Logan v. Bond

By the Court. Lumpkin, J. delivering the opinion. The bill charges that Logan borrowed $5,000, and gave his individual note, which Bond endorsed; that the money borrowed went into the firm of Logan & Atkinson ; that when that firm failed, they transferred by deed, to Holt and other creditors of the firm their assets, but that before Logan would consent to that transfer, the creditors promised (as he required) to let Bond share in the proceeds of the assets of the firm; that Bond’s name was not put in the written transfer, because counsel advised that it would vitiate the transfer, his being an individual debt. That since the transfer, the credi — 195 — tors to whom it was made, have disposed of said assets, and refused to pay Bond or let him share in the proceeds, according to their verbal agreement. To this bill a demurrer is filed, and five objections are urged against the complainant’s equity. . 1st. Because he seeks to make the firm assets liable for Logan’s individual debt. 2d. To engraft upon a deed in writing, a verbal promise, essentially adding to the deed; • Sd. To violate the Statute of Frauds by making Holt and others liable to pay the debt of Logan upon a parol undertaking. 4th. To make Holt and others debtors to Bond, without Bond’s having first fully discharged Logan, by extinguishing at the time of the alleged agreement Logan’s debt to him. 5th. Because, if the complainant has any redress, it is at Law, by his own showing. He can sue Logan upon his note, which he has never surrendered up, and he can sue the firm for money paid to their use, and the creditors to whom the assets were transferred, for money had and received to his use. [1.] Before examining any of these questions, I will notice a technical point which has been made, growing out of the pleadings. It is this. That as the bill does not allege that the agreement sought to be enforced, was by parol, it will be presumed to be in writing, until the contrary is made to appear from the proof; and that consequently the objection to the contract cannot be raised upon demurrer, but must be taken advantage of, by plea or answer. We admit that such is the rule. For myself, however, I much doubt its good sense. The plaintiff in any Court, as well in Equity as at Law, should make out a case of legal liability. Suppose the bill or declaration charges the defendant with undertaking to pay the debt of a third person. All this may be true, and yet no recovery can be had, if the agreement was verbal. To make the party liable upon such a promise, it must be in writing, and ought to be so stated. Other — 196 — wise there is not necessarily any issue of law between the plaintiff and defendant. Besides, this practice violates another well established rule, namely, that the pleadings are to be construed always most strongly against the plaintiff. If the agreement was in fact in writing, the probability is, that he could have so charged it, in stating his case. But whatever may be the established doctrine, our Statute requires that the cause of action should be plainly, fully and distinctly set forth. And if it be intended here to rely upon a written contract, the defendant should be notified' thereof. Indeed, if the writing be the gist or foundation of the suit, it should be specially declared on; for the defendant is entitled to oyer of the paper, that he may deny it on oath if it be not his act and deed. But the only legitimate construction that can be put upon the statements in the bill, as to the agreement is, that it was by parol. It was no new contract executed cotemporaneously with the original transfer of the assets, but simply a stipulation left out of the writing, because it was apprehended that its insertion might invalidate the instrument. How stands this case, then, upon its merits ? [2.] It is apparent, that the main equity upon which this bill was supposed to rest, was that the $5,000 borrowed of Bond by Logan, went to the use of the firm of Logan & Atkinson. But this really constitutes no claim upon the partnership effects. For the principle is well settled, that if a partner borrow a sum of money, on his own security only, it does not become a partnership debt, although applied to partnership purposes. Bevan vs. Lewis, 1 Sim. 376. Loyd vs. Frestefield, 2 Car. Payne, 325. Smith vs. Crowen, 1 Cromp. & Jerv. 500. Jaques vs. Marynard, 6 Cowen, 497. The presumption in such case is, that it is a part of the capital fund contributed by the individual partner, and if he is allowed a credit for it, as a part of the stock in trade, he gets credit for it twice. The fact that a separate security was taken by Bond, shows that he viewed it as a separate, and not — 197 — a firm debt. The bill does not charge even, that this $5,000 went in as stock in trade, or that goods were purchased with it for the concern. Seeing then, that Bond is not entitled to consider himself a creditor of the firm, it may well be doubted, whether a Court of Chancery would lend its aid. in assisting him to enforce payment of his separate debt, out of the joint assets. Suppose Bond had taken the firm note, in discharge of his separate. security, at the time the 'house of Logan & Atkinson failed, would it have been good against the partnership effects ? Most clearly not. Shineff vs. Wilks, 1 East. 48. “This is an action,” said Lord Kenyon, “brought against three persons, Wilks, Bishop and Robson, as acceptors of a bill of exchange. It appears that the acceptance was in fact made by Bishop alone, in the name of the firm, for a debt contracted by two of them only, and at. a. time when the third had no -connection with the house. The plaintiff ought not to have taken this joint security. The transaction is fraudulent upon the face of it.” And yet the creditor of Logan comes into Chancery and asks its interposition in his behalf to enforce just such a transaction. [3.] But as the second objection to the bill, is decisive of its fate, we proceed at once to its consideration. And that is, that it proposes to engraft upon a deed, a parol stipulation, and thereby add an entire new term to the written contract. It would be uncandid not to admit that respectable authorities may be found to support the complainant’s case. 2 Atkins’ Ch. Rep. 98, 256. 3 Ib. 388. 4 Bro. Ch. Rep. 578. 6 Ves. 325, note. 1 Eq. Cas. Abr. 20. 1 Murphey’s L. & E. 141. 1 Wash. Rep. 14. In the North Carolina case, (Gay vs. Hurt) the Supreme Court say, “ that whether parol evidence will be admitted to set up a trust, where a deed is absolute upon its face, depends upon the particular circumstances of each ease, in which it is attempted.” [4.] We are satisfied, horvever, that the weight of opinion, as well as the policy of the law, is the other way, and that the effort to obtain a specific performance of this parol agreement — 198 — should not he allowed. If this stipulation can be superadded, anything may be, and there would cease to be any faith reposed in written contracts. The uniform decisions of this Court have been, that all oral negotiations between parties to a written contract, which either preceded or accompanied tlie execution of the instrument, are to be regarded as merged in it, and that the writing is to bo treated as the exclusive medium of ascertaining the agreement to which the contractors bound themselves. 4 Phil. Ev. Hill’s notes, 1467, 1468. Miller and others vs. Collins and others, 5 Geo Rep. 341. Wynn Shannon & Co. vs. Cox, 5 Geo. Rep. 373. This last case was very similar to the present. The defendant ivas indebted to the plaintiffs some fifteen hundred dollars. The father, to relieve the son, sold to the creditor three negroes at I^AffQj^ncl executed a bill of sale, purporting to be paymeflifr'in full for the property. Suit was instituted for the balance «of,-the debt due-by the son. And the defence set up and proven was, that in addition to the purchase money paid the father, it was .agreed that the residue of the son’s debt left unsatisfied, was to be discharged in professional services, to be rendered by him to the plaintiffs, as an attorney at law. And the father, who was the principal witness on the trial, swore, and no one doubted his veracity, that “ in consideration of this promise, he let the negroes go at $200 less than he otherwise would have taken for them.” This Court rejected the defence and the parol proof adduced to support it, saying, “ it is not pretended that the bill of sale, by omissions or insertions, does not speak the real intention of the parties; that by fraud, accident or mistake, it was drawn differently from what it was designed to be ; it is not alleged that there is any ambiguity, either patent or latent, requiring explanation; there is nothing equivocal in the terms of the instrument, to make it necessary to resort to the circumstances under which it was made, to ascertain its meaning. It is neither more nor less than a naked attempt to “ add to" a written instrument, by parol evidence, a stipulation which it is insisted, ivas entered into at the time, but which the parties — 199 — did not see fit to have incorporated. We are satisfied that this cannot be done without infringing one of the soundest and most wholesome rules which Courts of Justice have devised for the security of private property.” And in support of this proposition a great mass of authority is cited, and which goes to establish not only the general principle, that all previous negotiations vesting in parol, but that those also which were had at the time, are merged in, and extinguished by the writing, and that admitting that the instrument does not contain the whole contract, still show conclusively that oral proof is inadmissible to supply the deficiency, unless it was occasioned by some fraud practised on the vendor, or by some mistake or surprise in reducing the agreement to -writing. But perhaps the leading case of C. C. 92,) is still more directly apj is cited with approbation by this Cor length, both in Miller and others vs. Collins and others, (5 Geo. Rep. 341,) and in Robson vs. Harwell and wife (6 Geo. Rep. 589,) and has, I believe, always been received as sound law. There the plaintiff had sold an annuity to NcuMse money, with an express agreement that he might redeem ; but apprehending that if his right to redeem were put in writing, it might be held to be usurious, it was agreed to let that rest in parol. The defendant refused to suffer the plaintiff to redeem, and to compel a specific performance of this verbal stipulation, the bill was filed and dismissed. The Chancellor says, “ here a large annuity is sold for rather a small price, not the natural sum. The agreement, they say, was that it should be redeemable, but this does not meet my present idea. To sell an annuity and make it redeemable, is not usury, because it is not a loan. It is a question whether to suppress this as leading to usury, will admit the paf ty to come into a Court of Equity. There is no case of the kind, of a mistake like this, where the doubt was whether the clause would be evidence of usury. It was agreed by — 200 — both parties, not to introduce the clause, but it was to stand on parol evidence.” “ Such a bill can be sustained only on an allegation of fraud, mistake or surprise. But that the plaintiff’s bill expressly negatives, by showing that it was intentionally left out of the deed, supposing its insertion would prove usury, while it did not.” “If so, they thought fit that the agreement should not be inserted in the instrument. If the insertion would make it usurious, no plaintiff could come here and state that as the reason of its not being inserted.” Analogous to this is the case also of Potmore vs. Morris, (2 Pro. C. C. 219,) likewise referred to favorably by this Court, in Miller and others vs. Collins and others, (5 Geo. Rep. 341,) where the Chancellor says: “ Before the Statute of Frauds, parol evidence could not be admitted to contradict written agreements, except in very particular eases indeed. If fraud was imputed, it might be done, but it is dangerous to depart from the deed. It might be the intention that the annuity should be redeemable. But I can only get at it, by demolishing one of the foremost rules of law. Therefore I reject the evidence.” Now, in all these cases, to which I have referred, a full and valuable consideration passed from the plaintiff to the defendant, in the agreement sought to bo enforced, according to the verbal understanding. Such however, is not the fact as it respects the case made by this bill. Logan & Atkinson being embarrassed, agree with certain confidential creditors, (Holt and others) named in the deed, of whom Bond is not one, to transfer to said creditors in full satisfaction of their debts, certain assets of the firm, and it is also agreed by these parties (not with Bond) that he, a creditor of Logan, should come into that contract. To exclude him, is not to put him in any worse condition than he occupied before. What loss will he sustain ? what right has he relinquished ? None. He does not even allege that he had been induced by reason of this — 201 — undertaking, to give up Logan’s note and cancel the debt, as against him. Testing this case, then, either by the Statute of Frauds or the Common Law, we deem it best to adhere rigidly to the rule, that where there is a deed in writing, it will admit of no ■contract that is not part of the deed, and that whether it adds to, varies or deducts from the contract, it is impossible to introduce it on parol proof, unless the foundation is first laid by alleging fraud, accident or mistake. Judgment reversed.