Johnson v. Clarke

The opinion of the court was delivered by McGowan, A. J. This was an action on a note for $1200, given to the plaintiffs as trustees, January 10th, 1872, and signed T. H. Clarke, executor. The note was given under the following circumstances: Henry H. Clarke, in his lifetime, borrowed money from the plaintiffs, as trustees, and gave them his note for the amount, $1200. H. H. Clarke afterwards died, leaving a will, of which T. H. Clarke is the only qualified executor, who made payments of the annual interest on the note for years. The endorsement of the numerous payments covered the back of the note, leaving no room for other credits, and, in 1872, as stated, the note sued on was given. The question was, whether the new note was a payment and satisfaction of the old note against the estate of H. H. Clarke, or was a mere substitution. By consent the case was referred to W. Z. Leitner, Esq., as special referee, who heard the testimony and reported that, in his judgment, the new note was taken in satisfaction of the old note, which was given up; that it was the individual note of T. H. Clarke, and that the estate of H. H. Clarke was discharged. The Circuit judge confirmed the report, and from his judgment the appeal comes to this court upon the following, among other, exceptions: “ 1. That his Honor erred in the statement of the evidence, as reported by the referee, and especially in this, that the consideration for the exchange of notes was only the increase of interest, when the whole evidence and the statement of the witness, and defendant, Clarke, himself, states that the note was full of credits, and that one credit on the old note had to be written on a separate paper. “That the signature of the defendant, as executor, was an inadvertence instead of a thoughtful act, showing that it was a debt of the estate, and his signing his own note in his own name, about the same time, is pregnant with proof of his intention. “ 2. That his Honor erred in law in holding that the mere surrender of the note was equivalent to payment; that it was necessary for plaintiffs to show that there was an express agree [80] ment that the new note was given as and for a continuation of the old debt by testator. Payment is an affirmative proposition, and the burden of proof rests on the party pleading it.” The main question involved was one of fact; whether by the change of the old note for the new the parties intended to pay and discharge the old note, which was a debt of the estate of the testator, H. H. Clarke, and to take instead the individual note of T. H. Clarke, the executor. Whether one security operates in payment and satisfaction of another, is always a question of intention. Burton v. Pressly, Cheves’ Eq. 1; Costello v. Cave & Bradley, 2 Hill 528; Adger v. Pringle, 11 S. C. 527, and authorities cited. Upon the question of intention, there is not much testimony. Hampton Johnson and T. H. Clarke, the executor, made the exchange. Johnson is now dead, and the defendant, T. H. Clarke, is the only living witness of the transaction. It is not within the province of this court to review the whole case and decide as to the weight of testimony. Although the issues of law and fact were referred to a referee, that alone does not make this a “ case in chancery.” It is still a law case, and, therefore, it is the duty of this court to consider only errors of law which may be raised by exceptions. This court always hesitates to set aside the judgment of the Circuit Court when it concurs upon facts with the report of the referee. Yet this rule, properly understood, only applies where the facts have been considered upon proper issues, and especially in regard to the burden ■of proof. It does not apply when there has been error of law in the manner in which the facts were considered as bearing upon the proper issues in the case. The defence of the defendant amounts to the plea of payment and satisfaction, and, as in all other cases, he who affirms must prove. The onus of proof was upon the defendant to maintain his plea. As the court say in the case of Adger v. Pringle, before cited,- “ whether the debt of the ancestor is discharged by the bond of the heirs, is a question of fact depending upon intention. It is not payment unless so accepted by the creditor, and the burden of proof is upon the party affirming it.” The referee held and the Circuit judge sustained him, as follows: [81] “ The fact that the new note was signed by T. H. Clarke, as executor, does not, of itself, bind the estate of H. H. Clarke, deceased. It could, at best, be regarded only as a link in the chain of evidence to show that the new note was intended as a substitute for the old. But this is destroyed by the fact .that the old note was delivered up; the further fact that there was no express understanding that the new should stand for the old, and the still further fact that the new note was based upon a new and distinct consideration.” As we understand it, this substantially affirms the proposition that it was necessary for the plaintiffs to show that there was “ an express understanding ” that the new note was intended as a substitute for the old note, and that, having failed to do so, judg-ment for the defendant must follow. This is the reason of the rule, as we understand it. The plaintiffs stood upon their note, and the defendant, whose defence was payment and satisfaction, should have shown affirmatively that the new note was intended to be and was actually received in payment and satisfaction. This might be shown by facts and circumstances, as well as by positive proof. The only witness to the transaction now living, T. H. Clarke, does not say that was the understanding and agreement of the parties. He says “ he does not recollect that Mr. Hampton Johnson, in express words, spoke of the substituted note as a release of the original note.” There is no positive proof upon the subject. The circumstances under which the new note was given — the cause which made it necessary — the identity of the amount, $1200 — the fact that defendant signed as executor, when, about.the same time, he signed his own note for borrowed money in his own name without adding executor — his own statement that the note signed by him as executor “ was substituted in lieu of the original note,” all tend to negative the affirmative allegation which it was incumbent on the defendant to establish. In looking over the testimony we see no fact in the case tending to show that payment was intended, 'except, perhaps, the change in the rate of interest, from seven to twelve per cent., and this is referred to in the first letter, January 6th, 1872, which the defendant wrote to one of the plaintiffs upon the subject of giving the new note, in these terms: “ I will come up to your house [82] and pay the balance of the interest and change the note to twelve per cent.” We think the onus of proof was on the defendant, and the case should be remanded to the Circuit Court for a new trial, and it is so ordered. SimpsoN, C. J., and McIver, A. J., concurred.