Case Name: Grove Wright v. James Latham
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1819-05
Citations: 3 Mur. 298
Docket Number: 
Parties: Grove Wright v. James Latham.
Judges: 
Reporter: North Carolina Reports
Volume: 7
Pages: 298–305

Head Matter:
Grove Wright v. James Latham.
j V From Beaufort. J
Action on the case by an indorse^ against an indorse^. Two counts in the declaration. 1. Upon tire indorsement. 2. Upon a special agreement entered into between the parties at the time of the indorsement, that the indorsee should sue the maker of the note, and endeavor by legal coercion to obtain payment from him; and if such endeavors should prove unavailing, that the indorser should be liable. Parol evidence received to prove this special agreement, and upon proof being made thereof, &c. Plaintiff recovered.
This was an action on the case brought by an indorsee against an indorser. The bond and indorsement were as follows, to-wit:
“ Five days after date I promise to pay James Latham, or order, two “ hundred and eighty-seven dollars, for value of him received. Witness “ my hand and seal, this 1st day of January, 1810.
ISAAC SMITH, (Seal.)
‘‘ Teste — Aiexandeh Latham:.”
* Pay the within note to Grove Wright, or order, for value received. * Washington, November 7,1811.
« JAMES LATHAM.”
The declaration contained two counts. The first set forth “ that Isaac Smith, on the first day of January, A. D. “1810, by his bond under his hand and seal, at Beau- “ fort aforesaid, promised to pay the said James Latham, “ or order, the sum of two hundred and eigbty-seven dol- “ lars, five days after date, to-wit, on the 6th day of “January, A. D. 181(1; and the said James Latham, “ afterwards, to-wit, on the 7th November, A. D. 1811, “ at Beaufort county aforesaid, by bis indorsement on the said bond in writing, ordered the contents thereof then “ unpaid to be paid to the Plaintiff, according to the tenor “ thereof j and the Paintiff, afterwards, to-wit, on the 10th day of November, A. D. 1811, at Beaufort county “ aforesaid, presented the said bond (the same being1 then “ payable by the said Isaac Smith) for payment, which ({the said Isaac refused to do: whereof the said Isaac “ Latham then and there had notice, and thereby became <e liable; and in consideration thereof then and there pro- “ mised the Plaintiff to pay him the contents of the said. <e bond, according to the tenor thereof,” &c.
The second count charged, “ that Isaac Smith, of Beaufort county aforesaid, on the first day of January, A. D* (C 1810, by his bond, under his hand and seal, promised ie to pay to the said James Latham, or order, the sum of e£ two hundred and eighty-seven dollars, five days after e< date, to-wit, on the 6th day of January, 1810,- and the “ said James Latham, afterwards, to-wit, on the 7th day “ of November, 1811, for a valuable consideration, transferred the said bond to the said Grove Wright; and is then and there it was agreed between the said Latham s£ and Wright, that the said Wright should endeavor by e‘ legal coercion to obtain paynient thereof from the said i( Isaac Smith; and if such endeavors should prove una-ei vailing, that the said Latham should pay the amount thereof to the said Grove Wright, and the said Wright, 4i after using all legal means to coerce payment of said bond from the said Smith, was unable to procure any <e satisfaction thereof; of which the said Latham, after- “ wards, to-wit, on the- day of -, at Beaufort aforesaid, had notice ,* and in consideration thereof then “ and there promised, the said Grove Wright to pay him “ the amount thereof,” &c.
The Defendant pleaded “ the general issue and the statute of limitations.” In support of his action, the Plaintiff proved the execution of the indorsement. He proved no demand on Smith, the obligor in the note, or notice to Latham, unless the evidence hereinafter set forth was pro-periy admissible, and the facts proved, constitute in law such a demand and notice as will make Latham liable» rpj(e pr0ved, by Slade Pearce, that he was present when the note ivas indorsed; that the bond in suit was transferred to Grove Wright in the payment of a debt; that when this bond was offered to Wright, he refused to take it, unless James Latham would indorse it; that at tiie time of the transfer,, it was expressly agreed between Latham and Wright, that Wright should first bring a suit against Isaac Smith, and then he might have recourse to Latham.
On the part of the present Defendant it was objected, that the testimony of Pearce was inadmissible, and should not go to the Jury, as it proved a contract variant from the contract entered into by Latham, by the written transfer, and contained a condition not set forth in the indorsement entered on the note. The Court admitted the testimony. The Plaintiff then introduced the record of the Superior Court of Law for Beaufort County, to prove that a writ had been issued on the bond in question on the 16th day of November, 1811, against Isaac Smith, by Grove Wright, assignee of Latham, returnable to Beaufort County Court at December term, 1811. The cause was continued until December, 1812, when the Plaintiff was non-suited, and appealed to the Superior Court. The appeal was returnable to Spring term, 1813, and the cause was continued ’till Fall term, 1814, when the death of the Defendant was suggested, and the suit abated. Slade Pearce proved that Isaac Smith was insolvent, and that, being confined in jail for debt, on or about the 17th day of May, 1813, he gave notice to Ms creditors that he intended to avail himself of the act providing for the relief of insolvent debtors; and, among others, a notice was delivered to him Pearce, as the agent of Grove Wright; of which he gave notice to Latham, who answered evasively. On the abatement of the suit, and during the week in wldcb it did abate, Pearce informed Latham of the abatement, and gave him notice of his liability.
This suit was commenced on the 11th day of April, 1816. Smith and Pearce lived in the same town, and Latham about eight miles from town.
■ On these facts it was contended, for the Defendant, that the Plaintiff could not recover, 1, Because, on the first count in the declaration, there was no evidence of a demand or notice. 2, Because, on the second count, the Plaintiff had been guilty of such negligence as to make the bond his own. The presiding Judge charged against the Defendant, and the Jury found a general verdict for the Plaintiff. A rule for a new trial was obtained, upon the grounds, 1, That the testimony of Pearce, proving the agreement between the parties, was improperly admitted. 2. If the testimony be admissible, it did not support either of the counts in the declaration. 3. That the negligence of the Plaintiff in conducting the suit, and in giving notice, had discharged the Defendant.
The rule for a new trial was sent to this Court, and the Judges were divided in opinion — Hah and HrNdersoN, Judges, being of opinion that the rule for a new trial should be discharged and judgment given for the Plaintiff\ and Tayxor, Chief-Justice, being of a contrary opinion-»

Opinion:
Hall, Judge.
— The testimony of Pearce is objected to, because it is said it goes to establish the special count, and form a contract variant from that set forth in the indorsement, which is in writing. Without at all impugning the rule, or believing that it ought to be impugned, which forbids the introduction of parol testimony to alter a written agreement, I think, the testimony was properly received. A contract in writing contains, in express terms, or by natural inference, the stipulations into which the parties have thought proper to enter. What is an assignment ? It is a name written on the backof a bill or note, in blank or ixi full, when it is expressed to whom the indorse- mcnt is made. Now, who would understand any thing more even from an indorsement in full, than that the indorser had parted with his interest in the bill or note, and trans-fcrre(2 y. |0 i11(iorsee ? There are no words to this effect, that if the indorsee use diligence to get the money from the drawer or maker, and fail, and then give timely notice to the indorser, that he the indorser shall he liable. How then does the indorser come to stand in that predicament, when there is nothing like it stipulated in the in-dorsement ? The law merchant has placed him in it, and fixed that liability upon him, which he has not subjected himself to by an express contract. If the law has imposed this obligation upon him, it must he for reasons founded in good policy •, hut when these reasons cease, the obligation loses its force. An instance may be readily given,, and that is, where the drawer of a bill has no effects in the hands of the drawee; this fact does not appear from the indorsement; how does it appear ? From parol evidence. If the objection to Pearce's testimony, in this case, be good, as altering a written contract, it would be equally good against the parol evidence in the case just put, where a question was never raised about it. Again, there is authority for saying, that where the drawer or maker is a bankrupt, there is no necessity of giving notice to the indorser, if he knew the fact at the time of the indorsement. How is this to be known without the introduction of parol testimony ? I admit this authority has been doubted, but not as to the purpose for which I introduce it, that is, to shew that parol evidence is admissable in. cases of indorsement, to do away the obligation of an indorsee to give notice, when the natui'e of the case does not require it. Cliitty, in his treatise on Bills, 63, says, " that by the very act of drawing a bill, a man enters into " an engagement with the payee, unless it be otherwise es agreed, that the person on whom he draws is capable of " binding himself by his acceptance, that he is to be found * at the place, &c." What is meant by the words " other» " wise agreed ?" do they mean that such agreement shall be inserted in the indorsement, because parol evidence is not admissible to prove it ? I think not — a majority of the Court are of opinion,' that the parol evidence was properly received $ that the rule for a new trial must be discharged and judgment be given for the Plaintiff.
Tavxor, Chief-Justice, contra
I cannot assent to the opinion of my brethren, which 1 have reflected upon with anxiety, to perceive, if I could, the fallacy of the reasoning which has led me to a different conclusion. It may, however, be obvious to others, and may hereafter become so to myself. I will state the reasoning upon which my opinion is founded.
The law has precisely ascertained the rights and duties of the indorser and indorsee, respectively, resulting from an indorsement, made as this is in the visual form. The indorser undertakes that if the indorsee present the note to the maker in due time, the latter will pay it according to its tenor ; and that if he fail to do so, he himself will, upon receiving notice of the failure of the maker, pay the amount in all cases, where notice is not dispensed with by the law in consequence of certain circumstances ; and that where it is so dispensed with, he will pay without notice. In this case, the testimony of Pearce would add to the indorsement which is in writing, a parol stipulation, tending to increase the duties of the indorsee, and to weaken and circumscribe the responsibility of the indorser. The admission of such evidence is, in my opinion, not only calculated to produce all the danger and confusion, to avoid which is the professed design of excluding parol evidence, in any case, to add to a written contract, but is at variance with a current of authorities, the force of which has been often i'ecognized by this Court.
In an action brought by the assignee of a bond, upon a written assignment in general terms, parol evidence was offered to shew that the Defendant had expressly guaran teed tlic payment of the bond 3 but it was rejected as an attempt to charge the assignor beyond the plain words and meaning of his written contract.- On the sale of a slave, ^ j3efencjaiit warranted the title in writing, which was a bill of sale in all other respects, except that it was unsealed, the Plaintiff declared on a warranty of, soundness, and offered to prove by parol, that the slave was unsound3 bat the Court rejected the evidcncc. Where the parties in the sale of a ship reduced the contract to writing by a bill of sale, it was held that no action would lie on a parol warranty made at the time of sale, no fraud being alleged5 it being a rule of law, that whenever a contract is reduced to writing, the writing is to be considered as the evidence of the agreement, and every thing resting in parol becomes thereby extinguished.
An attempt has been made to distinguish this case from the cases quoted, and a multitude of others belonging to the same class, on the ground, that the indorsement says nothing about notice 5 that the duty of giving notice results by operation of law, and therefore parol evidence shewing that the parties dispensed with it, or substituted something else for it, does not vary the written contract. To my understanding, the principle seems to be the same, whether the terms of a contract be distinctly stated by the parties, and its effects and consequences put down in writing, or whether they be annexed to it by operation of law. In both cases it is the contract of the parties, and parol evidence to change it, is alike dangerous in both. Let us see whither the principle will lead us. The words iS grant and demise" imply a waiTanty in a lease for years: yet, if the doctrine contended for by the Plaintiff be correct, it would be right to prove by parol, that it. was agreed the lessor should not warrant. If a man enter into a covenant without naming his executors, they are liable by operation of law, yet it might be shewn, that the parties agreed they should not be liable. A man who covenants to pay rent, is liable to do so, although the house he destroyed by fire -, yet he might prove a parol agreement that he should not be liable.
In addition to this, it appeal's to me that the distinction has been considered and found untenable by several adjudged cases. In Hogg v. Smith, it was held that parol evidence cannot be received to control the legal import of a known commercial instrument. In Thompson v. Ritchan, a note for the payment of money, in which no time of payment was specified, was declared on. The note was executed in Jamaica, and the Defendant offered evidence to shew a parol agreement that the money was to be paid on the arrival of the parties at New-York. But it was refused, on the ground that the time of payment was part of the original contract; and if no time of payment be expressed in a'note, the law adjudges it to be payable immediately. What was said by the Chief-Justice in that case, appears to me to cover all the ground taken by the Plaintiff in this. " When the operation of a contract is 46 clearly settled by general principles, it is taken to be " the true sense of the contracting parties; and it is <e against established rule to vary the operation of a wri-<e ting by parol proof." I would then ask, if the operation of this indorsement is not clearly settled by general principles of law ? If so, it was the true sense of the contracting parties, that notice should he given to the indor-ser of the drawer's delinquency ; consequently, it cannot be right to vary that obligation by parol proof.
4 Dallas 340.
I Law Repos, 263.
1 Johns. 414.
1 Taunt. 347.
8 John. 189.