Case Name: Bank of Newbern v. Pugh
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1820-12
Citations: 1 Hawks 198
Docket Number: 
Parties: Bank of Newbern v. Pugh.
Judges: Judge-Hair concurred with his brethren ,• and
Reporter: North Carolina Reports
Volume: 8
Pages: 198–207

Head Matter:
Bank of Newbern v. Pugh.
From Pitt.
A. being indebted to tbe Plaintiffs, came to an agreement witli them, that he should make a sale on credit, and take bonds payable to the Plaintiffs of which the Bank would take such as might be approved, in payment of its debt. A sale was accordingly made by A. who gave notice of the kind of bonds required ; and he took from P, for his purchases, a bond payable to the Plaintiffs, which was offered to the Bank and refused as a payment, and returned to A. to proceed on as he might think proper.
Held, that by this agreement, A. became the agent of the Bank to take and receive the delivery of the bond from P ; and that the bond, by the delivery to A, was therefore complete.
Held further, that ’the subsequent refusal of the Bank to give A. credit for it,.was not an attempt to undo the delivery and avoid the bond.
Held further, that, if such attempt had been made, it would be ineffectual — for if an obligee once accept a bond, he cannot afterwards disagree to it so as to make it void.
It seems, that, without any previous agreement between the Bank and A, this was the bond of P ; because the Plaintiffs had never rejected it in ¿oto.
Held further, that it is the province of the Jury to deckle, not only on the veracity and credit of the witnesses, but also on -what facts are proved by their testimony; and it is error in the Court to direct the Jury to infer one fact from another.
(fuere -. Can the Bank of Newbern take a bond payable directly to itself. It seems that it may, for a debt due to itself.
This was an action of debt upon a sealed note ; plea, non est factum. Upon the trial, the Plaintiffs gave in evidence the note, of which the following is a copy :
“ Six months after date, \ve promise to pay to the President and Directors of the Bank of Newbern, thirty-oiie hundred and five dollars, for value received: to which payment we hind ourselves and our heir% this fifth day of March, 1818. — 1—§3105. ;
(Signed) . « JOHN ALLEN, (Seal.)
« WILLIAM PUGH.” (Seal.)
The Plaintiffs proved the signature of “ William Pugh” to be that of the Defendant. The Defendant then proved, by M. C. Stephens) the Cashier of the Bank, that the said note was offered to the Bank by John Mooring, for discount, in lieu and payment of one of David Smith, the intestate of said Mooring, for a like amount, and that flic Bank did not accept it when so offered. Upon his cross-examination, he further proved, that Smith was, at the time of his death, a large debtor to the Bank, and that the President and Directors had authorised his administrator, the said Mooring, to take bonds with approved sureties from the purchasers at the sale of Smith’s effects, payable to the said President and Directors, and had agreed with Mooring to receive such of those bonds as they should approve, in payment of David Smith’s note to them : That the bond now sued on was one of those taken in pursuance of such authority and agreement ; but the Bank, doubting its sufficiency, would not accept it in payment, and that the Cashier returned it to Mooring, to be proceeded on as he might think proper. This witness likewise stated, (the same being objected to by the Plaintiffs,) that the President and Directors had not, to his knowledge, in express terms, either verbally or in writing, directed this suit to be brought, or authorised Mooring to sue on. the note in their name ; but they were privy to the suit, and were actually indulging Mooring for a portion of his intestate’s debt, awaiting the result of this suit, which was carried on by him for his own benefit.
It was further proved on the part of the Plaintiffs, that it was made an express condition, at the time of the sale of David Smith’s effects by Mooring, that the purchasers should give bonds, with security to be approved by him, in the form of that now sued on.
It was further offered to be proved, that since the note was returned to Mooring, he exhibited it to the Defendant, who, with a knowledge of these circumstances, offered to give another bond. This last evidence was rejected by the Court.
The Court charged the Jury, that if they believed the evidence of Stephens, the paper writing had not been re- ceivcd by the Plain tiff's, or by any one under their author^y» as the bond of the Defendant; and tiierofore that it was not the deed of .Pugh. The Jury found accord* ingly , and the Plaintiffs moved for a new trial, because the Court misdirected the Jury •, and because the Court admitted improper testimony j and because the Court rejected proper testimony. But the motion was refused, and judgment given for the Defendant ", from which the Plaintiffs appealed to this Court.
Gaston, for the Plaintiffs,
said that the points which be now proposed to make in the case wore those stated in the record. First: as the case appeared upon the trial, the bond declared on was the deed of the Defendant, and the Plaintiffs were entitled to a verdict upon the plea of non est factum. Three things are necessary to constitute a deed — Writing, to express the certainty of the contract — sealing, the assent of the party — delivery, to attest its consummation. If the delivery be made to the obligee himself or to his agent, the act is complete, if it be made to a stranger for the use of the obligee, it lias been a cuestión of nicety and much controversy, v. hat shall be the effect. There have beat decisions, that such a delivery k> a stranger, although the acceptance be af-íerv ardí! absolutely refused by the obligee, constitutes a good deed. It is admitted, however, that this is doubted by the great authority of Lord Coke, and perhaps the better opinion may be as 1 aid-down by him in'Bnller v. Baler — “that if A- deliver obligation to JB. to the use of “ is. it is the obligation of A. iustatUer ; but if it be presented to C. and be refuse it, it loses its force” and ■leaves the inslrumcnt as though it had not been delivered: But even in ibis case, non est factum is not a good plea, “ because it bad been once his deed” — Beyond all question, therefore, if the delivery be made even to a stranger, it is the deed of the obligor until the obligee refuse to receive it as Ms deed : The case already cited from Coke shews this ,• and besides that case, there are these others. The instrument has never been tendered to the Plaintiffs simply as the bond of the obligors, and by them refused as such : the tender was made sub modo only, — ■ that they should take it and give up .another. On tliose terms, they refused to accept it; but that does not vitiate the deed. That condition, which Mooring interposed^ was not annexed to the delivery by Pugh ; and it cannot, therefore, as regards the legal operation of the instrument, be interposed by Mooring so as to defeat the bond. The Plaintiffs have never refused to accept it as Pugh delivered it, unconditionally.
But Mooring was not a stranger. He was the agent of the Plaintiffs. When we consider his previous authority, the bond became conclusively obligatory on Pugh when he delivered it. It was an express condition of the sale, that an absolute bond should be given, payable to the Bank 5 and Mooring was authorised to take and receive the delivery of such a bond : when, therefore, he did receive it, as it was given absolutely by the obligor, and received absolutely by the agent of the obligee, it was complete and final. But if any thing more were necessary, on the part of the Plaintiffs, to shew an acceptance, it exists here 5 for the very bringing this action, is an acceptance of the bond. As to the agreement between the Bank and Mooring, that is solely between themselves — the Defendant was no party to it $ nor does it appear that he even knew of it. The most that can be made of it is, that the Bank should take in payment snch bonds as were approved, and take as trustees for Mowing, those they did not approve.
At all events, the Court erred in assuming to decide upon the effect of Stephens’s testimony, and instructing the Jury, in so many words, that, if Stephens was believed, the paper was not the deed of the Defendant, Now that would depend .upon what was the true nature of the agreement between the Plaintiffs and Mooring in point of fact — whether it was such as I have supposed or otherwise : and that is an inference of fact to be drawn by the Jury, and not by the Court.
The evidence objected to by the Plaintiffs was irrelevant, and ought to have been rejected. Its effect in the utmost latitude could only be to shew, that the Plaintiffs have not the beneficial or equitable interest in the bond. Take it so and it makes no difference. They are the Plaintiffs of record, and the sole question is, whether they have the legal right.
Sea-well on the other side.
The case from Dyer turns' wholly on the repugnancy of the plea, which does not meet the declaration, ‘but states a different obligation. Mford v. Lee did not depend on this question at all. It is a case of the performance of an award, and even if the release had been tendered personally to the releasee and he had refused to accept it, the action would not have been lost ; because a tender alone was sufficient. The most that can be made of that case is, that non est fact-win is not a good plea. Lord Coke says, in Butler v. Baker, that “perhaps” this plea will not be sufficient. In that respect modern decisions shew that he was wrong. In every other particular that case is good law and is expressly in point with us. It lays down the rule in precise terms, that the deed becomes absolutely void by the refusal of tiie obligee — and the case from Salkeld corresponds therewith, and shows that, although the bond might at first take effect, yet by the dissent it becomes .void ah initio by relation. This is proved by all the subsequent cases — -and what may have been the doubts which perplexed the Judges in those old cases, we find the Courts very clear shortly afterwards. In Whelpdale’s case, Taw’s case is overruled by name g and the principle stated, that if an obligation be deliver ed to one to the use of another and the obligee refuse it, he can never after assent, and the delivery becomes void and the obligor may say, “ it is not his deed” — and this is the true rule, that any thing may be given in,evidence under non est factum, that shews it is not his deed at the time of the plea pleaded. The doctrine contended for on the other side is alarming to the people of this State, where so much paper, not endorsed, is offered to the Banks for discount. Can the Bank recover on all the bonds that have been made payable to it, offered for dis - count and been rejected ? There is another question not undeserving of notice. If the Bank did accept this bond, or rather if it intended to accept it, lias it the power in law so to do ? The Bank is created by its charter — it exists by it; and its powers and capacities which arc thus conferred must also be limited by it. By the 11th section of the charter, this corporation is prohibited from “ dealing directly or indirectly in any thing but gold or silver bullion or bills of exchange,” discounted at the rate of 1-2 per centum for thirty days. They may probably deal safely in endorsed promissory notes, because by the endorsement they become quasi bills of exchange. Many good reasons might be given for such a restriction. It is sufficient, however, that such is the enactment of, the Legislature. A bond, therefore, payable directly to the corporation, is void ; because the Bank has not the capacity to make such a contract, or take a security in that form.
Gaston in reply.
The point last made is brought irregularly before the Court. The case is bore upon a motion for a new trial by the Plaintiff; and if the Court below erred ini any one particular, there must be a new trial, and then the Defendant can raise any questions he pleases. I will observe, however, that it will bo found upon looking into the charter, that it only controls the subject matter of the traffic of the Bank, and docs not a^ec^ prescribe the form, nature, or effect of the securities, which the Bank shall or may take to secure aba-lance or debt due to it, and contracted in the course of a legal traffic.
It is not disputed but that such matter as the refusal of the obligee may be given in evidence under the general issue — But that cannot avail the Defendant, whether Mooring be regarded either as a stranger or an agent: For if he be a stranger, the law presumes an acceptance until the Defendant shew a refusal by the obligee. There has been no rejection here ; but only a refusal to take this bond when it was offered to us coupled with the condition of giving up Smith’s notes. The Bank did not refuse to receive it as the bond of Defendant, as it had been delivered. The case of hardship and danger supposed, is of a bond made and offered to the Bank for discount for the accommodation of the obligor; but this w-as. made for the benefit of Mooring. The truth is, however, that Mooring was not a stranger, but the authorized agent of the Bank; and the case is but the common one of the delivery of a bond to an attorney. At all events, if the Court ought not to have instructed the Jury that it was the bond of the Defendant, the contrary instruction, that it was not his bond, ought not to have been given. It should have been left to the Jury to determine whether the circumstances proved a délive-ry in point of fact.
Taw’s case, 2 Dyer, 167. Alford v. Lee, Cro. Eliz. 54.
3 Rep. 26.
1 Salk. 301. Cro. Eliz. 626, 627.
Shep. Touch. 56.
Cro. Eliz. 143.
5 Coke 119.
Shep. Touch. 74. Bul. N. P. 172. Gilb. L. E. 162. Phil. L. E. 127, 361. Lambert v. Atkins. 2 Cowp. Rep. 272.

Opinion:
Tayeor, Chief-Justice.
Tiie principal question in this case relates to the delivery of the bond: as to which the evidence is, that the Bank authorised Mooring to take bonds payable to the President and Directors, reserving to itself the right of receiving such as it should approve, in payment of Smith's debt. In pursuance of this authority; the bond was taken : and it appears to me, that the delivery was complete and irrevocable, from the moment it was delivered to Mooring. The language of the books is clearly to this effect — a deed may be delivered to the party himself to whom it is made, or to any other person by sufficient authority from him ; or it may bo delivered to a stranger for and on behalf of him to whom it is made, without authority. It is true, that the Bank af-terwards^ refused to accept it in payment of Smith's debt and returned it to Mooring to be proceeded with as he might think fit. The evident meaning of this was, that the Bank did not think proper to relinquish the security which it already had, for the sake of one which it deemed weaker; but allowed Mooring to proceed and recover the money from the obligor, if he could. This did not amount to even an attempt to undo the delivery. But if it had been accompanied with even the strongest declaration to that effect, it could not have been effectual; for when "the obligee once by his agreement has íqade the deed good, he cannot afterwards by his disagreement,make it void. An opposite doctrine would be pregnant with mischiefs ; and in this very case, all the bonds not selected by the Bank must become void, though taken by its authority and with full notice to the purchasers, that they were to be so taken. As there must be a new trial, and as the whole record is not now before us, I will abstain, at this time, from giving any decisive opinion on the other points which have been discussed in the argument. It is possible, that, upon a more attentive consideration of the subject, I may doubt the right of the Bank to take a bond for a debt due to itself,- but from every aspect in which I have yet seen the question, and from frequent perusals of the act creating the corporation, the strong impression on my mind is, that the Bank may, for debts due to itself, take securities of any form or denomination recognised by law 5 particularly bonds, bills or notes—Act of Assembly 1804, sec. 5, 7, 11, 12. Whether the Bank can take all or any of these securi ties for debts, not due to itself, but merely as a trustee,' is a question on which I have not formed an opinion, nor should I willingly pronounce it if I had, until the pleadings shall be amended.
Henderson, Judge.
I agree entirely with the Chief-Justice in the very satisfactory opinion which he has given : and I go farther and say, that a new trial ought to be granted even if the previous agreement had not been made,, unless the Jury were of opinion that the Bank had in tolo rejected the bond. In that case, it would want an essential part of all contracts — the assent of both parties. But it is quite probable from the evidence, that the Jury, if properly instructed, and if their attention had been called to the question, would have been of opinion that the Bank only rejected it as a credit to Mooring, and did not intend entirely to annul it: for all declarations or words or signs must be judged of by the intent. The manner in which the Judge instructed the Jury, is. to me, also sufficient to warrant a new trial. He charged the Jury, that if they believed the testimony of Stephens, they should find the paper-writing not to be the deed of the Defendant. Now, what Mr. Stephens's testimony proved, was a thing on which he could not decide: that belonged ¡to the Jury. In the opinion of the Court, it might prove a total rejection of the bond} while in that of the Jury, only the qualified and sub modo rejection just spoken of. The nature of the rejection is an inference of fact, to be drawn from the evidence; which the Judge has, improperly, drawn for himself and the Jury both, leaving to the latter, only to say whether the.witness swore truly or not. The Jury are the constitutional judges not only of the truth of testimony, but of the conclusions of fact resulting therefrom. I would repel the interference of Juries, as far as the law will warrant, in all questions of law ; and, in like manner, the interference of the Judge in matters of fact.
With regard to the objection raised in the argument in this Court, that the bond is void because it is not a subject of traffic allowed by the charter of the Bank, unless under special circumstances, those the Plaintiffs must shew in the declaration, and prove, and need not be pleaded. I do not think it would be proper to decide on it on this record ; for the pleadings are very defectively stated, and the point is for the first time agitated. JYon constat, but that the Plaintiffs can, (if at all necessary,) bring tliis bond within its capacity to take according to the terms of the charter ; and on the other hand, should it be necessary to plead it, that object cannot be effected in this Court, which can make no amendment.
Judge-Hair concurred with his brethren ,• and
By the whore Court. — Let a new trial be ordered, with leave to the Plaintiffs to amend the declaration in any way they may think proper, and to the Defendant to plead de novo.
Shep. Touch. 56.
Shep. Touch. 68.