President of Middlebury College v. Williamson

Hutchinson J. delivered the opinion of the court. . This action is brought upon a note which the defendant acknowledges that he signed. And it appears by the case that this note was given for half the interest purporting to be due from the defendant, as having accrued upon the' whole sum subscribed by the defendant to the permanent fund of the College, and contained in the subscription-paper referred to in the case. The defence set up requires the court to decide, first, whether the contract contained in said subscription, and standing in connection .with the several votes and proceedings of the corporation, was binding upon the defendant ? and secondly, whether the County Court gave proper instructions to the jury, with regard to the detendant’s right to make die same defence to the note, which he might have made to a suit brought directly upon the subscription ? Under the first point it is urged that the plaintiffs can take no. benefit from this contract, nor be treated as parties to the same; because, it appears from the case that the .subscription-paper,.in its present form, was carried about by Dr.' Dams, then president of tlie College with a request by him made to those friendly to the cause of literature, and to that institution in particular, that they would subscribe thereto such sums as they were willing to contribute for the object therein named; and for aught that appears, President Davis acted upon his- own responsibility, and without any authority whatever from the plaintiffs to make such a contract. This is urged upon a correct principle, if it were applicable to the case, and it truly does not appear that any authority was originally given President Davis on this subject. But the plaintifis-.may accept an agency performed for their benefit, and accept a contract made to them, when it is offered, and thenceforward it becomes binding. And the defendant, and others, signing diis subscription, while in possession of President Davis,maybe considered as authorising him to deliver it as their contract to the plaintiffs to whom it was made payable. It was so — 224 — delivered 5 snd the Corporation have'so long, and by such repeated corporate acts, recognised it as made for tbeirbenefit, we arc disposed to consider the proceedings of Sr. Davis, the same as if the corporation had sent him cut upon the business by an express vote. It is further urged that the County Court erred in rejecting the testimony offered by the defendant to show the reduction of the subscription by vote of the corporation. It appears from the caso that the defendant offered to prove that in August, 1818, unpaid subscriptions to the amount of five thousand, dollars were wholly uncollectabie by reason of the poverty of the signers; that this was then known to the plaintiffs; and that they then, by their vote, discharged one half of each subscription $ all which reduced the available subscriptions to an amount less than twenty thousand dollars. This testimony was rejected 5 and we think, improperly rejected. One important condition of that subscription was, that none were to be holden, unless the amount subscribed should be twenty thousand dollars. This must be intended to mean fair subscriptions, such as may probably be collected. If any of them become unavailing afterwards, without the fault of the plaintiffs, that would not affect the binding force of the contract with regard to such as remained solvent. But if the plaintiffs, by their own act, reduce the available subscriptions below twenty thousand dollars, and that without the consent of the solvent subscribers, they become as they would be, had that sum never been rub-scribed. The object of the subscribers was to raise a sufficient permanent fund to relieve the wants of the College. They would not contribute unless the object could be accomplished. And they fixed upon the sum of twenty thousand dollars, as the mini~ mum. They wore desirous it should be greater ; but they would not be holden, if it were less. Now to admit the plaintiffs, by their own act solely, to reduce a subscription, that would meet the desired object, so low as to defeat that object, and then collect any portion from the solvent subscribers, would operate as injuriously to them as to collect before the sum had ever amounted to twenty thousand dollars» Closely connected with this, is flint part of the charge which — 225 — Instructs. the jury that a general reduction of all the subscriptions, and leaving twenty thousand dollars uncancelled, would not discharge the subscribers from paying the residue, though this reduction were without their consent. By this instruction, the attention of the court is drawn to the general character of the subscription, with its several conditions, as noticed in the suit against the administrators of Loomis. If the views we have just taken in that case be correct, the subscription returned to the corporation is an entire contract. Not that any subscriber is holden for any but his own subscription $ but the several conditions annexed to the subscription give each subscriber a right to have the whole amount secured and collected, without any diminution resulting from the doings of the corporation. 'Not only has each subscriber a right to be treated as well as any other subscriber, but he has a right that all the amount raised shall be collected and appropriated according to the terms of the contract; and has a further claim to be relieved, in the amount of his own subscription, by any surplus amount alluded to in the last condition of the writing itself. The corporation had, therefore, no right to reduce the subscription without the consent and agreement of the subscribers, against whom they would still assert a claim. This part of the charge, resting upon undisputed facts, we deem incorrect. The defendant further contends, that there never was any consideration for the contract contained in the subscription, and that nothing has been done by the plaintiffs oh the credit of it which amounts to a consideration ; but their discharging by their vote, on receiving pay in land, or one half in money or notes, defeats all pretension of their having created a consideration by acting on the faith of the subscription. This point, striking at the root of any action upon the original contract, has been ably argued by the counsel on both sides, and all the authorities adduced that can be found bearing at all upon the subject. Some of these authorities are claimed as favorable to both the parties. Cases cited by the plaintiffs—11 Mass. Rep. 113, The Trustees of Limerick Academy vs. Davis. This was a subscription to erect an academy, before any act of incorporation, and the suit brought by the Trustees after the act of incorporation. The de226 fence set up was, Üiat the plaintiffs were not payees of the contract; and secondly, that the contract was voluntary, and without consideration. The court got over the first objection by saying that, no promisees being named in the written contract, but the object defined, the act of incorporation supplied that defect by appointing the plaintiffs trustees to give effect to that object. Upon the other point, the want of consideration, the court said, the defence was base and dishonorable, but was available at law. Also, 12 Mass. Rep. 190, Larkin vs. Dana. This was a , subscription to support .a newspaper. The action was sustain-, ed, not upon the contract, as such, but upon á count for money, laid out and expended by the plaintiff, at the defendant’s request; the plaintiff having actually expended the money on the faith of, the subscription. Also, 14 Mass. Rep. 172, The Trustees of Farmington Academy vs. Allen, — The defendant subscribed a sum to help found an Academy. He paid part of it, and excused the non payment, of the residue, when called upon, by naming his poverty. And the amount was actually expended before the suit was brought., The plaintiffs recovered on á general count for money laid out, and expended; the court considering that the part payment amounted to an authority for the plaintiffs to expend the remainder on the credit of the subscription. Also, 5 Mass. Rep. 80, Worcester Turnpike Co. vs. Willard—6 Id. 40, Andover and Medford Turnpike Co. vs. Gould. These actions were brought upon contracts to pay the assessments upon the shares for which they subscribed; and the plaintiffs recovered. We may as well notice at this time, that the defendants by their subscription became owners of the stock, and had an interest in having the roads made, which would be for their benefit when made. In this they differ from the other cases cited-, where the money was intended solely for a public use. The plaintiffs also cite 7 Johns. Rep. 112, The Religious Society of Whitesboro’ vs. Stone. This was upon a written promise to pay for preaching, so much annually, for five years. Suit-brought to recover one or more of the annual payments. A recovery .was had. From the terms of this contract, the preaching — 227 — was to be performed before the payments became due. Also, 20 Johns. Rep. 89, McCauly vs. Bellinger, et al. A subscription to repair a church, at four equal instalments, provided sufficient be raised to do the whole repairs : sufficient was subscribed, and the defendant was holden liable. The defendant’s counsel, cite 3 T. R. 653, Cook vs. Oxley— the tobacco case. Contract for one to sell, and the other to buy, and notice to be given by four o’clock in the afternoon. The plaintiff complied; but failed in his action for want of consideration for the promise, and want of mutuality. Judgment was arrested after verdict. Also, 12 Johns. Rep. 190, Tucker vs. Woods; where A, in writing, promised to sell a house, a tan-yard, &c. on specific terms, and at a stated price, and give possession at such a day named,.and the contract to be binding till the first of January, then next. This was holden to be a proposal, and not a binding contract; and the defendant had judgment. Also, 16 Johns. Rep. 47, Jackson vs. Lawrence. In this it' was decided, that a deed with no consideration, except the grant-'' ee’s supporting the grantor, was void for want of consideration. To show a want of mutuality to aid consideration, and that the plaintiffs have never, by any act, bound themselves to receive, and take care of, the fund subscribed, the defendant cites 8 Mass. Rep. 292, Essex Turnpike Co. vs. Collins, where it was decided that no action lies to recover upon the contract, therein stated, to' take shares and pay assessments; the court saying the corporation could not act but by vote. Also, 1 Saund. 264, Osburn vs. Rogers— That' a request, actual or implied, must be proved. Also, 9 Mass. Rep. 254, Boutell et al vs. Codwin— An' ac~' tion upon a note given to the deacons of the church, naming them, and their successors in office — Decided that the note was void for want of consideration. As a preliminary remark upon the legal force of this subscrip-ti6n, under all the circumstances presented in the case, we observe, that the subscription paper itself describes no consideration in form for the promise to-pay the principal sum. With regard — 228 — to the interest, it recites, for the consideration aforesaid, they prom^ ise to pay said interest annually. That is, by reference; back, in consideration of the wants of the College, and promoting1 the object of a permanent fund, Sic. And further, that none of the authorities cited for the plaintiffs, are exactly in point to support the action on the subscription without tire aid of the, circumstances presented in the case, that the plaintiffs, on the credit of this subscription, created two new professorships, appointed their pro-lessors, and procured a philosophical apparatus, and proceeded in their- care of the institution upon a more enlarged scale than .would have been prudent, or at all practicable, without this fund upon which they in fact relied. Perhaps, the case shows less 'than was in the power of the plaintiffs to prove on this point. It shows nothing about the sums expended by the new professorships, or the purchase of the apparatus, nor whether the professors elect accepted the appointment. One of them at least, never entered upon the duties, nor resided at the College. On any future occasion' these matters may be made to appear more fully, ■ if either patty desire it. But it does appear that the corporation,’ by their several votes, agreed, and authorized their agents, to receive lands on the subscriptions j also to receive one half in money and the interest, and discharge the whole ; also to receive notes for that half and discharge the whole. Now, we are well agreed that this proceeding lets off every subscriber who did not choose to -settle his subscription in this way. The real and declared object of the subscription was to raise a sufficient permanent fund to support the College. ■ This, to be effective, must be in money. It was contracted to be in money. The receiving the amount in land, or receiving the half in money, or receiving that half in notes, and risking a loss in their final collection, was wholly destroying that fund ; wholly destroying that sufficiency and permanency which might well have formed the prevailing motive in the minds of the subscribers, at the time they gave tire measure of their liberalityby signing their names.* — 229 — There is a view of this subject that has not been mentioned by the counsel, and has no weight in our present decisions ; yet should be named, that the counsel may examine it against any future trial upon any of these causes. The subscription is rather intricate in some of its parts. It purports to contemplate the raising a fund of twenty thousand dollars, and more, if it should succeed as desired, and contains a stipulation, that if the plaintiffs should after the date, and before day of payment, receive by donation or otherwise, above the debts then, and that might after become, due from the plaintiffs for erecting a College, &tc. a sum equal to the whole amount of the sums thereto subscribed, the plaintiffs- should refund the sums paid on the subscription ; and on the receipt of a less amount, there should be a discharge for a sum to each-in proportion. Vague as this is, it must receive a construction. If that construction should be, that if the subscription should swell ever so large, the subscribers would receive no full discharge till other monies equalled all this, besides paying all the debts clue from the corporation, this condition would afford poor encouragement for people to enlarge the subscription ; for the larger it should he, the less probability of their ever realizing a full relief: and yet it seems probable that this condition was inserted to encourage subscriptions. If we should say that the expression, “ the whole amount subscribed to this contract,” means the sum of twenty thousand dollars therein named as the smallest whole sum which would give it binding force, another difficulty arises. The subscriptions bear interest from January 1, 1816, and probably the return was made by about that time to the corporation. Af-terwards, on the 15th of April, 1816, the corporation, discovering the uncertainty apparent as above noticed, voted that the sum of fifty thousand dollars should be the ultimatum, beyond which the subscribers should not be holden to the corporation; and that all beyond that should be applied to reduce the subscriptions. Now, if it should be decided that the subscribers might well understand that all beyond the first twenty thousand dollars was to operate for the relief of those who subscribed that sum, the vote of April, 1816, affixing fifty thousand dollars, would be virtually refusing to accept the subscription, without attaching new conditions to .which — 230 — the signers never agreed-. This-'may be examined by counsel against .a future trial'. . It has no effect upon our present decision.. Upon the other grounds we decide that this action could not be maintained, had it been brought directly upon the original subscription, and no note had been given, and the statement of facts-just as now are before the court. . We proceed, secondly, to notice the instructions given to the jury by the County Court, relative to the effect of the defendant’s giving the note in question. The court, after noticing a distinction between giving a note to compromise a disputed claim, and merely substituting a note for other evidence of a pre-existing contract, observe that “ the legal presumption arising from the giving of the notes on the one side, and the discharge of the subscription on the other, was, that a settlement was intended, and, not a mere substitution of the notes for the subscription ; and that this presumption must prevail, unless the defendant had shown, or it. otherwise appeared,that the intention ofthe parties was different.” We consider this part of the charge incorrect. The mode of doing the business affords no presumption either way, as we can discover. It is the ordinary way of doing business, and equally SO, whether the parties intended a substitution or a compromise.. The person giving the notes, either way, would want a discharge from the old claim, and the person receiving the notes would be willing to give such discharge. The presumption could not be as stated in the charge, without the additional fact, that the defendant, when he gave the notes, knew of the grounds of the defence to the subscription which he has now established by testimony. The court further instructed the jury, that if the transaction were in fact a compromise, the discovery of a further defence to the action comes too late to avail the defendant; and that, at all events, the new discovery must be of new and’distinct grounds of defence, not merely cumulative testimony; and that the discovery of particular frauds affecting the validity of the subscription cannot now avail the defendant, if he knew at the time of the settlement that such frauds were supposed to exist. The case recites nothing which shows what knowledge the defendant had of the grounds of his defence, when ho gave the — 231 — notes; of course, it cannot ntíw be accurately ascertained whether the •charge in that particular was applicable to the case. But the last' clause recited seems exceptionable. If the defendant has now proved particular frauds affecting the validity; this cannot avail him if he then knew that such frauds were supposed to exist. Now, he might have supposed that such frauds existed, and might have been so informed that he fully- believed it, and yet not be able to prove it, nor even know any testimony tending to prove it. He has now discovered full proof. This is not of a cumulative character 5 if such were its nature, the charge, in the last clause but one, would be correct. Cumulative testimony, strictly speaking, is that which adds to the weight of testimony upon a point litigated. For instance, if the defence set up was a particular ground of fraud in obtaining the subscription, and all the discovery made after the note was given was additional testimony to prove that particular ground of fraud, tills would be cumulative ; but if the new discovery comprehend another and distinct fraud, forming a defence of itself, this could not be termed cumulative. And ■suchmatter, not known at the time, would not be waived by the' giving of tire note. It seems probable, from the case, that the sub- ■ scription was considered good and valid, in point of its consideration, during the whole settlement. And when we consider that the County Court, oh the trial of the action against the admrs. of Loomis, admitted the subscription as valid in this respect, though-' ■objected to, it would-be too much to say that when the defendant' gave this note, he so understood his rights, so well knew that the • subscription was void for want of consideration, that he cannot ■now be permitted to set up such want of consideration as a de-fence to the note. That defect in the subscription, furnishing a •defence t® the same, is attended with so much intricacy, it cannot' be expected that a man unlearned in the law can judge of it so as to be said to know it, and impliedly waive the objection by a settlement. In most of the cases, where an indorser of a note promises to pay the holder, and yet is adjudged not liable Oh his promise on account of his ignorance of the circumstances when he made the promise, he had some knowledge ; he knew when notice ■came back to him of the non-payment by the maker or drawee, — 232 — but he, not knowing the connected circumstances, and the law applicable to the same, is admitted to set up the same defence when sued upon his promise, which he might set up when sued upon his legal liability as indorser. How it would appear, in respect to the defendant’s knowledge, if the testimony upon this point had been recited, we cannot say. But it was incorrect to exclude the defendant by reason of his knowing merely that frauds were supposed to exist. A new trial is granted. Starr and Phelps, for plain tiffs. Bates, for defendant. Footnotes [*] Hutchinsow, J. was of opinion that no action could be supported upon this subscription for want of consideration. That it amounts to no request to expend money on the credit of it. Indeed, nothing but the interest could ever be expended. Justice Turner inclined the other way ; if the plaintiffs hud kept their hold upon the subscription. But both were agreed in the position above-established.