Bank of St. Marys v. Mumford & Tyson

By the Court. Warner, J. delivering the opinion. On the argument of this cause, the counsel for the plaintiff in error, insisted on the following grounds of error, to the decision of the Court below : 1st. Because the Court erred in allowing the defendants to show, by parol evidence, that they were securities only, to the note, there being no evidence on the face of the note that they subscribed their names thereto, as securities. 2d, Because the Court erred in deciding that the notice to the plaintiff, to institute suit on the note, was sufficient. 3d. Because the Court erred in deciding that suit was not commenced within three months from the time of the notice. 4th. Because the Court erred in deciding that a Bank comes within the provisions of the Act of 26th Dec. 1826, and the amendatory Act of Dec. 1831. The other assignments of error, made in the record, are substantially embraced within the foregoing exceptions. We will first consider the second, third and fourth exceptions, made to the judgment of the Court below. [1.] Was the notice to the plaintiff, to institute suit against King, the alleged principal, sufficient ? The objection is, that it was directed to the Cashier of the Bank, and not to its President. We take it to be well established, both in Law and Equity, that notice to an agent, in relation to the business for which he is employed, is notice to the principal. The same rule applies equally to a corporation, as to a natural person. Lawrence vs. Tucker, 7 Green. 195. Bank vs. Whitehead, 10 Watts, 397. The Cashier of a Bank is held out to the world as its general agent, for the management of its notes, and other securities. But in this case, it appears from the record the Bank acted upon the notice ad — 50 — dressed to the Cashier. The notice bears date 19th Sept. 1840. On the 24th Sept. 1840, the Cashier of the Bank of St. Marys addressed the following letter to Thos. B. King, the drawer of the note : “ Dear Sir — I beg herewith to annex an extract from the letter of Mumford & Tyson, dated the 19th inst. in reference to your note, indorsed by them, and discounted at this Bank, by which you will perceive they require the Bank to place it in suit immediately. I am 'directed to say, if it is inconvenient for you to pay it at this time, with another indorser, our Bank will renew for ninety days.” D. L. Clinch testifies — “ While President of the Bank, he recollects a conversation had between the Cashier and himself, relative to a communication received from Messrs. Mumford & Tyson, desiring the Bank to proceed against Mr. King.” The record not only shows notice to the agent of the Bank, but that it was brought to the knowledge of the President, and acted on by the Bank, which was, in our judgment, altogether sufficient evidence of notice to the plaintiff. * [2.] Was the suit against King commenced within three months from the date of the notice 1 The writ and process was made out by the plaintiff’s attorney, and dated 29th October, 1840, returnable to the then next November Term of Glynn Superior Court, which, by law, was held on the 30th day of November, 1840. The process was datedmore than twenty days before the next Term of the Court, to which it was made returnable, but did not reach the Clerk of the Court in time to be placed in the hands of the Sheriff, to be served and returned to the November Term. There is no evidence that the writ and process was ever in the hands of the Clerk of the Court, before the sitting of the Court in November. The writ was afterwards returned to the plaintiff’s attorney, who altered the process, and made it returnable to the next April Term of the Court, without altering the date of the process. The Judiciary Act of 1799, declares that the Clerk shall annex a process to the petition of the plaintiff, which shall be signed by such Clerk. Prince, 420. We understand that it is the practice, in the Eastern Circuit, for the Clerk to sign his name in blank, and for the plaintiff’s attorney to make out and date the process, which will explain the alteration made by the plaintiff’s attorney in this case, without its ever having been filed in the Clerk’s office. The writ and process, in this case, was made out and dated by the plaintiff’s attorney, more than twenty days before the term of the Court to — 51 — which it was made returnable, but was not filed in the Clerk’s Office in time for that Court. The process was then altered by the'plaintiff’s attorney, and made returnable to the next April Term of Glynn Superior Court; and the question is, whether this can be considered as the commencement of a suit, as provided by the Judiciary Act of 1799. That Act contemplates, that all process sued out twenty days before the sitting of the next term of the Court, slall be returnable to the first term of the Court thereafter. The Act provides that, “ If any original civil process shall bo taken cat, within twenty days of the next Court, the same shall be rade returnable to the next Court, to be held after the expiratin of the said twenty days, and not otherwise. And all proces issued, and returned in any other manner, than that hereinbefte directed shall be, and the same is hereby declared to be wulpMd void.” Prince, 421. This process was not taken out loián twenty days of the next Superior Court of Glynn County, wich was held on the 30th day of November, 1840, but was taBn out more than twenty days before that term of the Court; md consequently, could not have been made returnable to the next April Term of the Court; and being taken out and returned, in a manner not authorized by the Statute, it is, in the imperative language of the Act, null and void. [3.] Is a chartered Bank embraced within the provisions of the Act of 1826, and the amendatory Act of 1831? The terms of the Act, in our judgment, are sufficiently broad to embrace artificial as well as natural persons. The Act of 1831 declares, “ That in every case which may hereafter arise, where the security or indorser of any promissory note, or other instrument, after the same has or shall become due, has required or shall hereafter require the holder thereof, to proceed to collect the same, and the said holder has not proceeded or shall not proceed tp do so, within three months after such notice or requisition, the indorser or security shall be no longer liable.” Prince, 471. The Bank of St. Marys being the holder of the paper, is necessarily embraced within the terms of the Act. Upon all the foregoing exceptions, our judgment is unanimous, in affirming the judgment of the Court below. [4.] In regard to the admissibility of the parol evidence, at the trial, to show that the defendants were securities only, to the note, we are not unanimous in our opinions; consequently, I shall — 52 — proceed to give my individual reasons, for affirming the judgment below, upon that ground of error assigned in the record. It is insisted, for the plaintiff in error, that this case comes within the principle of the cases of Stubbs vs. Goodall, and Collins vs. Everett, 4 Ga. R. 106, 266. The rejection of the parol evidence, in both those cases, was based upon the general doctrine of the Law Merchant, wholly independent of our State legislation. But in the view which I take of the questions settlel,in the cases of Stubbs vs. Goodall and Collins vs. Everett, with rfegard to the admissibility of parol evidence, upon the general prhniples of the Law Merchant, they do not stand in my way in this cae. The parol evidence offered in Stubbs vs. Goodall, was for the purpose of showing that a note, not payable on its face toa chartered Bank, was intended by the contracting parties, to b&negotiatcd at a chartered Bank, and thereby discharge the defé.¿ailj; as indorser, for want of demand and notice. The evidence offered, went to change the legal character of the contract, and legal liability of the defendant under it, in its inception — to chaiig his absolute liability on the face of the paper, into a conditions one. In Collins vs. Everett, we ruled, that according to the Lav\ Merchant, Collins was liable, on the paper, as second indorser, and that parol evidence was inadmissible, to alter or change his, legal liability under the contract, as it appeared on the fapgof the paper. In that case, we said — “ The legal import of'this instrument, is to make Collins a second indorser, with secondary liability, according to the Common Law, upon presentment for payment and notice, and with the right of going upon a previous indorser, if any, in the event of his having the note to pay. The effect of the parol testimony, is to change altogether this import, and to make Collins primarily liable, as an original promisor — to lubstitute a new cont7-act, in short. The writing is the evidence of the contract. If that is plain — if from that the meaning of the parties is fairly deducible, it must stand; the law will not make for them a new contract.” In both cases, the parol evidence was Rejected, because it went to alter and change the original character and legal obligation of the contract; in other words, to substitute a new contract. Does the parol evidence offered in this case, to show the defendants were securities, alter or change the original character of the contract, or the obligations of the parties to it ? By the terms of the contract, as it appears on the face of the pa — 53 — per, the defendants are joint and several promisors to the plaintiff. When it is established by the evidence that the defendants are securities, are they not still joint and several promisors with the principal maker, and in all respects liable to the plaintiff as such 1 Being securities for the principal maker, does not, in any manner, alter or change their legal liability or obligation to the pilaintiff, on the original contract, as joint promisors with the principal maker. The parol evidence offered, does not substitute any new contraction the written one, nor alter or change the legal liabilities ofihe contracting parties thereto. The parties are still bound by die contract, as they originally contracted to be bound, and henre, in my judgment, this case is clearly distinguishable from the cases of Stubbs vs. Goodall and Collins vs. Everett. In Alabaaa and New Hampshire, it is held that a maker of a note, who rigns as security, although such fact does not appear on the face of the paper, may show, by extrinsic evidence, that he is security. Grafton Bank vs. Kent, 4 N. H. R. 221. Pollard vs. Stanton, 5 Ala. R. 451. But suppose I am mistaken with regard to the admissibility of the parol evidence, to show that a defenriant is security to a note, upon the general principles of the Law Merchant, as ruled in Stubbs vs. Goodall, and Collins vs. Everett, yet, when I take into consideration our own legislative enactments, on the subject of securities, I can entertain no doubt that the evidence is admissible. The Act of 20th December, 1826, was enacted for the purpose of protecting the securities on bond, note or other contract. The 4th section of the Act provides— “ When any person or persons hath heretofore, or shall hereafter, become bail on recognizance, or security on bond, note or other contract, and shall be sued thereon, it shall and may be lawful for such bail or security, on the trial of such case, to make special defence; and in case it should appear to the Court, that one or more of the defendants is or are securities only, and not interested in the consideration of the contract sued on, then, and in such case, verdict and judgment shall be entered accordingly, and further proceedings had, and privileges exercised, as hereinbefore prescribed, in behalf of the other securities; provided, the plaintiff shall not be delayed, by any dispute which may arise between the defendants,” See. The 6th section of the Act provides, that when any security to any note, bond or obligation, shall subscribe himself as security thereto, it shall be good evidence of his being — 54 — such, and the plaintiff shall sue cut process against him, accordingly. Prince, 461. During the same session of the Legislature, another Act was passed, for the protection of securities, which was amended by the Act of 1831, requiring the holder of the note to collect the same, within three months after notice-to that effect, hy the security. Prince, 462. But it is said, that the Act of 20th December, 1826, only authorized the security to make special defence, and show he was security, so as to enable him to control the judgment against his principal. Whether the Legislature intended to limit the introduction of the parol evidence to that special object, I will not pretend to say. It is sufiicient for my purpose, that it is an express declaration of the legislative will, in favor of the admission of parol testimony, to show that a defendant is security only, when sued upon a note or other contract. The admissibility of the parol evidence is the question. — not the objects to be accomplished by its admission. The object of the Act of 20th December, 1826, as well as the Act of 26ch December, 1826, and the amendatory Act of 1831, was for the benefit and protection of securities. Take all the Acts together, and construe them as one Act, for the purpose of giving effect to the declared intention of the Legislature, and can it he doubted that when a security is sued upon a promissory note, and desires to avail himself of the protection afforded by the A ct of 26th December, 1826, and the amendatory Act of 1831, against the lacies ork negligence of the holder, he could make special defence; and show hy parol evidence, that he was security, so as to enable him to receive the benefit and protection,, as sucli security, which the Acts of the General Assembly secure to him ? I cannot for a moment believe that the Legislature intended that a security who had required the holder of the note to proceed to collect it out of the principal maker, but who had failed to do so, until after three months had expired, should he driven into a Court of Equity, to obtain th & protection given him by the Statute. When the Act of 26th December, 1826, and the amendatory Act of 1831 were passed, requiring suit to be instituted within three months from the date of .the requisition hy the security, the Legislature must have been aware of the provision made in the Act of 20th December, 1826, allowing the security to malte special defence, and to show upon the trial, he was security only to the contract. The object of the Legislature was not exclusively to protect the secu — 55 — rity against his principal, but to protect him also against the laches of the holder of the note ; and by construing all the Acts together, as one Act, for the relief and protection of securities, I am clearly of opinion, the parol evidence was admissible, to show the defendants were securities, they having specially pleaded that fact in their answer. In addition to the Acts already cited, we have another Statute, passed in 1831, which authorizes the securities, even when they have failed to make special defence at the trial, as provided by the Act of 20th December, 1826, and judgment has been rendered against them as principals, to show by parol, that they were securities only, to the original contract, so as to enable them to control the judgment against their principal. Prince, 470. "We are told, however, that when the defendants signed the note, their names appeared on the face of it as principals, and that the effect of the parol evidence, is to defeat the plaintiff’s right to recover, inasmuch as it lays the foundation to make the defendant’s notice to sue available. It is true, the evidence that the defendants were securities to the note, in connection with other facts proved at the trial, does destroy the plaintiff’s remedy to recover on it, as against them. The plaintiff who contracted with the defendants, hneio they were securities, and he must be presumed to know, that if he did not sue the principal maker, within three months after notice to do so, by the securities, they would be discharged. Both parties must be presumed to have entered into the contract, with reference to the law governing it. The defence set up by the defendants, does not, in any manner, affect the construction, or original obligation of the contract; it only affects the plaintiff’s remedy to enforce that contract. The plaintiff has lost his remedy on the contract, by his own negligence. He has omitted to do what the law required him to do, when notified to sue the principal maker of the note, and which duty the law obliged him to perform, to secure his remed y, when the contract was made. The law declared tó him, when the defendants signed the notes, (he knowing they were securities,) that when the note became due, they had the right to notify him to sue the principal maker; and if he omitted to do so within* three months, his remedy against them would be gone. The contract itself, is not in any degree, impaired by the parol evidence, as I have before endeavored to establish ; and the plaintiff’s remedy against the defendants, as securities, was perfect, until the expiration of the — 56 — three months after the notice, when, by his own laches, he lost it, as he knew he would do under the law, when he made the contract ; as much so as if he had lost his remedy by the Statute of Limitations, in not suing within six years from the time the note became due. The evidence, then, does not impair or defeat any of the plaintiff’s rights, as growing out of the contract itself; but it establishes a fact which was well known to the plaintiff, at the time the contract was made, and which, taken in connection with the other fact, that he neglected to sue within the time prescribed by law, after notice to do so, defeats his remedy against the defendants. It is conceded that the parol evidence would be admissible in a Court of Equity, if the defendants were seeking relief in that Court. But why compel securities to go into that Court, when the same relief can be had in a Court of Law, the more especially as the Legislature have taken some pains to provide for the relief and protection of securities, in our Common Law Courts % In Beall vs. The Ex’rs of Fox, (4 Ga. R. 404,) we held that the Superior Courts in this State, are empowered to exercise general Equity jurisdiction, in all cases where a Common Law remedy is not adequate, and that the Equity jurisdiction was not limited to certain specified objects, as insisted on in that case. The General Assembly, in the year 1820, after reciting the 53d section of the Judiciary Act of 1799, which declares that the Superior Courts, in the several Counties, shall exercise the powers of a Court of Equity in all cases where a Common Law remedy is not adequate, &c. enacted, “ That from and after the passing of this Act, whenever any of the cases enumerated in the before recited section, a plaintiff or complainant shall conceive that he, she or they can establish his, her oi their claim, without resorting to the conscience of the defendant, it shall^ and may be lawful for every such plaintiff or complainant to institute his, her or their action upon the Common Law side of the Court, and shall not be held to proceed, with Has forms of Equity, any law or usage to the contrary, notwithstanding.” Prince, 447. If the remedy, for the protection of the defendants, as securities, was not adequate in the Common Law Court, then, their case is embraced by the Act of 1820, provided they were plaintiffs or complainants; for cases in which a Common Law remedy is not adequate, are enumerated in the 53d section of the Judiciary Act of 1799. There are doubtless many cases which may be presented, in which a Common — 57 — Law Court could not afford an adequate remedy — as where terms are to be imposed on the parties, by the special decree of the Court. There is not, however, any such difficulty in this case; a Court of Law is as competent to afford relief and protection to the securities, as a Court of Equity, and the only reason urged for compelling the defendants to resort to a Court of Equity, is to enable them to obtain the parol evidence that they were securities only. I have cited the Act of 1820, for the purpose of strengthening the evidence, which I think is indelibly stamped on the face of our legislative enactments, that securities on bonds, notes or other contracts, may have the relief and protection expressly given to them by Statute, in the Common Law Court, in as full and ample manner as they could in a Court of Equity, and that it is not necessary for them to resort to the latter Court, to enable them to show, by parol evidence, that they were secwities. The whole drift and policy of our State legislation, looks the other way, and I will add, the reason of it too. Let the judgment of the Court below be affirmed.