Case ID: ohio-st_40/html/0431-01.html
Source: Caselaw Access Project
Author: {"author": "Granger, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Bank v. Green.
    1. If the holder of a promissory note of a firm, after its dissolution, accepts the note of one of the partners, payable at a future date, retaining interest for said time by discount, and agrees to release the other partner, no action on the firm note can be maintained.
    
      lo . Such agreement may be implied from the acts of the parties.
    CO . The omission as party, to a petition in error, of one of the defendants in the court below, will not deprive the reviewing court of jurisdiction of the case.
    4. In such a case, if the defendant in error in the district court does not there complain of a defect of parties, and that court reverses the judgment below, this court will not permit him to make such objection here; and if it affirmatively appears that the judgment of reversal will not materially and injuriously affect the rights claimed in the original case by the absent party, this court will not interfere.with it,
    Error to the District Court of Athens County.
    
      Milbury M. Green and Geoi’ge T. Gould, partners in two firms styled “ M. M. Green & Co. ” and “ The Salina Salt & Coal Company,” dissolved on April 22,1873. Gould took all the firm assets and agreed to pay all the debts. The First National Bank of Athens held notes of. the firms, amongst which were the following: One dated January 29, 1873, for $4,000, due May 1, 1873; one of same date for $1,000, due same day, and one of same date for $2,000, due June 1, 1873. The bank had notice of the dissolution and that Gould took the assets and was to pay the debts. On May 19, 1873, it stamped said three notes “paid,” and surrendered them to Gould, taking from him two new notes for $4,000 each — one payable in ninety days and the other in four months. These notes were signed, the first,
    “G. T. Gotjld.”
    “M. M. Gkeen & Co.”
    and the second, “ Salina Salt & Coal Co.”
    “G. T. Gould.”
    The proceeds of these notes sufficed to pay said three firm notes, including interest to May 19, 1873, the discount on the new notes, and also to place to Gould’s individual credit $227^L. This was checked out by him on his individual check. The rate of the discount was eight per cent. Adding these new notes to other firm notes then held by the bank, made a sum of $14,500. Under the National Banking law no person or firm could borrow from that bank at that time-more than $9,000 or “ a little over.” At the time these notes were taken the cashier asked Gould if he had authority to sign the firm name. He said that he had in settlement of firm business. Green claimed that the bank took the firm signatures to evade the rule limiting loans to one person.
    On February 5,1874, the bank cancelled and surrendered to Gould the two notes of May 19, 1873, taking from him two new notes of $4,500 each, dated February 2, 1874. These were drawn to the order of G. T. Gould. He signed one “M. M. Green & Co.,” and the other “Salina Salt & Coal Co.,” and indorsed both “ G. T. Gould.” They were payable in four months. The proceeds of these notes sufficed to pay the notes of May 19, 1873, including interest at nine per cent. to.February 2,1874, the discount for the four months at nine per cent., and to give to Gould alone" a credit of $427.84, which he checked out in his ordinary business.
    On May 5, 1874, the bank dropped these notes of February 5, 1874, from its books 'as part of a plan for deceiving the examiner. It obtained United States bonds from a Mr. Ballard, one of its directors, giving him a simple receipt. No entry thereof was made on the books. The bonds were sold and the proceeds entered on the books of the bank as cash received on said notes. The notes Avere put in an envelope and “put away” in the bank. Green resided in Columbus and was all the time amply able to pay the notes, as the bank Avell kneAV. Gould and officers of the bank were intimate and interested in joint ventures. When Ballard called for reimbursement for his bonds the bank urged Gould to arrange for a loan from Ballard in order to make such reimbursement, and as he failed to do so, it raised means from another source and satisfied Ballard.
    •In August, 1878, Gould became insolvent, and on September 23, 1878, the bank for^the first time called upon Green to pay the notes of January 29, 1873. As he refused to pay, the bank sued him and Gould in Athens common pleas on said old notes. They filed separate answers. Green averred that the notes Avere paid and.discharged and he released; set out the dissolution of the firms, Gould undertaking to pay their debts and that the bank well kneAV this. Gould did not deny that he had agreed to pay all the debts of the firm, but he averred that the notes sued .on had been “paid and discharged,” and were cancelled and delivered up to “the defendants by the plaintiff as duly paid, and admitted and considered so to be by the plaintiff.” The replies denied these averments of both answers. The evidence did not sIioav an express agreement to accept the new notes in payment or to release Green. A trial resulted in a verdict against both defendants. Green, at the proper time, asked the court to charge the jury thus: “ Whether or not the plaintiff accepted the new notes made by Gould on May 19, 1873, for and in payment of the old notes of the firm sued upon in this action, depends upon the intention and agreement of the plaintiff at that time; and this intention and agreement, in the absence of any express agreement, can be determined by the jury from the facts and circumstances of the case, and if the jury believe, from such facts and circumstances, that the plaintiff, at the time of the transaction, intended to give up the old firm notes as paid, and accept the new notes in place of them, then, no recovery can be had upon such old notes in this action.”
    This was refused and exception noted. A motion for a new trial was overruled and a bill of exceptions presenting all of the evidence' and the entire charge was duly made part of the record, and judgment entered on the verdict. On Green’s petition in error against the bank, (Gould was not made a party) the district court reversed the judgment below and remanded the cause for a new trial. The bank made no complaint in that court because Gould was not a party. It here seeks a reversal of the judgment of the district court. Other exceptions were taken in the common pleas and urged in the district court but they do not affect the decision of the cause.
    
      Welch if Welch and ReSteiguer Jewett, for plaintiff in error.
    I. The judgment in the common pleas was a joint judgment against Green and Gould, and the district court had no power to reverse it withorrt the presence of Gould. The only power it had was to retain the ease, and cause Gould to be brought in as a party. To show that such is the law no authority is needed beyond the case of Smetters v. Rainey, 14 Ohio St., 287, where it was held that “ All the defendants to a joint judgment are necessary parties to a petition in error filed by one of their number to reverse it, * * and if such defendants are not made parties to the petition within three years from the rendition of judgment, the revising court has no such jurisdiction over the subject matter as will authorize them to revise or modify any part of it.” The principle of this ease was again affirmed in Jones v. Marsh, 30 Ohio St.,'20.: • What right or power had the district court to interfere with the relation between the bank and Gould, without the consent of either of them ?
    Possibly it may be contended that the supreme court has no jurisdiction of the case, because we have not made Gould a party. There is no ground for such a claim. Gould is not a party to the judgment which we seek to reverse. When we make parties all who were parties to that judgment, we have fully complied with the requirements of the law. We don’t seek to affirm the judgment of the common pleas. That judgment is still in force, because the judgment of the district court is a nullity, which, nevertheless, we have the right to reverse. The truth is that, in any ease, the express affirmance of a judgment by a court of error is a useless ceremony. The judgment sought to be reversed stands in full force until reversed. The simple finding of no error, and the judgment that the 'defendant in error go hence,'or the dismissal of the petition, is all that is necessary, and leaves the judgment sought to be reversed in full force; the express affirmance of it is mere matter of form. The case of Ohio L. Ins. Co. v. Gooden, 10 Ohio St., 557, is no authority against us. In that ease the revising court had jurisdiction. The interest of Stallo, the party left out, was several, and in fact there was a separate judgment in his favor.
    Should this court dismiss the ease for want of jurisdiction, how would the parties stand ? It would leave the judgment of the common pleas reversed by a court having no jurisdiction, and our only remedy, if we had any, would be to issue execution on the common pleas judgment. And • if so, where is our remedy on the supersedeas bond, which is conditioned to pay what shall be adjudged against the defendants ?
    II. The charge requested by Green, and refused by the common pleas court, as to the intention of the parties, and which the district court held should have been given, was misleading and erroneous. It makes the question of payment depend upon the intention of the bank officer and not upon the agreement of the parties.
    There must be the intention of both parties; and not only an intention “to take the new notes in place of the old ones” — nay, not only an intention to take them in payment of the old ones — but an intention to take them in absolute, unconditional payment. There undoubtedly Avas an intention to take them “in place” of the old ones — nay, to take them in payment of the old ones — but not in absolute payment. What the parties intended was, that until the maturity of the new notes, they should stand as payment of the old ones; and a paft and'important part of their intention was, that the new notes would then be paid, according to agreement, and that then, and not till then, the payment and substitution should become absolute. The whole intention, or agreement was, that the new notes should stand in place of the old ones, and should be paid at maturity. If the defendants violated this intention — this agreement — by failing to pay the new notes, then the plaintiff was no longer bound by. it. He could rescind the contract. Such is the law, and such was substantially the charge of the court.
    We might go farther, and say, that there was no evidence upon which to base such a charge, for the undisputed evidence shows that the transaction was a mére ordinary reneAval, and that no special agreement Avas made in any form. In such a case, the “intention ’’ of the parties is merely their opinion of the law of the case, and is of no possible importance.
    But for another obvious reason the instruction would haAre been erroneous. The evidence tended' to show, and did clearly show, that the notes were renewed by fraud or mistake in the belief that Green had authorized it. Upon the discovery of this fraud or mistake the bank had a right to repudiate the transaction; arid fall back upon the old notes, notwithstanding its “ intention,” even its agreeme.rft, at the time of the renewal. It is hardly necessary to cite authorities to show this, and to show that in Ohio, in all cases of simple renewal, based upon no other consideration 'than the old debt, the payee or creditor has the option, upon dishonor of ' the new notes, to sue upon the old notes, and that it is for the defendant to show, and by “ clear proof,” that there was a special agreement to waive this right.
    The Ohio authorities leave no doubt as to the law in such a case. Harsey v. Heath, 5 Ohio R., 353; Gardner v. Com., 34 Ohio St., 187; Hmerine v. O'Brien, 36 Id., 491; Puchford v. Maxwell, 6 Term, 52; Palmer v. Bodge, 4 Ohio-St., 21; Miller v. Woods, 21 Id., 485; Merrick v. Bowry, 4 Id., 60; Cumbaugh v. Engle, 3 Id., 584; Leach v. Church, 15 Id., 169; Bank v. Bank, 37 Id., 208; Hunter v. Moul, (Pa.) Am. Law Reg. (August, 1882), 514, 520; 21 Wend., 452; 1 Hill, 516; 54 Barb., 455; 3 Denio, 410.
    
      James A. Wilcox, H. Guthrie, and C. H Grosvenor, for defendant in error.
    That an express or actual agreement is not necessary, and that whether or not the plaintiff agreed or intended to take the new notes in payment of the old, in the absence of an express agreement, may be proved by the facts and circumstances of the case, the acts and dealings of the-parties.
    That if a creditor receives the negotiable note of the remaining partner and gives up the original firm.note, or grants long credit, for a consideration, as for increased interest; or does anything which changes the condition of the parties, or renders it inequitable to permit a recovery on the original note, he thereby releases the retiring partner.
    It will be seen, from the authorities below cited, that in cases of this kind all depends upon the intention of the parties at the time; that if it appears, either affirmatively or from the circumstances of the case, that the creditor intended to accept the remaining partner for the debt-; or, in legal effect, did accept him and took his negotiable note f5r the debt and surrendered the original firm note, the retiring partner is discharged.
    And the courts hold the least consideration to be sufficient — such, even, as taking a negotiable note; receiving more interest; extending the time, &e. And the fact of giving up the original firm securities for the new securities of the partner, is, of itself, usually held strong evidence, unless explained, that the creditor intended to accept him for the debt, as otherwise he would not give up the original securities. Parsons on Part. (3d ed. 1878), 457-462, (421-30); 2 Parsons on Notes (ed. of 1863), 203; 1 Story on Part. (5th ed.), 425, 426; 2 Id., 540, n 1; Collyer on Part. (ed. of 1834), 324, 325; Mason v. Wickersham, 4 Watts & Serg., 100; Arnold v. Bangs, 12 Johns., 409, 410; Hart v. Boiler, 15 Serg. and Rawle, 162, 163; Harsey v. Heath, 5 Ohio, 353; 4 Ohio St., 60; 3 Id., 544; 15 Id., 169; Rawson v. Taylor, 30 Id. 389; 34 Id., 187; 36 Id., 491.
    As to the question of jurisdiction and the appearance of Gould in this court, see Secór v. Witter, 39 Ohio St., 218.
   Granger, C. J.

We concur with the supreme court in Secor v. Witter, 39 Ohio St., 218, and think that so far as concerns the question of jurisdiction, here made, Smetters v. Rainey, 14 Ohio St., 287, is not sound. Gould and Green were so united in interest that service of a summons upon one prevented the running of the statute as to the other. Had the district court been informed of the defect of parties, Gould could and should have been brought in before the judgment of reversal was rendered. See Buckingham v. The Bank, 21 Ohio St., 131. As was held in that case, to reverse the judgment below before Gould was broijght in, was error. But the present plaintiff in error cannot here avail himself of that error because he made no objection in the district court based upon the defect of parties. His silence there leaves it optional with this court to listen, or not, to such an objection by him here. No consideration on behalf of the bank calls /or a relaxation of the rule. As it affirmatively appears that Gould made no claim in the common pleas that Green ought to pay any part of the sum for which that court rendered the judgment, we see no reason for interfering with the judgment of the district court for his protection. If such interference were called for (as it would be if his rights were- in danger) we would reverse the judgment of that court and remand the case to it, so that Gould could be there made a party and judgment properly entered upon Green’s petition in error to that court.

As the case stands we proceed to consider its merits as between Green and the bank. After the dissolution of the firms, Gould had no authority to sign the firm name except “in settlement ” of firm business. Whatever question might exist as to his right, under the agreement of dissolution, to renew an overdue firm note, it is clear that he had no authority to sign the firm name to the notes dated May 19, 1873, and February 2,1874, because they included moneys loaned to him individually. The bank well knew that such moneys were included. Legally, therefore, said notes were the notes of Gould only. We think that the real question at the trial was “ Did the bank agree to take Gould’s notes as payment of the firm notes?” Did it agree to release Green in consideration of Gould’s notes? It is well settled that the surrender of the right to pay the debt, and thereby stop interest, is a sufficient consideration to support such a contract for a release. The discount for the four months, on one note, and the ninety days on the other, was a sufficient consideration... Counsel for the bank do not claim that the law is otherwise.

How can such an agreement be proved ? Precisely as any other agreement, or contract, not regulated or affected by statute. By proof of express stipulations, oral or written, or by proof of such facts, circumstances, acts, conduct, &c., as satisfy the mind that the parties so understood or agreed. We see no reason why such an agreement cannot be implied from such facts, circumstances, acts and conduct as would suffice to establish any other agreement or contract, in the absence of statutory provisions affecting the mode of execution or proof. From the nature'of the alleged agreement, the absence of express words touching payment and release ought .to weigh against its existence; and therefore the acts and circumstances relied. upon to establish such an agreement should be such as were clearly inconsistent with its non-existence; they must be so controlling as to justify the belief that at the time of the transaction the parties understood and intended that Green was released, and that the old notes were paid. Counsel upon both sides have cited numerous cases bearing upon this question. Without quoting from them we content ourselves with the statement that the decided weight of authority both in Ohio, and outside of it, is in accord with the view we have outlined.

In the charge the court said: “In answer to this last question you will look to the evidence’ and say whether the notes given as renewals hy defendant Gould after the dissolution of the partnership — was payment. The fact that other notes were given of a similar kind, the original notes or evidences of indebtedness given up and stamped as paid are not proof in and of itself of payment. It should affirmatively clearly appear from the evidence that such new notes were taken and accepted by the plaintiff as payment of the original obligation; if you find it did not receive the same as payment, the plaintiff is not estopped by reason thereof from maintaining this suit.” And also said, “ On the question of payment you may look to all the evidence in this case touching or reflecting upon tliis issue of payment including the conduct of the parties at the time when it was claimed payment was made, and subsequent thereto what was said and done at the time the renewal notes were made; if it is claimed that they were taken by the plaintiff of defendant Gould as payment of the notes set up in the petition, did the plaintiff by agreement with the defendants or either of them give up the notes sued upon in this action as paid and satisfied, and take the renewal notes in payment and satisfaction thereof; if it did, then the plaintiff cannot recover in this action.” •

After the charge had been read, Green asked the court to add the instruction quoted in our statement of facts. Taken by itself that instruction did not correctly state the law. It omitted the essential fact of an agreement; the understanding and intent of both parties — Gould and the bank. But, when added to the charge already given, the instruction asked for was good law. An intelligent lawyer might understand the charge as given, as meaning precisely what it would have meant after adding the instruction asked for. But even he might be misled by the refusal of the court to add the instruction, if the refusal were not accompanied by a statement that the charge as given substantially included the request. This request applied to the vital point of the case. • Upon it the charge ought to have been clear and explicit. It is fair to presume, upon the evidence presented in the bill of exceptions, that the main argument by Green’s counsel before the jury had been that an implied agreement was proved' by that •evidence. The unqualified and unexplained refusal by the court to say that the acceptance by and understanding of the bank, to which it had referred in the charge, in the absence of an express agreement, could be established by acts and conduct of the parties, was so likely to mislead the jury, that we think the district court Aid not err in holding it error sufficient to justify a reversal of the judgment of the common pleas.

Judgment affirmed.