Woodward v. Foster

• Decision Date: 05 February 1868
• Citation: 59 Va. 200
• Parties: WOODWARD, BALDWIN & CO. v. FOSTER.
• Court: Virginia Supreme Court

59 Va. 200

WOODWARD, BALDWIN & CO. v. FOSTER.

Supreme Court of Appeals of Virginia.

February 5, 1868

In an action by an endorsee against his immediate endorser, upon a protested bill, parol evidence of an agreement between them at the time of the endorsement, which would vary the legal liability of the endorser under his endorsement, is inadmissible.

This was an action of debt in the Circuit Court of the city of Richmond, brought by Woodward, Baldwin & Co. against L. W Glazebrook and Foster & Co. to recover the amount of two bills of $1,000 each, drawn by Glazebrook by his agent in March, 1862, upon Connolly & Co., of New York, in favor of R F. Foster & Co., and endorsed by them to the plaintiffs, and protested for non-acceptance. The suit abated as to Glazebrook by his death, and by consent was dismissed as to Enders, and carried on against Foster alone.

The case was tried in May, 1867, and after the plaintiffs had introduced the bills as evidence, and proved the protest and notice, the defendant introduced evidence to prove that, at the time the bills were endorsed and delivered by the defendant Foster to E. P. Smith, the agent of the plaintiffs it was agreed between Foster and the said agent of the plaintiffs, that Foster should retain in his hands the amount paid him for the bills by said agent, which was the amount expressed upon their face, with fifteen per cent. added, and paid in Confederate States treasury notes; and not pay the same over to the drawers of the bills until it was ascertained that the bills had been accepted and paid by the drawees in New York; and if they should not be accepted and paid by the drawees, upon notice thereof and the return of said bills to Foster, he should refund the money so paid to him for them. And he also introduced evidence to prove that he was a broker, and had no interest in the bills; but was only to receive a commission of two per cent. in case they were paid. There was other evidence, which it is unnecessary to state.

After the evidence was introduced, the plaintiffs moved the court to give to the jury the following instruction, viz.:

The court instructs the jury to disregard all parol evidence tending to prove an agreement between the defendant Foster and Smith, the agent of the plaintiffs, before or at the time of the endorsement of the bills of exchange, inconsistent with the contract between the parties, created by the endorsement of said bills of exchange by the said Foster, and the delivery of the same by him to said Smith; and that the contract so created, as evidenced by said bills of exchange with the endorsements thereon, between the said Foster and the plaintiffs by their agent said Smith, was an absolute contract by the said Foster to pay to the said plaintiffs the amount of said bills of exchange with all legal damages thereon, provided the said bills should be duly presented to the drawees Connolly & Co., and not paid by them, and duly protested, and due notice of such protest given to said endorser Foster; the value of said bills to be computed according to the value of Confederate notes at the date of said endorsement.

The court refused to give this instruction, and the plaintiff excepted. And the jury having found a verdict in favor of the plaintiffs for $86.25, a part of the debt in the declaration mentioned, with interest from the 3d of April, 1865, until paid; and the court having rendered a judgment accordingly, Woodward, Baldwin & Co. applied to this court for a writ of error; which was allowed.

E. Y. Cannon and Griswold, for the appellants.

Howison & Dunlop, for the defendant.

JOYNES, J.

This action was brought by Woodward, Baldwin & Co. against Foster & Co. as endorsers of two bills of exchange drawn in Richmond in 1862, upon New York, payable to the order of Foster & Co., and by them endorsed specially to the plaintiffs, and which were dishonored by the drawees. The suit was dismissed as to Foster's partner, and proceeded to a judgment against Foster, to which the plaintiffs, having recovered less than they claimed to be entitled to, obtained a supersedeas.

Upon the trial, the defendant introduced evidence to prove, among other things, that when the bills of exchange were endorsed by Foster and delivered by him to Smith, the agent of the plaintiffs, to whom Foster had sold them, it was agreed between Foster and Smith that Foster should retain in his hands the amount paid to him by Smith for the bills, being the sum expressed on their face, with fifteen per cent. added, which was paid in Confederate States treasury notes; and not pay the same over to the drawer until it should be ascertained that the bills had been paid by the drawees; and that, in case they should not be paid, Foster should, upon notice thereof and the return of the bills to him, refund the money to Smith; that this arrangement was made because it was uncertain whether the bills would be paid; that Foster was a broker, and had no interest in the bills, but was only to receive a commission of two per cent. as compensation for services as broker, in case the bills were paid.

The counsel for the plaintiffs moved the court to instruct the jury to disregard all the parol evidence tending to prove an agreement between Foster and Smith, before or at the time of the endorsement of the bills, inconsistent with the contract created by the endorsement of the bills by Foster and the delivery of them to Smith, and that the contract evidenced by the said bills and the endorsements thereon was an absolute contract by Foster to pay to the plaintiffs the amount of said bills, with all legal damages, provided they should be duly presented, dishonored and protested, and notice thereof given to Foster; the value of the amount called for by said bills to be computed according to the value of Confederate notes at the date of the endorsements. The court refused to give this instruction. The propriety of this refusal is the point for decision. The only question raised in the argument in this court is, whether it was admissible for the defendant to prove the parol agreement between himself and Smith at the time of the endorsement and delivery of the bills. This is the only question we are expected to decide; the counsel for the defendant having declined to raise any question arising out of the war which was pending between the United States and the Confederate States at the time these transactions took place.

The legal import of Foster's endorsement of the bills was, that he transferred them to the plaintiffs, and assumed upon himself the ordinary liabilities of an endorser of such bills. This legal intendment as to Foster's liability is not repealed or impaired by the facts that he was a broker, that he had no interest in the bills, and that he was only to receive a commission for services as broker in case the bills were paid. It is not the usage of brokers to endorse all the bills they sell. Why did Foster endorse the bills at all, unless it was to give them credit by his name? Why were they not drawn payable to the order of the drawer, as is usually done when the bill is to be sold in the market, upon the credit of the drawer alone? Foster's endorsement was not necessary to carry into effect the agreement as to his holding the proceeds. See Goupy & al. v. Harden & als. 7 Taunt. R. 159, 2 Eng. C. L. R. 58.

The evidence in relation to the cotemporaneous parol agreement tended to prove, that Foster was not to be liable as endorser, but was to be liable only as bailee of the sum paid to him for the bills, which sum he was to refund to Smith or to pay over to the drawer, accordingly as the bills might be paid or dishonored by the drawees. This evidence, therefore, evidently tended to vary and contradict the legal import of the endorsement. It did so as much as if the bills had belonged to Foster himself. The instruction asked was predicated on that view, and by refusing it the court virtually decided that it was no objection to the evidence; that it tended to vary or contradict the contract imported by the endorsement, and this has has not been disputed in the argument.

If the contract of Foster had been written out in words, this evidence would have been inadmissible upon the well established and familiar principle, that evidence of a contemporaneous parol agreement is not admissible to contradict or vary that which is contained in a written instrument. 1 Greenleaf Evid. §§ 277, 281, 282; Towner v. Lucas' ex'or, 13 Gratt. 703; Allen v. Furbish, 4 Gray R. 504. And such evidence could not be received on the ground that it would be a fraud to insist on the written contract, in violation of the parol agreement, because the evidence of the parol agreement is itself the only evidence of fraud. Towner v. Lucas' ex'or. These general principles are of the utmost importance in the administration of justice. Without them, there would be no certainty in written contracts, and no safety in the most formal transactions. They ought not to be frittered away by nice distinctions to meet the hardships, real or supposed, of particular cases.

These general principles were not controverted in the argument, but it was insisted that they have no application to contracts the terms of which are not written out in words, but are implied by law. And it was contended accordingly, that where an endorsement is in blank, or where, as in this case, its express terms import a transfer of the paper to the endorsee, and are silent as to anything more, it is competent for the endorser, in an action against him by his immediate endorsee, to prove the special agreement on which the endorsement was made, whatever it may be, and thus to vary or contradict the ordinary legal import of the endorsement. The following...