Case ID: scl_49/html/0262-01.html
Source: Caselaw Access Project
Author: {"author": "ING-Lis, A. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Cooper Cone vs. Pike Brown and P. H. Brown.
    
      Promissory Note — Payment to depository for safe-keeping.
    
    B. being indebted to C. by promissory note payable to C. or bearer, paid the same to C.’s agent with whom it had been deposited for safe-keeping during C.’s absence, and the note was surrendered by the agent to B. At the trial of an action by C. against B. to recover the amount of the note, the presiding Judge charged the jury that the, possession of the agent was like that of an ordinary chattel — a naked bailment — depositum, and implied no authority to receive payment and surrender the note: — Held, that the charge was erroneous and new trial ordered.
    The possession by an agent of a promissory note payable to bearer is not strictly analogous to the possession of an ordinary chattel. In the former case the agent has authority, prima facie, to receive payment and surrender the note, and the maker paying in good faith will be protected. The presumption, however, may be rebutted by contrary evidence.
    BERORE GLOVER, J., AT BARNWELL, SPRING TERM, 1868.
    The report of his Honor, the presiding Judge, is as follows:
    “ The action was assumpsit on a promissory note. The following evidence was offered in the case: the execution of the note for $1,000, dated December 14, 1860, payable January 1, 1862, with interest from the date, was admitted.
    “ DEFENCE.
    
      “B. H. Brown, defendant. — In January, 1863, he went to John Cone’s, plaintiff’s father, and where plaintiff lived when'at home, and there saw plaintiff’s father, brother, and sister. Witness said to his brother Lawrence that plaintiff had a note on which he was liable, and he wished to pay it. Lawrence made some slight hesitation and observation about Confederate money, and be and sister produced tbe note. Witness said he received Confederate money. Iiis sister gave the note to Lawrence, and after the interest was calculated, witness paid it. The plaintiff’ it was said, was in the war, on the sea-board near Beaufort. Boxes with provisions were frequently sent there to soldiers. Witness got and brought away the note. A year or more after, he got a letter from Lawrence, stating that his brother was not satisfied to take Confederate money. The money he paid was never offered back to him, and he heard no more about it until he was sued. Confederate money was then good in the purchase of goods and payment of debts, and no one had then objected to receive it. Lawrence slightly hesitated and then agreed to take it.
    “ Cross-examined. — Witness received no intimation that they would receive it. Lawrence and his sister had a conversation, and then his sister brought the note. Witness and Lawrence calculated the interest. His notion was, as note was drawn to bearer, and he had possession, that was enough. A letter was produced from witness to Lawrence P. Cone, dated Barnwell, December 20th, 1864, of which the following is a copy:
    “ 'Dear Sir: I received yours of the 11th inst., informing me your brother refused to receive the money I paid you for him; that he does not consider it as money at all. I have received and paid out several thousand dollars since the war, that was contracted before the war. I met with none that refused to take it, nor have I refused to receive it. I have heard of but two persons that refused to receive Confederate money, they were * * and I have heard many abuses heaped upon them for so doing. We all know that no paper money is a lawful tender for the payment of a debt, but whatever is the currency of the country we have to receive, there is no other funds to be bad, therefore we are obliged to use what is current in the country; besides, your brother, Mr. Cooper Cone, never let me have any money, he let Dr. Pike Brown have the money, and Dr. Brown requested me to pay it, which I did as he directed. Dr. Brown is in the war, and the matter must be settled with him.’
    
      “ He never had any dealing with plaintiff about it, and he did not know where the plaintiff was when he wrote him.
    “ Beply.
    
      “Rachel Cone. — Plaintiff’s home was at his father’s, and Lawrence lived near. Plaintiff had gone a good while when defendant called. He left his papers, and this note amoDg them, to take good care of them, and to let no person have them. Lawrence told her that Col. Brown had come for the note. Lawrence had nothing to do with the note, nor did he manage plaintiff’s business. When the plaintiff saw her, he said she had done wrong, and was displeased. This was the only note paid in Confederate money.
    
      “Cross-examined. — A few nure notes — three or four, were left with her. It was months after before she saw plaintiff — a little short of a year, and then he came home for good. The second time he came he was sick, and staid home three or four months.
    
      “Lawrence P. Cone. — Plaintiff, he thinks, went off in May, and Col. Brown came in December. W itness lived within two hundred yards of his father. Col. Brown asked if he did not hold a note of bis ? Witness said no, that plaintiff had left all his papers with his sister. Col. Brown asked, can’t you get it ? He replied, I think I can, and witness got it of his sister. He hesitated some. Plaintiff was then in camp at Grrahamville, and three or four months after he saw him; he was displeased and refused- to take the money. Plaintiff never authorized witness to receive any money for bim, nor bad he the custody of bis papers. He has the money now. Plaintiff told witness to write to Col. Brown on bis first visit, but he neglected to do so. The day Col. Brown paid, he told his sister of it, and she said nothing. When witness wrote to Col. Brown, plaintiff was away in the war. Witness produced eleven one-hundred-dollar bills, dated in 1862; five ten-dollar bills, and one two-dollar bill, dated February, 1864, and said the one-hundred-dollar bills are same money, the others ma}>' not be. He might have spent some, but he is sure he did not spend all. He don’t know if he spent any. He continued to neglect to write to Col. Brown until December, when he wrote. He thought he would neglect it no longer.
    
      “ Gooper Gone, plaintiff. — This note was never paid to him nor to his agent. He left this and his other papers with his sister for safe-keeping. He repudiated this payment as soon as he heard of it. No offer was made to pay him. He was off a good deal, but not on much. He left notes to $6,000 or $7,000 with his sister, and this is the only one that was paid.
    “ Cross-examined. — He wrote home occasionally.
    “It appeared to me, and I so held, that the possession of Bachel Cone was a naked bailment, depositum; and that she had no right or control over the papers left in her custody beyond their safety. The authority conferred by the plaintiff was to safely keep, and not to surrender the note to the maker on satisfaction of the amount due. It was not the case of commercial paper that had passed into the hands of an innocent, holder; nor is it within the general principle, that whenever one of two.innocent persons must suffer by the acts of a third, he who has enabled such-third person to occasion the loss, must sustain it.
    “Whether the evidence showed a confirmation by the plaintiff of the acts of his agent, was submitted to the jury, who found a verdict for the plaintiff for the amount of the note and interest.”
    The defendant appealed, and now moved this Court for a new trial, on the grounds:
    1. Because, on the question of agency, his Honor charged the jury that the doctrine which, in the case of Oarmichael vs. Bucle, (12 Rich. Law, 451,) was held to be properly applicable to a raft of lumber, is equally applicable to a negotiable promissory note, or any other kind of property, and that if they believed from the testimony, there was no agency to collect, but only to keep the note, payment by the maker to the agent, though made in good faith, and without notice of the prohibition against collection, will not discharge the maker; whereas, it is submitted his Honor erred in so charging, and should have charged that, when the holder of a negotiable promissory note, commits it to an agent, as a mere custodian, coupled with a prohibition against collection, and gives no notice to the maker of such prohibition, he does not act “in the usual way of doing such things," (to use the language of the case referred to,) and is to be regarded, in law, as giving such agent the indicia of authority to collect the note; and that if the maker pays the agent in good faith, and without notice of the agent’s limited authority, he will be legally discharged.
    2. Because, it is submitted, his Honor should have charged the jury, that an agency to collect a promissory note payable to bearer, is to be implied from the possession of the same, unless and until notice to the contrary thereof has been given.
    3.Because the verdict is contrary to law and evidence in this: that though the testimony of the witnesses for the plaintiff did. clearly establish that the plaintiffj/or nineteen months after he was notified of the payment by the defendant to his special agent, and of the surrender of the note to the defendant, yet the plaintiff wholly neglected to extend to the defendant the slightest notice of his disaffirmance of the act of his agent although he had ample opportunity to do so, and knew that his agent had not done so; which act of omission and acquiescence, it is submitted, amounted, in law, to a clear ratification of the assumed agency in collecting the note.
    4. Because it is submitted, that his Honor should have charged the jury, that if the plaintiff intended to disaffirm and repudiate the transaction connected with the settlement of the note in question, it was legally incumbent on him to have tendered back to the defendant, in a reasonable time, the Confederate currency which had been paid in satisfaction thereof, and his omission or neglect to do so, is legal proof of his affirmance or ratification of the transaction.
    Copy of the note produced by the defendant, B, II, Brown, at the trial.
    “ On the first day of January, 1862, we, or either of us, promise to pay Cooper Cone or bearer, the sum of one thousand dollars, with interest from date, value received. December 14, 1860.
    (Signed) Poce BrowN,
    B. H. Brown,
    Test,
    J. J. Brown.”
    
      Aldrich, for the motion,
    cited Commercial Bank vs. Norton, 1 Hill, 501; Nwen vs. Mazyck, 3 Rich, 210; Story on Prom. Notes, §§ 246, 339, 376, 378, 382, 389; Lichbarrow vs. Mason, 2 T. E. 63; Chit, on Bills, 394; Story on Bills, § 415; Sand on PL & Ev. 714; 2 Green Ev. § 65; Sloney vs. McNeil, Harp. 136; Owen vs. Barrow., 4 Bos. & Pul. 101; Games vs. Bleelcer, 12 Johns. E. 300.
    
      Maher, contra.
   The opinion of the Court was delivered by

ING-Lis, A. J.

The action is assumpsit, by the payee against the maker, on a promissory note, payable to bearer, the execution of which is admitted. The defence is, payment. Payment of a promissory note, or other negotiable instrument, can be made effectually only to the real proprietor, or to some one duly authorized by him to receive. In the present case, it is not pretended that the original payee, Cooper Cone, ever parted with his ownership of the note, or that he, in person, has received payment. The allegation is, that payment was made to, and accepted by, Eachel Cone, the sister, and, as it is said, the agent, quoad hoc, of the plaintiff) in whose possession the note was placed by the plaintiff) and who produced it upon the defendant’s call, and surrendered it upon receipt of payment. That the full sum of principal and interest due was, in fact, paid, in Confederate treasury notes, to Eachel Cone by the defendant, B. H. Brown, and that the note was thereupon delivered up to him, and is now in his possession, is 'not denied. We do not think it necessary to embarrass the case here by any question arising out of Laurence Cone’s interference in the matter, since all that he did seems to us to have been done in the presence and with the assent and concurrence of his sister Eachel, and, therefore, to have been, in law, her personal act. The real matter of dispute is as to the fact and scope of her agency for the plaintiff) and her consequent authority to bind him by her receipt of this payment. One may constitute an agent, by a previous delegation of authority, to act for him, either generally, or in a special matter and manner, or, without any previous delegation, in fact, of authority to do the particular act, may, by his subsequent ratification and adoption thereof, preclude himself lrom denying the agency. The facts of the present case furnish fair grounds whereon to argue that it is within the operation of one or other of these principles. And hence the whole investigation on the Circuit resolved itself ultimately into these two inquiries: First. Had Rachel Cone been, by any previous delegation of authority, constituted the plaintiff’s agent to collect, or receive payment of, this note as she did? Second. If not so made his agent to receive, or not authorized to receive in this particular manner, has the plaiutiffj by his subsequent ratification and adoption of her act, precluded himself, as against the defendants, from repudiating it ?

' Each of these is a question of fact proper to be solved by the jury, and should be submitted to them for this purpose with just instructions touching the principles of law involved, as giving legal character and consequence to facts. The report made to this Court certifies us that the latter question, as to the plaintiff’s subsequent confirrna.tion of his sister’s act in receiving payment in Confederate notes, was submitted to the jury; and no error, either in what he said or what he omitted to say, is discovered in the instructions of the Circuit Judge on this point. It was not, in law, incumbent upon the plaintiff to seek out Brown, and carry back and tender to him the treasury notes. It was enough, if he duly gave him notice that he would not stand to and abide by his sister’s act, done for him and in his name.

Erom the report itself it would be inferred that the other question was taken from the jury, and decided by the Court. The Judge says: “I held that the possession of Rachel Cone was a naked bailment — deposilum—and that she had no right or control over the papers left in her custody beyond their safe keeping. The authority conferred .by the plaintiff was to safely keep, and not to surrender the note to the makers on satisfaction of the amount due.”

If we should confine ourselves, as is usual here, to the report, we would feel constrained to send the case back to the. Circuit on this ground. But the grounds of appeal, and the arguments, so far from raising any such objection as this, on the contrary, concede that this question also was, in truth, left to the jury, and the passage which has just been cited must be understood as a report of what the Judge, while instructing the jury upon the law of the case, stated as his own opinion of the effect of the evidence. The terms in which this opinion is expressed are certainly very absolute; for the very matter to be ascertained by the jury was, whether the possession of Rachel Cone was a mere bailment or deposit, or whether her agency did not extend beyond the safe keeping to the collection or receipt of payment.

It is gathered from the grounds of appeal and the argument on both sides, to which the incompleteness of the report compels a resort, that the Judge, in his instructions, compared the case of a delivery, by the owner of a promissory note, negotiable by delivery merely, to an agent, to that of a similar delivery of an ordinary chattel, and held that the agent’s possession imported no more in the one case than in the other, and that he illustrated his views as to the legal significance of such possession by a reference to the recent case of Carmichael vs. Buck, (12 Rich. 451.) That was the case of a raft of lumber entrusted by the owner to the possession of an agent to be carried down the river, and there delivered to the owner’s factors for sale, but wrongfully sold by the agent represénting himself as the owner.

And it was held that the purchaser could not retain it, upon proof made of the true ownership. But surely this is not the law of negotiable securities when in such condition as to pass by mere delivery. One having possession, however acquired, of a promissory note, bill of exchange, check, &c., negotiable by mere delivery, is presumed to be the owner, or right holder, and any stranger, having no notice to the contrary, may safely act upon this presumption, and taking it thus in good faith and for value will acquire a title good in law. It is of utmost importance to the interests of commerce which these negotiable securities so largely serve that this shall be so. (Story Prom. Notes, § 381; Penny vs. Caldwell, Col. Dec., 1829, 2 Rice’s Dig. 233.) And where one, dealing with the person having-possession of a chattel, knows that he is not the owner, but is holding confessedly for another, the principle applicable was declared in Carmichael vs. Buck to be, “ that where one, for a special purpose, commits his property to a limited agent, in the usual way of doing such things, lie is not to be accused of holding out the agent as more than he is.” From which it would follow that the party so dealing has taken upon himself the burden of proving the scope of the agency so as to bring'himself within it. The maxim applicable is, “ Qui contrahit cum alio, clebet esse gnarus concliliones ejus, cum quo contrahit''' Of course reference is now had to the mere fact of possession, not modified by any negligence or omission of duty or other fault of the' principal. (Story on Prom. Notes, § 376.) But when the person having possession of a mercantile security negotiable by mere delivery, is known to be holding not for himself, but for another who is the true owner, his possession is yet prima facie evidence of an agency from the owner to collect the amount due, to receive payment, and surrender the note. The maker paying in good faith to such person, will be protected in so doing by the presumption created by this prima facies, until it is overcome by sufficient contrary evidence. Mr. Justice Story in his treatise on Agency, discoursing of the “incidents implied by law from the direct and principal authority,” (section 97,) and therein of “incidental authority as a mere inference of fact from the peculiar circumstances of the case,” says: ‘‘And, generally, the possession of a negotiable instrument is deemed sufficient prima facie evidence of the title of the possessor to receive payment of it.” (Story, Agency, § 104.), .And again, in his work on Promissory Ai tes: “ In general it may also be stated that if the note is endorsed in blank, and is in possession of a party, he will be deemed prima facie entitled to demand payment thereof, whether he be the actual owner, or only an agent for the owner.” (Story, Prom. Notes, § 246.) Mr. Chitty, in his work on Bills, &c., says: “In ordinary cases, the mere production of a bill of exchange or note endorsed in blank by the proper person, or the mere production of a check is sufficient to warrant payment to the person who produces it, for the possession of an instrument, so endorsed, affords presumptive evidence of the holder’s ownership or agency to receive payment, and this without reference to his being the habitual agent of the same party.” (Chitty, Bills, 394.) And so, also, Mr. Greenleaf: “The authority to receive payment is inferred from the possession of a negotiable security.” (2 Greenl. Evid. 165.) So far has this doctrine been carried, that such possession for the true owner has been held sufficient prima facie evidence of an agency to receive payment for the owner, to affect him criminally with the fact of such receipt in “ an action to recover penalties on the statute of usury.” (Owens vs. Barrow, 1 Bos. & Pull. N. R. 101.) The general proposi'tion is all that is affirmed here. Of course, as the presumption may be rebutted by contrary evidence, it will be stronger or weaker, according to the attending circumr stances, which may, themselves, either on the one hand constitute such opposing evidence, or, on the other, may corroborate the presumption. The possession of a member of the owner’s family in his own house would create a much weaker presumption and more easily overcome than the possession of a stranger, in a different place, and still less than the possession of an attorney, a collecting officer^ a broker, a banker, or other person acting in a business capacity. But even this presumption will be stronger where the owner is gone from home for a protracted absence, than where he is himself readily accessible. And there may be, and perhaps in the present case are, other circumstances operating one way or the other.

In the particular here indicated, the possession of a promissory note negotiable by delivery, is not strictly analogous to the possession of an ordinary chattel — it has more legal significance resulting from the nature of the property, the purpose for which possession is ordinarily parted with, and the power which appears on its face to belong to the possessor. On this point it is considered that there was error in the charge of the Judge, and as this Court is not able to discern how far the absolute terms of his instructions may have controlled the jury in their finding, a new trial must be granted, and it is so ordered.

DuNKiN, C. J., and Wardlaw, A. J., concurred.

Motion granted.