Coykendall v. Constable

• Decision Date: 09 June 1885
• Citation: 1 N.E. 884,99 N.Y. 309
• Parties: COYKENDALL v. CONSTABLE, etc.
• Court: New York Court of Appeals Court of Appeals

99 N.Y. 309

1 N.E. 884

COYKENDALL

v.CONSTABLE, etc.

Court of Appeals of New York.

Filed June 9, 1885.

S. L. Stebbins, for appellant, Samuel D. Coykendall.

John Lyon, for respondent, Abram Constable.

FINCH, J.

If the note upon which this action is founded was not paid, its makers were liable, unless those of them who were sureties became freed from their obligation by reason of some act which changed their contract or imperiled their rights. The referee does not find such payment as a fact, nor as an inference from the facts ascertained. Indeed, it is difficult to see how any such inference could have been possible from the proof. Whatever may be true as to the want of authority to sell the note in the bank which received it for collection, it is quite certain that the transaction between the plaintiffs and the collecting agent was a sale, or an entirely void proceeding. It could not be transformed into a payment in hostility to the expressed intentions of both parties who acted in the transfer. There was a sale, or an attempt at a sale, which utterly failed, but never a payment; and an erroneous supposition by Peters, the payee, as to the fact which produced the money, traceable to his ignorance of the truth, cannot alter the nature of that truth. The note being, then, unpaid, is due from the makers to some one, and must be payable to Peters or the plaintiff.

The only concern of the defendants, if the rights of the sureties have not been infringed, is to know to which of two parties they may safely pay the debt. If they had paid it voluntarily to plaintiff, could Peters, after full knowledge of the situation, and with the plaintiff's money in his pocket, and persistently retained, successfully sue upon it as owner? It is quite certain that he could not. He would be unable to produce the note, and could not force it from plaintiff's possession without return of the purchase money, and, while keeping that, would be obliged to admit that he held it as a payment of the note or consideration of its sale, and either alternative would be fatal to his cause of action. The defendants thus can pay the debt which they have not paid to the plaintiff, as its holder, with entire safety, and without danger of being liable to Peters. Why, then, should they not pay it? If the transaction had been found to be, or shaped upon competent proof as, an advance by plaintiff to De Garmo, the maker, of the money necessary to pay the note, the successful defense would have been payment; but when nothing of the kind was either done or intended, or found as a fact, and the note remains unpaid, why should not its maker pay it? It is not claimed that the sureties directed or required its collection, or put the owner, whoever he might be, under a duty to enforce it. Their contract was not changed. They promised to pay to Peters or bearer, and the plaintiff is the bearer, and comes to them with that title, and in accord with their contract. They agreed that the note might be sold when they made their contract negotiable. No right of theirs was violated, and they suffered no injury. If they desired the note promptly sued, they could say so as well to plaintiff as to Peters, or pay it and take their remedy against De Garmo. Their sole defense, therefore, was that which prevailed with the referee: that the bank had no authority to sell, and so plaintiff got no title. Undoubtedly, Peters might have repudiated the act of his agent, when he learned what it was. The moment he became possessed of that knowledge, he was bound in common honesty to return the money paid him by mistake, or retain it as it was given to his agent. The law will not endure that he shall keep the product of the agent's act and yet repudiate his authority. Even in a case of fraudulent representations by the agent, never at all authorized or suspected by the principal, a reception and retention of the proceeds may make the latter responsible for the fraud. National L. Ins. Co. v. Minch, 53 N. Y. 144;Hathaway v. Johnson, 55 N. Y. 93. No wrong or violence is done to the rights of Peters by the process. His agent obtained plaintiff's money by a pretended sale of the...