Dunham v. Clogg

• Citation: 30 Md. 284
• Parties: CORNELIUS DUNHAM v. GEORGE S. CLOGG.
• Decision Date: 10 March 1869
• Court: Court of Appeals of Maryland

30 Md. 284

CORNELIUS DUNHAM v. GEORGE S. CLOGG.

Court of Appeals of Maryland

March 10, 1869

APPEAL from the Circuit Court for Howard County.

This action was brought by the appellant against the appellee upon a promissory note, the signature of which was admitted to be the genuine signature of the appellee, and which note was as follows:

"$258.65. BALTIMORE, December 26th, 1860.

Six months after date I promise to pay to the order of Stetson Vaughn, two hundred and fifty-eight dollars sixty-five cents value received.

GEORGE S. CLOGG."

Endorsed "Stetson Vaughn."

The declaration contained the usual money counts, and a count on the note sued for.

The defendant pleaded:

1st. That he never was indebted as alleged.

2d. That he never promised as alleged.

3d. That the plaintiff is not the bona fide holder of the note in the declaration mentioned, and that the same was transferred to him after the said note had become due and been satisfied and discharged by payment to G. D. Vaughn, the then real owner of said note, which payment was known to the plaintiff at and before he became possessed of said note.

4th. That the said note in the declaration mentioned, was endorsed to the plaintiff after it was overdue, and not bona fide, or in the usual course of business, and that the same was satisfied and discharged by payment to the real owner of said note.

The plaintiff joined issue and replied as follows:

The plaintiff joins issue on the first and second pleas of the defendant.

And for replication to the defendant's third and fourth pleas plaintiff says:

1st. That he is the bona fide holder of the said note.

2d. That the said note had not been satisfied and discharged by payment before the same was transferred to the plaintiff.

The plaintiff proved at the trial, by the evidence of Cornelius L. Dunham, taken under a commission issued by consent, that the note in question was before its maturity endorsed and delivered by Stetson Vaughn to the witness, in payment of certain shoes sold by said Vaughn on commission for witness who, before its maturity, passed it by endorsement to Z. N Whitmarsh, in payment for goods. While in the hands of Whitmarsh, this note became due and was protested for nonpayment, when witness took it up by paying Whitmarsh the amount thereof. Witness subsequently endorsed it for a valuable consideration to the plaintiff. The appellee testified at the trial, that the note was given by him, drawn payable to blank order, to one G. D. Vaughn, in part payment for a lot of shoes sold by him to the appellee; that on the 18th of June, 1861, the appellee conveyed to G. D. Vaughn, as payment of said note and another, two small houses in the city of Baltimore, and received the following receipt therefor, viz:

"I promise to deliver to George S. Clogg, his two notes, one of the amount of three hundred and fifty-two dollars, thirty-seven cents, due on the first of May, last; one of the amount of two hundred and fifty-eight dollars, sixty-five cents, due on the 29th of June, as I have received value for the amount.

G. D. VAUGHN.

BALTIMORE, June 18, 1861."

Endorsed by Clogg, as follows: "Receipt, June 18, 1861, from G. D. Vaughn;" and by G. D. Vaughn, as follows: "G. D. Vaughn, 92 Pearl street, Boston."

And although G. D. Vaughn promised to return said note to the appellee he never did so. The appellee knew nothing of Stetson Vaughn in the whole transaction; and the name of Stetson Vaughn must have been inserted in the blank left in the note for the name of the payee, subsequently to its being given by the defendant.

The plaintiff then offered the following prayer:

If the jury shall believe from the evidence, that the promissory note offered in evidence by the plaintiff, was given by the defendant for value, and that he signed the same, leaving a blank for the name of the payee, and that said note came, before the same was due, into the possession of a certain Stetson Vaughn, whose name was then written on said note as payee, and that before the said note fell due, it was endorsed for value by the said Stetson Vaughn to a certain Cornelius L. Dunham, and that before it was due it was endorsed by said Cornelius L. Dunham, and given in payment of a debt due by him, and that after the said note was protested for nonpayment, it was taken up by said Cornelius L. Dunham, and then passed by him to the plaintiff, the present holder, Cornelius Dunham, for a valuable consideration, the plaintiff is entitled to recover.

This prayer the Court (SMITH, J.,) rejected, as also a prayer presented by the defendant, and gave the following instruction:

If the jury believe from the evidence in the cause, that the promissory note offered in evidence was uttered by the defendant as the consideration for certain goods sold and delivered to the defendant by Stetson Vaughn, as agent of Cornelius L. Dunham, and that Stetson Vaughn, as such agent, endorsed the said promissory note to Cornelius L. Dunham, as his principal, as the consideration for said goods so sold and delivered by him, and that the said promissory note was paid and satisfied to said Stetson Vaughn, as the agent of said Cornelius L. Dunham; and if the jury further find from the evidence that the said promissory note was endorsed to the plaintiff after maturity, then the plaintiff is not entitled to recover.

To this instruction as also to the Court's refusal to grant his prayer, the plaintiff excepted, and the verdict and judgment being against him, he appealed.

The cause was argued before BARTOL, C.J., STEWART, BRENT and ALVEY, J.

Wm. Reynolds, Jr. and Thos. Donaldson, for the appellant:

The plaintiff's prayer correctly stated the law of the case, and should have been granted. The note being originally given for value, and a blank left for the payee's name, the holder had a right to fill the blank with his own name, and his endorsement of the note to Cornelius L. Dunham, for value before its maturity, gave to the latter an absolute right of recovery as against the maker; and this right could not be affected by any transactions between the original parties to the note, subsequent to the issuing of the same. Then, as the right of Cornelius L. Dunham, to recover on the note was absolute, he could transfer this right for value, as he did, to Cornelius Dunham, the plaintiff. Story on Prom, Notes, sec. 37; Chitty on Bills, 156; Cruchley vs. Clarance, 2 Man. & Sel. 90; Crutchly vs. Mann, 5 Taunt., 529; Atwood and others vs. Griffin and others, 2 C. & P., 368; Boyd vs. McCann, 10 Md., 118.

The payment made by the defendant to G. D. Vaughn, before the maturity of the note, the note still outstanding, and the defendant's name left thereon, was at the defendant's own risk, and could not defeat the claim of a bona fide holder of the note. No valid payment could be made except to the holder or his representative. Morley vs. Culverwell, 7 M. & W., 174; Deacon vs. Stodhart, 2 M. & Gr., 317.

Cornelius L. Dunham being a holder of the note for value, before maturity, and having endorsed the same, and having as such endorser taken up the note at its maturity, had a right to sue the maker, (Geo. S. Clogg,) thereon; and therefore, after the note was overdue, he could negotiate the same so as to give his transferee the same right to sue the maker. Callow vs. Lawrence, 3 M. & S., 95; Hubbard vs. Jackson, 4 Bing., 390; Graves vs. Key, 3 B. & Ad., 313; Long & Byrn vs. Crawford, 18 Md., 220.

The equities subject to which an over due note is taken by an endorsee for value, are such as it may have been incumbered with, while in the hands of the person from whom he received it, and such only as naturally arise out of the note transaction, not out of any matter dehors the note, or collateral thereto, as set off, or even payment. Story on Prom. Notes, secs. 178, 180; Chitty on Bills, 219, 220; Burrough vs. Moss, 10 B. & C., 558; Whitehead vs. Walker, 10 M. & W., 696; Sturtevant vs. Ford, 4 M. & Gr., 101; Bosanquet vs. Dudman, 1 Starkie, 1.

The instruction given by the Court was manifestly erroneous, because it submitted to the jury to find facts of which there was no evidence whatever, and which, indeed, were directly contrary to all the evidence in the cause.

Geo. W. Sands, for the appellee:

The Court below looking to the pleadings in the cause as spread upon the record, could not grant the instructions sought to be given by the plaintiff, because by his admissions patent on the record, he had estopped himself from proving the facts necessary to sustain said instruction, or to maintain his action.

It is a rule of law that "every pleading is taken to confess such traversable matters alleged on the other side, which it does not traverse." Stephen on Pleading, 197 217, 218; Gould's Pleading, 152; Com. Dig. Pleader, (G. 2;) Back. Ab. Pleas, &c., 322, 386, (5 th Edit;) Howard vs. Wilmington and Susquehanna Rail Road Company, 1 Gil...