Brown v. Spofford

• Decision Date: 01 October 1877
• Citation: 95 U.S. 474,24 L.Ed. 508
• Parties: BROWN v. SPOFFORD
• Court: U.S. Supreme Court

95 U.S. 474

24 L.Ed. 508

BROWN v. SPOFFORD.

October Term, 1877

ERROR to the Supreme Court of the District of Columbia.

This action was brought by Spofford & Clark, against Samuel P. Brown and Austin P. Brown, on five promissory notes, for $2,267.33 each, made by the defendants Jan. 8, 1872, by their firm name of S. P. Brown & Son, and payable to the order of Austin P. Brown in one, two, three, four, and five months after date. The declaration alleged that the notes were, on the date thereof, severally indorsed by the said Austin P. Brown, and came before maturity, in due and regular course of commercial dealing, and for a full, fair, and valuable consideration, into the possession and ownership of the plaintiffs, but were protested for non-payment, whereof due notice was given the indorser.

The defendants, in addition to the general issue, pleaded two special pleas; but as the matters therein set forth could have been offered under the general issue, they are omitted here.

On Aug. 2, 1872, the plaintiffs sued the defendants on another note of the same series as the preceding five, but which was payable in six months after date.

The same defence was made as in the former suit.

At the trial, the plaintiffs having proved the signatures and indorsements on the notes, and that the defendants composed the firm of S. P. Brown & Son, rested.

The defendants then introduced evidence tending to show that for several years before the making of the notes they had had large dealings with the Philadelphia Coal Company, and that a controversy arose as to the amount of their indebtedness to the company; that on the said 8th of January, 1872, the notes in suit were executed by them and delivered to Henry L. Cake, president of said company, who thereupon delivered to them a paper, of which the following is a copy:——

'WASHINGTON, D. C., Jan. 8, 1872.

'Received from S. P. Brown & Son the following notes, in full settlement of their indebtedness to the Philadelphia Coal Company: —

One note dated Jan. 8, 1872, at one month $2,267.33

One note dated Jan. 8, 1872, at two month 2,267.33

One note dated Jan. 8, 1872, at three month 2,267.33

One note dated Jan. 8, 1872, at four month 2,267.33

One note dated Jan. 8, 1872, at five month 2,267.33

One note dated Jan. 8, 1872, at six month 2,267.33

Amounting to $13,603.98

'And in settlement of these notes I have agreed, upon behalf of the Philadelphia Coal Company, to receive an order on Edwin Stewart, paymaster of the United States Navy, and accepted by him, for five thousand five hundred dollars ($5,500), with interest from date, said order to be liquidated as follows: $2,000 at three months from Dec. 20, 1871; $2,000 at four months from Dec. 20, 1871; and $1,500 at five months from Dec. 20, 1871,—the whole amount, with interest, from Dec. 20, 1871; also, Z. Jones's indorsement on four notes, as follows: S. P. Brown & Son's notes to order of Z. Jones, dated Jan. 8, 872, for $1,250, respectively at six, eight, ten, and twelve months, amounting to $5,000; this sum of ten thousand five hundred dollars ($10,500) being in effect a compromise of the said indebtedness of $13,603.96, to be conclusive upon the payments being made at the times stated.

'And I further stipulate on behalf of the Philadelphia Coal Company, that, upon payment of the $5,500, with interest, by the paymaster within the time stated, the first, second, and third notes given by S. P. Brown & Son for the sum of $2,267.33, amounting to $6,801.99, shall be returned to S. P. Brown & Son as settled; and, upon payment of the four notes at maturity indorsed by Z. Jones, the remaining three notes of S. P. Brown & Son, amounting to $6,801.99, shall be handed back to S. P. Brown & Son, being settled in full by the payment of said four notes indorsed by Z. Jones.

H. L. CAKE,

'President Philadelphia Coal Co.

'Witness: A. B. WOLFE.'

The defendants then offered testimony tending to prove that the company, when it transferred the notes sued on to the plaintiffs, who acted as its agents in selling coal on commission, and who also occasionally bought and sold on their own account, received as the sole consideration therefor the promissory notes of the latter for the same amount; that, at the time of said transfer, Cake assured the plaintiffs that they should incur no loss in respect to said transaction, but that he would indemnify and protect them; that, at the time of the execution of said agreement between the defendants and Cake, it was agreed that as the notes in suit should respectively mature they should be paid and taken up by the company. The court excluded this testimony, and the defendants excepted. They thereupon asked the court to charge, that if the jury believed that the plaintiffs came into possession of the notes sued on without paying an actual valuable consideration, or by paying only a nominal one, or under circumstances which would have put a prudent man on inquiry concerning any agreement between the defendants and the Philadelphia Coal Company with respect to said notes, then the jury must consider the plaintiffs to be bound by such agreement. That, under the agreement of Jan. 8, 1872, the Philadelphia Coal Company was bound, among other things, to take up and hold the two notes sued on which first became due; and that if the jury found from the evidence that the company did not do so, but allowed them to go to protest, then the verdict should be for the defendants.

The court refused so to charge; but charged, that if the jury found from the evidence that the notes in suit were made by the defendants in liquidation of an antecedent indebtedness due to the Philadelphia Coal Company, and were, before maturity, indorsed for a valuable consideration by it to the plaintiffs, then the plaintiffs are entitled to recover from the defendants the full amount of said notes, and that any agreement between the company and the defendants in relation to said notes would not affect the rights of the plaintiffs, unless they, before the purchase of said notes, had actual notice of said agreement; that if the plaintiffs had actual notice before said purchase that the company had made the agreement of compromise, and that said agreement was not carried out by the defendants in the manner agreed upon, then the plaintiffs might recover on the original notes, and that so far as that question was involved the plaintiffs were entitled to a verdict; that the agreement to receive $10,500 as a compromise in discharge of the notes could be made available to the defendants only by proving that the sums were paid as therein stipulated, or tendered by the defendants, or by one of them; that if the defendants had failed to show that the compromise was accepted by them by payment of the stipulated sums, their original indebtedness on the notes remained, and the plaintiffs were entitled to recover; that if the notes were indorsed and delivered to plaintiffs before maturity, and in the course of business, they ere entitled to recover, and were not affected by any transactions between the original parties of which they had no notice when they received the paper.

The defendants excepted to the refusal of the court to charge as requested, and also to the charge as given.

There was a verdict in each case in favor of the plaintiffs; and the judgments thereon having been affirmed in general term, the defendants sued out this writ.

The assignment of errors is set forth in the opinion of the court.

Mr. Nathaniel Wilson for the plaintiffs in error.

Mr. Joseph Casey, contra.

MR. JUSTICE CLIFFORD delivered the opinion of the court.

Promissory notes payable to order may be transferred by indorsement, or when indorsed in blank or made payable to bearer they are transferable by mere delivery, and the possession of such an instrument indorsed in blank or made payable to bearer is prima facie evidence that the holder is the proper owner and lawful possessor of the same; and nothing short of fraud, not even gross negligence, if unattended with mala fides, is sufficient to overcome the effect of that evidence, or to invalidate the title of the holder, supported by that evidence. Goodman v. Harvey, 4 Ad. & E. 70; Goodman v. Simonds, 20 How. 343; Collins v. Gilbert, 94 U. S. 753; Noxon v. Dewolf, 10 Gray (Mass.), 346; Magee v. Badger, 34 N. Y. 247.

Sufficient appears to show that the plaintiffs claim to recover of the defendants the amount of five promissory notes, set forth in the record, each dated Jan. 8, 1872, payable to the order of Austin P. Brown in one, two, three, four, and five months from date, amounting in the aggregate to the sum of $11,336.64. Due indorsement of the notes was made by the payee, and the plaintiffs also claim to recover the costs and fees of protest and notice to the makers for non-payment.

Service was made; and the defendants appeared and pleaded the general issue, and two special pleas, which are fully set forth in the record.

Issue was joined by the plaintiffs upon the first plea of the defendants; and to the second plea the plaintiffs replied, and denied the same in fact and in substance, and all and singular the matters therein set forth, and alleged in further reply that they became the holders of the notes in the regular course of mercantile dealings, for a full, fair, and valuable consideration, before the maturity of the notes and without any notice or knowledge of the matters set forth and alleged in the defendants' second plea. They also deny and traverse all the allegations and averments contained in the defendants' third plea.

Special pleas in such a case are unnecessary, as every such defence, where the action is assumpsit upon promissory notes, is admissible under the general issue.

Delay ensued, and at a subsequent term the parties went to trial, and the verdict and judgment were in favor of the plaintiffs, in the sum of $11,300.47, with costs and interest. Exceptions were taken by the...