Hacker v. Perkins

The opinion of the Court was delivered by Hustox, J. On the 24th of September, 1832, Charles S. Peaslee, John C. Sims, and William F. Burkhart made an assignment for the benefit of their creditors, to Mr. Perkins, the defendant, ,in trust to pay— “ Class 1. All borrowed money loaned to the said firm of Peaslee, Sims &. Co., and for whieh neither the bond or note of the said firm is now held. Class 2. All and every the sum and sums of money borrowed by the said firm from individuals or firms, for which either the bond or promissory note of the said parties of the first part have been given, and fully to indemnify and save harmless all and every individual and firm of and from all loss for or by reason of any promissory note, draft, or l?ill of exchange, drawn, endorsed, or accepted, or signed by him or them for the accommodation of the. parties of the first part” (the parties of the first part were Pe.aslee, Sims & Co.) Class 3. The remaining debts and claims against Peaslee, Sims & Co. [108] In April, 1832, Peaslee, Sims & Co. had sold goods to Jones & Truesdell, of Wheeling, to about twelve thousand dollars, advanced about five thousand dollars, and were liable on acceptances to about twenty-four thousand dollars. The house at Wheeling having stopped, Peaslee, Sims &• Co. felt themselves under great difficulties, land proposed to assign. The father of William Burkhart, and Hacker, Brown & Co., proposed each to advance them twelve thousand dollars; and as they were largely indebted to Iiacker, Brown & Co., for goo„ds sold these, the latter proposed to give them .an extension of credit. The amount of goods sold was from fifty to-.sixty thousand dollars, for all of which they held the notes of Peas-lee, Sims & Co., payable at different times.. William Burkhart and Charles S. Peaslee were both examined, and stated what was agreed on and what was done under the agreement. The difference-•between their accounts of the matter is only verbal, jn substance ¿hey agree. This testimony was as follows: “ The plaintiffs were perfectly aware of our situation. They and .yve thought it advisable for them to renew these notes, that our .difficulties might not be known, as we had a prospect of getting .through and maintaining our credit; and they agreed to renew these potes ip this way that it might not be known. Jn the mode adopted .there is nothing peculiar. It was an extension of credit. The notes were renewed .by taking to Hacker, Brown & Co., a new note for the amount we wished renewed ; we paid on a note falling due as much as we could; the new note and interest was for the balance .and was given to them, and they gave us a check for the amount of .such new note. The check was taken to the bank where Hacker, Brown & Co. kept their money, and we drew the amount and with that and what we could p.ay, lifted the old note. The money was taken Jto t¡he .banjk where the plaintiffs kept their account, and not where we kept our account; we invariably took the money itself to the bank where the notes were. The new notes are for the balance of the old notes ; the present notes are the lowest amount of potes; the day after this took place, the plaintiffs stood better than they stood before, in this, that we owed them so much less as the difference between the respective amounts of the old and new notes. The money was passed to the credit of the plaintiffs; the new note had nothing to do with the bank transaction. I do not know that the bank knew of the notes being renewed. The course is that the piopey is passed to the'credit of the note in bank. They were not out of pohket longer than to go from one bank to the other. The arrangement between ús was that the notes should be renewed. There wás n.o arrangement that they should lend us money.” Again, the witness says ; “ There were some of these notes that I believe were, settled at the plaintiffs-’ counting-hoüse;” and as.to these, it seems conceded, the plaintiffs have no claim to come in as for ptoney lent. The allegation is, that in the mode which was adopted [109] Expressly that it might not be known what was going on, blacker, Brown & Co. gave to Peaslee, Sims & Co. money or a check to receive money and carry it to bank and pay it in for the use of Hacker, Brown & Co., and this they wish to call, and wish the Court to say, is money lent by them, and borrowed by Peaslee, Sims & Co. Where a man boi’rows money, it is his own, and he may use it for a purpose before arranged in his own mind, or for some other purpose. When money or a check to receive money is to be carried to a particular bank, and paid in to the credit of the man who handed the money, or gave the check, there is no lending money or borrowing money in the case — it is merely placing confidence in the man that he will do with the money or check what was intended by him who intrusted him; if he does any thing else with it he is guilty of a fraud, or, under some circumstances of preconceived intention to violate trust, and use the money, may be guilty of larceny. Generally it is, as between creditor and debtor, immaterial whether a note was given for money lent, or for goods sold. But in case of assignment, it has become usual to direct payment of the fund, so as to prefer debts contracted in one mode from those contracted in another mode: and in the case before us three different grades are marked. We had some learning and notice of the terms in old declarations and pleas; and not a few cases, in some of which the new note was an extinguishment of the old note ; and in some it was held not to extinguish the present debt or note. The result of all the cases in our own Court, and perhaps in all, is, that it depends on the intention of the parties; and if that intention can be ascertained, it decides whether it is or is not the extinction of the old, or creating a new debt. Such is the decision in Slaymaker v. Gundaker's Ex'rs, (10 Serg. & Rawle, 82;) and in 15 Serg. & Rawle, 183, the very point came up, and though it is stated by the late chief justice, that “ a new note, without any new consideration, given by the same parties, will generally be considered as the same debt, yet it is error to decide it as a point of law; that whether it is a continuance of the old, or creating a new, must be left to the jury.” In this case, the partners, Peaslee and Burkhart, were examined, one by the plaintiffs, and one by the defendant; and there is no discrepance. We have thus positive proof that the offer of Hacker, Brown & Co. was to extend the time of payment on the notes for goods sold, that there was never at any time any mention of a loan on the one side, or borrowing on theother, so far as respected these notes, or the renewal of them. That the understanding was, that the money or checks were given to Peaslee, Sims & Co., as a mode of extending the credit; and it was part of the understanding, that this was not to be known. Hacker, Brown & Co. understood perfectly the difference between a deht for goods sold, and one for money lent. About the time of [110] this arrangement they drew up a judgment bond, and presented it for signature to Peaslee, Sims & Co., who executed it, and Hacker, Brown & Co. gave a receipt, stating the receipt of the said bond as security for the repayment of twelve thousand three hundred and thirty-seven dollars and twenty-nine cents, “ which we have agreed to loan them; and for the payment of two notes we have lent them; one for three thousand four hundred and ninety-two dollars and twenty-eight cents, due the 23d of this month, and one for eight thousand two hundred and ninety-eight dollars and fifteen cents, due on the 17th of 7th month next; if Peaslee, Sims & Co. pay the above sums, with interest, the above bond and judgment are to be given upthus showing a clear distinction, understood by themselves, between a debt for money, or notes loaned, and a debt for goods sold. Their debt for goods sold amounted, then, to fifty or sixty thousand dollars; and in consequence of this arrangement was in six months reduced to about nine thousand dollars. The assignees, Peaslee, Sims & Co., also well understood and correctly expressed themselves. “ 1st class, all borrowed money loaned to us, for which no bond of note was given, or is held; 2nd, all sums borrowed by us for which a note or bond is held; and to save harmless, &c., every drawer, or endorser or acceptor of a note, draft or bill for our accommodation; 3, all other debts and claims against us.” Now from this it appears that each party understood the terms borrow and lend; and each used them about the same time in the instruments which each drew up; and used them in the same sense; and each seemed to think that in case of inability to pay all, a distinction ought to be made. There was then no mistake as to these terms; and it would be misspent time and labour to define what every body understands. The proposal by Hacker, Brown & Co., and agreed to and accepted by Peaslee, Sims & Co., was, that the former should grant an extension of time of payment, on the notes for goods sold; but as these notes, or some of them, were in bank, either discounted, or placed there for collection, they must be renewed or paid when due, or a protest and stoppage of Peaslee, Sims & Co., would ensue. This would be contrary to the wishes and to the interest of both parties, or of the creditor party, at least; for' they were to receive at the renewal of each note as much as Peaslee, Sims & Co. could pay; and did receive it. Where the note was not in bank, the debtors paid as much as they could, and gave a new note for the balance; and this is not denied to be an extension of credit. Now the only difference between these cases and those where the notes were in bank, arose from that part of the agreement which provided that what was doing between these parties should not be known; and what was done, in the form in which it was done, was calculated to effect that purpose. If Hacker, Brown & Co, had themselves gone to the bank and withdrawn the note due, and on receiving on it what the others could pay, can111 celled or given up the old note, and taken a new note for what was unpaid, there could have been no allegation that they loaned, or that the others borrowed; but this might have injured the credit of Peaslee, Sims & Co, and might have prevented their going on. To lieep up appearances, the plan of intrusting them to carry a check for the amount of the new note to one bank, and receive the money and pay it into another bank to the credit of Hacker, Brown & Co., was adopted; but the money thus received at one bank, and carried to another, never was the money of Peaslee, Sims & Co. for one moment — was never agreed or understood by either party to be so; it was as much the property of Hacker, Brown & Co. while in the hands of Mr. Peaslee in carrying it from one bank to another, as it was after he paid it into bank, as agreed and directed. Peaslee had more power over it while in his own hands than after he paid it into bank, but he had no more right to it before he paid it in than after. There was then no lending of money by the one party, or borrowing by the other in the renewal of these notes; and the plaintiffs cannot sustain their claim. I never much liked the practice, which I believe is peculiar to this city, of leaving facts and law to be decided by the Court. I have always believed, and still believe a jury more competent to find facts, and draw inferences from facts, than the Court, because they understand the common business and common contracts in life better, at all events than I do; and unless where the matter was to come before other judges than me, or other judges with me, I would never take up a case in that way. But where all the testimony is the same, and proves the same contract, and the same object in view of each party to the contract, there can be little difficulty; for a jury must believe it, except it proves something impossible, or for some reason incredible. Here the proof is full and clear that the agreement was to extend the credit to Peaslee, Sims & Co. on the notes for goods sold : that the arrangement was not to be known to the other creditors: that nothing was at any time said about lending by the one, or borrowing by the other: that by the agreement of the parties the extension of credit was to be given by the debtors paying as each note fell due as much as they could, and giving a new note for the balance; and that the checks or money given, to lift the note then due was no loan, but simply intrusting one of the debtor firm to receive money at one bank, and instantly pay it into another bank to the credit of the creditor firm, which drew the check. This dispute is not between Hacker, Brown & Co. and Peaslee, Sims & Co., but between the former and the other creditors. The assignee thought he could not pay these notes for goods sold as in the second class ; and the plaintiffs insisted it was money lent by them: we believe it was not: and that the agreement and intention of the parties precludes us from so considering it. Much was said on the effect of giving up the old note when part [112] was paid and a new one given for the balance. It may be a circumstance in weighing a doubtful case. A bank sometimes extends credit by accepting a new note for the whole or part of one due. The books show whether the new note was a renewal of the old note or a new loan by the bank. But in a case where it was an extension of credit on a note in bank, and it was not intended that the bank should know that it was not paid in full, by cash; and the bank did not know that the new note was for part of the old debt, it was most prudent to take home the old note when part paid, and a new one given for the balance: and if such was the agreement, and this was done in pursuance of the agreement, and the proof is full to that effect, it leaves nothing to conjecture orpresumption. Judgment for the defendants