Exchange Bank of Virginia v. Morrall

Haymond, Judge, delivered the opinion of the Court: The first and second errors assigned by the appellant are together substantially, thát the court erred in overruling the demurrers to the original and amended bills. The appellant’s third, assignment of error is as follows: — 550 — “ ^11 not dismissing the said bills on the hearing for want °f jurisdiction, as there was no proof of loss of said note, 0f any 0f ¿jjg papers connected with said action at law for the same demand, and no ground of equitable jurisdiction existed.” Syllabus i. The counsel for the appellant in his brief, which is before us, says: “The demurrer to the bill should have been sustained, because it fails to offer a proper indemnity, and cites 1 Story Eq. Jur. §§ 85, 86, and said counsel fails to suggest any other error of the court in overruling said demurrer. ' Mr. Story in said section eighty five in speaking of negotiable notes does say: “In such a case therefore equity will entertain a bill for relief and payment, upon an offer in the bill to give a proper indemnity under the direction of the court, and not without. And such an offer entitles the court to require an indemnity, not strictly attainable at law, and finds a just jurisdiction j ” and he cites authorities in note two. In the last clause of said section eighty six, Mr. Story says: “And a bond of indemnity under such circumstances is but a just security to the promisor against the vexation and accumulated expenses of a suit.” Adams in his excellent work on equity at side page 168 and top page 382, fourth American ed., says : “ If however the bill or note be negotiable, it.follows that a plaintiff alleging it to have been lost may in fact have assigned it to a third party, against whose claim the court of law cannot indemnify the debtor. For this reason it is held at law, that a plaintiff suing on a negotiable instrument shall not recover the amount, unless he deliver’s up the security. And therefore a court of equity, which can enforce a proper indemnity from the plaintiffs will entertain jurisdiction to compel payment, on such indemnity being given. If the security be not negotiable, its loss will not prevent the creditor from recovering at law, and will not therefore create a jurisdiction in equity.” In the case of the Bank of Virginia v. Bland, 6 — 551 — Munf. 166, the bill avers substantially, that the plaintiff applied to the agents of the bank at Fredericksburg for payment of the said notes on or about the 4th of March, 1811, and offered to give the said president, directors and company bond and security, to indemnify them against any claim that might thereafter be exhibited against them on account of said notes ; but there does .not appear in the bill an offer to give proper indemnity under the direction of the court, or its equivalent. In the case of Farmers’ Bank of Virginia v. Reynolds, 4 Rand. 186, the bill contained substantially the same averment as in the case last cited ; but still it does not appear from the report that the bill contained an offer to give “ a proper indemnity under the direction of the court.” And in this case the Court of Appeals held, that “when a bank note is cut in two, and one half sent by mail and lost, the holder of the remaining half has a right to demaud payment at the bank upon presentation of the half in his possession, proving ownership, and giving bond with adequate security for the indemnification of the bank. But if these prerequisites are not complied with, and the bank is sued in consequence of refusing payment, the holder shall not recover interest or costs, although he may perform the conditions after the suit is brought.” See opinion of the court in the case. In the case of the East India Co. v. Boddam, 9 Ves. 464, which was a bill setting up a lost bond, it appears, that the plaintiff in the bill offered indemnity as the court should direct. And so in the case of Tereese v. Qeray, Finch’s R. 301; and so in the case of Mossop v. Eadon, 16 Ves. Jr. 430. syllabus 3. Syllabus 2, It seems it is not necessary, to maintain the suit in equity against, the makers and endorsers of a negotiable note, I hat the bond of indemnity should be tendered before suit, still the question of costs is for the court to determine according to equity. But whether the proper indemnity, which the court may require, be offered in the — 552 — bill or not, certainly the court should not decree the payment of the debt without requiring the bond of indemnity to be executed. In the case in 4 Rand. 186, before cited, the court below entered a decree for the debt, &c., but in the decree suspended the effect of the decree, until the plaintiffs shall have entered into bond with good security to the defendants in the penalty of $120.00, &c. And the Court of Appeals did not find fault with the decree in this respect. I think it is more safe and more in conformity with what seems to be the general practice to offer in the bill to give a proper indemnity under the direction of the court, still I am not prepared to say in view of said cases in 6 Munf. and 4 Rand., that in Virginia it is indispensible to make such offer in the bill, while it is indispensible that the court shall, where it decrees for the debt, in such a case require ample indemnity tobe given for the indemnity and .protection of the maker and endorsers of the note and each of them decreed against for the debt in whole or part. Indeed the plaintiff should have no benefit of the decree for the debt, &c., until proper indemnity is given, and generally the decree should so provide. While for the- reason above stated I do not feel satisfied at this time that the plaintiffs’ bill is fatally defective upon general demurrer for the said special reason assigned by the appellant’s counsel in his brief, still I am free to say, that, if I could see that the appellant would in anywise be prejudiced by overruling said special reason assigned in his brief against the sufficiency of said bill, I would give the subject much more careful and full examination than I have; but as, under the view I take of the case in another material aspect, he cannot be prejudiced thereby, I now simply overrule said special reason assigned for the present in this case, but leave theque.'tion open in other cases hereafter, should they arise before this Court, when it may be more important to have a more thorough and full examination and consideration of the question. No other error is assigned or suggested by appellant in his brief or — 553 — otherwise before ns to the decree of the court in overruling said demurrers; and the appellant’s said assignments of error in the decree of the court in overruling the same are overruled.. Syllabus 4. In order to maintain a suit in equity, setting up a lost negotiable note or bond and praying for a decree for the payment thereof, it is indispensible, when the loss of such note or bond is controverted by the answer of the defendants, that the loss should at the hearing of the cause be established by competent and satisfactory proofs. If, therefore, the plaintiff in such bill fails at the hearing to establish the loss of the instrument, in such case the suit will be dismissed. 1 Story’s Eq. Jur. § 85. In the case at bar there is a total failure on the part of the plaintiff to prove the loss of the negotiable note in the bill mentioned. In fact it may in truth be said^ that the plaintiff has made no effort whatever to prove the loss of said note. No evidence tending to prove that fact appears in the record of the cause, as it is before us; and no evidence appears tending to prove the loss of the alleged certificate of protest. There are other insuffi-ciencies and defects in the plaintiffs evidence as against the endorsers of said note in the bill mentioned, but it is immaterial and unnecessary to specify or further refer to them, as they are immaterial in the absence of proof as to the loss of said negotiable note. For the foregoing reasons there is error in the said decree of the circuit court of the county of Barbour, rendered in this cause on the said 7th day of March, 1868; and the same must therefore be reversed, and the appellee, The Exchange Bank of Virginia, pay to the appellant, Lair L. Morral!, his costs about the prosecution of his appeal and supersedeas in this cause in this Court expended. And this Court proceeding to render such decree as said circuit court should have rendered, it is, for the reason that the plaintiff has failed to prove the loss of the negotiable note in the bill mentioned, adjudged, ordered and decreed, that the plaintiffs’ original and amended bills — 554 — filed in this cause be dismissed, and that the plaintiff, the * 1 A said Exchange Bank of Virginia, do pay to the detend-antg tfieir costs al30Ut their defence in this suit inthecir-cujt court 0f the county of Barbour expended. The Other Judges Concurred. Decree Reversed.