Sandell v. Norment

OPINION. ROBERTS, C. J. The first three propositions discussed by counsel for appellant in their brief are, (1) where both parties verbally move for an instructed verdict, such fact does not constitute a waiver of the right to a jury trial, (2) the motion of appellee was equivalent only to a demurrer to the evidence and (3) the suretyship agreement between Norment and Perry could be established by parol proof. Neither of these propositions need be discussed, because the evidence, viewed in the aspect most favorable to appellant -would not have warranted a verdict in his favor. It was his contention that he signed the note with Perry, as surety only, upon an agreement that Perry would leave the proceeds of the note on deposit with the Bessemer Bank, as security for the payment of the note, and that he would also deposit with the bank the twenty shares of stock of the American Bank & Trust Company, of Clovis, as collateral security for the payment of the note. He did deposit the stock as security, but failed to deposit the money, per his agreement with Norment. This money he deposited to the credit of the Savings Bank of Melrose, which subsequently withdrew the same before the maturity of the note. Appellant insists that it is competent for him to prove the relation and agreements of the parties by parol, and that the proof shows that the Bessemer Bank was cognizant of the above facts and assented thereto; that by permitting the withdrawal of the $2,000, the proceeds of the note, it released him from his liability upon the note by violating the terms of the suretyship agreement between Norment and Perry. Appellee, on the other hand, contends that parol proof of the alleged suretyship agreement between Norment and Perry was inadmissable. The legal question, however, is not involved in this case, because the evidence fails to show that the Bessemer Bank had knowledge of, or assented to the parol agreement, which of course, must be shown in order to bind it. The following excerpt from the evidence is copied from appellant’s brief: , “Testimony of J'. W. Norment: ’Some time in June, 1909, I don’t recall the exact date, N. A. Perry, with whom I had had former dealings, requested that I endorse his note in the sum of two thousand dollars. Mr. Perry was at that time considerably indebted to me and I hesitated to do so. His proposition was, in answer to my hesitation, that he only wanted this for a short time and didn’t expect to use the money, but only wanted a credit for the ostensible purpose of boosting his credit and offered to put up twenty shares of the capital stock of the American Bank and Trust Company, of Clovis, New Mexico, of the par value of two thousands, which bank was ■only a few months old at that time, and in addition thereto agreed to have the proceeds of this note placed to his •credit and left in the bank during the life of the loan. In view of the circumstances -and seeing where there could be no possible risk by my so doing, I signed the note in •question as I did. Signed as surety/ ” ‘Testimony, of Charles II. Bowlds: After stating that he was acting vice-president at the time the loan was ne■gotiated; that he was an officer of the Bessemer Bank through whom all negotiations were carried on, and that he communicated all matters and things in connection therewith t’o the appellee, J. II. Sandell, then cashier of •said Bessemer Bank, he testified as follows: ‘I told Mr. Sandell that Mr. Perry had promised me that the Savings Bank of Melrose, of which I was vice-president, would keep ■on deposit $2,000.00 with the Bessemer Bank of Pueblo. I was vice-president of both banks. T told Sandell when they made application for this loan that Perry had represented to me that he would see that the Savings Bank ■of Melrose kept an account with the Bessemer Bank, and that he would see it 'was sufficient to cover the amount of the loan/ ‘Q. But it was no part of the consideration for this loan that this deposit was to be. made, it was simply ■an inducement ? ‘A. That was an inducement to me to offer the Bessemer Bank/ ” “Testimony of A. B. Ellis: ‘A. N A. Perry stated to me about that time that he had arranged to borrow $2,000 from the Bessemer Bank and he wanted us to pay his ■drafts for $2,000 and let that amount remain in the Bes■semer Bank to the credit of the Savings Bank of Melrose, which we did/ ‘A. N. A. Perry stated to me that he had told the Bessemer Bank that a good part of this deposit would remain on deposit in that bank. He further stated if ~we needed the money to draw for it. I understood from •some one, probably from Perry, that Norment was on the note and that the 20 shares of the stock of the American Bank & Trust Company of Clovis, N. M., were put up as ■collateral for the loan/ ‘A. We drew on them three drafts of $500 each which were paid. After they had paid the second one, thejr wrote us that Perry had stated to them that a large part of this deposit would remain there and my recollections are that they objected to pay any more' of this deposit, but they afterwards paid the third draft. We made a fourth draft on them for the balance of the-account, $500, on which payment was refused. We drew again for the same amount and the draft was returned unpaid and protested/ ” The foregoing is all the evidence ujoon which appellant relies to establish knowledge on the part of the bank, of the agreement in question. Waiving the question as to the proper weight to be given the testimony of A. B. Ellis,, the material portion of which was clearly inadmissable under the hearsay rule, it would not have warranted a verdict for appellant. All that it shows is, that Perry agreed with the Bessemer Bank, as an inducement to it to make the loan, that the Savings Bank of Melrose would keep an account with it, which would be sufficient to cover the-amount of the loan. He did not agree that the deposit of the Melrose Bank should stand as security for the repayment of the money, nor did he state to Ellis that he had so ■ told the Bessemer Bank. Suppose the Melrose Bank had on deposit with the Bessemer Bank the sum of two thousand dollars at the time this suit .was instituted, how could appellant benefit thereby, unless the money, so on deposit, had been pledged for the payment of the note? Ellis said in his testimony, “Perry stated to me that he had told the' Bessemer Bank that a good part of this deposit would remain on deposit in that Bank.” But he does not say, that Perry stated that he had said to the Bessemer Bank that it should stand as security, or a pledge, for the payment of the note in question. There is no inconsistency between the testimony of Bowlds and Ellis. Bowlds said that Perry agreed that the Melrose Bank would' ’carry a. deposit with the Bessemer Bank, as an inducement to the latter bank to make the loan. The testimony fails in several particulars: (1) Because it does not appear that Perry told Bowlds or any one else connected with the bank that Norment had signed the note conditioned upon the amount realized therefrom remaining in the bank during its life. (2) Because it does-not appear that Perry told the bank officials that the money was to remain in his name during the life of the note, but that the Bank of Melrose was to keep a deposit in the Bessemer Bank of $2,000 during the life of the note. 1 The failure shown under (1) is fatal to the contention of the appellant, for the reason that his entire case must rest upon the proposition that the bank was advised that he signed as surety subject to the alleged agreement between him and Perry. If the bank was not informed that such was the condition attached to his contract, then the bank could look to him for payment at maturity regardless of any statement by Perry that the fund should remain in the bank during the life of the note. It is evident that any agreement between Perry and Norment would not be binding upon the bank when it sought to pursue the surety, unless it should be conclusively proven that the bank had knowledge of the agreement. Nelson et al., vs. Flint, 166 U. S. 277; 41 L. Ed. 1902. In the foregoing case, Mr. Justice Brewer for the court, laid down the law as follows: 2 “It is alleged that the trial court erred in ruling, out evidence of a conversation between Frank J. Cannon and A. H. Cannon in the absence of the plaintiff — a conversation which it was claimed induced A. H. Cannon to "sign the note. The mere statement of the proposition carries its own answer. Conversations between two makers of a note, in the absence of the payee, are clearly not binding upon the latter. No representations, true or false, made by one maker of a note to another, no secret understanding between such makers, no inducements offered by one to the other, affect the validity of the instrument in the hands of the payee unless he knew or was chargeable with notice of such facts. The vital question is not what passed between the makers by themselves, but what passed between the payee and any one of the makers.” Under (2) it is apparent that whatever the rule is concerning the duty of the bank to apply a deposit of the maker of the note in the bank to the payment of the ob-litigation, it was not its duty to apply the account of the Savings Bank of Melrose to pay the note at maturity and in fact, the Bessemer Bank could not do so under the law. In other words, the contention of appellant applies .only to cases where the deposit was in the name of the maker of the note, and does not apply where the deposit is not in the name of the party primarily responsible on the note. First Nat. Bank vs. Peltz, 176 Pa. 513; 36 L. R. A. 832; 53 Am. St. Rep. 686. The above being true, nothing would be gained by a discussion of the legal propositions presented by appellant on this phase of the case. 3 Appellant next discusses the effect of the failure of the Bessemer Bank, or Sandell, its assignee to dispose of the twenty shares of stock of the American Bank and Trust Company, which had become insolvent prior to the trial, thereby rendering the stock worthless. It is contended by appellant that the bank and its assignee were bound to exercise active vigilance in protecting and disposing of this collateral; that having held the same after maturity of the note until the stock became worthless, the appellant was thereby released. There are two answers to this proposition: First, the evidence shows that appellee did attempt to sell the stock, and the only offer he received was from appellant who offered to pay $1,600 for it, conditional upon appellee drawing upon Perry for the balance of the indebtedness. A sufficient answer to this is, that appellant should have paid the entire indebtedness, whieh, had he done so, would have entitled him to the stock and all equities therein held by the appellee. The second answer is that the mere passiveness of the creditor in the collection of his debt, either of the principal debtor, or from collateral securities held by him is not sufficient ground for discharging the surety. Vance v. English, 78 Inch 80, and see note to case First National Bank vs. Kittle, 37 L. R. A. (N. S.) 699. While it is true the case of Bank vs. Kittle announces a contrary doctrine, the weight of authority and reason accords with the rule above stated. In the note above referred to all the authorities are reviewed and very little support is found for the minority rule. What we have said above disposes also of the alleged error in excluding appellant’s exhibits 3, 5, 6, 7 and 8, which were letters exchanged by appellant and the bank and appellee relating to- the disposal of the bank stock and the collection of the note. In no one of these letters did appellant ever offer to pay the note, or to pay the difference-between what he offered for the stock and the amount due on the note. The primary duty of the surety was to p pay the note, principal and interest, upon maturity, upon the failure of his principal to meet the obligation and thereby obtain possession of the collateral. By this means he could have saved any loss which he now alleges he has sustained by virtue of depreciation. The following questions were propounded to the appellee on cross examination: “Did you get anything at the time you got this note?'”' “At the time you acquired this note state whether or not you acquired any shares of stock in the American Bank and Trust Company, of Clovis, New Mexico.” In both instances the court refused to permit the witness to answer. This, appellant claims was prejudicial error. Prior to this time, and upon the beginning of the trial the appellee produced in court the shares of stock in question, and the record shows that he tendered the same to appellant upon payment of the amount due on the note. The record also shows that this stock was deposited with the clerk, for the use and benefit of appellant, upon payment by him of the judgment. This being true, we fail to see how he has been damaged by the exclusion of the evidence. The deposition of C. H. Bowlds was taken on behalf of appellant, some time prior to the trial. In the deposition-this question appears: “Look at the statement headed ‘statement of Mr. C. H. Bowlds in respect to the case of Sandell vs. Norment and Perry’ and state whether or not that i-s a statement made by you in the presence of A. B. Kenehan and Stella V. Canny, and transcribed by her, and if so, state whether the statement is true ?” 4 The answer to the question is not shown by the record. On the trial in the district court the appellant sought to introduce the statement in evidence, for the purpose of contradicting and impeaching the witness. The court held that the statement was not admissable under the showing made. This ruling was correct. The statement was not incorporated into the deposition at the time it was taken, and no proper foundation was laid for its introduction. Appellant did not even offer to show that the statement which he proposed to read to the jury was the same statement which had been exhibited to the witness at the time his deposition was taken. It is next insisted that the court erred in awarding attorney’s fees, because there was no allegation in the complaint to support the same. In this counsel are mistaken. The note is set out in the complaint, and contains an agreement to pay ten per cent attorney’s fees upon the amount recovered by suit. The complaint also prays judgment for such recovery. Exchange. Bank vs. Tuttle, 5 N. M. 427; 7 L. R. A. 445. The verdict returned by the jury, under the direction of the court reads as follows: “We, the jury, find the issues in this case for the plaintiff”. Sub-Section 114, Section 2685, C. L. 1897, reads as follows : “When a verdict is found for the plaintiff in an action for the recovery of money, or for the defendant, when a set off for the recovery of money is established beyond the amount of the plaintiff’s claim as established, the jury must also assess the amount of the recovery, etc.” Appellant contends that the verdict is not sufficient to siipport the judgment, which question was duly raised in the district court by motion in arrest of judgment, and in his motion for new trial. The answer of the appellant confessed the execution of the note, its delivery to the Bessemer Bank and every essential to constitute a confession of the obligation incurred, but set up in avoidance the defense of a violation of an alleged suretyship agreement- 5 This defense presented the only issue for the jury to try. The amount of the note, the interest due and attorney’s fees was, under the provisions of the note, and the averments of the answer, only a question of computation, which the court could make, or direct the clerk to make. The statute, in our judgment, was only intended to require the jury to find the amount of recovery, when the question as to the amount due was one of the litigated questions in the case. It can not reasonably be held to apply where the amount of recovery is admitted, if some other disputed question, upon which liability rests, is decided adversely to the party liable for the payment of the money. That this is the correct interpretation of the code provision is established by the following cases: Buzanes vs. Frost, 19 Colo. App. 388; Hutchinson vs. Superior Court, 61 Cal. 119; Cooper vs. Poston, 1 Duval 92, 85 Am. Dec. 610; Moke vs. Felman, 67 Am. Dec. 656; Wines vs. State Bank of Hamilton, 22 Ind. App. 114. While the better practice would be to have the jury, in •all cases for the recovery of money, state in the ver die' the amount of the recovery, yet, where the amount of the recovery, if a recovery is to be had, is not in dispute and •can be ascertained from the. pleadings, the rule that that is sufficiently certain which can be rendered certain, applies. Appellant filed a motion for new trial and later filed an amendment to said motion setting up the fact that N. A. Perry would testify that Norment signed said note as surety on an express understanding with him that he was to deposit the proceeds of the note with the Bessemer Bank, which said deposit should remain on deposit with said bank as security for said loan and that he had communicated all of said facts to Bowlds, the acting Vice-President of the Bessemer Bank at the time he made the loan; that the fact that said Perry would so testify was unknown to appellant. Diligence in procuring the testimony of this witness, and ascertaining what he would testify to is set forth in the application in the following language: “It was impossible to procure the said Perry as a witness because he was beyond this jurisdiction, and although for more than two years efforts were made by the defendant, Norment, and his counsel to procure either the attendance of the said Perry as a witness on his part, or a deposition from him, as to what he knew, the said Perry refused to answer communications on the subject, refused to become a witness, either by deposition or otherwise, and the said Norment was without power and the courts of New Mexico were without power, and it was impossible to procure the testimony of the said Perry in any way, because' of his non-residence as aforesaid, and only now has the said defendant, Nolment, or his counsel, been able to learn from said Perry the facts of the said case, or to get any response from him on the subject.” Did the court abuse its discretion in refusing to grant a new trial on the ground stated? Appellant knew necessarily that whatever knowledge the Bessemer Bank had, as to the conditions and terms upon which he had signed the note with Perry, was communicated to its officers and agents by Perry, at the time he negotiated the loan. He does not claim that it derived knowledge from any other source. This being true, he knew from the time the suit was instituted, viz: July, -13, 1910, that it was highly important for him to procure Perry’s testimony, or at least to ascertain just what facts Perry had communicated to the officers of the bank at the time he made the loan. This being true, did he exercise the required diligence?- Perry was beyond the jurisdiction of the court, and of course appellant knew that he could not require him to attend and testify at the trial. His only recourse was to take his deposition. Had this been done, even though he'did not know what facts Perry would testify to, he could easily have ascertained. His defense depended entirely upon the facts Perry had communicated to the bank. Perry, of course, knew, and appellant was cognizant of Perry’s knowledge. Consequently it was incumbent upon him to exercise due diligence in procuring his testimony. The showing made, fails to show that he exercised the required diligence. 6 Where a party to a suit is cognizant of the fact that a, witness residing beyond the jurisdiction of the court, can testify as to certain facts, material to the issues in the case, it is his duty to take the deposition of the absent witness, and where «he does not do so, or attempt to do so in good faith, he cannot procure a new trial, on the-ground'of newly discovered evidence, based on facts as to which such witness will testify. 7 Here the showing, excusing the failure to take his deposition is that the “said Norment was without power and' the courts of New Mexico were without power, and it was impossible to procure the testimony of the said Perry in any way because of his non-residence as aforesaid.” Appellant does not allege the place of residence of said Perry,, nor that under the laws of the state of his residence, the courts of such state had no power to compel the attendance and testimony of a witness to be used in judicial proceedings in other states. Where a party seeks to justify a failure to take the deposition of a witness, residing within another state, it is incumbent upon him to establish the fact that under the statutes of the state where-the witness resides, no power exists in the courts of that state to compel the attendance and testimony of the witness. This, it will be noted, appellant failed to do. Therefore there was no abuse of discretion in denying the mo tion for a new trial on this ground. 8 Lastly it is urged that appellant’s counsel were entitled to notice of the entering of the judgment, under Sub-Sec. 136, Sec. 2685, C. L. 1897. At the time the verdict of the jury was returned the court announced that the motion for a new trial would be considered filed, as of that date, and overruled, and judgment would be entered for the appellee. The statute provides upon any hearing before the judge of a court wherein the judgment of the court upon-such hearing shall not be rendered at the time of such hearing, but shall be taken under advisement by the judge, no judgment or order relative to the matters pertaining to-such hearing shall be entered until notice of the same shall have been given to the attorneys for the respective parties in the action.” The statute itself discloses the lack of merit in this assignment. The judgment was rendered by the court immediately upon the return of the verdict by the jury, although possibly not entered until a later date. This statute plainly refers to the formal announcement by the court of its judgment, not to the ■entry of the same by the clerk. For the reasons stated, the judgment of the trial court will be affirmed, and, IT IS SO ORDERED.