Carlisle v. Hill

CHILTON, J. This was an action of assumpsit by the plaintiff in error against the defendant as the drawer of a bill of exchange, for the sum of five thousand five hundred dollars, drawn on William Bower & Co. and by them accepted, payable to A. W. Coleman or order, at the Bank of Mobile, and by him endorsed to the plaintiff. Many special pleas were interposed by the defendant, avering among other things fraud in the execution of the bill — want of consideration, usury, &c., but as no question arises upon the pleadings, it will be unnecessary to state them more particularljc The points for our revision arise out of a bill of exceptions which was sealed by the presiding judge. It appears that the plaintiff loaned to W. Bower & Co. the sum of $4500 cash, and on the day it bears date received from them the bill in suit for $5500, having nine months to run. It was shown that this bill was with several others signed in blank by Hill & Coleman, and that they were in the habit from year to year, of signing-papers in blank, for the purpose of enabling William Bower, and William Bower & Co. to renew a large debt due from Bower to the Life Insurance & Trust Company, on which Hill was bound as surety for Bower, and also to enable them to raise money for the prosecution of their business, said Bower & Co. carrying on the business of Factors & Commission Merchants in the city of Mobile. The bill in suit was filled up by Bower, before it was shown to the plaintiff, and the latter had no notice of the manner in which the bill had [405] been drawn and filled up, or the purpose for which it was ? executed, save such as the law may-imply from the above facts. The plaintiff asked the court to charge the jury, that if they believed from the evidence, that the said plaintiff obtained said bill of exchange from said Bower & Co. without notice of the circumstances under which the same was furnished to them, before the maturity of said bill, and for the sum of four thousand five hundred dollars actually paid, and without notice that it was in blank when handed by Hill to Bower & Co. then the plaintiff was a bona fide holder, and entitled to recover. This charge, the court refused, and charged in lieu thereof, that if the firm of Bower & Co. misapplied the bill in passing it to the plaintiff — that is to say, if Bower & Co. received the bill from the defendant to extend the debt in the Life Insurance & Trust Company, on which he was already liable, and Bower & Co. instead of so applying it, passed it to the plaintiff at a greater discount than eight per cent, and for a different purpose, then the plaintiff was not a bona fide holder, and could not recover against Hill. Before proceeding to state the other charges, let us examine the correctness of the charge refused and that above stated, as given. We think the proof most satisfactorily shows that the contract, by which Bower & Co. parted with this bill to the plaintiff was usurious. In the hands of Bower the bill was no more thau waste paper, as it was in blank and endorsed for his accommodation, and until put in circulation, or negotiated by him, had no vitality. This being the case, the law is well settled, that if the bill is sold at a rate of discount greater than the legal rate of interest, the contract is usurious. Were the law not so, the facilities afforded for avoiding the statute of usury would render it a dead letter upon the statute books. See Metcalfe v. Watkins, 1 Porter’s Rep. 57-91; Munn v. Commission Co. 15 Johns. Rep. 56; Powell v. Walters, 17 ib. 179; Saltmarsh v. Plant. & Mer. Bank, 14 Ala. Rep. 668, 680, and other authorities cited. In the case last' cited, which is very analogous in its facts to the case at bar in*» respect to the question of usury, we held, that Bower & Co.i': being the holders of the bill was evidence to charge the endor-|’d see contracting with said firm, with notice that it was drawn|u by Hill and endorsed by Coleman for the accommodation of1 [406] the acceptor, who by its negotiation gave it vitality. The plaintiff having advanced $4500 in money in consideration of the bill transfered to him by the acceptors, being for $5500 and having nine months to run, and thus .agreeing to receive one thousand dollars, instead of $270, the lawful interest, must be regarded as a usurious holder, and being affected by usury, cannot be considered a bona fide holder. This was expressly decided by this court in another of this class of cases not very unlike the present. See Saltmash v. Tuthill, 13 Ala. Rep. 390-410. The principle settled in the two cases last re-fered to is decisive to show, that the court did not err in refusing the fust charge asked by the plaintiff, or in giving the charge in lieu thereof; not being a bona fule holder in the usual course of trade, the defendant could set up any defence Avhich would have availed him as between the original parties, to defeat the plaintiff’s action, and as there was some evidence to show that the bill had been misapplied by Bower & Co. and used for a.purpose different from that designed by the drawer when he signed it, it was perfectly correct in the court, to charge hypothetically, that if the jury beLieved the bill had been so misapplied, and they should find the contract usurious, the plaintiff’was not entitled to recover. The charge of the court did not, as the counsel supposes, exclude from tire jury the investigation of the fact whether the bill was misapplied, but the jury were to determine the fact in the affirmative before the charge could affect the result of the case. 'Where the evidence as to the existence of a fact is conflicting, the court may hypothetically stale the fact as existing, and predicate his charge upon it. If the charge thus given is supposed to influence the mind of the jury in determining upon the fact, the opposite party should pray the court to state the law as applicable to the converse of the facts supposed. We have already said that the plaintiff', having acquired the bill by a usurious contract from the acceptors, must be charged with notice that the defendant drew it for the accommodation of the acceptors, and that if the bill was used for a purpose other titan that for which it was drawn, it could not be recovered. It follows as a corollary, lhat the second charge prayed for by the plaintiff was properly refused; for it assumes, irrespective of the question, whether or not the bill was. misapplied, [407] that the plaintiff, if he had on notice of the manner in which it was drawn, &c., was under' the state of the proof, entitled to recover the $4500 advanced by him for the bill. The usury let in the defence of misapplication, (Saltmash v. Tuthill, sup.) and the evidence conflicted as to the fact upon which the de-fence rested. It would therefore have been improper in the court to have decided that the proof did not sustain the de-fence, which is the effect of the charge. Philips v. McGrew, 13 Ala. Rep. 255; Nabors v. Camp, 14 Ala. Rep. 460. The third charge which was prayed for by the plaintiff be-n low, is clearly abstract, as there was no proof (as the bill of exceptions distinctly avers,) that the money was advanced to be used in the payment of any debt for which Hill was bound, or that it was so used. On the contrary, the only witness who testified on the subject, (and that witness was Bower himself) swore that he obtained the money to use in his general business as commission merchant, and that it was so used. The court should not charge the jury in the absence of all proof upon which to predicate such charge, much less should it be required to charge upon a hypothetical state of facts directly opposed to all the proof. The last charge prayed for by the plaintiff,asseris the general proposition, that if an accommodation drawer receives from the acceptor of the bill an assignment of all the acceptor’s effects to indemnify him against his general liabilities, although such liabilities exclusive of the bill sued on, may amount to a sum greatly beyond the extent of the indemnity, still the drawer is not entitled to notice of non-payment, and this irrespective of the time when the assignment was made. The charge under the state of facts as shown in the bill of exceptions would have been well calculated to mislead the jury, as the evidence was that no indemnity had been afforded the defendant until after the maturity of this bill, and then was given to provide against the liability of the defendant generally, he being liable for the acceptors for the amount of some $70,000 aside from this bill. It is not denied but that the defendant was entitled to notice, unless this indemnity excuses it. The accommodation drawer far the benefit of the acceptor is entitled to notice, even though he knew the acceptor was insolvent when the bill was drawn. Story on Bills, § 375, 311, 312,314,316,36S, 370. The same [408] author father says, in section 376, “ the fact that the acceptor has told the drawer before the maturity of the bill, that he could not take it up, and the drawer must, and that the acceptor has given money to the drawer for that purpose, will not excuse the want of due presentment; nor that the drawer, in apprehension of the dishonor of the bill, has lodged other money of the acceptor in the hands of the endorser, upon an undertaking by ,the endorser to return it, if he should be exonorated from the payment of the bill.” Cleage v. Cotton, B. & P. 239.— The rule requires that the drawer must either expressly or impliedly consent to waive the notice required by law to hold , him liable. This could never be implied from his receiving . indemnity from the acceptors, even though it should be ample, against his general liabilities, after he had been discharged for want of notice; for the bill in such case created no liability and consequently would not be provided for by the indemnity. But the authorities above refered to are conclusive to show that under the proof in this cause, there can be no doubt of the right of Hill to be notified in due time of the non-payment of the bill, and as the only indemnity which Hill received of any value, was a negro woman slave, who was turned over to him by Bower & Co., after the bill matured, it follows that the charge asked, taken in connection with the proof upon which it was predicated, was erroneous and calculated to mislead the jury. If a surely, or endorser, or accommodation drawer, receive ample indemnity against a 1 iabilty which they have incured, in such case notice is not required, or in case of a surety, he is not discharged by delay being given by the creditor to the principal debtor. — 4 Ala. Rep. 223-4. In such case, says Judge Story, he cannot complain of any loss or injury for want of notice, since he has funds in his hands 'to meet the payment. Story on Bills, 316, and authorities in n. 2. But partial payment or indemnity will not dispense with notice. Construing the charges refused and those given as applicable to the facts of the cáse, we think there can exist no doubt of the correctness of the decision of the primary court in refusing the charges prayed for, and that the charges given, especially the last one, is as favorable to the plaintiff, and perhaps more so, than the law will w arrant» Let the judgm’t be affirmed. Dargan, J., not sitting.