Borup v. Nininger

By the Court. FláNdeau, J. Nininger, the Plaintiff below, owned the note at tbe time of its mataity. He left it with tbe Defendants for collection. .Had they fixed tbe liability of Eaton, tbe endorser, tbe note would have been just — 548 — as much more valuable as the pecuniary ability of Eaton was adequate to make up the deficiency that remained' unpaid upon the note after the mortgage security was exhausted. They failed to notify Eaton of the dishonor of the note, and Nininger was left to collect it of the maker, and the security., After this the Plaintiff transferred the note and mortgage to Mrs. Saunders, as collateral security for a debt. Mrs. Saunders married and became Mrs. Kemp, while she held the note and mortgage. .While she was Mrs. Kemp, and her husband living, she, through an agent, transferred the note and mortgage to the wife’of the Plaintiff. Mrs. Nininger had the mortgage foreclosed while she owned the note, and there was realized upon it the sum of $1,475. This mortgage was also security for another note of about the same amount, given at the same time the one left with the Defendants for collection was executed. Immediately previous to the commencement of this suit, the note was transferred to the Plaintiff by Mrs. Nininger, his wife. The security is exhausted, the maker insolvent, and this action is prosecuted to recover of the Defendants the balance left unpaid upon the note. The cause of action is for the negligence of the Defendants in allowing the endorser, Eaton, to be discharged from his liability. It is not strictly an action arising ex eontraetu, and reasonable doubts may be entertained if the claim was assignable. Gardiner vs. Adams, 12 Wend., 297; People vs. Tioga Com. Pleas, 19 Wend., 73; People vs. Gibbs, 9 Wend., 29; Franklin, vs. Law, 1 John, 402; Hall vs. Robinson, 2 Comst., 293; Sumner vs. Wilt, 4 Serg. and Rawle, 19-28; North vs. Turner, 9 Serg & Rawle, 244; O'Donnell vs. Seybert, 13 Serg. and Rawle, 54; Shoemaker vs. Kelley, 2 Dall., 213. But aside from this view, there is nothing to show that the Plaintiff ever did assign or attempt to assign the claim for the deficiency. Nor was the cause of action regarded on the trial as inseparable from the note as contended for by the Defendants’ counsel. The Plaintiff insisted that the mere transfer of the note and mortgage did not carry with it the cause of action against the Defendants, and the Court so charged the jury. It was necessary, of course, in stating the cause of action against the Defendants, to recite the note and the fail — 549 — ure of the Defendants to charge the indorser, and the insolvency of the maker; but that did not unite the two. This action would not have been maintained in the name either of Mrs. Kemp or Mrs. Nininger upon the testimony that we have before us, while the note and mortgage were in them. They would have been obliged to show something more than the mere ownership of these instruments, supposing the claim to be assignable. Any action they could have maintained would have been upon the note and mortgage, against the parties to, those instruments. This action arises out of other facts, the note and mortgage being necessary only in measuring the damages. The ■ regularity of the several transfers of the note and mortgage, becomes therefore in this case unessential to the Plaintiff’s right to recover. Mrs. Nininger, in fact, availed herself of all the value the note and mortgage possessed while they were in her possession. She exhausted the security, and the insolvency of the maker left her without practical recourse on him. The endorser was wholly lost before either she or Mrs. Kemp acquired any interest in the paper. The Plaintiff in this action was the only person ever damaged by the discharge of Eaton. The measure of damages in such cases is prima facie the face of the paper. The Plaintiff must make out the insolvency of the maker, and the solvency of the endorser discharged by the act of the Defendants. The Defendants may mitigate the damages by showing either the solvency of the maker, the ' insolvency of the endorser, or that the paper was partially or ' wholly secured, or any other fact that will lessen the actual loss to the Plaintiff; the real loss occasioned by the improper conduct of the Defendant, being the fact for the jury to arrive at in measuring the Plaintiff’s damages. Sedgwick on Dam., 340, et seq.; Hoard v. Garner, 3 Sandf., S. C. R., 179; Blot vs. Boiceau, 3 Comst., 78; Allen vs. Merchants’ Bank, N. Y., 22 Wend., 215; Allen vs. Suydam, 20 Wend., 321. The first exception taken on the trial by the Defendants, was to a question put to the Plaintiff as to whether he had any conversation with Doctor Eorup immediately after leaving the note. The Plaintiff had a right to show any instruc — 550 — tions given to tbe Defendants concerning tbe note, at any time before it was transmitted to tbe Defendants’ correspondent at St. Anthony for demand and protest. In tbis case the residence of tbe endorser did not appear on tbe note, and there being two persons of tbe same name, it was incumbent on tbe Plaintiff to establish tbe fact that be informed tbe Defendants which of tbe S. S. Eatons was tbe endorser, tbe one at St. Paul or tbe one at Nininger. When informed that the endorser pf the note was tbe Eaton residing at Nininger, tbe Defendants should have conveyed that information to their agents in St. Anthony. Whether this notice was given by the Plaintiff, was one of tbe points most strongly contested on tbe trial, and tbe jury have found against tbe Defendants on tbe evidence. The second objection, concerning tbe agreement under which tbe note was assigned to tbe Plaintiff by Eaton, was irrelevant, as there is no issue upon the ownership of tbe bote, save at tbe time of the commencement of the action. Polio 140 of tbe case: and the title at tbe time of tbe transfer is admitted in the second defence. The third objection occurs in folio 19, and is to tbe question put to the witness, Eaton, as to tbe cost of finishing bis mill. Tbe Defendants were in error about tbe necessity of showing the endorser solvent on tbe day of tbe maturity of the note. Of course if he was solvent on that day, that would be sufficient, as we may presume that had he been charged he would * have paid the note. But certainly if he was solvent at any time between the maturity of the note and the commencement of the action, it is difficult to see why the Plaintiff may not show it. If he was so solvent, the Plaintiff could have made his money out of him, and the Defendants have deprived him of the ability to do so. In the case of Blot vs. Boiceau, 3 Comstock, 78, the Defendant sold goods consigned to him for less than he was instructed by his consignor. In an action against him it was held that he might show in mitigation of damages that the goods were not worth in fact more than they were sold for. It was objected that such a rule would render the instructions of a principal nugatory, and allow an agent to violate them with — 551 — impunity. The answer of the Court, by both Judges who delivered opinions, was, that the violation of the instructions would entitle the owner of the goods to recover the value of the goods at any time before the action was brought, and Bronson, J., says, i: Perhaps down to the trial.” The theory is, that the market belonged to the Plaintiff, and he had the right to it with all its advantages ; the Defendant having deprived him of it, must make it good. If the goods had risen in value, he had a right to the increase. The theory in this case is the same; the liability of the endorser belonged to the Plaintiff, and he was entitled to the advantage of his solvency at any time after he was fixed. Th'e fourth objection is answered thus : The Plaintiff had the right to show that the Defendants knew the Eaton, of Nininger, as one circumstance tending to strengthen the proof given, that he, and not the Eaton of St. Paul, was known to the Defendants to be the endorser of the note. 5th.- — -The contract of Eaton upon the note was that of an endorser. If the Defendants had notified him, the Plaintiff would have had an action against him as an endorser of the note, and been entitled to a judgment against him for the amount due upon it. In such action, Eaton would not have been allowed-to show any previous agreement, that his contract was different from what it appeared to be upon the note Walters, et al., vs. Armstrong, ante p. 448. It was this action that the act of the Defendants has deprived the Plaintiff of, and he cannot be allowed to show what would have been denied to Eaton therein, except such matters as would have rendered the judgment valueless, or depreciated it, as for instance, insolvency, or pecuniary embarrassments. 6th. — The evidence here offered, assumed that the Eaton of St. Paul, was the agent of the witness, a fact not proved in the case, and was properly rejected. Vth. — This objection is disposed of in the discussion of the third. 8th. — This ■ objection falls under the remarks upon the Plaintiff’s ownership of the cause of action heretofore made. 9th. — The exclusion of the foreclosure papers, and the Sheriff’s certificate of sale, was not substantial error. The — 552 — fact of the foreclosure, and the amount realized, were admitted in the pleadings. The Defendant had not laid a sufficient foundation in his answer, to attack the sale for fraud, and charge the Plaintiff with the actual value of the lands instead of the amount of the bid, and if he had, these papers would not have aided him in making it out. It appeared elsewhere that the mortgage was given to secure two notes, and the proceeds were apportioned between them. We cannot see how the admission of these papers could have affected the result one way or the other, even if they were admissible. 10th. — The Plaintiff was in no why responsible for the letter written by the attorney who foreclosed the mortgage for Mrs. Nininger. It proves nothing for or against him, and was properly ruled out. 11th. — It was the duty of the Defendants to transmit the instructions, concerning the residence of the endorser, received by them from the Plaintiff, to their correspondents. What those instructions were was for the jury. No custom could absolve them from this duty,- as it was the very essence of their undertaking, the fixing of the liability of the endorser. The objection that a custom must be universal to be proved, was perhaps rather broader than was required by the law on the subject; but it is rather hypercritical to question the form of the objection in this instance. We think when the form is considered with reference to the subject under consid--eration, and the chai’ge the Judge gave upon the question of notice of customs, it is clear that the objection was not understood to mean more than general, or universal in the community where the business was being transacted. Hinton vs. Locke, 5 Hill, 437-9. 12th. — This objection has been discussed under No. 5. 13th. — If thq Plaintiff did buy the note at a discount, he . was entitled to recover the full face of it against the parties to it, and the evidence offered could not change the measure of damages in this case. 14th. — The Defendant could not show that the value of the land was more than the bid at the sale, unless the sale was fraudulent, and he had not alleged facts enough in his answer to impeach the sale. — 553 — 15th. — Eisk was called to contradict the witness Livingston, as to some testimony concerning the marks and erasures upon the note, and as to a conversation that occurred between them at the bank of the'Defendants, concerning the failure to notify Eaton. Livingston’s recollection about the time of conversation with Eisk, was very uncertain. He, however, admitted having one with him at the bank; but the one conversation was referred to by either. This was sufficiently accurate to allow Eisk to give his version of what took place, the objection being merely as to the time. The Court was requested by the Plaintiff and ■ the Defendants to charge the jury according to their respective theories of the action and the defence. The charge given was substantially that the cause of action was not necessarily connected with the ownership of the note. That there was no evidence showing that the cause of action had been transferred by the Plaintiff. That the note, under the circumstances, could be lawfully transferred by Mrs. Saunders after cover-ture by delivery. That consent of the husband may be presumed as to personal chattels transferrable by delivery. That where nothing appeared to the contrary, the proceeds of the mortgage sale should be applied rateably to the two notes secured. That it was the duty of the Defendants to take prompt and proper measures to fix the endorser, and that due diligence depended upon the facts and circumstances of the case. That the Defendants could not attack the transfers of the note for technical defects, it being in the possession of the Plaintiff, and in evidence, and there being no fraud. That in the absence of fraud or coercion, a married woman may transfer personal property to her husband. That the Defendants were not in a position to attack the transfer from the wife to the Plaintiff. That when there are special facts in relation to parties to a note to be charged as endorsers, it is the duty of the party leaving the note to communicate such facts to the bank, and the bank must then advise their correspondents of the special matter. That in this case it was necessary for the jury to determine the facts — with whom the note was left — what was said — what did the Defendants do in the premises, and that the burden of proof is on the Plaintiff. — 554 — That if the testimony shows a party had dealings with a bank of the nature to which a special custom relates, he would be bound by it; but not so as to a mere depositor. The verdict was for the Plaintiff, for the amount of the note less the rateable proportion of the amount realized upon the mortgage. The Court did not charge all that either the Plaintiff or the Defendants requested, but qualified their respective demands as above. The charge is, in the main, the law of the case, and the Judge had the correct theory. Whether or not that part of the charge touching the powers of married women over their personal property, and the right of a husband to take directly from his wife, is good law or bad, cannot in any way influence the case upon the theory under which the Judge considered it. The cause of action had never been out of the Plaintiff. It did not follow the note and mortgage, although the amount of damages depended upon the result of the foreclosure. Therefore, the Court properly said the Defendants were not in a position to raise questions on the regularity of the transfers of the note. We see no error in the case substantially affecting the Ap~ pellants. The order denying a new trial is affirmed.