Steiner & Lobman v. Jeffries

MoCLELLAN, J. The sole defense in this case is that of payment, by Maas & Schwartz, the drawers of 'the bill sued on. 1. In respect to this defense and the evidence introduced to sustain it, we may recall the familiar principles, that a party pleading or relying on payment must prove it (3 Brick. Dig. 433, §392); that, “when one claims that a debt, the prior existence of which is admitted or proved, has been paid by the substitution of another security, whether it be of higher or of the same dignity as the debt, he assumes the burden of proving that the substituted security was taken and accepted in ex-tinguishment of the debt,” (McWilliams v. Phillips, 71 — 581 — Ala. 80); that the giving of the debtor’s own note or bill, in payment or discharge of a preexisting debt, does not operate to discharge such deb ¡,, unless accepted in absolute payment; that it is considered as being, prima facie, only a collateral or additional security to the antecedent debt, (Keel v. Larkin, 72 Ala. 493, 501); that, primarily, payment must be made in money, and when one gives a check for a preexisting debt, the presumption of law is, that it is to operate as a payment only when it is cashed, and if the party giving the check insists that it was in payment of the debt, he must overcome this legal presumption or intendment, by evidence as full and satisfactory as is required to establish the payment or satisfaction of an admitted debt or demand. — Lowenstein v. Bresler, 109 Ala. 326; Frank v. Thompson, 105 Ala. 232, 220; Williams v. Costello, 95 Ala. 529: Lane v. Jones, 79 Ala. 156; 3 Rand, on Com. Paper, §1509. 2. The defendants attempted to prove the payment of the bill in the suit, by showing that on the day it was payable, the drawers, Maas & Schwartz, sent their bookkeeper, Converse, to the bank, with their check on the National Park Bank of New York, for a like amount, with instructions to take up the defendants acceptance with said check. The vice-president of the bank, Wilkins, declined to surrender the acceptance, stating that the president, who was absent, had instructed him not to do so, but retained both the check and the acceptance to submit the matter to the president, on his return, which was shown to have been either the next day or the day following. There is no conflict in the evidence, that on the return of the president, he refused to accept said check on account of said acceptance, or for the payment of the same, but sent it forward to the bank on which it was drawn, and applied the collection when made, to a bill past due and unpaid, drawn by Maas & Schwartz on the Bank of Montreal, London, England. Schwartz, examined for defendants, stated that the next day after the check had been presented to the bank by Converse, as he had instructed him to do, Gen. Nelson, the president, sent for him, and insisted that Maas & Schwartz owed the bank other paper; that he had to retire the Bank of Montreal check for that purpose, and asked him, Schwartz, to get a renewal of the acceptance of Steiner & Lobman, which Schwartz informed Nelson he could not do, and that Nelson refused “flatly” to — 582 — allow the check to be used in payment of defendants’acceptance. Nelson testified, that his bank discounted for value the paper sued on,' before its maturity, and that he had an agreement with Schwartz, the day after the paper fell due, that the National Park Bank check should be applied to the Bank of Montreal paper; that said check was sent forward to the bank on which it was- drawn, and placed to the credit of the Commercial Bank, and that he sent the Commercial Bank’s check to the Bank of Montreal; and the evidence tended to show, that the sum of $2,500 was paid on the last named debt, on the 19th of October, 1896. It is observable, that Mr. Schwartz was not called to deny, and did not deny, this statement by Nelson, of an agreement on his and Schwartz’s part, that the check should be applied to the Bank of Montreal paper; but the other evidence in the case, apart from Nelson’s, tends toshowthathe did agree Avith Nelson, to such application of the proceeds of the check, such as Nelson had deposed to. Converse, defendants’ witness, for instance, testified that when he drew the check, he had entered on the stub of the check book, that it Avas on account of Steiner & Lobman’s acceptance, but that, after Schwartz had his interview, the next day, with Nelson, and on his return from the bank, he instructed him, Converse, to change the entry on the stub-book, as to the account on Avhicli said check had been drawn, and make it, as drawn on account of the Bank of Montreal, and it was so changed. Furthermore,for purpose of s'hoAving that Maas & Schwartz did consent to such use of said check, the plaintiffs introduced other evidence, such as that in December, after the occurrences, the assignees of the bank called on Maas & Schwartz for a list of their liabilities to the bank, and Schwartz instructed their said bookkeeper, Converse, to make out such statement Avhich he did, on the 1st of January, 1897, and exhibited it to Mr. Schwartz, before he delivered it to the assignees, and that on this list appeared acceptances of Steiner & Lobman for Maas & Schwartz, held by the bank, one, due December 19, 1896, for $2,500, another on December 31st, 1896, for $3,000, and the third, for $2,500, due October 12th, 1896, which last named acceptance, Converse swore was the bill sued on. Defendants ob — 583 — jected to the introduction of this list of liabilities, on the ground that the paper was only evidence of liabilities of Maas & Schwartz, and though the last named parties might be liable on the bill sued on, it did not show that defendants were liable, and that the same was illegal and irrelevant as to defendants. The objection was overruled, and the court admitted the list of liabilities. There was no objection to its introduction on account of any other items appearing thereon, except as to the ones specified. 3. The plaintiffs, on the cross-examination of the witness, Schwartz, as to the liabilities of Maas & Schwartz on the defendant’s said acceptances appearing on said list — amounting, as there appears, to $8,000— asked the witness, if he had not given a note (to defendants) on January 1, 1897, for $8,000, and he replied he. had, for about that amount, and had given a mortgage to defendants to secure the payment of the note. The mortgage was proved and introduced in evidence, so far as appears, without objection. It bears date the 1st January, 1897, and recites as its consideration that Maas & Schwartz, the mortgagors, were indebted to defendants in the sum of $8,000 by their note of even date, payable to defendants on the 1st day of October, 1897. The defendants did object to the evidence of the witness, that he had, on the 1st of January, 1897, given defendants their note for $8,000, on the ground that the same was illegal and irrelevant, and called for illegal testimony. There was no error in either of these rulings of the court, on the grounds interposed to the introduction 'thereof, as to the admission of the list of liabilities, and to the testimony of Schwartz, that he had given the $8,000, note on January 1, 1897, to defendants. The entry on said list of liabilities of the obligation sued on, tended to show, that on the 1st of January, 3897, nearly three months after it is claimed they paid the same by their said check on the National Park Bank, Maas & Schwartz were carrying on their books the acceptance sued on, and had been to that time carrying the «ame, as an unpaid obligation to said bank. If it had been paid by said check, as claimed, it ought not to have appeared, thereafter, on Maas & Schwartz’s books as an existing obligation to the bank. Moreover, it tended to corroborate the witness, Nelson, in his statement, that — 584 — ¡Schwartz agreed before said check was collected that its proceeds, when collected, should be applied to the Bank of Montreal indebtedness, and not to the one sued on. The evidence of Schwartz, that on the 1st of January, 1897, he gave a note for $8,000, to the defendants was, also, clearly admissible. The other evidence tended to show, that the bill sued on was included in that note. If so, that fact tended to show,- tha.t on the date of said note, Mass & Schwartz and the defendants, all recognized the paper as stili due and unpaid, and that there had been no application of said check to the payment thereof. 4. The evidence is without conflict, that the check was not received when presented to the bank in payment of this acceptance. Converse, introduced by defendants and the only witness to the transaction, (Wilkins who, as vice-president of the bank, with whom Converse had the transaction, being dead), testified that Wilkins did not accept the check in payment of defendants’ acceptance. If, therefore, the check is to be treated as a payment of said acceptance, it must be so treated, because the debtors, Maas & Schwartz, before its collection, instructed its proceeds, when collected, to be so applied. But, as has appeared, the evidence tends to show, without contradiction, that Schwartz agreed, the day after the check had been received, and before it was possible for it to have reached New York where it was payable, that it might go to the Bank of Montreal bill. The defendants certainly had no right or authority at any time to control the application of the proceeds of this check, when collected, to their debt. Maas & Schwartz and Nelson alone had the right to make this appropriation of the credit, and it was perfectly competent for them to do so, up to the time the check was collected, and its proceeds were applied. — 18 Am. & Eng. Encyc. of Law, 244. 5. There was no error in refusing to allow the witness Steiner, one of the defendants, to answer the question, propounded by his counsel, if any demand had ever been made on his firm for the payment of the paper sued on. It is well settled, that an unconditional acceptance imports an engagement on the part of the acceptor to the payee or other lawful holder of a bill, to pay the same, according to its tenor, when it becomes due; that its effect is to constitute the acceptor the principal or — 585 — primary debtor, and, as such, he is not entitled to presentation or demand for payment; that generally, nothing but an actual payment or discharge will exonerate him, and further, that as to the right of the holder, it can make no difference whether the acceptance is one for value or for accommodation. — Hunt v. Johnson, 96 Ala. 130; Capital City Ins. Co. v. Quinn, 73 Ala. 560; Connerly v. The Merchants & Planters Ins. Co., 66 Ala. 441, 443; Story on Bills of Exchange, §§113, 252; 1 Dan. on Neg. Inst., §§532, 543, 571; 2 Parsons on Notes & Bills, 27; 2 Am. & Eng. Encyc. of Law, 399. There was no error, therefore, in this ruling of the court. 6. From what has been said, the rulings on the charges given and refused are of easy disposition. The charge given for the plaintiffs was a correct proposition. That it was subject, in its latter part, to the vice of calling attention to particular evidence, is not available on appeal. 7. The first charge requested by defendants and refused was unsound. No demand was necessary to be made on defendants, at any time before suit. It was also abstract. There was no evidence that no demand was made on defendants “until some time in December, 1896,” or at any time. The last refused charge of defendants was also unsound. That defendants were accommodation acceptors did not affect their liability. The hypothesized fact, 'that it had been the custom of the bank to take New York checks in payments of demands, could not affect its refusal to do so in any particular instance, as the evidence tends to show it did in this case. Custom could not take the place of agreement. Affirmed. Hakalson, J., not sitting.