State ex rel. State Bank v. Hastings

By the Court, Cole, J. This is a motion to quash an alternative writ of mandamus. The substance of the relation is, that Judge M. M. Cothren, on the 3d day of August, 1861, executed and delivered to the Iowa County Bank the following instrument: “ $625. Mineral Point, August 3, ’61. On the first day of October next, pay the Iowa County Bank or order, six hundred and twenty five dollars, in full for my quarter’s salary commencing on that day, and oblige M. M. Coth-ben. To S. D. HASTINGS, State Treasurer of Wisconsin and that the Iowa County Bank, for value, indorsed and delivered the same to the relator, The State Bank. The relation states that the quarter’s salary of Judge Cothren became due on the 1st of October last, and was certified by the secretary of state to the respondent, the state treasurer; that the same remains unpaid, and that the respondent has neglected and refused to pay the amount thereof to the State Bank, though he has sufficient funds in his hands applicable to that purpose. The writ is issued to compel the state treasurer to pay to the State Bank the sum of six hundred and twenty five dollars. It is admitted that the state treasurer refused to pay the sum to the State Bank on the instrument above described, for the reason that Judge Cothren wrote him a letter previous to the first day of October last, forbidding its payment. The single question arising upon the motion is : Does the relation state such facts as show that the State Bank is entitled to the amount of money, and to a writ of mandamus to compel the respondent to pay it over on the order ? It is conceded on both sides that the order is not in the nature of a bill of exchange, and that the legal incidents of negotiable paper do not belong to it. The order is drawn upon a particular fund, and its payment depended upon such [77] contingencies as to deprive it of tbat character. What then is the nature and effect of the order ? In support of the motion it is argued that the instrument is merely a written authority given to the Iowa County Bank to draw for Judge Cotkren his quarter’s salary falling due on the 1st of October, 1861, with the power of substitution, but that this authority was revocable at pleasure, and did not operate as an assignment to the holder, of the particular fund upon which it was drawn. We deem this an erroneous view of the nature and effect of the order. We think it was an assignment by Judge Oothren of the quarter’s salary in question to the Iowa County Bank, and that the money became payable to such bank, or to its order, according to the terms of the instrument. This position is fully sustained by the cases to which we were referred on the argument by the counsel resisting the motion to quash, as well as the following additional authorities: Morton vs. Naylor, 1 Hill, 583; Peyton vs. Hallett, 1 Caines, 363; McLellan vs. Walker, 26 Maine, 114; Legro vs. Staples, 16 Maine, 252; Nesmith vs. Drum, 8 W. & S., 9; Blin vs. Pierce, 20 Vermont, 25; Brooks vs. Hatch, 6 Leigh, 534; Mullhall vs. Quinn, 1 Gray, 105; Hartley vs. Tapley, 2 id., 565; Taylor vs. Lynch, 5 id., 49; Lannan vs. Smith, 7 id., 150. The quarter’s salary of Judge Oothren which became due on the 1st of October, 1861, was a possibility coupled with an interest, and as srrch capable of being assigned. Brackett vs. Blake, 7 Met., 335. Chancellor Kekt says, that it is sufficient that the thing contracted for has a potential existence, and that a single hope or expectation of means founded on a right in esse, may be the object of sale, as the next cast of the fisherman’s net, or fruits or animals not yet in existence, or the good will of a trade. 2 Kent, Lecture 39, page 602, 8th ed. The future earnings of a party to a contract may be assigned (Hartley vs. Tapley; Taylor vs. Lynch; Lannan vs. Smith, supra); or rents to become due (Morton vs. Naylor, supra); while in Brackett vs. Blake and Mulhall vs. Quinn, the court say: “ If a party is under an engagement for a term .of time, to which a salary is affixed, payable quarterly, especially if he has entered [78] uponthe duties of bis office, although at anytime liable to be he has an interest which may be assigned.” ifife cannot see why this doctrine is not strictly applicable to the case at bar. It is true we were referred to some English cases, which held that the assignment of the pay of officers in the public service, judges’ salaries, pensions, &c., was void, as being against public policy; but it was not contended that the doctrine of those cases was applicable to the condition of society, or to the principles of law or of public policy in this country. Eor certainly we can see no possible objection to permitting a judge to assign his salary before it becomes due, if he can find any person willing to take the risk of his living and being entitled to it when it becomes payable. Assuming that the instrument operated as an assignment of the salary to the Iowa County Bank or its assignee, still it is insisted the writ should be quashed on several grounds. First, it is said the order should be presented to the secretary of state, to be audited and allowed. This we deem unnecessary. The quarter’s salary due Judge Cothren on the 1st of October, 1861, was undoubtedly audited — if such a ceremony can be necessary — and certified to the treasurer as stated in the relation. This is the invariable practice of the state auditor. The order merely showed that this quarter’s salary belonged to the State Bank. And this order was undoubtedly all the voucher or receipt which the treasurer might require, to show that he had paid the quarter’s salary to the person to whom Judge Cothren had sold and assigned it, and who was authorized by Judge Cothren to receive the same. Again, it is said that the proceeding by mandamus is peculiar, and that the writ will not lie when the party applying for it has any other adequate remedy. This is undoubtedly a correct proposition of law. But what remedy has the State Bank against the respondent ? It is his duty to pay over money on appropriations to the party entitled to the same. He would probably have paid over to the State Bank the quarter’s salary on this order, had he not been forbidden by Judge Cothren to do so.' Still we hold that [79] Judge Ootbren has no right to stop the payment of the salary, haying sold and transferred his interest in the fund another. It then becomes the duty of the treasurer to pay it to the /State Bank It would not be contended that the treasurer would not be compelled by mandamus to pay the salary to Judge Oothren, had he not assigned it. Why then should he not be required by the same proceeding to pay the fund to the person whom Judge Oothren has clothed with his rights over it and authorized to receive it ? Abbott, Gregory & Finney, for the demurrer : The court has already decided that the order was an assignment of the quarter’s salary to the Iowa County Bank or its assignee. The legal effect of that instrument cannot be varied by parol evidence, even as between the Iowa County Bank and Judge Oothren. 7 Wis., 532; 1 Hill, 116; 1 Denio, 400; 1 Cow., 349; 4 Wis., 369. The instrument is not a bill of exchange, but the words “ or order ” must be construed so as to have some legal effect We insist that they import, if the question is one of agency merely, a right on the part of the Iowa County Bank to sell and dispose of the quarter’s salary. What else could the State Bank suppose they meant ? Where a loss is to be sustained from the misconduct of a third party, he who selected and trusted such party must bear the loss. Farmers' & M. Bank ■ vs. Butchers' & Dr. Bank, 16 N. Y,, 125; 4 Kern., 628; 1 , Story’s Eq., 887. Judge C. selected tbe Iowa County Rank as Ms agent, and furnished it with the most complete evidence that it bad a right to dispose of the quarter’s salary ; and he is now estopped from saying that it had instructions at variance with the power which the written' instrument imports. Note of Prof. Dwight to the case of Gould vs. The Town of Sterling, Am. Law Reg. for March, 1862, p. 297; Mallory vs. Mariner, decided June Term, 1862, of this court. [79] The motion to quash the writ must be denied. If the respondent desires to put in an answer, he can do so by filing the same within twenty days. An answer or return was afterward filed, which alleged, among other things, that the order in question was delivered to the Iowa County Bank by Judge Oothren without any consideration, and upon an express verbal agreement that the bank was to act as his agent in receiving the money when it became due, and to pay it over to him; and that he did not, at the time of signing and delivering the order, or at any other time, authorize said bank to indorse, sell, transfer, hypothecate or in any way dispose of the same to any person or for any purpose whatever. The relator demurred to the return. J. H. Knowlton, contra: The order was non-negotiahle, and whoever takes such paper, takes subject to all equities between the maker and the first holder, even when a consideration is expressed on the face of the paper; a fortiori is this so when the instrument expresses no consideration. Contracts unsealed and nonnegotiable must have a consideration to uphold them. 4 Johns., 235 ; 9 Cow., 779, 780 ; 7 Cow, 57; 5 Mass., 301 ; 1 Stewart, 51; 4Munf., 95 ; 11 Vt., 166 ; 4 Shep., 458. Even in bills of exchange and promissory notes, there must be a consideration as between the immediate parties. 5 B. & C., 503; 8 D. & R, 165; Bayley on Bills (5 Ed.), 499 ; Chitty on Bills (8 Ed.), 79-90; Roscoe, 111, 123 ; Chitty on Contracts (5 Am. Ed.), 27, 28; 4 Shep., 394. Had the order contained the words “ for value received,” it would have been a valid assignment on its face. But where an unsealed, non-negotiable instrument is silent as to a consideration, the purchaser must see, at his peril, that there is a consideration which will support it. An assignee of such a paper can get no greater right than his assignor had. The fact that no consideration is stated, is a most suspicious fact, and full notice to every assignee that the paper is void unless a consideration can be shown. As between Judge Cothren and the Iowa County Bank, the latter could not' have drawn the money from the treasurer after payment was countermanded. Anything that would have been a good return to the writ if that bank were the relator, is good against the present relator, as it could get no greater right than its assignor had. Had the Iowa County Bank collected the quarter’s salary, tbe money would bave belonged to Judge Cotbren. Tbe same is true bad tbe money been collected by tbe ent relator. 2. If tbe order is negotiable, or if, being nonnegotiable, it was in fact supported by a valid consideration, tben Judge Cotbren is liable to an action, in tbe one case as drawer, in tbe other for wrongfully forbidding its payment, and therefore a mandamus will not lie. By the Court, DixoN, C. J. It was decided on a former occasion that tbe order “was an assignment by Judge Cotb-ren of tbe quarter’s salary in question to tbe Iowa County Bank, and that tbe money became payable to such bank or its order, according to tbe terms of tbe instrument.” That, decision was of course made with reference to tbe facts as they tben appeared, one of which was that tbe order was- given for a valuable consideration received by tbe judge of tbe Iowa County Bank. This was averred in tbe relation and admitted by tbe motion. Now, however, tbe ease is in that respect reversed. It is admitted that tbe judge received m> consideration. Tbe averment of tbe relation is denied by tbe return. Tbe respondent furthermore alleges not only that tbe order was drawn without value, but that it was intended by tbe parties as a mere authority to tbe bank to receive and bold money for tbe judge’s use. To this return there is a demurrer, and tbe question is, Who, under these circumstances, is entitled to tbe money, tbe relator or Judge Cotbren ? Tbe actual good faith of tbe relator is not denied. It is conceded that it purchased and paid full value for tbe order, without notice of the judges’s rights, except such as is to be implied from tbe order itself. It will be seen at once that this is a very different question from that heretofore presented — so different, indeed, as scarcely to be influenced by the considerations which tben led to our decision. Upon tbe supposition that tbe judge drew tbe order for value, tben there could be no controversy as to tbe equitable or even tbe legal rights of tbe parties. They were wholly on tbe side of tbe relator, and not at all on tbe side of tbe judge. But now, viewed from tbe same stand point, they bang “ in even scale,” or so nearly so that we can with difficulty determine in [82] whose favor tbe beam is inclined. Indeed, I must say, were we to stop with tbe principles by wbicb we were tben governed, and to decide tbe case solely upon tbe effect to be given to tbe order as an assignment or conveyance in fact from Judge Cotbren to tbe Iowa County Bank, I tbinkwe should arrive at directly tbe opposite conclusion. Within all tbe authorities, upon tbe facts stated in tbe return, there was no assignment as between tbe judge and tbe Iowa County Bank. In an action between him and that bank, be could come in with parol evidence and show that there was no consideration, and thus turn tbe apparent assignment into a mere authority. Tbe decisions are numerous and uniform that between tbe original parties and those not protected by tbe operation of some other principle, such orders are not absolute but only prima facie or constructive assignments — presumed to be such until it be shown by extrinsic evidence that they were designed as a mere authority, wbicb may be by proof of want of consideration or other circumstances inconsistent with tbe supposition that a transfer was intended. How far this doctrine is encountered by tbe rule wbicb forbids tbe introduction of parol evidence to change tbe legal construction and meaning of written instruments, or whether it can be harmonized at all with that rule, I need not inquire. It is enough that it is established by a long line qf adjudications in several of tbe states, especially in Massachusetts. Looking tben to actual title, and that alone, and bold-ing that tbe relator must trace it through tbe Iowa County Bank, it is obvious there can be no recovery in this proceeding. If, therefore, tbe claim of tbe relator is to be sustained, it must be upon some other ground than that of assignment in fact from tbe judge to tbe Iowa County Bank. And tbe question is, whether there is any such ground upon wbicb it can be rationally placed. I think there is, and that it is one wbicb gives a most just and decided preponderance in favor of such claim. It is that of estoppel — that tbe judge, after having, by proper documentary evidence of title, clothed tbe Iowa County Bank with tbe apparent ownership of tbe fund, is estopped, as to Iona fide purchasers for value, from asserting that such apparent ownership was not tbe real ownership. [83] Having voluntarily entrusted tbe bank witb written evidence of. title, be is bound by tbe disposition it made of tbe erty, upon tbe obviously just principle, tbatwben one of two parties must suffer from an unauthorized act, tbe loss should fall upon that one who has enabled tbe guilty agent to perpetrate tbe fraud, and not upon tbe other, who has acted in good faith and witb proper caution. In In Pickering vs. Busk, 15 East, 38, tbe owner of hemp lying at wharfs in-London at tbe time of purchase, bad it transferred iff tbe wharfinger’s books into tbe name of tbe broker who effected tbe purchase for him, and whose ordinary business it was to buy and sell hemp. Tbe broker, without authority from tbe owner, sold tbe hemp to a purchaser for value, not having notice of tbe want of title. In trover by tbe owner against tbe assignees of tbe purchaser, it was held that tbe title was in tbe latter. ' The decision was put upon tbe ground that tbe broker hadan implied authorily to sell. Lord ElleNboboug-j, C. J., said : “ Strangers can only look to tbe acts of tbe parties and to tbe external indicia of property, and not to tbe private communications which may pass between tbe principal and bis broker; and if a person ■ authorize another to assume tbe apparent right of disposing of property in tbe ordinary course of trade, it must be presumed that tbe apparent authority is tbe real authority.” I think tbe same doctrine applicable here, and fully decisive of tbe rights of tbe parties, and that whether we regard tbe order as a prima facie assignment of tbe quarter’s salary or an authority to tbe bank to receive it. If an authority, then I think it must be construed as an authority not only to receive, but in tbe mean time to dispose of tbe fund by a transfer of tbe order in tbe form of an indorsement. Otherwise I can give no effect to tbe words “or order.” They seem to me to be wholly inconsistent witb tbe idea of mere substitution, or that tbe money collected was to come back into tbe bands of tbe Iowa County Bank to be held for tbe use of tbe judge. On tbe other band they appear clearly to have been used to give tbe instrument, so far as might be, tbe character of negotiable paper; at all events, to signify that it was assignable, and tbe fund subject to transfer at tbe [84] option of tbe payee. This, being the natural import, should the legal construction of the language employed. It gbould admit of no explanation incompatible with the interest of third persons who have acted in good faith upon it. As to them, the instrument should be fixed and irrevocable as it appeal’s, and not subject to limitation by the actual authority of the payee, the extent of which is subsequently to be ascertained the fact. But it is not by the instrument as an authority that I choose to test the rights of the parties. I prefer rather to treat it, according to the decisions, as a prima fade assignment. As such, upon the principles already stated, I can feel little doubt as to the proper solution of the question. Understanding the expression, "prima fade' to be equivalent in signification to the word “ apparent” as used by Lord ElleNBOROUgh, I say with that learned judge, that I cannot subscribe to the doctrine, that the engagements of the assignee named in such instrument are necessarily and ft. all cases limited to his actual interest, the reality of which is afterwards to be tried by the fact; but that he may bind the assignor or maker within the limits of his apparent ownership; and that there would be no safety in mercantile transactions if he could not. It was a part of the business of the Iowa County Bank, in common with all similar institutions, to buy, sell, and deal in funds and evidences of debt of various kinds ; and when intrusted with them under written evidence of title given by the owner, it must be presumed that a transfer was intended, or at least that the bank was authorized to sell. Between the owner of the hemp and the broker, the evidence afforded by the entry in the wharfinger’s books was open to explanation and disproof; but as there the apparent authority became real, when the rights of a purchaser in good faith intervened, so here the prima facie assignment becomes conclusive under like circumstances. “ Or I should have left it to the jury to say, whether the plaintiffs had, by their own conduct, enabled Smith (the agent) to hold himself forth to the world as having not the possession only, but the property; for if the real owner of goods suffer another to have possession of his property and [85] of those documents wbicb are the indicia of property, then perhaps a sale by such a person would bind the true Abbott, C. J., in Dyer v. Pearson, 3 Barn. & Cress., 38 (10 E. C. L., 15). See also Davis v. Bradley, 21 Vermont, 55. It is impossible for me to discriminate between the effect, as an estoppel, of executing and putting in circulation an instrument like that under consideration, and the effect which is given to many other acts in pais, by which a man is excluded from asserting the truth. If for instance Judge Cothren, being present, had verbally represented to the relator that the Iowa County Bank was, the owner of the fund, and the relator had purchased relying upon such representation ; or if, under like circumstances, he had merely remained silent while the sale was being made, there can be no doubt that he would afterwards have been concluded by his representation or conduct, although contrary to the truth. According to the interpretation given by law, the order in question was a continuing representation, to whomsoever it was offered for negotiation and sale, that the quarter’s salary belonged to the Iowa County Bank, and the judge should be bound by whatever disposition was made of it by the bank. “ There is, I think, no distinction in principle, although the party who enables another to assume the credit of ownership, may not be actually present when the act is done by which the third party is deceived.” Thompson v. Blanchard, 4 Coms., 310. Cases are numerous in which parties have been held estopped by their written statements acted on in good faith. Wickoff v. True, Clarke’s Ch. R., 237; Holmes v. Williams, 10 Paige, 336; Chamberlain v. Townsend, 26 Barb., 611; Mechanics’ Bank of Brooklyn v. Townsend, 29 Barb., 569. “ The truth is,” says the annotator (Doe v. Oliver — Duchess of Kingston’s Case), 2 Smith’s Lead. Cas., 620, “that the courts have been for some time favorable to the utility of the doctrine of estoppel, hostile to its technicality. Perceiving how essential it is to the quick and easy transaction of business, that one man should be able to put faith in the conduct and representations of his fellow, they have inclined to hold such conduct and such representations binding in cases [86] > where a mischief or injustice would be caused by treating . their effect as revocable.” The foregoing observations render particular comment upon the positions of the respondent’s counsel unnecessary. It is a matter of no importance that the instrument was not negotiable within the law merchant. It is not as a chose in action, or contract to be performed in the future, but as a present executed transfer, that we are to regard it. Neither is it material that no consideration was expressed on the face of it. Prima, fade, such an order is evidence of a consideration, without the words 11 value received,” or other express evidence of consideration, so as to constitute a good assignment. Adams v. Robinson, 1 Pick., 460; Bourne v. Cabot, 3 Metcalf, 305. In my judgment the demurrer should be sustained. Mr. Justice Cole concurring: Ordered accordingly.