Case Name: LEAS and another against JAMES
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1823-10-17
Citations: 10 Serg. & Rawle 307
Docket Number: 
Parties: LEAS and another against JAMES.
Judges: 
Reporter: Reports of cases adjudged in the Supreme Court of Pennsylvania (Sergeant & Rawle)
Volume: 10
Pages: 307–316

Head Matter:
[Chambersburg,
October 17, 1823.]
LEAS and another against JAMES.
IN ERROR.
If the debtor assign over to the creditor a bond payable to himself but not yet due, and the assignment is silent as to its being transferred in payment or not, parol evidence may be given by the creditor to show,' that it was transferred as a collateral security and not as payment.
Where a chose in action is transferred to a creditor by his debtor, the presumption is that it is not intended as payment, if not so expressed.
If a creditor for goods sold, &c receive a chose in action as a collateral security, and payment is not obtained from it, he may recover on the general assumption, and is not obliged to resort to an action on the special agreement under which the security was received.
This was a .writ of error to the Court of Common Pleas of Cumberland county.
In the court below itewas an action of debt on assumpsit, brought by David James,t\\ejis.i'aüShe\o'w,Ags.m?ABe,njamin Leas,¡má Henry Leas, defendants below, and plaintiffs in error, in which the plaintiff filed a statement, alleging his demand to be founded on a book account, for goods, wares and merchandizes, sold and delivered by the plaintiff to the defendants, and also for commission on certain goods purchased for the defendants, leather sold for them, and money paid as follows; (then followed the account,) May, 1st 1816, balance 2432 dollars, 15 cents. • The defendants pleaded non assumperunt and payment with leave, &c. replication non solverunt, and .issue.
On the trial, it appeared in evidence, that the plaintiff lived in Philadelphia, and the defendants in Cumberland county, and on the 6th July, 1815, the plaintiff made the following entry .in his day book, and gave a copy of it to the defendants, but it was not signed by either party;
Philadelphia, 6th July, 1815.*
As Benjamin and Henry Leas agree to give D. James their entire business to transact in this city, the principle upon which it is to be transacted is so fixed, that I). James is to supply them with all kinds of goods which they may want, and charge them 2§ per cent for all merchandise which he may purchase for them, that does not come under the denomination of dry goods, (which he will supply himself.) All of which goods shall be sent B. and H Leas on the best possible terms, they supplying funds. D. J. is to make sale of flour and other articles sent him by B. and H Leas, at the usual per centage.
Once in about six months, the accounts shall be settled, when any interest due on either side shall be charged or credited, and the accounts balanced.
In the plaintiffs books were the following entries.
Sundries, Dr.
To Benjamin and Henry Leas.
Cash for Western paper. «■ $1174.
Baltimore - 234.
Philadelphia - 55.
Various Southern - 37.
Bills receivable.
For John Keen’s bond payable, > May, 1st 1816,5 Interest on bond,
$1500
$2056. 133, 64.
$3689, 64.
Interest on the above bond to be charged Until paid.
The plaintiff gave the following receipt, indorsed on the above-mentioned copy of the agreement delivered to the defendants.
“Received, Philadelphia, July, 6th 1815 of B. and H. Leas, 1500 dollars, and John Keen’s bond for 2056 dollars, payable May, 1st 1816, at which time there will be 13 months interest due thereon, amount 133 dollars 64 cents: and in the aggregate, — In West-
ern paper, - - - - - 1174 00.
Baltimore - 234 00.
Philadelphia - - - - 55 00.
Various Southern, - - - 37 00.
$1500 00.
Bond, ----- 2056 00.
Interest credited, - 133 64.
For David James, Alexander Clay, Jr.
On the above mentioned bond from John Keen to B. and IL Leas, they indorsed this assignment.
“ June, 6 th 1815.
“ We do hereby assign over all our right, title, interest and claim of the within bond to David James, for value received.”
BenjaminLeas, Jr. Henry Leas.
After proving these papers, the plaintiff offered in evidence the deposition of Alexander Clay, Jr. who, it was admitted, was a clerk in his store at the time of this transaction, which stated, among other things, that before the bond was assigned a good deal of conversation took place in the hearing of deponent between the plaintiff and defendants in relation to the bond, and the manner in which it was to be taken by theplaintiff: that it was clearly and explicitly understood, thatthe defendants were to have credit upon the books of the plaintiff for the amount of the bond and interest to the 1st May, 1816, and that if John Keen did not pay the said bond and interest when they became due, the defendants would pay the money and take up the bond. The defendants objected to this part of the deposition on two grounds; 1st. That it went to support a special action on the case for not taking up the bond, and not the action of debt brought. 2d. That it was an offer of parol evidence to contradict the agreement in writing, and the entry of credit for the bond. And the court admitted the evidence and sealed a bill of exceptions.
Theplaintiff then offered in evidence a letter from the defendants to him dated the 15th May, 1812, in which they make an overture to the plaintiff to transact their business according to the terms of the entry of the 6th July following, afterwards made, and speaking of Keen’s bond say, that they would leave it in the plaintiffs care, till due, and if required, would give security for the payment of it besides. To this letter also the defendants objected, and the court received it, and sealed another bill of exceptions.
The plaintiff also offered another letter from the defendants to him dated August, 15th 1815, referring to the contract before made on the 6th July preceding. The defendants objected to this, but the court allowed it, and the planitiff tendered a third bill of exceptions.
The items and the amount of the account claimed by the plaintiff were not disputed by the defendants: but they objected to the plaintiffs right to recover, and requested the court to chaige the jury.
1st. That the bond of Keen assigned by the defendants to the plaintiff, produced by the plaintiff on notice given by the defendants and read in evidence, the amount of which bond was credited to the defendants in the plaintiff’s book of original entries, under date of the 6th July, 1815 and a receipt given for the same to the defendants at the same time, is a good and legal credit, and ought to be allowed to the defendants by the jury.
2d. If the jury find that the aforesaid bond was due on the 1st May, 1816, and was kept by the plaintiff four, five, six, seven, or eight months thereafter, without making any demand nf payment from the said Keen, or notifying the defendants of the demand and non-payment by said Keen, then the plaintiff could not compel the defendants to pay the money due on the said bond in this suit.
3d. That the defendants are entitled to credit for the amount of Keen’s bond of the Cth July, 1815, when the same was assigned by the defendants to the plaintiff, and by him credited in his book and a receipt therefor given to the defendants. But if the plaintiff has any claim against the defendants on the ground of the alleged special agreement, proved by Clay, the same cannot be tried in this suit, and on the issues joined therein between the parties,
4th. If the jury find the whole or any part of the goods sold and other charges and claims made by the plaintiff against the defendants were sold and arose after, and in pursuance of the agreement between the parties, reduced to writing in the plaintiff’s day book, and given in evidence in this cause, and that no subsequent settlement took place between the parties, then the plaintiff cannot recover in this action for such goods and the charges sold and made after the date of the said agreement and in pursuance thereof.
Charge of the court to the jury:
First point of the defendants: The plaintiff claims the amount of his account as exhibited in his statement filed. The items, and the amount of that account, are not controverted between the parties. Several objections.are made to the recovery, but the principal one, we think, rests upon the determination, whether the defendants shall have a credit for the amount of a bond,- put into the possession of the plaintiff by the defendants on the 6th July 1815, for the sum of 3056 dollars, payable by one John Keen, with interest from the time charged.
The defendants contend, that the plaintiff took this bond as cash, and that his having entered it as such on his day book of original entries and also his having given a separate receipt for the same on the 6th July, 1815, indorsed on a copy of an agreement or memorandum between the parties, amount to a legal credit, and ought to be allowed to the defendants by the jury. The court felt some difficulty at first in admitting parol’ evidence to vary or control the apparent meaning of the transfer indorsed on the bond, the receipt given, and the entry made in the plaintiff’s books. But the whole must be considered as one transaction, or as component parts of the res gesta. ■
The whole appears to have been considered aS a negotiation between the parties, entitled to no greater solemnities than book entries. The agreement referred to is but a memorandum entered in the plaintiff’s day book, on the same leaf with the other entries and charges, and not signed by either party. Great latitude has always been allowed in transactions of this kind, and particularly in permitting book entries to be explained, controlled, and in some cases to be contradicted.
Considering the nature of this transaction, and the cases we have had an opportunity of consulting, the court now has no doubt of the propriety of admitting the testimony of Clay, and the letters of the defeadants to elucidate and explain the whole affair, and as far as we can, to do exact justice to the parties according to their own intentions and understanding at the time. We therefore believe we are not bound under the evidence in the cause to say as the defendants request, that the credit entered on the books of the plaintiff, and receipt given with the transfer indorsed on the bond, of themselves in law entitle the defendants to the credit claimed.
To point second of defendants: Whether the plaintiff can compel the payment of the amount of the bond in this suit after kéepind the bond four, five, six, seven or eight months after it was due without making any demand of payment from John Keen, or notifying the defendants of the non-payment thereof, depends upon the agreement and understanding of the parties. If the plaintiff took the bond as an absolute payment; or if the defendants were only to guarantee to the plaintiff the solvency of Keen, then the plaintiff would not be entitled to recover the amount of the bond referred to in this suit. For under such an agreement last stated he' would have been bound to prosecute with due diligence the recovery of the money, (if practicable,) from Mr. Keen, before the bringing of this suit. It is not contended this was done. If the understanding of the parties in giving and taking this bond was, that it should merely be held by the plaintiff as a collateral security in case of non-payment, the’ plaintiff would undersuch circumstances^ have the right of selecting his remedy either against the present defendants or to resort to the security under the bond,
Third point of defendants: The precise intention of the parties must be ascertained by the jury from the evidence before them. If upon the whole, it appear that the bond was taken by the plaintiff with the consent and approbation of the defendants as a mere collateral security, and not in satisfaction of the purchase nor as conditional payment to be guaranteed by the defendants, then the defendant would not be entitled in this suit to credit or deduction to' the amount of the bond in controversy. And on the other hand, if it appear from the whole testimony that it was the intention of the' parties at the time, that the bond referred to was given and received as a conditional payment, in which it was only agreed to be guaranteed by the defendants and there was no demand by tire plaintiff of payment from John Keen, before this suit brought, or there was not due diligence used by the plaintiff to recover it; or if the bond was taken as an absolute payment, then the defendants would in this suit be entitled to a deduction out of the plaintiff’s claim for the amount of the said bond and interest. It is not pretended, that any other infringement of the special agreement, or other matters not contained in the plaintiff’s statement, can be inquired into in this suit.
Fourth point of the defendants: To the form of action under the testimony in this cause we can discover no insurmountable objection. We consider the agreement referred to, as a matter preliminary to the book entries, and that the entries so made, constitute substantially the cause of action. Mr. Clay, states in his deposition that in October, 1815, some particulars of the plaintiff’s account were examined and corrected by the defendants after which they acknowledged it was correct* If this testimony is true, there is no doubt that the present suit is in due form, so far as regards the amount stated, examined and approved by defendants. And we would further say that, although the whole or any part of the goods sold and other charges or claims made by the plantiff against the defendants were sold and made after and in pursuance of the agreement read from plaintiff’s clay book, and no subsequent settlement took place between the parties, still the plaintiff might sustain a suit in this form for such goods and charges sold and made, if duly delivered to and performed for the defendants and entered in plaintiff’s books, after said agreement and in pursuance of it. We have said that the agreement or the entry of the memorandum in plaintiff’s day book is of a preliminary character; not the foundation of the action, but inducement to it. It cannot be objected that the form of suit is incorrect, as applied to the two principal items in the plaintiff’s account, the 455 dollars, and the 4075 dollars 63 cents, if the evidence is true, that the defendants examined and approved the accounts of the plaintiff as respects them. The claim is not stated by the plaintiff to be on account settled, but after revision by the defendants and their approving it,- it may well be called a book account under the meaning of the terms of the act of assembly of 1806. The law abhors the multiplying of suits — and where the justice of the case maybe fully answered, as we believe it may be in this case, it will not be astute in the support of technical objections, and peculiarly so, under the act last referred to. The case falls within the principle, under the evidence if believed, that although the purchases and per centage, may have accrued under a special agreement, and the goods were accordingly afterwards sold and delivered and entered in plaintiff’s books, when the agreement was thus consummated and the debt has accrued, it could not be required that the action be predicated on the terms-of the special agreement, but may be sustained in general assumpsit.
The jury found a verdict for the plaintiff for his claim, and the defendants excepted to the charge of the court.
Mahon and Carothers, for the plaintiffs in error,
now insisted on the following errors the other errors assigned being relinquished.-
3d ei’ror. In admittingthe contents of the deposition of A. Clay, Jr. to prove other facts when there had been a written agreement between the parties, a written assignment of a bond, and a written receipt for that bond, and when no fraud or mistake was suggested. It was introducing parol evidence to explain the construction of written instruments, which is not allowable. M'Dermot v. The United States Insurance Company, 3 Serg. & Rawle, 607, is an authority, that when the controversy arises on the construction of words, no evidence dehors is to be received. So also are O‘Hara Hall, 4 Dall. 340 Christ v. Deffebach, 2 Serg. & Rawle, 464. Besides this objection there is another founded on the form of action.Clay proved the engagement of the defendants to be, that if Keen did not pay the bond and interest, when they became due, the defendants would pay the money and take up the bond. This evidence was not applicable to debt on an assumpsit under the act of assembly: but was the foundation of a special action on the case for not complying with this contract, in which the plaintiff should have shown a tender of the bond before suit brought.
4th error. Admitting the letter of May, 1815. This letter was previous to the written agreement under which the goods were furnished by the defendants to the plaintiff, and all preliminary intercourse was merged in the subsequent agreement.
6th error. There was manifest error in the courts saying, that-the entry of the agreement in the plaintiff’s book* á copy of which was delivered to the plaintiff, was a mere book entry. There was no other reason for delivering a copy than that both considered it as an agreement.
7th error. The defendant’s second proposition was not answered by the court. We contend that the plaintiff could not hold the bond without endeavouring to collect it, for 4, 5, or 6 months after it became due, and without notifying the defendants of the nonpayment.
9th error. It may be that in case of a special agreement, where the plaintiff has performed it, he may recover in a general indebitatus assumpsit: so may he where the contract has been rescind-» ed by consent, or where the non-performance of the plaintiff’s part has been occasioned by the act of the defendant. But it does not lie where the plaintiff has neither executed the contract* nor agreed to rescind it. In the present case, the agreement was not executed. The accounts were to be settled in about once in six months* and interest charged on either side according as the balance appeared.
Alexander and Metzger, for defendant in error.
3d error. Our courts admit parol evidence, wherever' the equity of the case requires it* to explain the contracts of parties. The plaintiff’s suit is for goods sold : the defendants set up the assignment as payment, and we deny that the bond was received in payment. The burden of proving that it was so received, is on the defendants. In truth, however, our evidence is offered* not to contradict the writings, but to explain an ambiguity in them: to Show, that the allegation by the defendants of something beyond the' writings, is not true. This is a case of ambiguitas latens, where parol evidence is always admissible. Parol evidence may be given to explain a receipt. 5 Johns. 68. It is by no' means clear, however, that there was any written agreement on the subject, as it was a mere entry in a book, a sort of memorandum of a parol agreement, not signed by either party. The objection to the form of action is not sound: because, even supposing there was a special agreement on which the plaintiff might have recovered, yet having performed every thing on his part to be performed by the special agreement, he may recover in indebitatus assumpsit, on the account settled between the parties, as proved by Clay’s deposition. Settling an account is a new promise. 1 Johns. 35.
4th error.. The letter of the 15th May, stands on the same principles as the deposition of A. Clay, Sr.
6th error: The expressions used by the court in speaking of the book of entry, if incorrect, do not affect the material points in question.
7th error. The questions proposed by the plaintiff were all answered, though not, perhaps, in the order in which they were asked.
9th error. The rule is, in respect to a special agreement, that as long as it is executory, that is, as long as it is unperformed in toto, the plaintiff must declare on it: but if performed, or rescinded, or prevented by the other party from being carried into effect, the plaintiff may declare generally, and give the instrument in evidence. Kelly v. Foster, 4 Binn. 4. Miles v. Moodie, 3 Serg. & Rawle, 213.

Opinion:
The opinion of the court was delivered by
Tilghman, C. S.
David James, the plaintiff below, filed a statement, in which he declared his cause of action to be a book account, for goods,. wares and merchandize, sold and delivered by him to the defendants, and also for commission on certain goods purchased for the defendants, leather sold for them, and money paid, on their account, as follows, viz. (then followed the amount of particulars,) 1st May, 1816, balance #2432, 15, &c. &c. On the trial of the cause, the plaintiff in support of this action, gave in evidence, an entry in his day book, specifying the terms on which he was to furnish goods of his own, to the defendants, make purchases of other goods for them, and make sale of goods to be sent to him by the defendants to be sold on their account. A copy of this entry was given by the plaintiff to the defendants, at the commencement of their dealings, but was not signed by either party. It was proved also, that the defendants transferred to the plaintiff the bond of a certain John Keen, for 2056 dollars principal, on which was indorsed a written assignment by the defendants, in the words following: 11 June 5th 1815, we do hereby assign over all our right, title, interest, and claim of the within bond, to David James, for value received." There was also the plaintiff's receipt, in writing, for the bond. This bond was not payable until some time after the date of the assignment, and a credit was entered to the defendants on the plaintiff's books, for the amount of the principal and the interest which would be due on the bond on the day on which it would be payable. The principal dispute between the parties, was whether this bond was received by the plaintiff, as an absolute payment, or only as a collateral security; and to prove that it was received as a security only, the plaintiff offered the deposition of Alexander Clay, who had been a clerk in the plaintiff's store, at the time of his transactions with the defendants. Clay's testimony went also to the proof of the goods which were sold and delivered by the plaintiff to the defendants, and of some other matters. The plaintiff offered in evidence also, several letters of the defendants to him, previous to the commencement of their dealings, proposing certain terms on which the defendants wished to deal with him. To all this evidence the defendants objected, on the ground of its being contrary to the entry in the plaintiff's books, which they considered as the written agreement of the parties; and contrary to the written assgniment, indorsed on the bond, and the written receipt of the plaintiff. I concur with the defendants' counsel, in opinion, that the entry in the plaintiff's books, is to be considered as the agreement of the parties. Because, when it was copied and delivered to the defendants, and accepted by them, without objection, their consent may be fairly inferred, although the writing was not signed by either party. That, being the case, the agreement was not to be contradicted, by parol evidence of what had passed between the parties before, neither was the written assignment of the bond to be contradicted by parol evidence. But I am of opinion, that the evidence objected to by the defendants, and admitted by the court, did not materially contradict, either the entry in the plaintiff's book, or the assignment indorsed on the bond. The entry in the book, did not specify the goods which were delivered to the defendants. It was necessary therefore to prove that, by evidence aliunde; neither did the written assignment of the bond, declare, whether or not it was to be accepted by the plaintiff, as an absolute payment. It was open to the plaintiff, therefore, to prove by parol evidence, on what terms it was accepted. The error in the argument of the defendants' counsel is, in treating the matter as if this had been an action brought by the plaintiff against the defendants charging them with a responsibility by virtue of the assignment, because the money had not been recovered of the obligor in the bond. But that is not the case. This action is founded on the contract for goods sold and delivered, &c. Then, when the defendants set up the assignment of the bond, as a payment, it is incumbent on them to prove that it was so intended. The wriing itself shows no such thing, and in cases where a chose in ac-tion is assigned by the debtor to the creditor, I think the presumption is, that it was not intended as an absolute payment, unless it is so expressed. The reason of this presumption is, that such assignment is not in its nature a payment. It puts no money in the hands of the creditor, but only gives him the means of collecting money from another. If these means fail, therefore, without the fault of the creditor, there is no reason why the original debtor should be discharged. The entry of credit in the plaintiff's book, was by no means conclusive. It was not credited as cash, but as an assignment. And this entry is perfectly consistent with the testimony of Clay, that the bond was to be held as a security by the plaintiff, until the time when it was payable, and if not paid then, it was to be considered a§ payment. The court below, having admitted the evidence, submitted to the jury as matter of fact, on what terms the bond was assigned, and directed them to allow it as a payment or not, according to their opinion of the intent of the parties. There was no other way to do justice. I am of opinion therefore that there was no error, either in the admission of the evidence, or in the charge of the court.
An objection was made to the form of actioá. The defendants' counsel suppose, that it should have been a special action on the case, founded on the written agreement. But I think the plaintiff had a right, after the delivery of the goods, &e. to charge the defendants on their-general assumption. The written agreement contains nothing very special. And when the plaintiff had done every thing which he was to do; when he had furnished the goods, &e., according to the agreement, he was not under the necessity of embarrassing his case, by a special declaration. This has been repeatedly decided. I will refer to the following cases in this court, without mentioning those in other courts, which are numerous. Kelly v. Foster, 2 Binn. 4. Miles v. Moodie, 3 Serg. & Rawle, 211. The defendants in this case, assigned a number of errors, which I have not considered separately, because they are comprehended in the points to which I have adverted. I am of opinion on the whole record, that there is no error, and therefore the judgment should be affirmed.
Judgment affirmed.