Hawes v. Woolcock

Paine, J. The court below erred in excluding all evidence of the. counterclaim set up in the answer. The note being payable in Canada currency, and therefore not negotiable, and plaintiff having purchased it long after it became due, it was, of course, subject to the equities between the original parties. The answer then shows,- by way of counterclaim, that after the note was due, and while it was held by William J. Hoare, the payee, the defendant being indebted to him on the note, and he and his brother being jointly indebted to the defendant in a larger amount for the.rent of a farm leased by him to them in Canada, there was an accounting between the defendant and William J. Hoare as to the amount of the rent due, and a mutual agreement that if the defendant would wait for the rent until Hoare could go to Canada, if the latter did not bring back to the defendant the written obligation of his brother to pay the balance of the rent, he would himself pay it, and that so much of it as was necessary should be applied in payment of this note. It was further alleged that Hoare went to Canada, and failed to bring back the written obligation of his brother to pay the rent as alleged. We are unable to see why these facts do not show a [634] valid, binding agreement between William J. Hoare and the defendant to apply the rent in payment of the note. There can be no reasons as between Hoare and his brother that should deprive him of the authority to make such an agreement. It is not like the case of a partner or joint owner selling the joint property in payment of his individual debt. On the contrary, it is a case of a joint debtor paying the joint indebtedness with his individual property. This he may always do. And after he has made a valid agreement for such payment by applying a claim in his own favor in extinguishment of the joint debt, there seems to be no reason why it should not be enforced. There was a sufficient consideration for the agreement. The defendant promised to wait for the rent until Hoare could go to Canada and return. This, alone would have been a sufficient consideration. But without this, the promise of each was a good consideration for the promise of the other. Neither party could have enforced such a set-off without such an agreement. The promise of Hoare on the one part to apply his individual claim in payment of the joint debt of himself and brother, and the promise of the defendant on the other part to receive it as such payment, were each a good consideration for the other, and sufficient to uphold it as an agreement. It would operate as a mutual application and extinguishment of the two debts, so far as the one was set off against the other. It is also alleged in the answer, that the defendant had released the brother of William J. Hoare from the indebtedness for rent. If it had been alleged that this was done while William J. Hoare held the note, it would then, under our statute, which allows one joint debtor to be released without discharging the other, have clearly shown a valid counterclaim as against William J. Hoare, for the balance of the rent due from him. But this allegation is deficient in not showing [635] when the release was given. But as a good counterclaim was shown on the agreement, it was unnecessary to rely upon the alleged release. Although the judgment must be reversed for the error in excluding the evidence offered in support of the counterclaim, it will be proper, as necessary to a final adjustment of the controversy, for us to pass upon another question presented and discussed. The note being payable in Canada currency, and that currency having been at a premium at the time the note fell due, and subsequently fluctuating in amount, at what date should the premium be taken in determining the amount due upon the note ? This is a question of considerable interest. There are authorities which would support the position, that where a note payable in the currency of a foreign country is sued on in this, the difference of exchange between the two should not be considered at all in determining the amount of the recovery. Martin and others v. Franklin, 4 Johns. 124; Scofield v. Day, 20 id. 102; Adams v. Cordis, 8 Pick. 260. But the weight of authority seems to be the other way, as appears from the cases cited in Edwards on Bills and Notes, pp. 725 et seq. At all events, this court has adopted the other rule. See Pfeil v. Higby and another, 21 Wis. 248. But conceding that the party in such case should recover exchange, the question still remains, at what date the premium shall be taken in estimating the amount of the recovery. Shall it be the time when the note fell due, or the time of the trial ? This may be a very material question, as the facts of this case show. For at the time the note fell due, the premium on Canada currency was thirty-seven per cent., while at the time of the trial it was only about nineteen or twenty. Perhaps a strict application of logical reasoning to the question would lead to the result that the premium should be estimated at the rate when the note [636] fell due. That was when the money should have been paid, and when the default in performing the contract occurred. This conclusion would be supported by the analogy derived from the rule of damages on contracts to deliver specific articles, fixing the market price at the time when they ought to have been delivered as the criterion. This rule might sometimes be to the advantage of the holder of the note, as in the present case. In other cases, where the premium was less at the time the note became due than at the time of trial, it would be to his detriment. And in view of these uncertainties and fluctuations in the rate, upon grounds of policy as well as for its tendency to do as complete justice between the parties as is possible, we have come to the conclusion that the true rule in such cases is to give judgment for such an amount as will, at the time of the judgment, purchase the amount due on the note in the funds or currency in which it is payable. To accomplish this, of course, the premium should be estimated at the rate prevailing at the time of trial. By this rule the holder would neither gain nor lose by the fluctuations in the rate, but whenever he obtained a judgment would obtain it for a sum which would then procure him the exact amount to which he was entitled in the proper currency. This does complete justice between the parties and seems, therefore, to indicate the true extent to which the difference of exchange in such cases should affect the amount of recovery. It appears that on November 9, 1869, a payment was made on the note, of $640 in American money. The amount which ought to have been credited on the note as of that date, was the amount of Canada currency which the $640 American money would have then bought. If the premium at that date was, as testified, thirty-two per cent., the correct amount to be credited would have been ascertained by dividing the $640 by $1.32. [637] The directions given by the court below, upon this point, as well as upon the date at which the rate of the premium was to be taken in fixing the amount of the judgment, were not in conformity with the rules above indicated, and are therefore erroneous. By the Court. — The judgment is reversed, and the cause remanded for a new trial.