Hopkins v. Detwiler & Co.

Green, Judge: The only question presented by the record in this cause, which it is necessary for us to consider is: Was the negotiable note dated Julv 10, 1864, executed by J. B. Detwiler & Co. to the plaintiffs, Hopkins & Janney, payable and negotiable at the Merchants’ and Mechanics’ bank of Wheeling two years after its date, and which fell due on July 19, 1866, paid by J. B. Detwiler & Co. on the day on which it fell due ? If paid at all, it was paid by J. B. Detwiler & Co. on July 19> 1866. I have stated all the evidence of the witnesses bearing — 743 — on this question. I have stated this evidence instead of stating simply the facts proven, because though there were several living witnesses, who were personally cognizant of all the facts bearing on this question, only one of them was examined, and he did not state all of the facts, which must have been within his personal knowledge. But this failure to state all the facts clearly was not the result of any apparent unwillingness on the part of the witness, but resulted from the failure of the counsel on both sides to propound to him questions, which would have called forth a statement of facts, which would materially have aided the court in determining the question under consideration. The witness to whom I refer is A. £1. Detwiler. All of these facts were obviously personally known also to J. B. Detwiler. He was living, for he filed his answer in this cause on September 3, 1884, and the depositions in this cause bearing on the question under consideration were taken on August 30, 1884, four days prior to the filing of his answer. Yet his deposition was taken by neither the plaintiffs nor the defendants. It is probable too that important facts bearing on the question, which we are considering, were personally known to the cashier of the National Bank of "Wheeling and to the directors of this bank in July, 1866, when that bank discounted the draft of J. B. Detwiler & Co. on Detwiler & English, out of the proceeds of which the plaintiffs claim, that this negotiable note of $2,480.00 was at once paid by J. B. Detwiler & Co. Yet the deposition neither of this cashier nor of any of these directors was taken, though it is probable that some of these parties were living. Instead of taking the deposition of any of the persons, who were probably cognizant of the facts, the plaintiffs contented themselves with taking the deposition of John Wagner, only the cashier ol this bank in 1884, who stated that he had no personal knowledge of the facts, as he was not cashier of the bank in 1866, when these facts transpired, and all he knew of them was from the original entries on the books of the bank and from its correspondence. Because of the defective manner, in which this cause is presented to us, we are compelled to supply the deficiency by inferences from the few and imperfectly stated facts which' are proven. And first: Was the draft dated July 19, 1866, — 744 — drawn on Detwiler & English of Philadelphia and payable to the order ot J. B. Detwiler & Co. for $2,480.00 ever accepted by Detwiler & English; and, if so, when? It is stated by John Wagner, the cashier of the National Bank of West Virginia, that the books of that bank showed “ that on the 19th of July the bank discounted for J. B. Detwiler & Co. a draft drawn by them July 19, 1866, on Detwiler & English at ninety days for $2,480.00.” He does not say, that the books of the bank showed, that this draft had then on it the acceptance of Detwiler & English; and I presume, if 'it had been then accepted formally on the face or back of the draft, the books of the bank would have shown the fact. Heneé I infer, that it is most probable that this draft had not been accepted by Detwiler & English, when it was discounted by the National Bank of West Virginia. After it had been discounted by this bank, was it presented to Detwiler & English for their formal acceptance in writing, and did they so accept it? We might infer that this was the case, because it is usual to present such a draft for acceptance, and because we have in the evidence of A. H. Detwiler what amounts to a statement, that J. B. Detwiler & Co. asked of him as a member of the firm of Detwiler & English the privilege of drawing this draft on Detwiler & English, and further because James W. English expressly states, that Detwiler & English accepted this draft. But still it is doubtful, whether this draft was ever formally presented,to Detwiler & English for their acceptance. It may have been, and most probably was, only presented to them for payment at the expiration of the ninety days, the time for which it was drawn. This inference we draw from the fact, that this draft is filed with the answer of Eorbes, and, as the record is presented to us, has on it no acceptance signed by Detwiler & English. This may be the result of the clerk’s failure to copy such acceptance, when the record was made out by him ; and if so, we could ascertain, whether or no it was such an omission, by a writ of certiorari; but we deem it unnecessary to issue such writ, because we have concluded, that it would make no difference in our conclusions, whether this draft was or was not formally accepted by Detwiler & English. We will therefore regard it as a fact, that the draft never was presented to’ Detwiler & — 745 — English for their acceptance and never was formally accepted by them. Was it paid by them^and if so, when ? That it was paid by them at maturity is expressly proven by A. H. Detwiler, who was one of the firm of Detwiler & English. It is true James W. English says, he thinks it was protested, but says he is not positive. That it was not protested is evidenced by the fact, that it was filed with the answer of Eorbes, and there was no protest accompanying it, as there would have been had it been protested. Before this draft was drawn by J. B. Detwiler & Co., did they have an understanding with A. II. Detwiler, of the firm of Detwiler & English, that Detwiler & English would accept this draft, and that it would be met, and to meet this second negotiable note of J. B. Detwiler & Co. payable to A. H. Detwiler for $2,480.00, due July 19, 1866, and secured in the second clause of the deed of trust ? That there was such an understanding, seems to me clear for several reasons. First. James W. English, the confidential book-keeper of A. H-Detwiler & Co. at that time, says in his deposition, that he knows the draft was drawn for the purpose of meeting this note of $2,480.00 due by J. B. Detwiler & Co. to A. II. Det-wiler & Co. His knowledge of this, considering his confidential position, would naturally result from such an understanding between A. H. Detwiler and J. B. Detwiler & Co. Then A. II. Detwiler expressly states in his deposition that “ J. B. Detwiler & Co. asked of him the privilege of drawing on Detwiler & English for this purpose.” Of course, if this statement is to be believed, there was such an express understanding, as we have spoken of, between A. H. Detwiler of the firm of Detwiler & English, before the draft for $2,480.00 was drawn, and it was drawn in consequence of this express understanding. And lastly, what occurred when this draft was drawn by Detwiler & English, and discounted by the National Bank of West Virginia, it seems to me, demonstrates beyond doubt, that there was, before this draft was drawn, a distinct understanding between Detwiler & English and J. B. Detwiler, that they would accept and become responsible for this draft when drawn, if it was used to meet the negoti able noteAf J. B. Detwiler & Co. to^A. H. Detwiler & Co. fo — 746 — tbe same amount as tbe proposed draft. This negotiable note had been sent to the bank for collection July 11, 1866, nine days before it fell due, and when it fell due, the bank discounted the draft of J. B. Detwiler & Co. on Detwiler & English for the exact amount of the note, and handed the note to J. B. Detwiler & Co., and the next day, I presume by the next mail, forwarded the proceeds of the discount of the draft to the Manufacturers’ National Bank of Philadelphia, from whom it had received the note, and in whose hands it had been placed by A. H. Detwiler, of the firm of A. II. Detwiler & Co. for collection. At the same time, J. B. Detwiler & Co. sent by mail to Detwiler & English the note which had been handed to them by the bank. This is stated in the deposition of A. H. Detwiler. He says; “ They (J. B. Detwiler & Co.) took up their note with the draft on Det-wfiler & English. They returned us then the note to Detwiler & English.” This statement shows, that the note as soon as it was handed to J. B. Detwiler & Co., was by them sent to Detwiler & English on whom they had drawn this draft. When Detwiler & English paid this draft at maturity, they were paid the amount of the draft or note by A. H. Detwiler & Co., and they passed the note to A. H. Detwiler Co., the original payees, and it was produced in this cause by their counsel, in whose hands they placed' it for collection. This is proven by A. H. Detwiler, and it was to some extent corroborated by the testimony of James W. English and by Isaac Detwiler, though their evidence throws but little light on the subject. There is no evidence on the part of the plaintiffs, that tends in any degree to rebut these statements of A. H. Detwiler in his deposition; and we cannot but regard them as stating the real facts, so far as they go. If it was not true, that this note was forwarded at once to Detwiler & English, as soon as it was handed to J. B. Detwiler & Co. by the bank, it should have been proven by the plaintiffs, and whether it was or not, could have been proven, I presume, by J. B. Detwiler. They did not take his deposition, Isup-pose, because his answer in this cause plainly indicated, that if his deposition had been taken, he would have corroborated the statements made by A. H. Detwiler in his deposition. There is nothing then in the record to support the position — 747 — of the counsel for the appellants, that the National Bank of "West Virginia discounted the draft drawn by J. B. Detwiler & Co. on Detwiler & English on the exclusive credit of J. B. Detwiler &. Co., and that out of the proceeds of this discount they paid their negotiable note of $2,480.00 due to A. H. Detwiler & Co. and took up the note; and that after the destruction by fire of their mill, some four days afterwards, they agreed with A. Ii. Detwiler one of the firm of A. H. Detwiler- & Co., that if Detwiler & English would pay this draft, this negotiable note would be transferred to them as unpaid, and that thus the orginal security by deed of trust on the real property of Detwiler & Co. and on their insurance of said property for the security of their notes would be kept alive, though in point of fact this note had been paid in full. If this had been so, their position, that the security for this note could not be kept alive by an agreement made after the note had been fully paid according to the understanding of both the makers and the payees, would be a .sound position. But the evidence seems to me to show clearly, that the real arrangement between A. H. Detwiler & Co. and J. B. Det-wiler & Co. was, that Detwiler & English, of which parto ei’ship he was the pi’incipal party, would accept this draft by J. B. Detwiler & Co. when drawn, provided that out of its pi’oceeds they would take up this note secured by this deed of ti'ust and send it to Detwiler & English as an unpaid note secured by the deed of trust; and that this agreement was earned out by J. B. Detwiler & Co. drawing this draft on Detwiler & English and getting it discounted, and out oi the proceeds taking up the negotiable note of J. B. Detwiler & Co. to A. H. Detwiler & Co. and at once delivering it to Detwiler and English as a note secured by this deed of trust. So understanding the facts the only question is : "Was this transaction to be regarded in a court of equity as a payment of the negotiable note or only as an extension for ninety days, when this draft became due, of the time when this note became due? The circuit court regarded this transaction as a simple granting to J. B. Detwiler & Co. of a further credit of ninety days on the debt evidenced by this negotiable note secured by this deed of trust. The question before us is': Did — 748 — the circuit court err in this conclusion? It is evident it did not err, unless there is some inflexible rule of law, that, if a note is secured by a deed of trust, it is the note itself that is secured by the deed of trust and not the debt represented by such note, and if the form of the evidence of this debt is changed, that the deed of trust can not be regarded as a security for the debt represented by the new form of its evidence. But nothing is clearer than that no such rule of law exists, but that the very reverse of this rule is universally held to be law in a court of equity. Take for instance the case of The Merchants National Bank v. Good, administrator, 21 W. Va. 455. This Court decided in that case three propositions as stated in points three, four and six of the syllabus as follows : “8. The giving of a new note for an old one which has became due — the amount and makers of the two notes being the same, will not be treated as a payment or extinguishment of the old note or the pre-existing debt, unless the parties so expressly agree; but it will be regarded as a mere extension of credit. “4. In such case the surrender of the old note will not of itself raise.a presumption of such agreement to extinguish the old debt by the giving of the new one, it being considered as a conditional surrender and that its obligation is restored and revived, if the new note is not paid. “6. Nor will the presumption of payment apply where the creditor, when he takes the new note abandons some security which he holds.” In this case, page 465, Judge Snyder in delivering the opinion of the Court said : “ It is well settled in both Virginia and this State, that a note will not be regarded as an absolute extinguishment or payment of a precedent note or pre-exist-ing debt, unless it be so expressly agreed, whether the note received was that of one previously bound, or of a stranger; See Poole v. Rice, 9 W. Va. 73; Lazier v. Nevin, 3 W. Va. 627-8; Miller v. Miller, 8 W. Va. 550; Dunlap v. Shanklin, 10 W. Va. 662; Bantz v. Basnett, 12 W. Va. 772; Sayre v. King, 17 W. Va. 562; Farmers’ Bank v. Mutual Association So., 4 Leigh 88 ; Moses v. Trice, 21 Grat. 556; Lewis v. Davisson, 29 Grat. 216.” In Jones on Mortgages, vol. 2, § 924, the author states — 749 — the law on this subject: “ No change in the form of indebtedness or in the mode or time of payment will discharge the mortgage. A mortgage secures the debt and not the note or bond or other evidence of the debt. No change in the form of the evidence or in the mode or time of its payment, nothing short of the actual 'payment of the debt or an express release, will operate to discharge the mortgage. The mortgage remains alien, till the debt it was given to secure is satisfied, and is not affected by any change of the note or by giving a different instrument as evidence of the debt, or by a merger at law merging the original evidence of indebtedness, or by a recognizance of record in lieu of the mortgage note.” To sustain this proposition the author refers to sixty cases, among which I would call special attention to the case of Flower v. Edwards, 66 Ill. 438. Among the cases cited is one, which so strongly resembles the case before us, that I will state it at some length. I refer to the case of Babcock v. Morse, 19 Barb. 140. In that case the facts were as follows : On the 4th of March, 1848, Morse & 'Wiggins executed a mortgage to Babcock & Burnap to secure the payment of all such sums of money, as the mortgagees should become liable for by accepting or signing for the mortgagers any notes or drafts. Soon after Morse & Wiggins drew drafts on Babcock & Bur-nap to the amount of $850.00, which they accepted. These drafts were renewed by other drafts drawn and accepted by the same parties from time to time till March 21, 1851, there then remaining due on them the sum of $850.00. On that day Morse drew a draft on Babcock, Dubuisson & Iiall, which with another draft by and on the same parties, was discounted and the proceeds remitted to Babcock to meet the acceptances of Babcock & Burnap. This was done under-an arrangment made between Morse & Babcock and Babcock, Dubuisson & Hall to the effect that Morse might draw on the firm of Babcock, Dubuisson & Hall for the purpose of meeting the original acceptances of Babcock & Burnap, and that Babcock would indemnify Babcock, Dubuisson &Hall against loss. In an action to foreclose the mortgage executed by Morse & Wiggins, it was insisted, that the receipt by Babcock of the proceeds of the draft drawn upon Babcock, Dubuisson & Hall to meet the acceptances of Babcock & Burnap was a payment of the debt, — 750 — for which the mortgage was a security, and consequently the action would not lie. But the court decided, that Babcock was not discharged from liability, nor the debt secured by the mortgage substantially changed, except in respect to further credits; that as between Babcock and the firm of Bab-cock, Dubuisson & Hall he was the principal debtor and they were his sureties; that as to him the transaction was but a renewal of drafts, and the mortgage continued to be security for his liability; and that it might be foreclosed by him upon the non-payment of the drafts drawn on this firm. The court says on pages 143 and 144 : “ If Morse had drawn upon Babcock & Burnap, and Bab-cock had accepted his drafts and secured the proceeds to the full amount due upon the mortgage, it would not be contended, that the demand secured by the mortgage was thereby paid ; the transaction would have been simply a renewal of the evidence of indebtedness and an extension of credit for the period the drafts were to run. It has often been held, that a renewal of notes secured by mortgage or judgment is not a satisfaction or extinguishment of the original debt so as to affect the continuance of the security. (Dunham v. Dey, 15 Johns. 554; Brickerhoff v. Lansing, 4 Johns. Ch’y. 65 The Bank of Utica v. Finch, 8 Barb. Ch’y. 293.) So if Bab-cock had given his promissory notes and taken up the drafts upon Babcock & Basnap, the effect would be the same; it would be a mere renewal. And if he had procured others to unite with him in the note as his sureties, it is not perceived, that the result would be different. There is no difference in principle between the present case and the case supposed.” In my judgment there is no difference in principle between the ease now before us, and the supposed case put by the New "York court; and as held by the circuit court, the draft of J. B. Detwiler &. Co. of July 19, 1866, for $2,480.00 upon Detwiler & English was not a payment of the negotiable note for that amount given by J. B. Detwiler & Co. to A. H. Det-wiler & Co. secured by a deed of trust, but was merely an ex-tention of credit on the debt represented by that note. There was no error in the decree of the circuit court giving costs against the plaintiffs, as by their false demand of the funds in the hands of the trustees they delayed the defendants, A. II. — 751 — Detwiler & Co., for many years in the receipt of funds, which were justly coming to them. The decree ot the circuit court of Ohio county of October 11, 1884, must therefore be affirmed and the appellees must recover of the appellants their costs in this Court expended and $30.00 damages. AFFIRMED.