Brummel & Co. v. Enders, Sutton & Co.

• Decision Date: 03 July 1868
• Parties: BRUMMEL & CO. v. ENDERS, SUTTON & CO. BRUMMEL & CO. v. HILL'S ex'or. BRUMMEL & CO. v. JAMES GRAY'S SONS.
• Court: Virginia Supreme Court

59 Va. 873

BRUMMEL & CO. v. ENDERS, SUTTON & CO.

BRUMMEL & CO. v. HILL'S ex'or.

BRUMMEL & CO. v. JAMES GRAY'S SONS.

Supreme Court of Appeals of Virginia.

July 3, 1868

1. B &amp Co. make their negotiable notes, blank as to the names of the payees, and put them into the hands of an agent to be sold for their benefit. The agent sells them at a greater discount than the legal rate of interest; the purchasers not being informed that they were sold for the benefit of B & Co.; and the names of the purchasers are inserted in the blanks as payees either by the agent at the time of the sales, or by themselves afterwards. The purchasers sue upon the notes describing themselves as payees, against B & Co. as makers and B & Co. plead usury. HELD: It is not usury.

2. The case of Whitworth v. Adams, 5 Rand 333, has settled the law of Virginia on the subject of usury in the purchase and sale of negotiable paper.

These three cases were heard and decided together in this court. They were actions of debt in the Circuit Court of the city of Richmond, brought respectively by Enders, Sutton & Co. Hill's ex'or and James Gray's sons, against Joseph Brummel & Co., upon promissory negotiable notes. In their declarations the plaintiffs declared upon the notes as payees against the defendants as makers thereof. The defendants pleaded usury; on which issues were made up. The question involved is the same in all, though the facts are slightly variant.

In the case of Enders, Sutton & Co., the plaintiffs declared on seven notes, amounting to $10,234.75; and on the trial, after the plaintiffs had introduced the notes in evidence, the defendants introduced B. W. Green as a witness, who stated that the notes sued on were given to him by Joseph Brummel & Co. to raise money upon, the names of the payees being left blank; that the witness passed the said notes to the plaintiffs, and inserted the names of the plaintiffs as payees in said notes; that he did not remember at what time he did so, but inferred that it was when he passed the notes to the plaintiffs, as it was done in his hand-writing; that the plaintiffs were in the habit of taking the notes of the said Joseph Brummel & Co. from the witness at a greater rate of discount than six per cent. per annum, and that he remembered but one instance in which the plaintiffs took such a note of Brummel & Co. at a rate not exceeding six per centum per annum, but after the great lapse of time the witness could not recollect as to these particular notes. Another witness proved that the note taken at the legal rate of interest was not one of the notes sued on.

In the case of Hill's ex'or, B. W. Green was introduced as a witness, who stated that Hill met him on the street, and asked him if he had any of Brummel & Co.'s notes, that he wanted to buy one; that he replied that he could get one, and that the witness went to Brummel & Co.'s office and got said note; that the said note was made for the purpose of raising money; that it was payable to blank or order, leaving a blank for the name of the payee to be inserted in it; that it was handed to him by the defendants without any consideration moving from him to the defendants at that time, and that Hill took the note from the witness at a greater rate of interest than six per centum per annum. That he passed the note to Hill without the blank being filled up. It was further proved that Johnson, a clerk of Hill's, filled up the blank; and that Green owed Hill a note, which was taken up as a part of the consideration of the note of the defendants; and that Green promised to endorse the note if requested.

In the case of James Gray's sons, one of the plaintiffs was introduced as a witness by the defendants, who stated that the note sued on was purchased by him of a note and exchange broker, but he could not recollect who it was; that at the time of the purchase the note was payable to _____ or order; there being a blank space for the name of the payee; and that he filled up that blank space with the names of the plaintiffs; that the price paid for the note was less than the face thereof after deducting therefrom six per cent. per annum. That the discount was one per cent. per month; and that the broker from whom he bought the note told him that it had been given by the defendants for wheat, which they had purchased from a person who wanted to leave town, and who had left it there to be sold. The witness said further that the plaintiffs had had no transactions with the defendants, and had not loaned them any money.

The defendants asked in each case, several instructions varying slightly in form, but substantially the same. The substance of these instructions was, that if the jury believed the facts as they have been hereinbefore stated, they should find for the defendants.

These instructions the court refused to give; and in the first case instructed the jury, that if they believe, from the evidence, that the notes declared on in this action were made by the defendants for the purpose of being sold, leaving the names of the payees blank, and were given by them to B. W. Green to be sold, that said Green offered the notes to the plaintiffs, and that the plaintiffs, knowing the notes to be made for the purpose and in manner aforesaid, and to have been delivered to Green as aforesaid, purchased the same at a discount greater than legal interest, then the jury will find for the defendants.

In the second case, the court instructed the jury, that if they believe from the evidence that the note declared on in this action was made by the defendants for the purpose of being sold, leaving the name of the payee blank, and was put by them in the hands of B. W. Green to be sold, and that Green sold the note to the plaintiff's testator at a discount greater than legal interest, and at the time of the sale promised and agreed with the plaintiff's testator, that he would endorse the said note before its maturity, then the jury will find for the plaintiff; unless they shall further believe from the evidence, that at the time of such sale the plaintiff's testator knew the note to have been made for the purpose and in the manner aforesaid, and to have been delivered to Green to be sold as aforesaid; in that case they will find for the defendants.

In the third case the instruction was: If the jury believe, from the evidence, that the plaintiffs bought the note on which this suit is brought, from a broker, who represented that the note was a business note, and had been made by Joseph Brummel & Co. for wheat by them purchased, and had been left by the person to whom it had been originally given, to be sold for said person, and that the plaintiffs having no notice or information to the contrary, bought the said note under these circumstances, then the transaction is not usurious, although the plaintiffs may have bought it at a greater rate of discount than six per cent. per annum, and although when they bought the note the names of the payees were left blank, and the plaintiffs, after purchasing the note, inserted their own names as payees thereof.

The defendants excepted to the opinions of the court refusing to give the instructions asked by them, and giving those given by the court. And the juries having found verdicts for the plaintiffs in all the cases, the court rendered judgments upon them. Brummel & Co. thereupon brought up the cases to this court.

The cases were argued by Andrew Johnston, for the appellants, and Howison, for the appellees; but they are fully discussed by the judges.

RIVES J.

It is essential to the proper consideration of these causes to acquire precise ideas of the state of the pleadings, the force of the proofs, and the real nature of the transactions to which they relate. A common principle underlies them; and though a slight diversity of circumstances may distinguish them, it will be found, on examination, to constitute no ground for practical distinction in the disposition to be made of them.

The pleadings are the same in all the cases. They are actions of debt by the payees of promissory notes against the makers. The defence is usury. The contract of indebtedness declared on, is a plain and complete promissory note, and has no other parties to it upon the record but the maker and payee. The action is founded on this privity of contract; the right of recovery grows out of the note alone; the defence is predicated of the invalidity of the note; and the record admits no " lis mota " except between the immediate parties to this written contract. If, therefore, the rights or interests of any third party are affected by this litigation, it must be outside of the pleadings, and arise out of the proofs.

Let us then examine these latter critically, and see if they establish any fact calculated to impart to the pleadings, and the issue made by them, any effect different from that which legally and properly attaches to them. The facts are prefaced in the bills of exceptions taken to the instructions refused, and the instructions given by the court on the trial. The chief distinctive feature consists in the fact that these notes were originally payable to _______, and that the blanks were not filled until the discount, and then with the names of the respective payees. That in the first of these cases, the names were inserted by the witness, who was acting as the agent of the makers in raising money upon the notes, in the second, by the clerk of the payee, and in the third, by one of the payees, is wholly immaterial; for clearly it is to be taken as done in every case with the assent of the payees, and stands on the same ground as if the payees had inserted their own names with their own hands in these respective blanks. It is a fact common to all these...