all, except as furnished by the copy of the instrument itself; and I am at a loss to perceive why this complaint would not, as respects the maker, have been by parity of reason, good without the prefix “ signed,” or the word “ written,” or any other word indicating the making of the note.

I am not aware that the decision in that case has ever been appealed from, and am not disposed to question its correctness. Within the principle of this decision, also, I think the identity of the persons named as maker and indorsers of the note with the defendants to the action, sufficiently established in the complaint. The note being signed “ John McClave & Co.,” is that such a variance on the face of the note, as to deprive it of the character of the individual note of McClave in which character it is declared upon? Should it have been alleged that it was signed by Mc-Ciave in the name of McCiave & Co. ? We think' it should. The words “ & Co.,” indicate a firm. John McCiave, the defendant, may have been a member of that firm, and yet never have made the note, nor have had any knowledge of its existence. It may have been made by some other member of the firm, for his private purposes, and passed to the plaintiff under circumstances of notice, or otherwise, which would wholly relieve the defendants from all liability on the note. It will not do to call the words “ & Co.” a mere adjunct or surplussage. If the pleader relies on the copy of the note as sufficient, under § 162, then it shows the note to have been made by a partnership, and not by McCiave individually. Some averment was, therefore, necessary to obviate this objection. It is not an answer to say that it is an objection which should have been taken advantage of by special demurrer. The objection is not strictly for defect of parties, but that the complaint does not, on its face, show an individual liability on the part of McCiave.

The only remaining question is, whether. the allegation that when the note became due it was “ protested for non-payment,” is sufficient, without the allegation that it was presented to the maker and payment refused ?

In Coddington v. Davis (1 Coms. 186) the Court of Appeals held that the word “protest,” in its popular sense, includes all the steps necessary to fix the indorser, to wit, demand of payment, refusal, and notice. The question, however, arose on the construction of a mercantile letter, by an indorser of a note addressed to the holders, and agreeing to “ waive the necessity of the protest of the note.”

So in Cook v. Litchfield, (5 Sanf. 330,) the court held, that the word “protested” in a notice of protest, necessarily implied a demand of the maker and refusal.

We do not suppose these cases authoritative on a question of pleading, yet the Supreme Court in the Fourth District, in the case of Woodbury v. Sachrider, (2 Abbott’s Pr. Reports, 402,) held, on the strength of Coddington v. Davis, that the words “ duly protested at maturity,” in a complaint, were sufficient to admit evidence-of demand, neglect, or refusal to pay, and notice of non-payment.

Unless the words “ protested for non-payment,” are to have the effect of an allegation of presentment to the maker, and refusal on his part to pay the note, essential conditions to the indorsers’ liability, then this complaint is clearly insufficient as to the indorser, whose contract is not of the class intended by § 162, as distinctly decided by this court in Alder v. Bloomingdale, above cited.

I am not disposed to give to these words so broad a construction as that given to them in Woodbury v. Sachrider, nor to favor so loose and indefinite a style of pleading. To allege that a note was protested for non-payment, is entirely consistent with an entire omission to present the note at all, since the notary may have noted his protest falsely. The essential fact to charge the indorser, is presentment to and refusal of payment by the maker; a protest assumes these conditions to have been complied with, and yet, in fact, the protest may be made while presentment never was.

It is no answer to say that a notarial protest of a promissory note is not necessary, and therefore the pleader must have intended, not the formal certificate as evidence of protest, but the acts which the protest implies; since, if the word is capable of two meanings, one, as defining the act of the notary, and the other, the steps necessary to charge the indorser, it is evident that of itself alone, it does not distinctly determine its own meaning; and, therefore, cannot, with propriety, be said to state any fact which goes to constitute a part of the cause of the action. (Ante, 514.)

The judgment at Special Term should be affirmed as to both demurrers, the plaintiff to be at liberty to amend his complaint within twenty days after notice of entry of this decision, on payment of costs of demurrer,

       See Price v. McClave (5 Duer, 570); Prindle v Caruthers (15 N. Y. R. 425)


source: Caselaw Access Project

author: By the Court. Oakley, Ch. J.

license: Public Domain

text:
    Brown v. Davis.
    Prior and up to the 23d of September 1,1850, the firm of Evans, Davis and Lownd, owed plaintiff $14,069.38, for moneys advanced to it, and for which he held their notes. That firm dissolved that day, and Evans and Davis formed a new firm with Dodge, under the name of Davis, Evans and Dodge. Plaintiff gave up the notes of the old firm and took two new notes of $7500 each, dated September 23, 1850, payable “ on demand after date,” one of which was signed by Evans, and the other by Dav.is, of the firm of Evans, Davis and Lownd.
    Plaintiff signed the partnership agreement of Davis, Evans and Dodge; that stated, that the amonnt of $15,000 due to the plaintiff from the old firm “is to remain in the new concern during the continuance of the copartnership,” he receiving interest at the rate of seven per cent, per annum. Under same date, Davis, Evans and Dodge and the plaintiff, signed a paper stating they had received from plaintiff $15,000, “ being the amount contributed by him as special partner to the concern of Davis, Evans and Dodge.” Davis, Evans and plaintiff, signed another paper of the same date, stating that they had formed a limited partnership under the name of Davis, Evans and Dodge, the nature of its business, the residence of the partners, that plaintiff is the special partner, and as such has contributed $15,000 in cash, and that Davis, Evans and Dodge, were the general partners. Enough was not done to create a limited partnership. The new firm failed and was dissolved within a year, and before this suit was brought, owing some $30,000 more than it could pay. This suit is brought on the note for $7500 given by Davis to plaintiff when the new firm was formed. On that note, and also on the other note for a like sum, given by Evans, there is indorsed: “ This note is given as security to Levi Brown, (the plaintiff,) for one half of the $15,000 advanced to Davis, Evans and Dodge. Egbert Davis.”

      Held, 1. The plaintiff never discharged Davis and Evans from liability for the amount the firm of Davis, Evans and Lownd owed him, but took the note of each for half of that sum.
    2. Though that sum was continued, in the assets which represented it, as a loan to the film of Davis, Evans and Dodge, it was not placed, as between themselves, at the risk of its business, h'or lent on an agreement to look solely to the new firm for payment.
    3. The note in suit became due, on demand of payment, made after the new firm had actually dissolved, and plaintiff could sue on the note without having first sued and exhausted his remedies by action against the new firm.
    4. The evidence given is insufficient to establish an intent of Davis, Evans and Dodge, and of the plaintiff, by the arrangement in respect to a limited partnership, to defraud the public, or that they knew their acts were invalid, or that they were done with an improper motive.
    6. The plaintiff is entitled to a judgment on the verdict. Permitting such a recovery will not withdraw from the legal or equitable process of the courts any property which should be appropriated to the creditors of the new firm, though held tó be composed of Davis, Evans and Dodge, and the plaintiff, as general partners. A judgment by such creditors against the four, and appropriate ulterior proceedings, will reach all the individual property of each, as well as all the effects of the new firm.
    (Before Oakley, Ch. J., Bosworth and Hoffman, J.J.)
    March 28, 1857.
    This action was tried before Chief-Justice Oaldey, and a jury, in November, 1856. A verdict was ordered for the plaintiff for the amount claimed, subject to the opinion of the court, whether the action could be maintained upon the facts which the evidence given established, and the case was directed at the trial to be heard in the first instance at the General Term. The plaintiff moves for judgment on the verdict. The case presented to the General Term was in the words following, to wit:
    “ This was an action on the following promissory note:
    “$7,500. “New York, September 23d, 1850.
    “ On demand, after date, I promise to pay to the order of Levi Brown seven thousand five hundred dollars. Value received.
    “Robert Davis.”
    Endorsed.—“ This note is given as security to Levi Brown for one half of the fifteen thousand dollars advanced to Davis, Evans & Dodge. “ Robert Davis.”
    The complaint was in the usual form.
    The answer was as follows:
    “ Robert Davis, the defendant in this action, for answer to the complaint of Levi Brown, plaintiff, says: That he admits making the promissory note in the said complaint mentioned; that he denies the said promissory note became due and payable; that he denies that the plaintiff is the lawful owner and holder of the said promissory note; that he denies that he is indebted unto the plaintiff on the said promissory note in the sum of seven thousand five hundred dollars, with interest thereon from the 23d day of September, 1850; and, for a further defence, this defendant says, that the said promissory note was made and delivered to the plaintiff without any consideration whatever having been paid for the same, and was given to the plaintiff with another promissory note, as a memorandum, for the purpose of showing that the plaintiff had paid into the firm of Davis, Evans & Dodge, of which said firm the plaintiff and defendant were copartners, his, the plaintiff’s share of capital in trade, agreed to be put into the said firm by the plaintiff, and for no other purpose whatever.
    “ Wherefore, the defendant demands that the said complaint be dismissed, and that he may recover of the plaintiff his costs of suit. “L. D. Fredericks, att’y for def’t.”
    The cause came on for trial on the 25th day of November, 1856, before Chief-Justice Oakley, and a jury.
    The plaintiff read in evidence the note declared on, and the indorsement thereon, and rested his case.
    The defendant called several witnesses, from whose evidence, and that of a witness of the plaintiff, called in reply, the following facts appeared:
    That for about two years previous to the 23d of September, 1850, a partnership had existed between Francis B. Evans, the defendant Davis, and Charles Lownd, in the business of the manufacture and sale of files, in the city of New York. To this firm the plaintiff had advanced money from time to time by way of loan, so that on the said 23d of September, 1850, they were indebted to him for such advances in the sum of $14,069.38, for which he held their notes. On that day the firm was dissolved by mutual consent, and a new partnership was formed to continue the business, from and after the dissolution, by the defendant, said Evans, and David S. Dodge, under the style of Davis, Evans & Dodge. The agreement of partnership was in writing, bearing date the 23d of September, 1850, and with the receipts and stipulations indorsed thereon, was given in evidence, and is hereto annexed, marked “A.” To this agreement the plaintiff was* also a party, and appended his signature, as thereby appears. And, with the assent of the plaintiff, an advertisement of the formation of the partnership was published by the firm, which is given in evidence, and is hereto annexed, marked “ B.” It further appeared that, in pursuance of the articles of agreement, the plaintiff, on the same day, and at the time of their execution, transferred to the new firm the loan he had made to the old one, by executing his receipt (indorsed on the articles) to the old firm for the amount due him, $14,069.38, and taking the receipts of the new firm (also indorsed on the articles) for $15,000. It did not distinctly appear how the difference was made up, but no part of the $15,000 was paid or advanced by the plaintiff, or received by the new firm, in cash or otherwise, than as above stated. The plaintiff was thereupon credited on the books of the new firm with the sum of $15,000 cash.

      And the plaintiff thereupon received from the defendant the note in suit, and from said Evans another note for the same amount, and of the same tenor at the time of the execution of said articles, both given for the advance of $15,000 made by the plaintiff, as above stated, and for the purpose of securing its repayment. And at the same time gave up the notes which he held against the old firm.
    It further appeared that the old firm, at the time of its dissolution, though still conducting business, was in reality insolvent. That the new firm failed for a large amount, about one year after-wards, being insolvent, to the extent of $30,000. And that no part of plaintiff’s advance, or the interest thereon, or of either of said notes, had ever been repaid him, except three small items of cash charged him in the books of the firm, amounting to about $100.
    Upon these facts the Chief-Justice directed a verdict for the plaintiff for the amount due on the note and interest, subject to the opinion of the court upon the question whether the action could be maintained upon the foregoing facts, and directed the case to be heard in the first instance at the General Term, with leave to either party to turn the case into a bill of exceptions.
    And the jury accordingly returned a verdict for the plaintiff for $10,740.38, subject to the opinion of the court on the questions reserved.
    EXHIBIT A.
    This memorandum of agreements made this twenty-third day of September, 1850, by and between Robert Davis and Francis B. Evans of the first part, and David S. Dodge of the second part, witnesseth:
    That the said party of the first part, having been engaged in the business of manufacturing and vending files, under the name of the American File Works, and being the sole and exclusive owners of a certain file machine, invented by John Crum, which is styled “ An invention for the cutting of files,” entered by caveat in the patent office of the United States, at Washington city, by said John Crum, on or about June 11th, 1850, and the same having been assigned subsequently by said John Crum to the snid Robert Davis and Francis B. Evans, propose to the party of the second part, for the consideration hereinafter named, to form a copartnership for the purpose of continuing and extending the said business of manufacturing and vending files of every kind and description, and more especially for the greater facilities afforded to said copartnership for the sole and exclusive use of said patent file machine in the United States, for carrying on extensively said manufactures in all the various branches; and to sell one-third interest in the general business as now and heretofore carried on, as per exhibit in their books this day as a basis; it being understood and agreed that the amount of fifteen thousand dollars, which appears by said exhibit to be due to Levi Brown, is to remain in the new concern, during the continuance of the copartnership, by the consent of said Levi Brown, which is annexed to these articles of agreement; he, said Levi Brown, receiving interest for the same at the rate of seven per cent, per annum.
    The said parties of the first part also agree to sell to the party of the second part, an undivided third part of said “invention for the cutting of files,” or patent right, and assign the same for record, on the books of the patent office at Washington; it being understood that such patents as may be obtained in foreign countries shall inure to the exclusive benefit of the party of the first part, but not to be used in any way to the injury of the American business.
    The patent in the United States to be used only for the joint benefit of the copartnership.
    The party of the second part agrees to furnish capital to the new concern as follows:
    Ten thousand dollars at the signing and sealing of these articles of agreement. Five thousand dollars during the year one thou sand eight hundred and fifty. Five thousand dollars during the year one thousand eight hundred and fifty-one. Also, for the further accommodation of the new concern, to furnish the name of William E. Dodge as confidential indorser, as may be necessary from time to time, to the amount of twenty thousand dollars. And, also, for the undivided one-third interest in said patent, the party of the second part agrees to pay the party of the first part for their exclusive benefit, ten thousand dollars at the signing and sealing of this agreement. And, also, twenty-five per cent, of his net profits annually, till said sum so deducted shall amount to the like sum of ten thousand dollars. It is understood that any difference in amount of capital furnished by either shall be adjusted by interest. It is also understood, that any' agreement made between the party of the first part and John Crum, shall inure to the new concern, and any improvements which may he made to the present patent machine, or to any other part of the manufacture of files, shall also pass to their benefit, it being understood, that if any new patents are taken out, they shall be also owned by the new concern in the same proportion as the original for the United States; but if any foreign patents are obtained, they shall be at the expense, and for the benefit of the party of the first part, they also paying the just proportion of any expense incurred in perfecting the same.
    This copartnership shall continue for the term of ten years, unless sooner dissolved by death or mutual consent. In case of the death of either partner, his capital shall remain in "the business, and his estate shall receive twenty per cent, of the profits, unless his representatives shall prefer to sell his interest. The business shall be conducted under the name of Davis, Evans & Dodge. Neither partner shall use the name of the firm to the benefit of himself or others, without the foreknowledge and consent of each of the other partners. Neither partner shall draw from the concern more than sufficient for his own or his family expenses without the consent of the other partners. It is also mutually agreed between the parties, that in case any difficulty shall arise during the prosecution of the business, or in the final settlement of the same, Francis B. Evans and David S. Dodge, shall each choose a competent and disinterested person, and the persons so chosen shall choose a third to whom all matters shall be submitted, and their decision shall be final, and forever binding on the parties.
    To the faithful performance of these obligations we hereunto affix our names and seals, this day and year above written.
    Robert Davis, [l. s.]
    Francis B. Evans, [l. s.]
    Witness: Nath’l Davis, Jr. David S. Dodge, [l. s.]
    Levi Brown. [l. s.]
    Received, New York, September 23d, 1850, from Evans, Davis & Co., by the hands of Robert Davis and Francis B. Evans, fourteen thousand sixty-nine dollars and thirty-eight cents, in full.
    Levi Brown.
    We have this day received the sum of fifteen thousand dollars from Levi Brown, being the amount contributed by him as a special partner to the said concern of Davis, Evans & Dodge.
    New York, September 23d, 1850. Robert Davis,
    Francis B. Evans,
    David S. Dodge,
    Levi Brown.
    The true meaning of the foregoing agreement is this, viz.: That Levi Brown, the special partner, is to receive at the rate of seven per cent, semi-annually, on the $15,000 advanced by him, and of the net profits of the business, Robert Davis, Francis B. Evans, and David S. Dodge are each to receive an equal amount, or thirty-three and one-third per cent. Robert Davis,
    Francis B. Evans,
    David S. Dodge,
    Levi Brown.
    exhibit B.
    The copartnership heretofore existing under the firm of Evans, Davis & Co., is this day dissolved by mutual consent. Francis B. Evans and Robert Davis are alone authorized to use the name of the firm in liquidation. Francis B. Evans,
    Dated September 23d, 1850. Robert Davis,
    Charles Lownd.

      Limited Partnership.—The undersigned have, pursuant to the provisions of the Revised Statutes of the State of New York, formed a limited partnership, under the name or firm of Davis, Evans & Dodge; that the general nature of the business to be transacted is the buying, selling, and manufacturing of files, under the name of the American File Works. Levi Brown, whose place of residence is in the city of Brooklyn, is the special partner, and Robert Davis, whose place of residence is in the city of New York, Francis B. Evans, whose place of residence is in the city of Brooklyn, and David S. Dodge, whose place of residence is in the city of New York, are general partners; and that the said Levi Brown has contributed, as such special partner, to the common stock fifteen thousand dollars in cash. The said partnership is to commence on the twenty-third day of September, 1850, and will terminate on the twenty-third day of September, 1860. Dated this twenty-third day of September, one thousand eight hundred and' fifty, at the city of New York. Robert Davis,
    Francis B. Evans,
    Levi Brown.
    New York, September 23d, 1850.
    The subscribers will continue the manufacture of files at the American File Works, at Ramapo, and are making extensive preparations to introduce their American Patent Files.
    Davis, Evans & Dodge,
    No. 212 Pearl-street, New York.

      M J. Phelps, for plaintiff,
    made and argued the following points:
    I. The consideration of the note in suit, was one-half the loan of $15,000 made by the plaintiff to the defendant and his partners. This sum was advanced in cash to the former firm, and their notes taken therefor, and was transferred to the new firm by agreement, the first notes being taken up, and this note, with another of the same tenor, given in their stead. This fully appears from the case, and is also shown by the indorsement on the note, which is conclusive between the parties as to the consideration.
    H. The contract between the parties did not make the plaintiff a partner, either special or general, in the firm of Davis, Evans & Dodge. He had no interest in the profits or loss. His advance to the firm was a mere loan, to be repaid with legal interest.
    ^ III. The notes given the plaintiff for this loan, by Evans and the defendant, in place of those he held against the old firm, were, therefore, in any view, perfectly valid in their inception, and founded upon a sufficient consideration.
    PV". The subsequent advertisement by the parties, under a mistake as to the legal effect of the transaction, that the plaintiff had become a special partner, did not invalidate these notes. Whether it operated to make the plaintiff liable to creditors as a general partner, or whether a judgment upon this note would be permitted, in equity, to take precedence of a creditor’s judgment, who had trusted the creditors on the faith of the advertisement, are very different questions. The case shows no such illegal intent as would preclude legal remedies, and, among themselves, the rights "of the parties must depend upon the real contract between them. Under that contract, the validity of the notes is unquestionable. Certainly the mere publication of a mistaken advertisement, which did no harm so far as appears, and was not intended to do any, could not divest the plaintiff of his right to recover for money previously and honestly loaned.
    "V". Even if the plaintiff could be regarded as a special partner, he would still be entitled to recover in this action. 1. Because no defence growing out of this fact is set up in the answer. The defence disclosed by the pleadings is entirely different. In no case can a defendant plead one defence, and rely at the trial upon another; and least of all where the defence is technical and without merit. 2. If the facts were properly pleaded, they amount to no defence, as between the parties, whatever might be their effect between the firm and its creditors. A note given by a general to a special partner, for the capital contributed by the latter, might be void as to creditors, or might make the partnership a general one; but, if given in good faith, would be valid between the parties. (Beers v. Reynolds, 12 Barb. 288; affirmed, 1 Kernan, 97.) No principle of law forbids such a contract; nor is it in conflict with any provision of the partnership act. On the contrary, the statute evidently contemplates agreements of this kind, and carefully provides against creditors being prejudiced thereby in the event of insolvency. (Revised Statutes, p. 767, § 23.) This clause has been held to apply to the claim of the special partner against his insolvent firm for his capital, (Bower v. Argall, 24 Wendell, 496.)

      A. R. Ryett and L. R. Frederick, for defendant,
    made and argued the following points:—
    I. The note, as alleged, was given as security to the plaintiff, for one half of $15,000 claimed by him to have been advanced to Davis, Evans & Dodge. The plaintiff proved that this was the consideration of the note. The proof showed that no such money was advanced by Brown to Davis, Evans & Dodge by the plaintiff, but the alleged advance of $15,000 was by receipting a debt due to the plaintiff from another firm, of which the defendant was a member, and taking a receipt from Davis, Evans & Dodge for $15,000; the money, in neither receipt, having been paid or received. The firm of Davis, Evans & Co. were insolvent at the time, and the plaintiff was credited on the books of the new firm with $15,000, whereas he had not advanced any money whatever to them. There was, therefore, no consideration for the note.
    II. The note was an illegal contract, and against public policy, and its consideration was also illegal. The plaintiff published to the world that he had contributed this $15,000 as capital stock to the firm of Davis, Evans & Dodge, without contributing one cent. And in the partnership articles he stipulated to receive seven per cent, on this fictitious advance or capital, whichever it was—and took this note as security, from Davis, for money never advanced, and which he so published to the world was capital, thus drawing away from the funds of the new firm $1050 a year, instead of aiding them by $15,000 capital. Indeed the new firm instead of having $15,000 capital added by plaintiff was, by the arrangement, $15,000 in debt to the plaintiff, making a difference to the creditors of $30,000, and making the new firm assume a debt to the plaintiff, without any consideration, to the diminution of its actual assets to that extent, instead of an increase of them, $15,000. The firm failed for $30,000, and it was no wonder. This arrangement was a fraud upon the Act, a fraud upon the public, and illegal, (1 R. S. 764, and §§ 1 to 24,) if not actually a misdemeanor, and no action can be sustained upon any contract founded on such an arrangement. (Perkins v. Savage, 15 Wend. 412; Mackie v. Cairns, 5 Cowen, 547; Graves v. Delaplaine, 14 Johns. R. 146; Burt v. Place, 6 Cowen, 43; Payne v. Eden, 3 Cai. R. 213; Prince v. Lee, 4 Johns. 419; Nellis v. Clark, 4 Hill, 424; Mell v. Young, 23 Wend. 315; Crooker v. Crane, 21 Wend. 211; Bell v. Quin, 2 Sand. 146.)
    ITT. The $15,000 was in fact advanced as capital, and at the risk of the business, and the true construction of the indorsement on the note is, that the note is to secure payment to him of his capital, if not lost in the business.
    IY. The action is not brought on the old loan to Davis, Evans & Co., nor on the old notes to them, which were given up; whether the old loan or the old notes were paid, or whether an action might be sustained on the old loan or old notes against the old firm is not a question here. The suit is on a note of Davis. If the suit be brought on the old loan or old notes, it cannot be against Davis alone, but against'all the members of the old firm.
    Y. This note and indorsement was a contract of suretyship. No action would have lain against the firm of Davis, Evans & Dodge, for the recovery of this $15,000, indeed it cannot be pretended such an action could lie. How, then, can an action be maintained upon a collateral contract, when no action can be maintained upon the principal contract ? (Leavitt v. Palmer, 3 Comst. 19.)
    YI. The judgment should be for the defendant.
   By the Court. Oakley, Ch. J.

This action is brought to recover the amount of a promissory note made by the defendant, dated the 23d of September, 1850, by which he promised to pay on demand, after date, to the order of the plaintiff $7500, value received.

For two years prior to the date of the note, Evans, Davis and Lownd had been partners. That firm, the name of which was Evans, Davis & Co., owed the plaintiff $14,069.38, for money ad-' vanced to it; that firm dissolved, and the plaintiff surrendered its notes, and took new notes, one of them being the note.in question, and another note, in all respects like it, made by Evans.

Upon these facts alone, the only change of liability is this:— The plaintiff relinquished the liability of the firm and the notes made by it, and took for the same claim the individual- notes of two members of that firm, viz.: the note of each for half of the amount of the whole claim. Before these ’notes were given, Davis, as one of the firm of Evans, Davis & Co., was liable for the whole debt. That liability has been converted, as to him, into his individual liability for $7500.

Ip there any thing in the other facts of the case 'which impairs this liability ?

On the date of this note, Davis & Evans, as parties of the first part, entered into a written agreement with David S. Dodge, as party of the second part, to form a partnership between themselves, under the name of Davis, Evans & Dodge, to continue for the term of ten years. The agreement thus signed, makes them the only parties constituting the firm, and the only persons who were to participate in its profits. The plaintiff, instead of compelling the old firm to pay the money he had lent it, and thus diminish its assets accordingly, agreed to continue the loan, treating it as one made to the new firm, and he was made a creditor of the new firm on its books, to a corresponding amount, Brown agreed that this sum might remain in the new firm “ during the continuance of the said copartnership,” “ he receiving interest for the same at the rate of seven per cent, per annum.” The new firm failed within a year after it was formed, and thenceforth ceased to exist, and has paid no part of the principal nor any interest.

Dodge was to contribute, as capital, $20,000, in three instalments. The theory of the agreement seems to be, that this sum was treated as equivalent to a third interest in the business as it stood, because, without declaring in terms of what the capital of Evans & Davis should• consist, it declares that “it is understood that any difference in the amount of capital furnished by either shall be adjusted by interest.”

There is no agreement on the part of Brown to look exclusively to the new firm, as his debtor for the $15,000. He continued the liability of Dax is & Evans, by taking the note of each for $7500. That liability he now seeks to enforce. The indorsement on the back of the note, in connection with the written papers signed by the plaintiff, might be a defence to a suit on the note, if the firm of Evans, Davis & Dodge was continuing. But that firm ceased to exist long before this suit was brought, and was owing some $30,000 more than it could pay. Brown now seeks to collect his note. Looking at its terms only, it is due; looking at the agreement, as to the time the new firm should have the $15,000, and the fact that such firm has ceased to exist, it is due.

A party is never bound to prosecute the principal debtor, as a condition precedent to his right to sue the surety, unless such suit is required by the terms of his contract, or necessarily implied from the terms used. (Morris v. Wadsworth, 17 Wend. 103.)

It is quite clear, at all events, as between the plaintiff and de fendant, that this $15,000 was not to be at the risk of the success of the new firm. By the terms of the partnership agreement, to'" which the plaintiff assented by signing it, the $15,000 “ was to remain in the new concern during- the continuance of the partnership,” and the defendant gave this note to secure to the plaintiff actual payment of one half of that sum. If he put it at risk, as between himself and the firm, he did so only on the terms of having the note of the defendant for half of the amount, and of Evans for the other half. The plaintiff was to have only interest and no profits. The three members of the firm were to have all the profits, and consequently were to bear all the losses.

We think the note is upheld by sufficient consideration, and was due when the action was brought. There is no suggestion that it was not due, if the claim as between the plaintiff and the firm was due. The claim of the plaintiff against the firm was due when the firm ceased to exist as such.

But it is alleged that the note was an illegal contract, and against public policy, and, therefore, no recovery upon it should be permitted. We do not think the facts proved justify the conclusion of any actual fraudulent intent, on the part of the plaintiff. He had, in fact, advanced to the old firm about $15,000. It was represented by enough of the assets of the new firm to pay it. It was to be continued in the new firm. There is not the slightest reason to suppose that either he or Mr. Dodge supposed there was any ground to doubt the success of the new firm. There is none to suppose that Evans & Davis did, unless it is to be inferred from the fact that the firm failed within a year after it was formed, and that an actual subsequent investigation disclosed that the old firm was insolvent at the time the new one was formed.

Brown was probably gratified with the idea of being advertised. as a special partner, who had put in $15,000 cash; but there is nothing to j ustify the idea, that it was any part of his purpose to contribute to a credit, with the expectation or belief that it would be the cause of loss to those who might deal with the new firm.

Giving effect to the contract of the parties, as between themselves, will not necessarily tend, -of itself, to produce a fraud on the public. It will neither diminish the means which they otherwise might reach, nor impair the remedies to which they otherwise might resort, to collect their demands.

All that was done and advertised did not create a limited partnership, under the statute. Brown may be liable, as a general partner, to all who have dealt with the firm. (1 R. S. 765, § 8.)

But holding Evans & Davis individually liable upon their notes to the plaintiff, will not withdraw from the legal or equitable process of the courts any property that could be reached by a judgment against the general partners, so called, and subsequent proceedings founded upon it. A judgment against the firm, and appropriate ulterior proceedings, will reach all the individual property of each, as well as all the effects of the firm.

This case is unlike an action by one of several creditors, upon a note given to him by a debtor, for an amount beyond his proportion of the amount which each creditor of such debtor had agreed to take, of his claim or demand, and discharges the debtor, in cases where the composition agreement is made upon the representation that all have agreed to come in on equal terms. To allow a recovery in such a case, would operate as a fraud on those who released their own claims for a stipulated percentage on the faith that the creditor, who secretly stipulated for payment of the whole of his claim, had also released his claim on receiving the like percentage.

If the assets of the firm, and the individual property of each, are sufficient to satisfy the creditors of the firm, they will obtain payment. If insufficient, several judgments in favor of one of the firm against two of its members will not diminish their means or chances of obtaining payment.

If the fact had been found by the jury, upon sufficient evidence, or if we ought to hold, as a matter of law, upon the facts found, that it was the design of the parties, by this arrangement, to defraud the public, the court might very properly refuse to enforce any claim of either against the other, founded on such an arrangement. But the plaintiff wras not to have, in any event, more than a debt justly his due, and which, for aught that appears, the partners in the old firm were able to pay. This debt, and interest upon it, were all the advantages for which he stipulated. He had no motive, and there is nothing to justify the belief, that he was a party to an actual intent to defraud the public.

The certificate published contains false statements, and as a necessary consequence, the plaintiff may be liable for engagements of the firm, and yet he may not have contemplated, and probably did not contemplate, such a contingency, as that the firm should be without means sufficient to pay its debts, as at all likely to occur.

We think the plaintiff should have judgment on the verdict.


author: By the Court. Bosworth, J.

text:
    Earle v. Crane and Taylor.
    A sale and delivery of property by M. to C. and T., and an agreement by the latter to pay, as part of its price, to E. a sum named, on account of M.’s indebtedness to E„ is a valid contract, on which E. can sue in his own name, and recover the sum so agreed to be paid to him.
    If, after the consummation of such a sale, by a delivery and acceptance-of the property under it, M. executes a formal bill of sale of the property to C. and T. for a pecuniary consideration expressed in the bill of sale, and signs a paper stating that he consents to sell such property for his indebtedness to 0. and T., the fact of the subsequent execution of such papers does not render it incompetent for E. to establish by parol the actual agreement under which the property was sold, delivered, and accepted.
    The execution of a bill of sale, expressing a pecuniary consideration, and a delivery of it with the property, present no obstacle to showing that such consideration was not wholly pecuniary, but consisted in fact of a special agreement in which E. is interested, and its non-performance to E.’s damage.
    Whether, if the executory contract to sell and deliver had been rescinded before it was obligatory on either party to it, and it should appear that the delivery of the goods, and the execution and delivery of the bill of sale, and of the receipt, were cotemporaneous acts, they would preclude the parties to them, or the plaintiff, from- showing the agreement to have been such as the complaint states, quere.

    (Before Bosworth and Hoffman, J.J.)
    March 28, 1858.
    This action was tried before Mr. Justice Woodruff and a jury, in February, 1856. The complaint was dismissed and the decision excepted to. The question of law arising on that exception, and those arising on exceptions taken during the trial, were directed by the court to be heard, in the first instance, at the General Term.
    The complaint states, that plaintiff and defendants are merchants in the city of New York, the defendants comprising'the firm of R. E. Crane & Co.

      On and before the 1st of September, 1852, Nathan Meyer owed the plaintiff §1131.63, and owning ready-made clothing and unmanufactured articles, he agreed with the defendants, about that time, to sell and deliver the stock to them, at prices to be thereafter agreed upon, and they agreed to pay therefor as follows, to wit:
    1. To pay to plaintiff §531.63 of the §1131.63.
    2. To pay themselves $1263.37, the amount due to them from Meyer.
    3. To account to Meyer for the balance. Plaintiff was notified of, and acceded to this arrangement, of which the defendants had notice.
    That about the 9th of October, 1852, the stock of goods was delivered to the defendants in pursuance of this contract, at prices agreed upon amounting to §2800. That after satisfying the $1268.37 due to the defendants, and paying to the plaintiff the §531.63, there was a balance of $1000 in defendants’ hands, and Meyer’s claim for that had been assigned to the plaintiff"; that although required to do so, they had not paid that nor the $581.63, and it prayed judgment for §1531.63, with interest from the 9th of October, 1852, besides costs of the action.
    The answer admitted a sale to the defendants by Meyer, on or about the 9th of October, 1852, but denied that it was under any such agreement as the complaint states, and that any such agreement was made. It averred that Meyer, instead of owing the defendants only $1268.37, in fact, owed them $3040.18; that of this $1407.47 was due to Crane, individually, and that certain of the stock was accepted and transferred to him in gross in satisfaction of that debt; that he also owed R. E. Crane & Co. $1632.71, and that certain other goods were transferred by Meyer to them, and by them accepted in gross, in satisfaction therefor, and that in each case a bill of sale was executed and delivered by Meyer. On the trial, the indebtedness of Meyer to the plaintiff, in the sum of $1131.53, was proved by a witness other than Meyer. Meyer was then sworn in behalf of the plaintiff, and testified to the same fact, and that he sold his stock of goods to Crane and Taylor about September, 1852. He said, “ the sale was in writing ; I made out an invoice of said goods and gave the defendants a copy of it.”

      The plaintiff’s counsel requested defendants’ counsel to product it, which he did, and plaintiff’s counsel then read it in evidence.
    It was a formal bill of sale, dated October 9, 1852, from Meyer to Crane and Taylor, for the expressed consideration of §1632.71, and sold and conveyed absolutely the goods described in the schedule annexed to it. The schedule contained a list of goods, which, at the prices affixed to them, amounted in the aggregate to $2814.07. At the end of the schedule was a receipt in these words, viz.:
    “I do hereby agree and consent to sell to Rufus E. Crane & Co. this stock of goods, of which this is the invoice, for my indebtedness to said Rufus E. Crane & Co.” “ N. Meyeb.”
    This receipt or writing had no date. The witness, in relation to this invoice or schedule, further testified as follows:
    “ The goods I have spoken of, which I purchased of Crane & Taylor, the defendants, I returned to them, as I bought them, and they accepted them, and they are not contained in this invoice or bill of parcels.”
    Question by plaintiff’s counsel. “ Was any oral agreement made between the plaintiff, Crane & Taylor, and yourself, as to the sale and transfer of your goods to Crane & Taylor, before any bill was made out, and how the consideration was to be paid, and if so, what was the arrangement?” This question was objected to by the counsel for the defendants, and the objection sustained by the court. To which ruling of the court the plaintiff’s counsel then and there duly excepted.
    “ Did you, after this paper was executed on the 9th day of October, 1852, owe Crane & Taylor any thing?” Objected to by the defendants’ counsel, and then withdrawn by the counsel for the plaintiff.
    “ Before any papers were delivered to Crane & Taylor was any arrangement made by which you sold them your stock of goods and they agreed to pay Mr. Earle any sum of money?” The defendants’ counsel objected to the question,'on the ground, among others, that the arrangement made was in writing. The court sustained the objection. To which ruling of the court the plaintiff’s counsel then and there duly excepted.
    “ You sold to Crane & Taylor your stock in trade?” “Yes.”
    “At what price?” The defendants’ counsel objected to the question. The court sustained the objection. To which ruling of the court the plaintiff’s counsel then and there duly excepted.
    “ Were the goods put at cost, above cost, or below cost?” Similar objection, ruling and exception.
    “ How was the consideration to be paid by Crane & Taylor on that sale?” Similar objection, ruling and exception as above.
    “Were they or were they not sold before the 9th of October, 1852, and delivered on an agreement between the plaintiff and defendants and youi’self, that they (defendants) were to pay the plaintiff" any, and if so what Sum of money ?” Similar objection, ruling and exception as above.
    “ On the 9th of October, 1852, did you owe the firm of Crane & Taylor any thing, and if so what?” Similar objection, ruling and exception as above.

      “ Did you, or did you not, return to Crane & Taylor, and they accept the goods bought by you of them, and rescind the contract of indebtedness to them after the bill of parcels of the 9th of October, 1852, by which all your indebtedness to them was can-celled?” Similar objection, ruling and exception as above.
    “ Does this bill of parcels or invoice contain the goods that you bought of Crane & Taylor, and which you subsequently returned to them?” “No, sir. There is not a single article there I returned to them, and they rescinded the contract.”
    “ Had Crane & Taylor any other indebtedness against you after the 9th of October, 1852, after returning those goods ?” Question objected to by the defendants’ counsel on the ground, among others, that the complaint itself admits an indebtedness at the time of the transfer.
    The plaintiff’s counsel now moved the court to be permitted to amend the complaint by striking out the name of “ Co.” after the word Crane.
    The defendants’ counsel objecting to the motion, the court sustained the objection, and denied the motion to amend.
    The plaintiff’s counsel here introduced and gave in evidence the following transfer from the witness to the plaintiff.
    “ Whereas, Rufus E. Crane & Co., heretofore purchased from me a quantity of merchandise, consisting of ready-made woollen clothing, etc., for the sum of $2,900, or thereabouts; and whereas, the said Crane & Co. did then and there agree to pay for the same in manner following, viz.: First, to pay to John E. Earle, of the city of New "York, $531.63; secondly, to deduct the sum of about $1,400 for their own claim, or debt; and lastly, to pay the remaining balance to me, or my order, and which said balance "would amount to about $968.
    “Now know ye that I, Nathan Meyer, in consideration of one dollar to me, in hand paid by John E. Earle, and for divers other good considerations, do hereby assign and set over to the said Earle the said remaining balance. First, to pay himself the sum of about $600 due to him from N. & M. Meyer, (independent of the sum of $531.63,) and to pay over to me, or my assigns, the residue of said remaining sum, after the payment of the aforesaid sum of money. “N. Meyer, [l. s.]
    “Dated, New York, March 7, 1853.”
    And also another transfer to Rachael Smith, as follows:
    “ In consideration of one dollar to me, in hand paid, and for divers other considerations, I hereby assign and set over to Rachael Smith, of the city of New York, any and every sum of money that shall or may be coming to me from John E. Earle, of the said city, by reason of a certain assignment made and executed to him, by me, on the 7th of March instant, of a claim or demand of mine against Rufus E. Crane & Co:, of the city of New York, more particularly mentioned and described in said referred to assignment. This assignment is intended to embrace only what shall be coming to me after the payment of the amount due said Earle, as provided therein. “ N. Meyer, [l. s.]
    “ Dated, March 8, 1853.”
    The defendants’ counsel thereupon moved the court to dismiss the plaintiffs’ complaint.
    The plaintiff’s counsel opposed the motion, but the court sustained the same, and dismissed the complaint, with leave to the plaintiff to move the court, if so advised, to amend the complaint, and on such amendment being granted, to set aside dismissal: and to the decision of the court, in so dismissing the complaint, the plaintiff’s counsel then and there duly excepted.
    And inasmuch as the said several matters so given in evidence, and the objections, offers, decisions, refusals, and exceptions, on the part of the plaintiff, do not appear by the record of the trial aforesaid, the counsel for the plaintiff did thereupon request his honor, the said Justice, to sign this case upon exceptions, containing the matters aforesaid, according to the statute in such case made and provided, which is accordingly done, the said 20th day of February, 1856.
    It was further ordered, that the exceptions taken be heard, in the first instance, at the General Term.

      Jos. W. Gerard, for plaintiff.

      R. M. Harrington, for defendants.
   By the Court. Bosworth, J.

Proof of such an agreement as is stated in the complaint, and of full execution of it, on the part of Meyer, standing alone, would entitle the plaintiff to recover the $531tm-. The plaintiff could sue on such a promise, in his own name, although not a party to the agreement, by being present and participating in the making of it, and such an agreement is not affected by the statute of frauds. (Barker v. Bucklin, 2 Denio, 45, and cases there cited.)

Notwithstanding that Meyer testified that “the sale was in writing,” and that the papers shown to him were executed by him, and delivered to the defendants, the plaintiff should not, for that cause, have been stopped short in his examination of the witness, and precluded from showing, if he could, that such an agreement was made in.September, 1852, as the complaint states, and the delivery of the goods to, and an acceptance of them by the defendants, pursuant to, and in execution of, such agreement. We think that answers, naturally and fairly responsive to some of the questions put by plaintiff’s counsel, and excluded by the court, might have proved such an agreement and its consummation. We are not at liberty to say, that if the witness had been permitted to answer, he would have failed to give such evidence. We must presume those questions were put with a view to prove the plaintiff’s cause of action; and as responsive answers might have established it, the refusal of the court to allow the witness to answer was erroneous.

If the agreement alleged in the complaint was made, and Meyer delivered, and the defendants accepted the goods in pursuance of it, the plaintiff is-entitled to recover the $531tóv, although subsequent to the delivery and acceptance of the goods Meyer executed the papers, which were produced and exhibited to him on his examination at the trial.

An agreement between Meyer and the defendants, such as the complaint avers was made in September, 1852, would not preclude them, before any thing had been done under it to make it obligatory upon the parties to it, and which would have created a right of action by reason of it, in favor of the plaintiff against the defendants, from, annulling or abandoning the agreement, and making a new one upon such terms as they might think proper.

If it should turn out that they subsequently made-a different agreement, under -which the goods were delivered and accepted, and that it was no part of that agreement that the defendants should pay to the plaintiff the debt which Meyer owed the plaintiff, the plaintiff could not recover in this action.

Even if such agreement was a fraud upon the creditors of Meyer, and was made with intent to defraud them, the plaintiff, as a creditor at large of Meyer, could not assail it in this action. (Reubens v Joel, 3 Kern. 488.)

But the plaintiff may show, if he can, such an agreement as is stated in the complaint, and the delivery by Meyer, and the acceptance by the defendants of the goods, in execution of it, before the bill of sale of the 9th of October, 1852, was executed and delivered. If, after such a delivery and acceptance of the goods, in. execution of such an agreement, that bill of sale, and the receipt 'annexed to the invoice, were executed, it should not affect the plaintiff’s right to recover.

The bill of sale, of itself, and standing alone, would be no obstacle to the reception of parol evidence to prove what price the defendants agreed to pay for the goods, or the manner in which, or the persons to whom, they promised Meyer they would pay it. (Murray v. Smith, 1 Duer, 412. Affirmed as to those points in the Court of Appeals.)

But if there was no agreement concluded before the goods were delivered and accepted, or if one had been made in form, but before any thing had been done to execute.it, by either party to it, it was modified, and all previous conversations or understandings ended by accompanying the delivery of the goods with a delivery of the bill of sale, and the receipt, so called, which is annexed to the invoice, a different question may be presented.

A mere receipt is, undoubtedly, susceptible of explanation by parol evidence, as to the nature or payment of the consideration stated in it, when such proof does not prevent the instrument from operating to pass a title, or to give effect to the transfer as a transfer. But when a receipt also contains clauses of contract, the latter are no more subject to be varied by parol evidence than any other written contract. (Kellogg v. Richards, 14 Wend. 116; Coon v. Knap, 4 Seld. 402; vide Noel v. Murray, 3 Kern. 167.)

The receipt in question imports that Mr. Meyer was indebted to Rufus E. Crane & Co., and agreed and consented to sell the goods, to the invoice of which it is appended, in satisfaction of his indebtedness to them. It does not state, in terms, that they agreed and consented to accept them in satisfaction of such indebtedness, nor that such satisfaction was the whole consideration of such transfer. Their acceptance of the goods, with that paper annexed, may import, and is, undoubtedly, evidence that they accepted them on those terms.

Whether, if they were plaintiffs in an action against Meyer to recover an alleged balance, which the proceeds of the goods were insufficient to pay, or to recover the indebtedness mentioned in the receipt, proof of the delivery of the goods, and that the invoice and this receipt accompanied such delivery, without proving more, would preclude them from showing that they did not accept, nor agree to accept, them in full payment, may be a somewhat different question from any one settled by either of the three cases last cited.

In Kellogg v. Richards and Coon v. Knap, supra, the plaintiff’s receipt, which was produced in bar of the plaintiff’s action, stated in the first case, the receipt of a note made by a third person, “ as a compromise for the full payment,” and in the latter, of a specific sum, “in full for damages done to us by the stage accident,” or, in other words, of the plaintiff’s cause of action. The court held these clauses to be clauses of contract, and not capable of being varied by parol evidence. In the present case, no paper writing, signed by the defendants, was shown which evidenced any agreement on their part. The acceptance of the bill of parcels, with the receipt annexed, is, undoubtedly, evidence against them that they accepted the goods on the terms stated in the receipt. But do those facts alone estop them from showing to the contrary ?

In Noel v. Murray, (1 Duer, 385, and 3 Kern. 167,) the receipt of the plaintiff stated that the note of a third person and a sum of money were “received in full for the above bill,” the amount of which bill that suit was brought to recover. In the latter case, a verdict was taken in this court for the plaintiff, subject to the opinion of the court upon a case containing the whole evidence. This court gave judgment against the defendant; and in the opinion delivered, the question was suggested, but not decided, whether such a receipt ought not to be deemed to conclude the defendant. That action went to the Court of Appeals after the case had been turned into a bill of exceptions, according to which it was submitted to the jury for them to determine, as a question of fact, whether the note was received as actual payment and satisfaction, and they found that it was.

The Court of Appeals do not intimate or suggest the idea that the receipt was conclusive, although they held, on the facts of the case, that there was no valid debt existing against the defendant prior to the day on which the receipt bore date, and that, independent of any thing contained in the receipt, the legal presumption was, that the note was received in payment. Whether the plaintiff is estopped from showing that' the receipt, so called, does not state the actual agreement between Meyer and the defendants, even if it would be conclusive as between the latter, except in an action by one of them against the other, to set it aside for fraud or clear mistake, it is .unnecessary to decide. That question does not now arise, and may not, on another trial.

It is sufficient to say, that the plaintiff is not a party to that paper, nor to the bill of sale of the 9th of October. He does not claim under those papers, nor under any agreement made on the day of their date, or at the time of their delivery.

A written agreement concludes the parties to it, and privies, but not strangers. (Whitbeck v. Whitbeck, 9 Cowen, 263-270.)

Whether the evidence which may be given on another trial will place the plaintiff in the position of a privy to these contracts cannot now be foreseen.

Nor are we, now, at liberty to pass upon the question, whether, if it should appear that the delivery of the goods by Meyer to the defendants was accompanied by the bill of sale and the receipt, both of those parties, as between themselves, would be concluded from showing by parol, that the consideration was different in its nature from, or larger than that named in, either the bill of sale or the receipt ? In the bill of sale it is stated to be $1632TVY lawful money. In the receipt it is stated that Meyer consents and agrees to sell the goods to Rufus E. Crane & Co., for his indebtedness to them.

Construing the two together, it is not an unnatural construction of the receipt, to read it as declaring that such indebtedness is treated by both parties as .money paid to Meyer, to the extent of its amount. Nor would proof, that such indebtedness, in the contemplation and agreement of the parties, consisted, in part, of the sum owing by Meyer to the plaintiffs, and which the defendants had assumed to pay, be necessarily in conflict with the meaning of the terms of the receipt.

In Murray v. Smith, when before the Court of Appeals, Gardiner, J., said, that, prima facie, the consideration was such as the deed stated, and payment of it had been made, as the deed declared. Still it was competent for the plaintiff to prove that it had not been paid; that the sum was greater or less than the deed declared, or that it was not pecuniary, in whole or in part.

That if a special agreement constitutes a part of the consideration, that agreement and a breach of it might be shown, whether it was an agreement to pay money to the plaintiff or to Powers, the mortgagee, or whether it was an agreement to indemnify the plaintiff against half of that incumbrance.

In other words, when proof of the agreement as alleged, will not prevent the bill of sale or instrument of transfer from being effective as such to pass a title, and such agreement, in fact, forms part of the actual consideration, the plaintiff may prove it if he is the party damnified by non-performance of it, and there is nothing in the clause relating to the consideration so conclusive upon the parties as to render such proof inadmissible.

When the facts are fully developed, the court must judge whether they present a case falling within this rule, or one falling within the prohibition against varying or enlarging the terms, or clear legal import of a written contract by parol evidence.

We grant a new trial on the ground that it was competent for the plaintiff to prove, if he could, the contract between Meyer and the defendants set out in the complaint, and the delivery of the goods by Meyer to the defendants, and an acceptance of the goods by the latter pursuant to, and in execution of, that contract.

We think the plaintiff was precluded from giving such evidence by the decision, that the questions put to the witness, Meyer, could not be allowed to be answered by him.

A new trial must be granted, with costs to abide the event.


author: Hoffman, J. Bosworth, J.

text:
    William R. McCready v. John V. Rumsey, President of the Suffolk Bank.
    The plaintiff was an assignee, for value, of a certificate for twenty shares of the capital stock of the defendant’s bank. The certificate was in the name of one Jenkins, and the shares stood in his name upon the books of the bank. The plaintiff demanded a transfer of the shares to himself, and a new certificate in his own name therefor. The president of the association refused to make the transfer, alledging that Jenkins’ original subscription for the shares was unpaid, and the plaintiff brought this action to recover damages for such refusal.

      Held, that the plaintiff, as an assignee, bad no other rights than would have belonged to Jenkins had he not parted with his certifícale, and that by the true construction of section 19 in the general banking act, (1888,) and of the provisions in the bank’s articles of association, he had no right to demand a transfer of the shares without paying to the bank the sum then due from Jenkins thereon.

      Held, therefore, that the refusal of the president to make the transfer demanded was justifiable, and furnished no ground of action to the plaintiff for the recovery of damages.
    Judgment ordered for the defendants, with cost».
    (Before Oakley, Ch. J., Bosworth and Hoffman, J.J.)
    February 24;
    March 28, 1857.
    A verdict was taken, in this case, by consent of the plaintiff, subject to the opinion of the court at General Term, on the questions of law arising in the case, and which were directed to be there argued in the first instance, the court to be at liberty, at the General Term, to direct a verdict to be entered for the defendants. if they deemed that result just, and the plaintiff to be at liberty to except thereto. Either party may turn the case into a bill of exceptions or special verdict. The cause was tried before Bosworth, J., and a jury, in January, 1857, and the following are the material facts proved on the trial:—
    In December, 1852, the plaintiff, for a valuable" consideration, purchased of one Chandor, twenty shares of the capital stock of the Suffolk Bank, a corporation organized under the general banking law of 1838.
    Chandor, at the time of such purchase, executed to him a written assignment of said stock, which he indorsed on the back of the scrip or certificate of the same. The certificate was in the following form:—
    “ (Seal.) “ State of New York.
    “Twenty Shares.
    “Be it known, that E. F. Jenkins, Esquire, is the proprietor of twenty shares of the capital stock of the Suffolk Bank, which is transferable only' on the books of the bank by the said E. E. Jenkins, or his attorney, on the surrender of this certificate.
    “New York, 9th August, 1852.
    “ Wm. E. Arnold, President.
    “Henry E. Cunlip, Cashier,pro tem.”

    This stock had been purchased by Chandor, of E. E. Jenkins, on the 9th day of December, 1852. It then stood on the books of the bank in the' name of said Jenkins,' who, on that day executed an assignment thereof to said Chandor, coupled with a power of attorney in the usual form, authorizing him to transfer the same, etc.
    This assignment and power of attorney was annexed to the scrip or certificate which the bank had issued to the said Jenkins for the said stock on the 9th of August, 1852.
    In February or March, 1853, Chandor went to the bank with Mr. Wright, plaintiff's attorney, and tendered to the president the said certificate, with the assignment, etc., annexed, to be surrendered and cancelled, and both Mr. Wright, on behalf of the plaintiff, and Mr. Chandor demanded that the stock should be transferred to the plaintiff.

      The president refused to permit the stock to be transferred, assigning as a reason, that Jenkins had not paid up to the bank his subscription for the stock.
    Jenkins was the original subscriber for this stock, and had sub-' scribed for one hundred shares, par value $5000, on the 30th of July, 1852, of which this stock was part.
    The by-laws of the bank authorize the bank to sell the shares of any shareholder to pay any debt then due, and provide that no shareholder shall be permitted to transfer his shares while any debt which had become due shall remain unpaid. That every transfer, to be valid, shall be made on the books, and signed by the shareholder or his attorney, duly authorized in writing.
    That no share shall be transferable on which any call for installment of capital, or interest on such installment, shall remain unpaid, and that every transfer shall be made and taken subject to the conditions and stipulations of the by-laws.
    It does not appear that Ghandor or the plaintiff had any actual notice of these provisions.
    Jenkins paid for his subscription by his own notes, which were due and unpaid at the time of the plaintiff’s demand at the bank.
    He afterwards renewed them at the request of the bank, and the bank made him a discount in addition of $2000, which was also included in the renewed notes.
    The renewed notes were not paid.
    Fo question arises as to the value of the stock.

      Mr. Harderibrook, for the plaintiff.

      Mr. Phelps, for the defendants.
   Hoffman, J.

The first and most important question thus arises. The defendants have a valid lien upon the stock in question as against Jenkins, the original subscriber, by reason of the non-payment of the notes given upon his subscription? They had issued to Jenkins a certificate stating “that he was the proprietor of such shares, which are transferable only on the books of the bank, by the said E. F. Jenkins or his attorney, on surrender of this certificate.” This certificate has come to the hands of the present plaintiff, for valuable consideration, by successive transfers. He demands a transfer of the stock on the books of the company. It is refused, because of the lien claimed to exist. Can the assignee of the certificate sustain a claim which Jenkins, the assignor, could not do ?

The lien of the company is thus created:

The defendants were organized as a corporation under the general banking act of 1838. The articles are in evidence, and are very explicit as to the existence and enforcement of the lien.

These were embodied in the certificate recorded and filed pursuant to the sixteenth section of the act. But this court has decided in this case, when previously before it, that the record was constructive notice only of what the statute prescribes must be contained in the certificate. None of the clauses of the articles now referred to are among those specified in the sixteenth section as necessary to be contained in the certificate.

But the nineteenth section of the act provides that the shares shall be deemed personal property, and shall be transferable on the books of the association, in such manner as may be agreed on in the articles of association; and every person becoming a shareholder by such transfer shall, in proportion to his share, succeed to all the rights and liabilities of prior shareholders.

The articles of association, in the present case, prescribe that the association may sell the shares of any debtor stockholder, that no shareholder shall be permitted to transfer his shares or receive a dividend thereon, who shall owe a debt to the association, until it be paid, and that no share shall be transferable on which any call for any installment of capital, or any interest on such installment, shall remain unpaid. And every transfer shall be made and taken expressly subject to all the conditions and stipulations contained in the articles.

Now the question is, whether the general act is not a constructive notice to an assignee of a certificate that it can only give to him the same rights as were possessed by the party in whose favor it was issued? He is to succeed to these rights and liabilities. The transfer is to be made on the books, as may be agreed upon in the articles. The liability for an unpaid subscription is declared in the articles.

Stebbins v. The Phoenix Fire Insurance Company (3 Paige, 350) was cited by the plaintiff’s counsel. Certain stock belonged to Charles Mowatt, and was transferred by him on the books to one James Donaldson, a mere fictitious person, to enable him to be placed on the list of directors. A certificate was issued in the usual form, signed by the president and secretary, stating that Donaldson was the owner of such shares of stock, transferable only on the books of the company. Mowatt appropriated the corporate funds to his own use. He afterwards fouud a person of the name of James Donaldson, and obtained from him an assignment and power of attorney in blank. Being indebted to the Chemical Company, of which the plaintiff was cashier, he filled up the blanks with his name and delivered the certificate and powers to him as security for such debt. The bill was to compel a transfer. The defendants insisted upon their lien.

Vice-Chancellor MeOoun held, 1st, That the lien could not be created by the by-laws, but was created by the statute granting the charter, and by that only. 2d, That lien must exist against a stockholder. 3d, Donaldson, and not Mowatt, was the stockholder. The company had vested the title in him by the certificate and entering his name on the books as the owner. (Kane v. Bloodgood, 7 John. Ch. Rep. 108.) 4th, The equities between Donaldson and Mowatt, if there were any on such a transaction, were of no consequence as related to the plaintiff being a bona fide holder of the certificate. He was not such a holder, although he took the transfer for an antecedent debt. The plaintiff was entitled to a decree for an absolute transfer of the stock.

On appeal, the Chancellor held, 1st, That though the by-law created no lien, yet, as the possession of the certificate did not give a legal title which would only pass by the transfer on the books, a purchaser without such transfer would take, subject to any equitable claim of the company or others upon the stock. The by-law made a transfer necessary to pass the legal title. Without it a bona fide assignee of the certificate would have taken it free of any lien of the company, 2d, The company had a legal and equitable lien upon the stock, under the eighth section of the charter. (That was very explicit in declaring it.) 3d, The transfer to Donaldson was a mere nullity, and the ownership of the stock never passed to Mowatt; but of this the officers were aware. If the plaintiff- had, therefore, actually advanced money on the assignment to them, he was inclined to think they could have prevailed against the company’s lien. But an assignment for securing an antecedent debt conferred no such superior equity. 4th, The lien existed upon all stock standing in the name of a stockholder, or in that of a trustee for him.

The right of the defendants to the lien was declared; the complainant was allowed to redeem the stock.

The intimation of the Chancellor as to the rights of the parties,. had money been advanced, appears to rest upon this, that the directors had connived in issuing a certificate declaring Donaldson to be a holder, against whom they had, in fact, no claim. The present case is free from any such difficulty.

I apprehend that the right of the defendants to this lien in the present case would be sustained upon the doctrine of either the Vice-Chancellor or the Chancellor, provided a lien were constituted by statutory law.

This, then, is the inquiry, I think, and that proposition is not contested, that the articles of association gave the lien as against Jenkins. The stock, so long as it stood in his name, was liable for the demand. The assignee takes, as his successor, and by the statute takes with the same rights and liabilities.

It, has not escaped my notice that the language admits of the construction, that the assignee is to be responsible only for personal liabilities of his assignor, for example, to creditors. It can scarcely be claimed that a personal liability would arise for the unpaid subscription-money. Í But, then, the transferree succeeds to the rights of the transferror. He cannot succeed to greater rights; and rights certainly contemplate the relation with the company as well as with others.

The case of Bates v. The New York Insurance Company, (3 John. Com. 238,) is in point upon this question. By articles of association of the company, no transfer of any share was to be valid or permitted’until all the instalments on the shares were paid. An assignment of a shareholder’s stock had been made to the plaintiff) and notice given on the 20th of January, 1797. It was held, that the company had a right to retain all dividends until the debt of the assignor, actually due at the time of the notice, had been satisfied. The court declined to pass upon the question as to what the defendants’ rights would have been if the note held by the company had not been due.

The New York Insurance Company was incorporated by an act of the 2d of April, 1798, and it recites that Archibald Gracie, and others, had associated as a company, under the same title. I am informed by the present counsel of the company, Mr. Justice Emmet, -that they were associated in 1796, and got their charter in 1798, after the stock had been fully paid up.

The counsel for the defendants insists that the case of The Mechanics' Bank v. The New York and New Haven R. R. Co. (3 Kernan, 600,) is decisive. Undoubtedly, it goes far, if not fully, to establish the position, that transfers of certificates confer nothing beyond the title of the assignor. The rule thus stated is, I think, particularly applicable, and particularly clear, where the company has a valid lien upon the stock for an undoubted demand. At least, it is more apparent to my mind, that where, as in that case, there was, in the judgment of the court below, room to treat the company as debarred from a defence by reason of its acts, through agents presumptively authorized.

I think a judgment in favor of the defendants should be qrdered.

Bosworth, J.

This action is brought against Mr. Rumsey, as president of a bank, organized under the general banking law of 1838.

The 19th section of that act declares that the shares of stock “shall be transferable on the books of the association in such manner as may be agreed on in the articles of association.” (1 R. S., 4th ed., 1147.)

Sections 2 and 3 of article II., and sections 1, 2, 3, and 4 of' article Y. of the articles of association, are valid, and as efficient as if forming parts of a special charter.

As between the bank and Jenkins, the former, by force of the articles of association, to which the latter was a party, had a lien on this stock, as security for the notes given for the stock subscription, and had a right to sell the stock to obtain payment of the notes.

The plaintiff -has not obtained, as yet, a legal title to the stock. To obtain that, a transfer must be made on the books of the association, signed by the shareholder or his duly authorized attorney in writing. Unless by a transfer made in a different manner, the assignee of a certificate can acquire rights and equities against .the corporation superior to those which the assignor had, the defendant may assert its lien upon the stock, as against the plaintiff, precisely as it could have done against Jenkins.

The opinion of the Court of Appeals in The Mechanics' Bank v. The N. Y. & New Haven Railroad Co., (3 Kern. 599 & 623-629,) is explicit in asserting the proposition, that an outside transfer of a certificate will confer upon the assignee, merely, such rights as his assignor possessed. The proposition is argued at great length, and its soundness is so often and directly declared, that we are not at liberty to regard it as an obiter dictum.

Applying that rule to the facts of this case, the complaint should be dismissed, unless the plaintiff elects to have a transfer of the stock upon the books of the company, upon the terms of satisfying the incumbrances which are a lien upon it.

Independent of the decision made in The Mechanics' Bank v. The New York & New Haven Railroad Co., it is not clear that the lien of the defendants could be asserted, evenifitbe conceded that its rights are not weaker than they would have been if the bank was incorporated by a special act containing the provisions found in the articles of association of the present defendants. The plaintiff is a purchaser for value, without notice of the equitable lien of the defendants.

W The Chancellor, in Stebbins v. Phoenix Fire Ins. Co., (3 Paige, 350-362,) intimated the opinion, that “the defendant could not be permitted to enforce that lien against bona fide purchasers of the stock who had no notice of such equitable lien,” but it was unnecessary to the decision of that case, to consider that question. The charter of that company contained a provision in effect like section 4 of article II. of the defendants’ articles of association.

The Chancellor’s dictum is not necessarily opposed to the decision made in The Union Bank v. Laird, (2 Wheaton, 390.) In the latter case, Laird took the transfer as security against a preexisting liability; he was not, therefore, a purchaser for value paid for the certificate, and on the faith thereof.

In Bates v. The New York Ins. Co., (3 J. C. 238,) the decision was put on the ground, that all stock dividends declared before the company was notified of the transfer of the stock, being money in its hands, it might equitably apply upon a debt actually due and owing by the person who held the legal title on the books of the company; but that on the stock being paid for in full by the purchaser, the company could not refuse a transfer, until it was paid the whole sum owing to it by the shareholder having the legal title at the time the transfer was demanded. The purchaser having been compelled to pay the debt owing by such person to the company, in order to obtain a transfer of the stock to himself on the books of the company, he was allowed to recover the money back in action for money had and received.

When there is nothing in the terms of a certificate to indicate that the stock has not been fully paid for, and an outside purchaser of the certificate has no notice that it has not been paid for, it is difficult to perceive why he should be any more affected by a lien created by the articles of association, than by a lien created by a special agreement between the parties for an unpaid note, which has been discounted in the ordinary course of business. (Vide Bank of Utica v. Smalley, 2 Cowen, 770, 778; Gilbert v. Manchester Iron Manufacturing Co., 11 Wend. 627.)

In The Mechanics' Bank v. The New York & New Haven Railroad Co., (3 Kern. 629,) the court said, that before an assignment of a stock certificate could be admitted to confer on the assignee a better title than the assignor had, “it must be shown to have not only all the negotiable qualities of a bill of lading, but others also which that instrument does not possess.”

“It is mainly by assuming for these instruments the possession, in a greater or less degree, of the peculiar qualities of negotiable securities, that the plaintiffs claim to have acquired by transfer better rights than their assignor had; and as that assumption fails, this claim must fall to the ground.”—Id.

“ While it may be the effect of a stock certificate to give to the holder a credit, its terms do not request, invite, or guarantee it.” —Id. 630.

“But to say, that like a letter of credit, ... it contains any assurance or guarantee addressed to the dealer, of the safety of the transaction, is, in my judgment, to confound plain and long-settled distinctions.”—Id. 630, 631.

We think it quite clear, that the Court of Appeals meant to decide, and to be understood as deciding, that an assignee of a certificate could not thereby acquire any rights against the corporation superior to those possessed by the assignor. That he was to be deemed an assignee of a thing in action not negotiable, and as succeeding merely to the rights and equities of the assignors. Applying that rule to this case, the complaint should be dismissed. (See 1 R. S., 4th ed., p. 1147, § 170, and id. 1152, § 196.)

Under the stipulation made at the trial, and contained in the case, judgment should be entered for the defendants.

Oakley, Ch. J., concurred in the result, and -in giving judgment for the defendants, on the grounds stated in the opinion of Bosworth, J.


text:
    The Atlantic Fire and Marine Insurance Co. v. Ethan E. Boies, impleaded with John H. Washburn and Curtis L. North.
    The law presumes that the acceptor of a bill of exchange has funds of the drawer in his hands, and in an action against the acceptor, the burden of disproving the presumption rests upon him. When the presumption is not repelled, the drawer of the bill stands in the same relation to the acceptor as the indorser of a promissory note to the maker. The acceptor is the principal debtor, the drawer his surety merely.
    In such a case, the extension to the drawer of the time of payment does not operate to discharge the acceptor.
    The question whether a negotiable or other security was received by the holder of the bill as a payment, or merely as a collateral, when there is a conflict of evidence, is for the determination of the jury, and their verdict, when it cannot be set aside as contrary to evidence, is conclusive. When a promissory note, received by the holder of the bill as a collateral security, is not that of a third party, but of one already liable on the bill, it cannot be treated as a pledge, and hence the rules of law relative to the disposition of a pledge are not applicable,
    (Before Hoffman, Slosson and Woodruff, J.J.)
    Jan. 19;
    March 21, 1857.
    Case upon a verdict for plaintiff taken subject to the opinion of the court at General Term, upon questions of law. Judgment in the mean time suspended.
    The action was upon a bill of exchange for $6000, against North as the drawer, and Washburn and Boies as the acceptors. Boies answered separately, and set up payment as a defence, and it was against him alone that the cause was tried.

      It was tried before Oakley, Ch. J., and a jury, in November, 1855.
    The following are the material facts established by the evidence upon the trial, and raising the questions of law reserved for the determination of the court at General Term:—
    The plaintiffs are an incorporated company in Providence, Rhode Island, and gave full value for the draft to North, from whom they received it.
    Washburn and Boies were a firm in New York. The acceptance is in the handwriting of Boies. At the same time' Wash-burn and Boies had funds of North, and continued to pay them out until the latter ceased to supply them.
    Whether they were actually in funds at the time of this acceptance does not appear. At the time it was given, nothing was said to the plaintiffs by North about his having funds in the hands of Washburn and Boies. Stevens, the secretary of the company, says, he supposed he would provide money to pay the draft, or he would not have let him have the advance.
    When the draft fell due, it was not paid. The secretary of the plaintiffs, (Stevens,) went to Meriden, where North resided, taking with him the draft, to see North, and arrange it. Boies was there, and they arranged the matter by Boies transferring to Stevens, as collateral security for the debt, the note of North, with his own indorsement for the exact amount of the draft, with interest added for the time the note had to run, which was two months, and as collateral to the note North transferred shares in the .North Avery Sewing Machine Company, at the par value of $6000.
    The plaintiffs never did any thing with this stock, and of course still hold it. The plaintiffs retained possession of the draft. When the note fell due it was not paid, and suit was immediately commenced upon it in the Superior Court. Boies put in an answer to the complaint, denying that his indorsement was for value, denying notice of protest, and claiming that the Avery Sewing Machine Company stock should be applied in extinguishment of the note.
    About a month after the commencement of the suit, it was settled by the plaintiffs with North. The settlement was effected by North transferring to the plaintiffs the acceptance of one Wilbur, not then due, for, deducting interest, $2733.94; the acceptance of one Wilbur, not then due, for, deducting interest, $2785.75 ; the note of E. J. Collins, not then due, for, deducting interest, $685.31.
    Interest and expenses were added to the amount of the $6060 note, and the aggregate was the exact amount of the above two acceptances and note. The $6060 note was then surrendered to North.
    At this settlement neither Boies nor Washburn were present, nor had they any thing to do with it, nor were their names in the new paper.
    Both these acceptances, and the Collins note, were turned over by plaintiffs in payment of losses for which they were liable, but the plaintiffs indorsed the paper.
    The Wilbur acceptance, not being paid, was renewed by the plaintiffs drawing on North for the amount, with interest, at tw;o months, in favor of the party to whom it had been transferred in payment, but was not paid at maturity, and the plaintiffs took it up. The Wilbur acceptance was not paid at maturity, and the plaintiffs also took that up as indorsers. The Collins note was paid at maturity.
    From this it appears that not only the note of $6060 but the two acceptances and the Collins notes were taken as collateral security for the original debt as sworn to by Stevens.
    Since these transactions, it was proved Boies had frequently promised the plaintiffs, in conversation with Stevens, to pay the debt.

      K Seeley, for the plaintiffs,
    moved for judgment upon the verdict.

      J. Sutherland, for the defendant.
    He cited Wilson v. Little (2 Comst. 443); Nourse v. Borne (4 John. Ch. R. 490, and 7 John. Ch. R. 69); Stearns v. Marsh (4 Denio, 227); Dikers v. Alstyne (1 Hill, 497), and some other cases.
    The only question of fact left to the jury was, whether the $6060 note was taken in payment of the original debt, (the one in suit,) and they were instructed, if they found it was not so taken, to give a verdict for the plaintiffs, which they did in the sum of $6056.62.
   By the Court. Slosson, J.

The presumption is that the acceptance in question was made upon funds of the drawer in the hands of Boies & Washburn, it being usual to draw upon funds in hand or their equivalent, and I find nothing in the evidence to disturb this presumption, but, on the contrary, much to support it. These defendants are, therefore, not only primarily liable according to the face of the contract, but are, in fact, the principal debtors as to all the parties. As a general rule, nothing will discharge an acceptor of a bill, but payment or a release.

The note of $6060 was not received in payment, but as collateral merely. The'finding of the jury settles this question.

The securities received in settlement of the suit on this note were also all received as collateral to the principal debt, and with the exception of the Collins note have realized nothing to the plaintiffs. Boies & Washburn have lost nothing by the use made of these collaterals by the plaintiffs. They were received from North, the drawer of the original bill, and who, as respects the other defendants, stands in the position of surety merely. Giving time to the surety does not discharge the principal.

Moreover, the plaintiffs had ultimately to take up these securities, having indorsed them when they used them in payment. It is true the $6060 note was given up to North on the receipt of these latter securities, but this of itself is not conclusive that they were received in payment of the debt. On the contrary, the evi dence of Stevens is explicit and not contradicted, that they were received as collateral merely. It was a substitution of one security for another for the same debt.

But the defendant contends that the note of $6060 was in the nature of a pledge in the hands of the plaintiffs, and that they had no right to give up the note to North except on its payment, and that having done so, without the knowledge or consent of Boies and Washburn, the note is, as respects the latter, to be treated as paid.

The general rule as to pledges, which are always collateral, is, that the creditor cannot sell the property without calling on the debtor to redeem or to pay the debt, and also giving him notice of the time and place of sale, unless in case of a special agreement to the contrary. If the pledge consist of commercial paper, the creditor must hold it until maturity, and collect and apply the proceeds in payment of the debt. (Garush v. James, 12 J. R. 146; Wilson v. Little, 2 Com. 443; Dykers v. Allen, 7 Hill, 497 ; Stearns v. Marsh, 5 Denio, 227; Brown v. Ward, 3 Duer, 660.)

The objection to the theory of this being a pledge is, that the note in question is not that of a third party, but is made by the parties already liable for the original debt, and expressly as a means of extending the time of its payment.

If this note can be regarded as a pledge, so'may every note made by the same parties in renewal of another. We think there is nothing in this idea. Even if it were a pledge, the plaintiffs kept it until maturity, and were then obliged to sue it. They were certainly not bound to pursue the suit.

The Collins’ note having been paid, was allowed by the jury in the verdict. The sewing machine stock is still held by the plaintiffs, but they hold it in trust for the party, North or Boies, from whom they received it, as soon as their debt is paid. They have never made any disposition of it.

Judgment should be for the plaintiffs for the amount of the verdict, with costs.

Judgment accordingly.