Chappell v. Allen

Wagner, Judge, delivered the opinion of the court. It will be unnecessary to give a summary of all the facts in this case, or to notice in detail all the points made. The whole transaction, from the endorsement of the notes by Allen, in 1857, to Valentine & Co. to the final close of the . business after the execution of the second deed of trust by Alexander, must be taken into consideration to form a correct conclusion as to the legal merits' and claims of the parties. The first deed of trust was made to secure and save harmless Allen from all loss which he might sustain or incur in consequence of his endorsements, and the notes now sued on, it appears, were part of the notes secured in the said deed. When they were in the hands of Lucas & Co., they operated as en equitable assignment, pro tanto, of the property recited in the deed of trust, in favor of Lucas <fc Co.; and if they were paid off and discharged with the money of Allen, Lucas & Co.’s equity then enured to him, independent of his being the original cestui que trust. The plaintiff having received the notes when they were past due, was put upon inquiry, and will be considered as having taken them with full notice of all the infirmities or equities which attached to them. The first instruction given by the court, on motion of plaintiff, was clearly wrong. It loses sight of the fact, that the plaintiff received the notes as dishonored, and took them with notice of all legal defences which would defeat a recovery ; and it singles hut certain facts, and tells the jury, if they believe those facts to be true, prima facie the plaintiff is entitled to a verdict, when there was a large array of testimony conducing to show an opposite state of things. For a court [222] to instruct a jury, that if they are satisfied of the existence of certain particular things, they shall then find a given verdict, is virtually withdrawing all other evidence from their attention and control. Instructions should be predicated on the whole testimony, and when they have a tendency to restrict the consideration of the jury to isolated facts, to the exclusion of other facts which are before them in evidence, it is not only a misdirection, but an infringement on the province of the triers of the fact. The error complained of here was not cured by any counter-instruction given on the other side. Whether the phrase “prima facie’’’ had any tendency to mislead the jury, we cannot tell. It is much better for courts to instruct juries in plain English, and avoid the use of technical terms. The next inquiry is, the effect to be ascribed to the acknowledgment of satisfaction on the margin of the record, made by Alexander on the first deed of trust. He describes himself as assignee of Allen and others, cestui que trusts in the deed, and acknowledges to have received full satisfaction of the deed of trust, and then releases the property from all lien on account of the conveyance. This acknowledgment of satisfaction and release of the lien of the property is made under seal. It is contended by the counsel for the defendants, that the release, being under seal, not only destroys the lien on the property, but also imports an absolute extinguishment of the debt on which the deed of trust was founded, and that parol evidence is inadmissible to rebut this presumption or conclusion of law; whilst, on the other hand, it is ai'-gued, the only effect of entering satisfaction on the record is to extinguish the encumbrance on the property in favor of the real owner, and that the debt is not thereby discharged. The statute does not require that the entry or acknowledgment of satisfaction should be made under seal, but there is nothing to prohibit a party from resorting to that inode. Where a bond is made not in accordance with the statute, it may still be good as a common law bond, and will be governed by the legal effects and incidents pertaining to it by [223] the common law. In speaking of the effect of a technical written release under seal, Judge Cowen, in McCrea v. Purmont, 15 Wend. 474, said: “ A release cannot be contradicted or explained by parol, because it extinguishes a pre-exist-ing right; but no receipt can have the effect of destroying, per se, any subsisting right: it is only evidence of a fact. The payment of the money discharges or extinguishes the debt; a receipt for the payment does not pay the debt — it is only evidence that it has been paid. Not so of a written release ; it is not only evidence of the extinguishment, but it is the extinguisher itself.” But suppose the release has not ' this conclusive effect — that it is tobe regarded as nothing more than a simple entry of satisfaction ; in other words, a mere receipt. Prom the language of the statute, it was doubtless contemplated that a mortgage or deed of trust would continue effectual as long as any part of the indebtedness secured by it should remain. The manifest object, scope and design of the provision was to furnish and perpetuate the evidence that the encumbrance no longer existed, and that the constructive notice of the lien by the record should be accompanied by that of the discharge. (See R. C. 1855, p. 1091, § 21.) Now the principle has long been settled, that a receipt simply acknowledging that a debt referred to therein has been paid, is prima facie evidence only of such payment; and it is always open to explanation. It is a presumption of law that the debt referred to has been paid, and the receipt is true, though this presumption is disputable in its nature, and the onus of proof is on the party attacking its correctness and denying the payment. The entry made upon the margin of the record, unaffected by any proof, is sufficient to show payment of the notes on which the mortgage or deed of trust is founded; and if the acknowledgment is sought to be rebutted or controlled, it can only be accomplished by evidence introduced for that purpose. The plaintiff having obtained the' notes after they matured, before she could destroy the effect of the presumption of payment contained in the acknowledgment of satisfaction, it rested on [224] her to explain it away by competent evidence. The notes, it seems, were delivered to plaintiff by Alexander after the dissolution of the firm of which he was a member, and to which they had previously belonged. It is true, there was no new endorsement; but that can make no difference. The notes had previously been endorsed in blank, and they were transferred with the blank endorsements upon them. After the dissolution of the firm, one partner may endorse the notes and bills of the firm in liquidation, to settle up the partnership business; but he cannot, without the consent of his co-partners, make such endorsement to pay a private debt of his own,-or in the transacting of business wholly unconnected with the partnership affairs. Should it turn out in evidence that Alexander took up the notes from Lucas & Co. with his private funds, and thereby made them his own, be had a right to assign and transfer them to plaintiff; but if the money paid for them was partnership assets, they were the property of the firm, and his transfer and delivery of them was without authority. We see no error in the ruling of the court in excluding the depositions of Valentine and Dunlap ; they pertained to matters anterior to the assignment, and were incompetent. The judgment is reversed and the cause remanded. Judge Holmes concurs; Judge Lovelace absent.