Farmers' National Bank v. Marshall

Opinion by Smith, J., The plaintiff held two negotiable notes of T. S. Brick, for $200 each, on which the defendant was indorser; and another note of $500, indorsed by Davis Pennock only. The notes not having been paid at maturity were protested, and it is alleged that notice of protest was mailed to the indorsers. Subsequently the plaintiff took from the maker a promissory note for $900, in part as collateral for the two notes indorsed by the defendant. This collateral note was renewed from time to time, on payment of the interest, and was finally reduced by payments to $600. The maker when making these payments- directed that they be applied to the $500 note, indorsed by Pennock, which was accordingly done. This suit was brought against the defendant on the notes indorsed by him, and he seeks to avoid liability on the ground that the acceptance of the collateral note was, in effect, an extension of time to the maker, without the' defendant’s consent, and that, therefore, he was released from liability. The other principal ground of defense relied on here is the refusal of the court to affirm the defendant’s third point, that: “ Where the bank holds funds of the iiiaker of a note, when the note matures, it is bound to consider the interest of the indorser, and if it allows the maker to withdraw his funds, the bank is liable and cannot recover against the indorser.” At the close of the evidence a verdict was directed for the plaintiff. There would seem to be no room for serious dispute as to — 627 — the law of the case. There is nothing in the evidence showing an extension of time to the maker on the notes in suit; and this cannot be implied from the fact that a note of the maker, as collateral to those in suit, was taken by the bank. “ Nothing short of an agreement to give time which binds the creditor and prevents his bringing suit, will discharge the surety. Giving time and a contract to give time are distinct and independent things: ” Brubaker v. Okeson, 86 Pa. 519. This principle applies, with like force, to makers and indorsers of commercial paper. It has been held that the acceptance from the maker of a new note for the same debt, with a new indorser will not operate as a payment of the old note, unless it was so intended by the parties, and this is a question for the jury: Kemmerer’s Appeal, 102 Pa. 558 ; Dougherty & Co. v. Bash, 167 Pa. 429. “ Taking a new note for the same debt mentioned in the old, without an agreement to give time to the drawer, or to deliver up the old note to him, or that the new shall be taken in satisfaction of the old note, has ever been considered a mere collateral security, which does not effect or alter the original liabilities of the parties on the old note in any respect whatever:” Weakly v. Bell et al., 9 Watts, 273. See also McCartney v. Kipp, 171 Pa. 644. This rule is founded upon the doctrine that in order to be binding, an agreement to extend the time of payment must have the essential elements of a contract, including a sufficient consideration and a definite period of time: Campbell v. Floyd, 153 Pa. 84. It is alleged in the appellee’s paper-book that the collateral note and its renewals contained these words : “ This note being-given in part as collateral security for two notes of #200 each, indorsed by Jos. N. Marshall.” But this does not appear in the notes of evidence, and no copy of this note is given in the paper-books, although it was probably introduced in evidence, and is now. relied upon as a material feature of the case. It is the duty of the appellant to print the entire evidence, including all documents material to the issue, as required by the rules of court. If this provision was by a separate writing, or was, as alleged, incorporated as a part of the collateral note, it would come within the ruling of Weakly v. Ball, above quoted, and would be for the court to construe ; otherwise the purpose of the parties in giving the collateral note would be wholly for the jury, under proper instructions. — 628 — The third point of defendant, above quoted, is, as an abstract proposition, correct, and as such might have been affirmed. But it did not correctly state the facts of the present case, and for this reason was rightly refused. If the evidence showed that, at the time either of the notes in suit matured, the bank held sufficient funds of the maker to meet either, it was in duty bound to apply the funds in payment, and, failing to do so, could not recover from the indorser. This is on the principle that where the creditor has the means of satisfaction, belonging to tire principal debtor, actually or potentially within his grasp at the maturity of the obligation, he must retain it for the benefit of the surety, or the latter will be relieved from liability. But this duty is not a continuing one in the case of a bank holding commercial paper. The deposit must be sufficient at the maturity of the note; subsequent deposits will not raise the duty: Bank v. Peltz, 176 Pa. 513. “The general rule is well settled that, while the bank may appropriate funds in its hands belonging to any previous party to the note, to the payment of it, ... . yet it is not bound to do so. The note may be treated as, in effect, an order or check authorizing the bank to apply the deposit to the payment, but the deposit is not payment in law. . . . But where the bank holds funds of the maker when the note matures, it is bound to consider the interests of the indorsers or sureties, and if it allows the maker to withdraw his funds after protest, and the indorsers are losers thereby, the bank is liable to them. The reason of tills rule is, that the maker is the principal debtor, and liable to all the indorsers, whose undertaking is to pay if he does not: ” Bank v. Seitz, 150 Pa. 632, cited approvingly in Bank v. Peltz, supra. There was no attempt here to show the state of Brick’s account at the maturity of the notes, and, in the absence of evidence showing a balance in his favor sufficient to meet them at that time, this rule could not be applied. The fact that the defendant may have been an accommodation indorsér does not affect his liability, under the evidence in this case. We think the court below erred in directing a verdict for the plaintiff on all the evidence. This for a reason not referred to in the argument, but adequately raised by the eighth specification. It is within the power of the court to pass upon the evidence when the facts or the conclusions to be drawn from — 629 — them are not in dispute. And when the evidence involves the intrinsic effect of a paper, its construction is exclusively for the court. Where, however, the question is not the legal effect of a written instrument, and it is offered as evidence of a fact, merely, its interpretation is for the jury: McGee v. Bank, 5 Watts, 32. In this case the protest of a notary public was held to have the probative force of a deposition only, a substitute for oral testimony delivered at bar. “ It is but testimony of a witness still; and its having been put upon paper, not more for the sake of convenience than necessity, cannot change its properties or its nature. Had the notary testified in person, as he might, that he had given notice at Northumberland, no one would pretend it to be the province' of the court to say whether he meant that he had given it through the post office or that the party was present to receive it. His meaning would be for the jury, and so it must be in respect to what he testifies under the sanction of an official, instead of a judicial oath.” The Act of January 2, 1815, 6 Sm. L. 238, as well as the Act of December 14, 1854, P. L. (1855) 724, makes the acts, protests and attestations of notaries public prima facie evidence; and such has been the legal status and effect ascribed to notarial certificates by the courts: Kase v. Getchell, 21 Pa. 503; Bennet v. Young, 18 Pa. 261. In this last case it was held that the power of a notary cannot be extended by the language of his official protest, and it can have no greater legal effect than is given by the act of assembly. By the statutes referred to it is expressly provided, “ That any party may be permitted to contradict, by other evidence, any such certificate. ” In the present action, brought more than four years after maturity of the notes, the plaintiff did not rely upon the notarial certificate, alone, to show notice of protest to the defendant, but gave oral testimony on this point, by the notary’s clerk, to the effect that the body of the certificate was .prepared by him and that he (the clerk) mailed the notices of protest to the defendant by 4 o’clock on the day of protest. Further testimony, by a letter carrier, was to the effect that a letter if mailed by 4 o’clock on any working day would be delivered at the house of the defendant on the same day. It is not alleged in the certificate or in the parol testimony that the letter inclosing the note of protest was “ a prepaid letter, ” — 630 — or that it was properly stamped for transmission and delivery. Tliis we thinlc was part of the necessary preliminary proof in order to raise the presumption of delivery by mail to the defendant. The defendant testified that he never received any notice of protest, and had no knowledge of any kind, directly or indirectly, that the notes had been dishonored, and that he was never called upon to pay them until about the time this suit was commenced. While this testimony is not literally in contradiction of the notarial certificate in the present case, it is certainly in contradiction of its import and legal purpose. The object of such certificate is to show a notice of protest to the indorser, and this testimony of the defendant is in denial of the fact thus officially averred. It is, in effect, a denial of the averment of notice contained hi the certificate, and sufficient to carry this question to the jury. The certificate sets forth that the notary demanded payment at maturity which was refused and that lie thereupon “ gave notice of the nonpayment thereof to the indorsers this day by mail through the West Chester post-office, enclosed and directed to Joseph N. Marshall, ” the defendant. Whether such notice was deposited in the post-office duly addressed, is a question of fact depending on p.arol testimony. It is not an official'declaration, and like all questions when resting in parol, is for the jury to decide, under proper instructions. Tli is conclusion does not conflict with the earlier decisions of the Supreme Court holding that sending notice of protest by mail is constructive notice, and sufficient in law. “ It is sufficient proof of delivery of a notice to show, that it was sent ilia letter by post, without proving that the letter was received, provided the delivery be on the day on which notice should be given. The presumption is a fair one that the letter reaches its destination' in due time ; and whether it does or not, this is all the law requires; it would be extremely inconvenient to require more: ” Smyth v. Hawthorn, 3 Rawle, 355; Weakly v. Bell, 9 Watts, 273; Jones v. Wardell, 6 W. & S. 399; Smith v. Bank, 5 S. & R. 318. Under the evidence of the plaintiff, whether the notice was mailed, was made to depend on oral testimony as well as on the notary’s certificate. The whole question was thereby drawn to the jury: Association v. Kilpatrick, 140 Pa. 405. The case — 631 — of Jensen v. McCorkell, 154 Pa. 323, was, like the present, a suit against the indorser of a promissory note, and the only question there was whether the defendant was legally notified of the dishonor of the note. The notary by whom- the note was protested testified that he inclosed notice of protest, in an envelope addressed to the defendant at his place of residence in the city and mailed it at the post-office. It was also in 'evidence that the carrier delivery service delivered the defendr ant’s mail at a subpost-office, where he usually received mail. The defendant denied having received notice of protest. In affirming a judgment for the plaintiff the Supreme Court said: “ The plaintiff’s evidence, as we have seen, was to the effect that on the day the note was dishonored, a notice of protest properly addressed to defendant was deposited in the Philadelphia post-office. In due course of mail the letter thus deposited by the notary would be properly transmitted to the subpostoffice — in the vicinity of defendant’s residence — where he was accustomed to regularly receive his letters and other mail matter. The plaintiff’s evidence on that subject was sufficient to warrant the jury in finding the fact of which their verdict is necessarily predicated, viz: that the letter reached its destination — defendant’s-place of business or residence — by due course of mail, etc. As we said in Whitmore v. Dwelling House Insurance Co., 148 Pa. 405; 23 Atl. JR. 1131, it is well settled that the fact of depositing in the post-office a properly addressed, prepaid letter, raises a natural presumption, founded in common- experience, that it reached its destination by due course of mail. In other words, it is prima facie evidence that it was received by the person to whom it was addressed; but that piima facie proof may be rebutted by evidence showing it was not received. The question is one of fact solely for the determination of the jury under all the evidence Folsom v. Cook, 115 Pa. 539; Insurance Co. v. Tunkhannock Toy Co., 97 Pa. 424; Huntley v. Whittier, 105 Mass. 391; Briggs v. Hervey, 130 Mass. 186; London Assurance Co. v. Russell, 1 Pa. Superior Ct. 320. We think that under the evidence this case should have been submitted to the jury. For the reasons given the judgment is reversed and a venire de novo awarded.