McDaniels v. Lapham

The opinion of the court was delivered by Poland, J. This was an action of ejectment, brought to recover a portion of a certain farm in Danby, which was mortgaged by Timothy Reed to Alexander Barrett on the tenth day of January, 1828, to secure the payment of five notes for the sain of three hundred dollars each. The facts proved on the trial were substantially the following; — that the plaintiff was the assignee of the mortgage from Reed to Barrett and holder of all the notes, which were secured by it; that Reed, in January, 1842, conveyed the whole of the farm to the defendants, and they continued in possession of that portion of it for which this suit is brought, until the time of the commencement of this suit; that in March, 1843, the defendants conveyed the portion, for which this suit is brought, to the Bank of Rutland, which deed was previous to the commencement of this suit, but was not recorded until afterwards; that before the commencement of this suit the Bank of Rutland tendered to the plaintiff the sum of $2,072,00 upon the mortgage notes, which the plaintiff refused to receive; but that in March, 1845, while this suit was pending, the plaintiff demanded said tender of the Bank of Rutland, and the Bank refused to pay the money to him. It ap — 231 — peared, that the notes were all unpaid; but the interest was indorsed on each note to April 26, 1830, and upon each of the notes was a written acknowledgment, signed by Reed, dated April 26, 1835, in these words, — “ There is due on this note, with annual interest, four hundred and one dollars and forty five cents,” — and upon each of the notes there was an indorsement, that the interest was paid to April 26, 1836, — and on one of the notes was an indorsement, that the interest was paid to April 26, 1839. The plaintiff then proved, (to which the defendant objected,) that the indorsements of interest on the twenty sixth of April, 1836, were only of the interest for one'year on the sum of $401,45, — that sum being treated as the principal of the notes respectively; and that the indorsement of April 26, 1839, on one note, was made in a similar manner, being the interest on $401,45 to that time. The defendants then proved, that, on the tenth day of April, 1847, the Bank of Rutland sent a special'agent, with instructions in writing, to the plaintiff, and that the agent met the plaintiff at Bennington, and then informed him of his business and authority, and then offered and tendered to him, in behalf of the Bank, the sum of $1875, to be received by him in full satisfaction of the amount due him for principal, interest and costs on the mortgage notes; that the plaintiff said, that he could not receive the money on those conditions,, but would take it, as far as it went upon his debt, — that he had not his notes there, and did not know how much was due ; that the agent then told him, that he had no instructions to pay or tender him the money on any other conditions, than as a full payment and satisfaction of his claim, and could not make any other terms, and then placed the money on the table ; that the plaintiff repeated hi® offer several times, to receive it and apply it as far as it went, which was as often answered by the agent, that, if he took the money, it must be in full satisfaction. The plaintiff then took the (poney and offered a receipt, which the agent declined to take. The defendants also offered evidence, to prove that the plaintiff had been in. possession of the mortgaged premises and had received rents and: profits, and also that he had recovered rents and profits of other persons on the other part of the land, — to show a part satisfaction, of the mortgage debt; which the court excluded. There are several questions raised upon the exceptions in this232 case, and which have been discussed at the bar, upon which the court are not entirely agreed ; and as their decision is not necessary to a determination of the case here, they will not be decided; — but upon the following points the court are so far agreed, as to be able to decide the case. 1. As to the admissibility of the parol evidence to explain the indorsements upon the notes. It has repeatedly been decided, that indorsements of payments, made upon notes, whether of interest, or principal, constitute, when made upon the note itself, no part of the note ; that they are mere admissions, or evidences, of payment, against the holder of the note, for the benefit of the maker. See State v. McLeran, 1 Aik. 311. Kimball v. Lamson, 2 Vt. 138. We consider these as standing upon the same ground, as receipts executed by the holder to the maker of the note, for the sums received ; and it has been well settled for a considerable time, that parol evidence is admissible to explain and even to contradict a receipt, whether it purports to be a receipt in full, or for a certain sum. Sparhawk v. Adm’r of Buel, 9 Vt. 41. Tobey v. Barber, 5 Johns. 68. It is urged, however, that though this may be true in general, and even in this particular case, as against Reed, the original mortgagor and signer of the notes, yet that as against the defendants, who subsequently purchased the mortgaged premises of Reed, parol evidence ought not to be introduced, to show a greater sum due on the mortgage, than the note and indorsements thereon would furnish evidence of; and that the admission of such evidence would operate as a fraud upon them. There may be cases, undoubtedly, where a mortgage debt could not be set up against a subsequent purchaser, when the same would be good against the mortgagor; and other cases, where it could not be set up to the same extent, as against the mortgagor; — as when a mortgagee stands by and allows a purchaser to buy an estate as being unencumbered, without disclosing his mortgage; or where he represents to the purchaser, that only a certain sum is due on his mortgage, and then attempts to set it up for a greater sum. But in the present case nothing appears, that, when the defendants, or the Bank of Rutland, purchased the premises, they made any inquiry of the plaintiff as to the sum due on his mortgage, or that they had any knowledge, from any source, — 233 — as to the indorsements upon the n'otes, or that they made their purchase with any reference to them. Under these circumstances, if it became material upon the trial in the county court, to determine the sum that was really due upon the mortgage notes, we think it was proper to permit parol evidence to be introduced to explain the indorsements upon them, or even to show-, that they were erroneously or mistakenly put upon the notes. 2. Ought the evidence offered by the defendants, to show that the plaintiff had been in the receipt of the rents and profits of the mortgaged premises, and evidence to show, that he had recovered damages for rents and profits upon the other portion of the mortgaged premises, to have been admitted? There is no occasion for us to decide, whether, in any supposable case, a defendant in ejectment could be permitted to show a payment of the mortgage debt, either in Whole, or in part, by a receipt of rents and profits by the plaintiff; and hence we give no opinion upon that question. In the present case, however, in the view we have taken of it, we think the evidence offered should have been admitted, — --but for a different object and purpose, altogether, having, as we think, an intimate connection with and an important bearing upon the main question in the case, that is, the effect of the receipt by the plaintiff of the $1875 at Bennington, in April, 1847. The debt of the plaintiff was not against the defendants, of the Bank of Rutland, who had succeeded to the rights of the defendants in the land, for which this suit was brought; but, inasmuch as that debt was charged upon the land, they were bound to discharge it, or yield the land to the plaintiff. How much were the defendants bound to pay, to relieve the land from the plaintiff’s incumbrance? Clearly, the sum that was due in equity upon his mortgage, — which Would, of course5 be the principal and interest of the mortgage debt, deducting such payments, as might have been made, and any sum, which the plaintiff might have received as rents and profits from the mortgaged estate. In the present case, as the sums, which were received by the plaintiff, (as proposed to be proved by the defendants,) were wholly uncertain and unliquidated, and the necessary and proper subjects of an accounting, before any application could be made anywhere, they could not be shown as payment upon the mortgage debt, (even — 234 — if it can ever be done;) but yet the defendants had the right to have such application made in some form, either by the aid of a court of chancery, or by the exercise of the equity power of the county court, and were only liable to pay the balance due after such application had been made. We think, therefore, that the defendants ought to have been permitted to show, that there did exist these equitable offsets to the plaintiff’s, debt, because, if such were really the case, then the sum “ due in equity” on the plaintiff’s mortgage beeame entirely uncertain and unliquidated, and the proper subject for settlement, adjustment, or compromise, upon such terms and conditions as the parties might agree to, — which might not be the case, if the sum due to the plaintiff were fixed and certain, 3. The great question involved in this case, however, is as to the effect of the receipt of the $1875 by the plaintiff from the agent of the Bank of Rutland on the tenth of April, 1847. Was it in law a mere naked unqualified payment of that sum, in part satisfaction of the plaintiff’s debt, as claimed by him? Or, on the other hand, did it amount to a full and complete accord and satisfaction between the parties, and thus bar the plaintiff from any farther claim for any balance he may be able to show in his favor ? We are not disposed here to question in any respect the soundness of the doctrine, “ that the receiving a part of a debt due, under an agreement, that the same shall be in full satisfaction, is no bar to an action to recover the balance,” which was established at an early period in England by the case of Cumber v. Wane, 1 Str. 426, and which was followed by a long and uninterrupted series of decisions in England and in this country. Although several recent decisions in England (especially the case of Sibree v. Tripp, in the exchequer chamber, 15 M. & W. 23,) have apparently somewhat shaken the doctrine there, yet it has become too well settled by repeated adjudications in this state, to be now departed from. This doctrine has never, to our knowledge, been held to extend to any cases, except where the plaintiff’s claim has been for a fixed and liquidated amount, or where the sum due could be ascertained by mere arithmetical calculation. In this case, as we have already attempted to show, the sum really due to the plaintiff was entirely unliquidated and uncertain, and could only be ascertained by having an account taken of the rents and profits, which he' had received, — 235 — and necessarily depended much upon mere judgment and opinion as to their amount and value. More than this, there was a dispute in reference to the amount due upon the notes themselves, — the plaintiff claiming to recover a much larger sum upon them, than the notes and indorsements showed to be due; and the whole matter had been involved in a protracted litigation for several years. Under these circumstances, we do not think, that the present case comes at all within the doctrine of Cumber v. Wane, so as to need sufficient consideration, provided the agreement can be established. The more important and much more difficult question to be settled in the case is, whether there was such an agreement between the parties, as to make the payment of the money to the plaintiff and the receipt of the same by him a good accord and satisfaction of his debt;.-for it is only upon that ground, that this can operate to bar his claim. There is no doubt, but what the offer of this sum to the plaintiff by the agent of the Rutland Bank would have been entirely inoperative as a tender, for the very reason, that it was clogged with this condition, that, if he received the money at all, he must receive it in full satisfaction of his mortgage debt; and the reason given in the books for this is, “ that the party making the tender has not a right to insist upon the claimant’s being concluded from claiming more than what was tendered, by force of any implied admissions, growing out of the reception of the money, that the sum tendered was the amount due to him, and that he received it in satisfaction of his claims." The party making the tender must not attach such conditions to it, that the other party cannot take it, and still have a full right to claim more, if he can show himself entitled to it upon trial of. his cause. It would seem to follow, as a necessary deduction from this well established rule, that, when a party makes the offer of a certain sum, to settle a claim, when the sum in controversy is open and unliquidated, and attaches to his offer the condition, that the same, if taken at all, must be received in full, or in satisfaction, of the claim in dispute, if the other party receive the money, he takes it clogged with the condition which the other party has attached to it, and is thus bound to its fulfilment. It is an acknowledged general principle, that the party paying money has the right to direct its application on any particular de — 236 — mand; and if the creditor receive it, he is bound to apply it as directed, even though he may declare to the debtor, at the very time of receiving it, that he will apply it in a different manner. It is urged, however, and with a good degree of plausibility, that it can-, not with propriety be said, that the plaintiff in this oase, when he received the money, received it in full satisfaction of his mortgage debt, when the case shows, that, at the very time of receiving it, he declared, that he would not receive it in that manner, but only so far as it went in part satisfaction of his debt. But we think, that the Bank of Rutland had the right to make him an offer of money ©n the very condition, upon which this was offered. The plaintiff was under no obligation to receive it; he could take it, or refuse it, as he chose; but if he saw fit to take it, after having been repeatedly informed of the terms and condition of the offer, and of the want of authority in the agent to vary the terms, he took it subject to the terms and conditions of the offer, and the law implies his agreement to the conditions from the act of taking the money thus offered ; and he could not alter this .legal implication, by expressing his dissent from the condition so attached to the offer. The case of McGlynn v. Billings, 16 Vt. 329, seems on this point to be identical with the present. In that case the plaintiff and defendant met for the purpose of'making a settlement, and, having examined their accounts, they disagreed as to the balance due to the plaintiff from the defendant. The defendant then drew an order in favor of the plaintiff upon a third person for the sum he admitted to be due, and offered it to the plaintiff as the balance his due. The plaintiff refused to receive the order, and claimed a larger sum, as being the amount the defendant owed him. The defendant then gave the order to one Hanley, who was present, and directed Hanley to deliver the order to the plaintiff, when he would receive it as the balance due to him. The plaintiff subsequently took the order from Hanley, but at the same time declared, that he did not receive it in full for the balance due him from the defendant, and brought his suit to recover the balance. The auditor reported, that there was still a clear balance due to the plaintiff above the amount of the order. In that case this court held, that the acceptance of the order by the plaintiff, under those circumstances, operated as a full discharge of all his claims, although he expressly declared, he did not — 237 — so receive it. As before said, we are entirely unable to find any ground to distinguish that case from the present, and we are satisfied, that that case was decided upon correct and established legal principles. » The case of Miller v. Holden, 18 Vt. 337, has been strongly pressed on ns, as establishing a contrary doctrine from that of McGlynn v. Billings ;-but, upon examination of that case, we think it was decided by the .court mainly upon the ground, that, after the witness standing by had given his opinion, that the reception of the money by the plaintiff then would only go in satisfaction of'his claim so far as it went, the conditions, which had been insisted on by both parties before that, were mutually waived, and that the money was received by the plaintiff without any condition attached to it whatever. And I am informed by those members of the court, who participated in that decision, that the case was decided on that ground entirely. The case of McGlynn v. Billings cannot be considered as shaken by this decision, for that case is cited and approved by the court, ip giving judgment in Miller v. Holden. We have come to this conclusion with some reluctance, as it is possible, that the result may, in this case, be productive of injustice to some extent, and as the plaintiff evidently did not understand, that such would be the effect of his receiving the money, which wag thus conditionally offered to him. But the old maxim, “ignorantia. legis non excusat,” mast apply in this case, as there does not appear-to have been either fraud, or mistake in fact- Upon the whole we think, that if the defendants satisfied the jury of the existence of the facts, as the exceptions in this case state the testimony tended tq prove, they formed a good defence to the plaintiff’s suit, and the jury should have been charged to that effect; and in refusing so tq charge and in rejecting the defendants’ evidence as above mentioned we think the county court erred, and their judgment is therefore reversed and a new trial granted.