Brahan & Atwood v. Ragland

By JUDGE COLLIER. The appellants who had before been, and perhaps were at this time co-partners in trade, exhibited at different periods during the years 1823, ’25, and 26, five bills on the equity side of the Circuit Court of Madison, all proposing to enjoin perpetually the collection of a judgment recovered by the appellee, Ragland, against them as first indorsers of a note of one Henry C. Bradford, upon the allegations that the noté was indorsed for the accommodation of Bradford, and in violation of their mercantile association; that at the time the indorsement was made, the note was not drawn; the paper on which it was drawn was indorsed by Simon Turner, the appellee, and the figures indicating the amount were written on the left corner on the other side; that the consideration of the note was the loan of money by Ragland to Bradford, for which notes had been repeatedly renewed. On the renewed note last preceding, the name of Turner appeared as first indorser, though on some of the previous notes the appellants may have been first indorsers. It further appears that Turner had paid to Ragland the amount of a judgment recovered against him on his in-dorsement, and that the collection was about to be coerced for Turner’s benefit, as appeared by an indorsement by Ragland’s attorney on the execution which had issued thereon. Turner admits that he had paid Ragland with an agreement that he was to have the benefit of the judgment against the appellants, and to the third bill denies that he had in256 dorscd, or authorised the indorsement of any of the notes of Bradford to Ragland, which the proof established so far as it is incumbent on him to adduce it. The points we propose to examine as arising out of these facts, or presented by the arguments of counsel, are Is Turner, as between the appellants and himself, to be considered an indorser of Bradford’s note? 2nd. Is he liable to contribute jointly with the appeU lants to its payment? 3rd. Is he entitled to the benefit of Ragland’s judg* ment against the appellants? 4th. Is the indorsement of the appellants good in favor-of a b.ona fide holder for a valuable consideration? 1st. It is conceded that Turner’s answer, so far as it de» nies the indorsement of Bradford’s note, is fully sustained, by proof. And.the question recurs, whether he can be permitted to deny it after having suffered a judgment against him upon it in favor of Ragland, without interpo-. sing as a defence a denial of his signature. The record of the recovery by Ragland against Turner would be admissible if material, for the purpo.se of shew-, ing that a judgment was recovered. But when introduced by the appellants, they cannot claim the benefit of the legal consequences which result from it in favor of parties and privies; they are strangers, and it cannot according to the rules of evidence, naalte testimony for thepi. It is es* sential to the admissibility of judgments, that each party should be entitled tp their benefit as proof, and they cannot be used against a stranger, so neither should they ho used by them. The verdict may perhaps have been founded upon his testimony, when he had an interest in procuring it for the purposes of evidence; now as he cannot give evidence diiectly, he should not be permitted to do it circuitously. These views are sustained by Gilbert, ap ancient law writer of celebrity, in his treatise on evidence,a and are adopted by more modern authors.b Again, judgments operate by way of estoppel, and all estoppels are f°uncled on mutuality; for the want of this essential, the "judgment against Turner is inadmissible.c But let it be conceded that -tho judgment in favor of Ragland v. Turner is inadmissible, both for the purpose of shewing a recovery and the defence interposed, and we are then unprepared t.o yield an acquiescence to the conclusions which the appellants counsel have deduced from such premises. A denial in that- suit by Turner of his indorse — 257 — ment, could not have availed the appellants any thin#, even if such denial had prevented a recovery. The appellants would still have been liable to Ragland. And if Turner had given notice to the appellants before action brought, that his indorsement was a forgery, it would not have afforded to them a valid defence. In moral justice then, the appellants have no cause of complaint against Kim. It is granted that the recovery by Ragland against Turner is conclusive between the parties, for the reason that it is evidenced by record. Against strangers, we think it has been made manifest that' it is no evidence. Let us next inquire what influence the neglect of Turner to make known to the appellants the forgery of his name can have upon their title to relief. The record discloses no evidence of Turner ever having admitted his signature to be genuine, or contributed his aid to Bradford to impose upon the appellants. Perhaps he was in the habit of lending his name to Bradford by indorsing blanks, and he may not have acquired a knowledge that the in-dorsement of his name was spurious, at an earlier period than that at which be disclosed it in his answer. Be this ás it may, it does not appear that he ever adopted the in-dorsement as his own, so far as the appellants are con-, cerned, and the only deduction to be made in their favor from the inattention and neglect of Turner, is not a conclusion but a presumption Of fact, that his signature is genuine; this presumption is met and explained .away by proof. 2nd, Though it was conceded as well by the counsel for the appellants as the appellees, that authority was adverse to contribution-, we deem it' fitting to examine the question that the law may be ascertained and adjudged. Every indorsement is equivalent to the drawing of a new bill; the indorser undertakes with his indorsee, that if he will use due diligence to obtain payment of the maker, and if hte fail, advise him thereof in a reasonable time thereafter, then he, the indorser, will pay it. Every indorser is liable to those whose names appear on the paper after his, if the proper steps have been taken to charge him, and they are.required to respond severally and not jointly to the holder. This being the nature of an indorsement, and the liability imposed by it, it is obvious that indorsers cannot be viewed as sureties; the latter are liable at all events, . unless discharged by some past factum occurrence, while — 258 — 'be 'former incur no engagement, and the liability of all or either, will depend upon the fact whether the proper stops have been taken to charge them. In Hixon v. Reed.a this question came before the Court of Appeals in Kentucky. In that case the first indorser paid the note at maturity, anti brought his action to recover of the second indorser, one moiety of the money paid. The Court ruled that had the defendant paid the note, he would have been entitled to recover the amount from the plaintiff, and “in such cases, the first indorser should be considered as saying to the subsequent indorser, I will stand behind you for the whole}” and consequently contribution 'cannot be coerced in his favor. In Brown v. Mott,b it is held that a prior accommodation indorser is liable toa subsequent one, and in such cases “the indorser cannot setup that he indorsed the note without consideration, because by sending the note into circulation by a general indorsement, and making thereby a negotiable bill, a consideration is implied by the law merchant, and an inquiry into that fact is precluded.” In the Farmers’ Bank v. Vanmeter,c it was adjudged that the doctrine of contribution did not apply us between accommodation indorsers, unless there was an express or implied agreement to bear parts of the loss as joint sureties, in the event of the inability of the drawer to pay. The learned Judge in pronouncing the opinion of the Court, remarks with great perspicuity of diction, “Sureties may bind themselves severally in succession, so that each may be a supplemental surety in respect to another. Craythorne v. Swinbourne.d In this case they have bound themselves by an instrument, the legal effect of which is to subject them in respect to each other in succession, in the order in which they indorsed, and they mi list be taken to be bound according to the legal effect of the instrument,, until the contrary appears.” In Campbell v. Mesier and another,e the doctrine of contribution at common law, is considered somewhat at. length. That was a suit in Chancery, brought for the recovery of a moiety of the money expended in the repairing of a party wall, which divided the premises of the complainant from thoso ofthe defendant. It appeared that the wall was in a dilapidated state, and that the enjoyment of their respective premises rendered its reparation necessary. The Chancellor remarked, that “the doctrine rests on the principle; that when the parties stand in cguali — 259 — Jure, the law requires equality, which is equity, and one of them shall not be obliged to bear the burthen in ease of the rest. ” Again, “contribution depends rather upon the principle of equity than upon contract. The obligation arises not from agreement, but from the nature of the relation, or quasi ex contractu, and as far as Courts of law have in modern times assumed jurisdiction, it is as Lord Eldon said,a upon the ground of an implied assumpsit. The inference deducibie from these authorities is, that when the parties have made a contract, which by its legal interpretation, does not place them in equali Jure, but considers the undertaking of some of the promising parties os supplemental: neither law nor equity will expound the contract otherwise than according to its legal effect, unless the consent of the parties expressed or to be implied from circumstances authorizing the Courts to give a different exposition and operation; and will not therefore in such ease compel contribution. But when one of two parties have expended money in the performance of that which was beneficial to another, and in which that other was bound to aid, as in the case of Campbell v. Mesier and another, equity will compel him who has borne no part of the expense, to contribute his proportion. Considered with these distinctions in view, the doctrine of contribution stands on solid and discernable ground. 3rd. Though the doctrine of cession as applicable to a subsequent indorser who has paid a judgment in favor of the holder, against a prior indorser, offers a very interesting inquiry, the view which we take of the case so far as it has been sought to be applied, does not make its examination material. It cannot be important to answer the question, whether by the silent operation of law, without the aid of a Court, Turner has been subrogated to thd rights of Ragland. He declares in his answer that he paid Ragland, with an understanding that he was to have the benefit of his judgment against the appellants, and the testimony shews that Turner had received an assignment from the attorney of Ragland, to which assignment it does not appear that Ragland has ever objected. Nor does it appear whether the individual who made the assignment was the attorney at law or in fact; nor is it shewn that he transcended his authority; if he has, it forms no ground for relief in equity. The payment of the judgment to the officer authorized to coerce its' payment by execution, wo'uld be a sufficient discharge for the appellants. — 260 — It is too well settled upon authority to inquire now whether judgments are assignable in equity. Chancery will protect the assignment of a judgment in favor of one who has paid a valuable consideration for it, whether ihe assignment, has been made by parol or in writing. The facts which appear on the record, it is believed bring Turner within the operation of this rule and entitle him to its benefit. 4th. It is a rule of the English law merchant, in the ascertainment of which, there is no Variety of decision, that he who writes his name on a blank paper stamped fora bill or. note, gives an implied authority to the holder of it, to fill it up with any amount that the stamp will warrant. In this country we have no stamps, so that the security which they afford in England, to him who writes his name upon a blank paper, with a view to be made the drawer, maker, or endorser of a bill or note, afterwards to be filled up, is lost here. Yet by analogy it would seem, that he continues liable without limitation as' to amount in favor of a bona fide holder for a valuable consideration. The appellants do not however complain that the note was filled up with a larger sum than they had authorized; in fact there were figures on the paper indicating its amount. But their complaint is that they are to be made first indor-sers instead of Turner, who they beli'eve-was to have been such. Let usexamine the grounds of their belief, and the benefit which would have resulted to them, had that belief been realised. Bradford did not inform them that Turner was to be the payee, and consequently the first indorser; and with neither Ragland or Turner did they have an interview. They concluded from the circumstance of Turner’s name appearing on the paper when they lent theirs, that he was to be the first indorser, and from the further reason that he had first indorsed the last renewed note; and this conclusion was superinduced, though on some of the previous notes, they may have been first indorsers. If Turner had been made the payee of the note, the facts shew that it would have been void as to himfapd that a recovery could not be coerced at law. Hence the appellants could have derived no advantage from the making and in-dorsement of the note agreeably to their expectation. Let it be remarked that the liability of the appellants is founded rather upon the law merchant, than upon the principles of the common law proper, and that that law will — 261 — Kot entertain such a defence as the one set tip against a mer-Cintile security, when in the [lands of a bona fide holder for a valuable consideration. Usury and forgery are knowlcdgcd grounds of defence as against all persons, but neither of these are pretended by the appellants to exist. It is then obvious that Ragland is entitled, to recover the appellants, unless he had contributed to their delusion, and that Turner as his assignee, is entitled in equity have execution of the judgment. The limited powers of Atwood, as the copartner of Brahan, cannot render void his indorsement as to Brahan, unless their limitation, or the fact that he lent the names of the appellants without consideration was known to Rag-land, in either of which instances Ragland would have been chargeable with A fraud on Brahan, which is not pretended. Many other topics have been discussed by the counsel in this cause, which we forbear to notice, either because they are unimportant to a decision upon the merits, Or are: not presented for an examination by the record. The decree must be affirmed with costs; and such is the opinion of Judoss Chssshaw-, White and myself. Footnotes [a] Page 31. [b] 1 Starkie 185. [c] 4 Jh. & S. 479. [a] 2 Littell’s Rep. 176. [b] 7 John. 361. [c] randolph'sRep. 553. [d] 14 Ves. 160. [e] 4 John. Ch. Rep. 334. [a] 14. Ves.164.