Burnes v. Scott

Decision Date05 April 1886
Citation117 U.S. 582,29 L.Ed. 991,6 S.Ct. 865
PartiesBURNES v. SCOTT and another, Ex'rs, etc. 1 Filed
CourtU.S. Supreme Court

B. F. Stringfellow, for plaintiff in error.

S. M. Brainard and G. W. De Camp, for defendant in error.

WOODS, J.

This was an action at law brought by Milton Courtright against James N. Burnes, the plaintiff in error, upon the note of the latter made at Chicago, and dated October 10, 1872, whereby he promised to pay, 30 days after date, to the order of F. H. Winston, $7,333, at the Cook County National Bank, in Chicago. Courtright, by indorsement and transfer, became the owner and holder of the note. The defendant pleaded four pleas:

The first of these was a general denial of the averments of the petition.

The second plea was in substance as follows: That, when the note was made, the plaintiff Courtright, the defendant Burnes, the said Winston, and one Campbell had been and were partners in a contract for building a certain railroad therein named; that prior to the date of the note Winston had received and was in possession, as part of the assets of the partnership, of 40 bonds for $1,000 each, of the city of Atchison, subject to the payment of the partnership debts, and, after such payment, for distribution among the partners; that a short time before the date of the note the partners had appointed the defendant a trustee to settle the partnership affairs; that when the note was given the partnership affairs had not been settled, and were not settled at the time of filing the plea; that, at the time of the making of the note, Winston turned over to defendant the bonds above mentioned, and estimated that there would be due him, as a partner in the firm, from its assets, the sum men- tioned in said note, and thereupon requested the defendant, as trustee of the partners, to make the note 'with the understanding that the same was not to be sued on, but was to be deemed a mere memorandum of the amount that should be estimated as the share of said Winston, on account of said bonds, in a settlement among said partners;' that the defendant executed the note accordingly, as trustee of the partnership and not as his individual note, and the plaintiff acquired title to the note with knowledge of these facts.

By the third plea it was averred as follows: That the note sued on 'was and is wholly without consideration, and is null and void, and that said note is based upon and grew out of transactions relating to the business of said partners; that said partners are interested in the same, and are necessary parties to a suit relating to said note, and the amount due in said note, if any, cannot be ascertained until a final settlement of said partnership can be had.'

The last plea was that the suit was prosecuted under an agreement between the plaintiff and George W. De Camp, his attorney, whereby the latter undertook to prosecute the suit, and pay all the expenses incident to its prosecution, in consideration that he should receive four-tenths of the amount recovered.

The parties waived a trial by jury, and submitted the issues of fact, as well as of law, to the court, which made a general finding for the plaintiff, and entered judgment thereon in his favor against the defendant, Burnes, for $11,401.60, who thereupon sued out this writ of error. After the record was filed in this court Courtright died, and the executors of his last will were made defendants in error in his stead.

The bill of exceptions shows that upon the trial of the case the defendant, to sustain the issue on his part, offered evidence tending to show that 'Winston, the payee and assignor of the note sued on,' Courtright, 'the plaintiff,' Burnes, 'the defendant, and one Campbell, were the contractors for the construction of the Chicago & Southwestern Railroad, as partners, and that Winston was entitled to an interest of two-fifteenths in such contract; that Winston had charge of the execution of the contract, and possession and control of the assets arising from the contract; that after the completion of the road, in October, 1872, Winston delivered to defendant forty bonds of the city of Atchison for one thousand dollars each, which had been received and were then held by him as part of the assets under such contract; that the bonds were delivered by Winston to and received by defendant as the trustee for the parties in interest in the contract; and that at the time the bonds were so delivered defendant gave to Winston the note sued on.' The defendant also offered evidence to show 'that the note sued on, when given, was not intended by him, the maker, nor by Winston, the payee, as a promissory note, but was only intended, and so given by him and received by Winston, as a memorandum of the then estimate of the value of the estimated interest of Winston in the Atchison bonds, then delivered as part of the profits of the aforesaid contract for the construction of the Atchison branch, to be accounted for on a settlement between the partners to such contract; * * * that the only consideration of the note sued on was the transfer by Winston to defendant of the interest of Winston in the Atchison bonds, as part of the profits of the contract for the construction of the Atchison branch;' and 'that, upon a settlement of the partnership accounts between said Winston and his partners in the contract for the construction of said Atchison branch, the said Winston would have had no interest in the profits of said contract, having received more than his share thereof prior to the giving of said note.'

To all of which evidence so offered plaintiff objected as incompetent and irrelevant, and the objections were sustained by the court, and the evidence excluded. The exclusion of the testimony so offered is now assigned for error by the defendant.

So far as the evidence excluded was offered in support of the second plea, it is plain that it was inadmissible. Its purpose was to vary and contradict by an alleged contemporaneous verbal agreement the contract which the parties had reduced to writing. It was offered to show that a promissory note in the usual form was not intended by the parties to be a promissory note, but was a mere memorandum by which the maker prom- ised nothing, which gave no rights to the payee, and was to all intents and purposes vain, futile, and of no force or effect whatever. It is not necessary to cite authority to show that the evidence was inadmissible for such a purpose.

The counsel for defendant, not strenuously insisting that the evidence was admissible to support the second plea, insist that it was competent to prove the third. They argue that, as want of consideration may be shown in defense of an action on a promissory note, the evidence should have been received. As a general rule, want of consideration is a defense to a promissory note, but it is not always a defense which can be made at law. It frequently requires the aid of a court of equity to give it effect. The plea to support which the defendant contends the evidence of want of consideration was admissible, clearly sets up an equitable defense. It alleges that the note sued on is based on the 'transactions relating to the business of said partners.' Referring, therefore, to the preceding plea, which states the business of the partners, as we are authorized to do, we learn that the partnership business had not, at the time of filing the pleas, been settled, or the interest of Winston therein or in the bonds been ascertained. The plea under consideration further avers that the members of the partnership were interested in the said business, and were necessary parties to a suit relating to the note, and that the amount due thereon, if anything, could not be ascertained until the final settlement of the partnership. It is plain, therefore, that the defense set up by the plea is not the legal defense of want of consideration,—for the plea admits, by implication, that there may be something due on the note,—but the equitable defense that the amount due on the note, if anything, is dependent on the amount coming to Winston fron the assets of the partnership, which cannot be ascertained without a settlement of the partnership affairs in a suit to which all the partners are necessary parties. And yet, having so pleaded, the defendant insists, in argument, that in a trial upon the promissory note, in a court of law, and without the presence of two of the four partners, evidence is admissible to...

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