Cake v. Pottsville Bank

Opinion, Mr. Justice Trunkey : On May 1, 1877, the bank held overdue notes against J. W. [270] Cake amounting to $14,060, two of which amounting to $6,000 were indorsed by J. A. Cake! The bank wishing to have the notes settled, its president went to Sunbury for the purpose of effecting a settlement and adjusted the claim by J. W. Cake giving three notes amounting to $14,128.29, which were indorsed by J. A. Cake; and J. W. Cake also gave a bond and mortgage for the amount of the notes as collateral security. So says the bank. It follows that the notes in suit, secured by the mortgage, were given in settlement of overdue notes, and that the president of the bank was its agent who took the old notes to Sunbury and negotiated the settlement. Therefore the defendant in his relation to the bank, does not stand as if the bank were an innocent holder who discounted or purchased for value. Nor is he an accommodation indorser for the purpose of enabling the maker to obtain money on the notes. He is prima facie liable for the debt, but it is as competent for him to prove any matter to impeach the indorsement as it would be were his liability evidenced by written contract in another form. And the president of the bank was not performing the duties of the directors respecting discounts, when he made the settlement; he was a mere agent and whatever he did within the apparent scope of his authority, to obtain the new security, is binding on the bank which accepted and holds the security. That a written agreement may be modified, explained, reformed or set aside, by. parol evidence of an oral promise or undertaking material to the subject matter of the contract made by one of the parties at the time of the execution of the writing, and which induced the other party to put his name to it, is repeated as a settled principle in the late case of Cullmans v. Lindsay, 18 W. N. 509. It was also said that the fact whether or not the parol promise was the inducing cause of the execution of the contract, is generally an inference to be drawn by the jury from the evidence. When a party is charged with the commission of an act with a particular intent, he may testify what that intention was; but he cannot testify to the undisclosed purpose of his mind, or declare a mental reservation, to nullify the express words of his contract. The offers of testimony set out in the first and third assignments of error ought to have been admitted. If the facts are [271] as therein stated, by the law of this state the defendant is not liable on his indorsements. The giving of the bond and mortgage by the principal debtor to secure all the notes, was for the benefit of the bank and of the indorser, if the latter were liable; the taking of that security was part of the transaction, and is consistent with the allegation of either party respecting the nature of the indorsement. At present the question is whether the proposed testimony was admissible. Had it been received, other testimony might have been adduced tending to establish the alleged facts. At the argument it was contended by the plaintiff’s counsel that had the proposed testimony been heard, the uncorroborated testimony of the witness would not have been sufficient to overthrow the indorsements. That point does not arise, for the testimony was rejected. The court refused the offer without inquiry of, or statement by, the defendant whether it was to be followed by corroborative testimony. The second assignment is not sustained, because the offer seems to include testimony by the defendant himself that he “would not have indorsed the notes, had it not been for the express stipulation that he should not be liable thereon.” It was competent for him to testify what he said to Saylor at the time of indorsing, to testify all that then and there was said and done by the parties relating to the alleged agreement, but not that he indorsed for any reason that he did not express. His thoughts and purposes not disclosed at the making of the contract, shall not be disclosed to the jury in the attempt to show that his indorsement means something else. Judgment reversed, and venire facias de novo awarded.