Brown v. Haggerty

Caton, C. J. Dunlap & Co. had two notes of the same tenor, except that one was due about a week before the other, payable at the bank of Benson & Co. A few days before this note fell due, and a day or two after the other matured, Dunlap called at the bank, said he had a note there that was due, that he wanted to take up, and gave his check for the amount of this note, and took it up, and carried it away with him. The teller of the bank to whom he paid it did not notice which note it was, but took out the first note he came to in the pocket book. After Dunlap & Co., and Benson & Co., had both failed, and five months after the note had been taken up, the assignee of Benson & Co. called on Dunlap and got this note, upon which the indorsement of Benson & Co. had been stricken out by the teller when he gave it to Dunlap. Benson, or the assignee, delivered the note to the plaintiff, who was in fact the owner of the note while it was in Benson & Co.’s hands, for payment. Benson afterwards again indorsed it, and this action was brought. Brown, who was security on the note, insisted, on the trial, that the note had been paid and taken up by Dunlap, while the plaintiff insisted that the payment was designed to be made, and was in fact made on the other note. The defendant asked the court to give this instruction: “ If the jury believe, from the evidence, that the defendant paid to said E. H. Benson & Co., on the 26th day of November, 1856, the amount due on the note in qu'estion, and took up said note, and said Benson had a right to receive the money due thereon, by authority from the legal holder of the same, and the defendants had no notice of the application of the money paid on said note, other than in full payment of the note taken up, for several months after the payment, and until after the failure of said Dunlap & Colburn, and after the failure of said Benson, then said Benson has no right to alter the destination of the money paid on said note, other than payment to the legal holder of said note, and not in payment of a note due to himself, the said Benson, without the consent of all the defendants.” Which the court refused to give as asked, but added to it as follows: “ This is so, unless there was a mutual mistake in regard tfl the note, and the wrong note delivered up and canceled.” We think the instruction should have been given as asked, and that the qualification was wrong. If there was an original mistake in the application of the check to the payment of this note, an acquiescence of five months by Benson & Co., who had. a right to receive the money on this note, amounted to a ratification of the payment upon the note which had been given up to Dunlap, especially as to Brown, the surety. If this note was given up to Dunlap by mistake, and was not in fact paid at maturity, it was due to Brown, the surety, that he should have been notified of that fact promptly, that he might have paid it at once, and taken steps to have secured himself from Dunlap & Co., while they were yet solvent. But instead of that, he is suffered to remain in ignorance of the alleged mistake, and with the strongest possible evidence that the note had been paid, for five months, and until the principals in the note had failed, and then, when that event showed that some one must lose the amount of this note, for the first time he is told that the note had not been in fact paid, but that the check had been applied to it, and the note given up, by mistake. Brown was not guilty of any mistake or laches, while the plaintiff, or his agent, was, and he should consequently bear the loss, if any. The judgment must be reversed, and the cause remanded. Judgment reversed.