Court Opinion

ID: 7128446
Source: CourtListenerOpinion
Date Created: 2022-07-24 15:16:11.627659+00
Date Added: 2024-06-11T16:14:22.203462
License: Public Domain

Petitton eor a Re-hearcng on the part oe Fords,

October 30.

By Mr. Duncan.
' As the counsel of the Fords, and especially of James C. Ford, I cannot, after reading the opinion, rest satisfied that my duty is fully discharged, without requesting the Court to grant a re-hearing, or at least carefully to re-examine the record and the opinion given.
. The opinion says, “the Chancellor shows nor refers to no precedent for the discharge of J. C. Ford, and we are not aware of any adj.udged case or authority directly applicable to that question.” That cannot be a good objection to the decree of the Chancellor, -for he may have considered the precedents for the principles involved familiar, and the reversing opinion must, itself, stand obnoxious to the very objection thus taken to the reversed decree.
By the terms “cases of this kind,” the Court is understood to mean, cases for which there can be found neither precedent, adjudged case, nor authority, and not cases of principal and surety; because it is believed that cases *339affecting the rights and responsibilities of sureties, are of such great importance, that the rules to govern them should be fixed, stable, and well known, and that the very worst rule that could be made would be that which would submit every case on that subject to the mere arbitrium of the Judge, uncontrolled by precedent. The Court is, moreover, understood to say, that even in cases for which no precedent nor authority can be found, the discretion of the Judge is to be limited and controlled by the general principles of equity. The counsel has searched, with great care, for any great controlling principles of equity which has been violated by the opinion of the Chancellor, and has been unable to find them, after ex. amining this opinion, which, on its face, purports to be a leading case, upon a new and hitherto unexplored subject.
The opinion says, “that it is obvious that the arrangement to draw the bill did not originate with Taylor.” Now if that fact is to be all Important, then it is respectfully urged that it is equally obvious that it did not originate with James C. Ford.
The opinion says, “that Taylor had nothing to gain by it; he realized no money by it, but delayed thereby the payment of the note.” In answer to which, with due respect to this Court, it is believed by the counsel, that it may fairly be said that Taylor, holding a note which was due, not only wished to collect it, but was bound as administrator, to do so, and that he must have demanded, or "requested payment, to have imposed on N. W. Ford the necessity of asking for time; and that Taylor did have something to accomplish, something to gain by the arrangement. If he had sued at law, he would probably have lost more time and been subjected to a longer delay than by taking the bill; and he would have incurred costs of counsel fees which he could not have recovered back. He had then the strong probability of gaining in time and saving in expense; and although he gained no money in hand, he gota sixty days bill oh New Orleans, proven on the record by its payment, to be a perfectly good bill, and he got an allowance of interest and exchange. Such a bill will ordinarily, and I may say always command money, and in most cases it is a better payment than *340money, because the holder can retain it and save interest, till the very day he wishes to use it, with a reasonable certainty of commanding the money when he wants it.
The next proposition is, “that Taylor was to receive no pecuniary consideration for it.” He was to receive the legal rate of interest, which it is believed is always regarded by Courts of Law and Ecjuity, as a just and full consideration for the use or forbearance of money. I do not contend, however, that a mere voluntary forbearance, with the understanding that interest was to run, and when the obligor cannot claim a light to delay upon the agreement made, would discharge a surety. The next position is, “nor was he to obtain any additional indemnity or security for the payment of his demand upon the Fords.” This, it is respectfully insisted, is a mistake; he got a bill onE, Ford & Co. with an express assurance, which the law would otherwise have implied, that E. Ford & Co. would, upon presentment, accept it, If Taylor had done his duty according to the agreement, the terms of which were reduced to writing, the Court, it is believed, cannot doubt that the acceptance promised would have been given. There was, to say the least, a contingent and highly probable prospect of obtaining additional obligors, with a certain equitable transfer of any funds that the drawer might have in the hands of the drawees.
The Court is not asked to presume what was contemplated by a contract, reduced to writing with great care and deliberation. It is asked only to give to the writing the force and effect of its own terms. It is conceded, that the writing, No. 2, was drawn for the protection and benefit of Taylor and not for the protection and benefit of J, C. Ford: but then the indorsement of the hill was made for Taylor’s benefit, and hence J. C. Ford had a right to judge of the terms on which he would make the indorsement. Those terms were adjusted, and there can be no difficulty in ascertaining what they were. Taylor might have avoided all risk and responsibility as to that bill, in two ways, to-wit: by refusing to accept it and to stipulate about it; or if he made any agreement about it, and did receive it, then by complying with the duties devolving *341on him by the terms upon which he accepted it, he received it as a collateral, and it was his duly to present it. He was not at liberty, after becoming the holder, to make an arrangement with any body, by which the proceeds were to be diverted from himself, without discharging J. G. Ford. The substance of the assurance given to Taylor was, that the bill, till payment, was to stand in Taylor’s hands, as collateral, and that if paid, the proceeds were to be applied bij Taijlor to the payment of (he interest and exchange; and the note, if paid upon the terms of the writing No. 2, it was equivalent, in equity, to a payment of the note to Taylor.
The Court assume the proposition that the arrangement was “incomplete,” “in fieri,” till the papers were left with-'Stewart. An agreement was made between Taylor and N. W. Ford, for the giving of a bill to be indorsed by J. C. Ford; Taylor gets his attorney to draw up a paper to be signed by J. C. Ford, as a part of that agreement; he is consulted, and agrees to the terms, signs the papers, indorses the bill, and both are delivered to Taylor; what remained to be done to complete that arrangement, is not perceived.
It is contended that Taylor, by the first arrangement, No. 2, made an agreement, not only with James but also with Nicholas, to accept and collect the bill: but it is admitted that afterwards there was a novation by said Nicholas and Taylor, by which Nicholas, so far as he was concerned, waived the necessity of Taylor’s complying with the duty devolving on Taylor by the original stipulation on that subject to Nicholas Ford.
If it be conceded that Taylor undertook with J. C. Ford, to collect the bill as the condition or consideration on which that bill was indorsed, it is respectfully insisted that no question of neglect or bad faith arises, or can be considered; for if he so undertook, he was bound to comply with his undertaking; and the bill having been actually paid, it would, on that hypothesis, be a payment to Taylor. The payment to his agent was a payment to him. If he was bound to present and collect and did present and collect, by himself or his agent, there would end all *342controversy — such collection by him would be equivalent to payment.
The Court says, however, that although the paper says “it is passed to Taylor,” that in fact it did not, and the pleadings are referred to to sustain that proposition. Let us advert then to the pleadings: N.W. Ford files his bill to compel Stewart to pay Taylor, and to surrender his note, making Taylor and J. C. Ford defendants. He alledges that when J. C. Ford was applied to for his concurrence, James consented to the arrangement about the bill, “provided it was to be given to Taylor, to be applied to the payment of said note, either at the time of the delivery of it, or- when the bill should be collected. Said Taylor hada memorandum drawn by his counsel, to be signed by J. C. Ford, and it was accordingly signed by J. C. Ford, and delivered to said Taylor.” He then alledges, in substance, that he afterwards again met Taylor, and they finally went to Stewart and made and signed another memorandum, and left thebill and the note, and the said two written memoranda, all of which Stewart is called on to produce and file. Stewart answers and files each memorandum, and both are copied into the opinion delivered. They are brought forward by the process of the .Court, from the position in which they were placed by Nicholas Ford arid Taylor.
Taylor answers and does not controvert or deny any of those allegations. And, moreover, he says, after speaking of the treaty and the agreement in relation to the bill, “that inpursuance of this understanding, the paper filed with Stewart, with his answer, No. 2, was executed,” $c.
Taylor cannot escape the conclusions that he took this bill upon some understanding, “in pursuance of which” he, when it was fresh in his memory, had the paper, No. 2, drawn by his counsel; and that this paper, after it was executed, was delivered to him. There is then no room left for conjecture as to the understanding on which J. C. Ford indorsed that bill.
But again — when Taylor and Nicholas W. Ford made and left their written memorandum, and the note and bill with Stewart, this writing, No. 2, drawn by Taylor’s counsel, was present, and was committed to Stewart’s cus*343tody. The bill and note was handed to Stewart, accompanied.by that paper, which gave Taylor power over the bill, and that was done by Taijlor, for the writing then made begins, “we leave with you,” &c. and ends, “Wm. D. S. Taylor, N. W. Ford.” Taylor must, upon legal principles, be estopped to deny that he accepted the bill, after he has, with a paper giving him control over it, assumed a right to control it, and in fact controlled it.
The opinion propounds the interrogatory, “was any thing done or omitted to be done by Taylor afterwards which discharged or released J. C. Ford?” My answer to that- inquiry is, that he afterwards made an agreement with Stewart and N. W. Ford, without the privity or assent of J. C. Ford, whereby he tied his hands, and that this new agreement was highly prejudicial to James C. Ford, and, therefore, that James C. Ford was discharged.
When we poise ourselves on those great general principles of equity which the opinion concedes must govern and control the discretion of the Judge “in such cases,” no proposition is plainer or sounder, or has a deeper foundation in natural justice than this, that any agreement, made by a creditor with his principal debtor, without the assent of, and which is prejudicial to the surety, should discharge that surety. If A, and B, as his surety, give a note to C for $1000, and A, as a collateral security, mortgages estate of the value of the debt to C, and C release that security without B’s consent, I take it that B is discharged, because B, by paying the debt, would have been entitled, in equity, to be substituted to all of C’s rights under the mortgage.
And if, instead of mortgaging estate, A had delivered to C notes and bonds of the value of the debt as collateral, and C, without the consent of B, assigned them away, or returned them to A, or collected them, I take it that C is discharged in equity.
Hoyv is the case at bar distinguishable from that? Here A draws his bill, indorsed by B in blank, and it is delivered to C. It can be passed by delivery as effectually as by indorseme?it; and by a combination between A and C, it is diverted from its position as a security for the debt without B’s consent. Here is a novation by Taylor *344without James C. Ford’s consent, which has greatly prejudiced his rights. Without this novation TayJor would have continued to hold the bill himself, and must have collected its amount, and when collected by him, the cob lection would, in equity, have been equal to a payment of the note. Fie had power over the hill by the memorandum which was left with Stewart, and certainly did part with it to James O. Ford’s prejudice and without his approbation.
The opinion says, the presumption is, that the bill was paid by the funds of N. W. Ford. J. C. Ford required the stipulation,.that if he indorsed the bill Tayloy must take it. He denies that he asked time, that he requested the arrangement. He says he knew that a bill on his factors, indorsed by him, would certainly meet due honor, and that he was not willing to incur the hazard of providing for the bill and of being, by the fraud or im. providence of unknown agents, left bound also to provide for the note. N. W. Ford was good or good for nothing. If good, then Taylor, when he made the novation at Stewarts was confiding in him and Stewart. If good for nothing, then he probably did not provide the means to pay the bill. All I ask is, that he shall not, for one purpose, be considered good, and then for another purpose in the same argument, be considered good for nothing.
The opinion says, that James C. Ford’s answer says the bill “was to be passed to Taylor.” With due deference I think that is a mistake. The Court has confounded the allegation of the hill, as to what J. C. Ford said, when first consulted on the subject and before the paper was drawn, with J. C. Ford’s answer. James C. Ford’s answer says, “the paper of the 16th October, 1839, signed by N. W. Ford and J. C. Ford, was signed and delivered for the purposes therein expressed and none otherand in his answer to the original bill he says, “he was called on to indorse the bill and consented to do so on the terms set forth in'tbe paper which, said Taylor procured to be drawn and sent to him for; his signature, and which he signed, and sent to said Taylor.” He says he was not privy to the arrangement made with Stewart, and did-not know of it till the bill was paid, *345and that he did not solicit time and did not ask any indulgence. This, however, is deemed immaterial after Taylor, with that paper, left the bill in the hands of Stewart. .
The counsel, however, thinks that the principles which should govern this cause are well settled by precedents and adjudged cases. They may be found in the case of Norton vs Roberts, &c. (4 Monroe, 491-7.) The numerous cases therein cited, establish the doctrine, that to discharge a security it is not necessary that anew agreement should be taken in satisfaction, or that there should be any new consideration. That it is not necessary that the new engagement, without the assent of the surety, should be such as to bar an action at law. That a holder of a bond or bill may and can do what he pleases, but he acts at his peril, “for if he alter the situation of any other party to the prejudice of that person, he cannot after-wards proceed against him.” “He must not let slip any lien” — “he must not increase the risk.” It would be an idle parade of authority to cite the very numerous cases settling the principle last noticed. The last case on the subject, perhaps, is Kenningham vs Bedford, &c. (1 B. Monroe, 325,) establishes the proposition, that an executed agreement between the creditor and the principal, without the assent of the surety, discharges the surety, but it does not reverse Norton vs Roberts.
This Court has decided over and again, that where, by the act of the creditor, the surety cannot proceed against the principal, the surety is discharged, and, therefore, whenever the principal has bound his hands so that he cannot proceed or so that the surety could not proceed in equity against the principal, the surety is discharged. In the case of Norton Roberts, it is laid down that it is not necessary for the new agreement to be sufficient to bar an action at lawn What, I ask, was the condition of Taylor when he, upon a contract with the principal, parted with the note upon the agreement made with N. W. Ford and Stewart? Would it not have been against the scope and spirit of that agreement for him to have proceeded upon the note? He tied his hands by the deposit *346of the note, and J. C. Ford then coaid not have attached N. W. Ford’s property in equity.
It is not pretended that J. C. Ford was a party to that contract. J. C. Ford could not be construed as assenting to that contract with Stewart. Taylor had dominion over the bill, by his contract with J. C. Ford, and acted at his peril. He, to J. C. Ford’s prejudice, violated the terms, consideration and condition on which J. C. Ford indorsed the bill and gave him, dominion over it. I therefore contend, that adjudged cases do settle the principles on which this case should turn, and that it is notone to be adjudged by the feelings of the Court or a reference to any hardship that may be supposed to result from an application of settled principles to the facts of the particular case.
I now come to the other branch of the case, in which James C. Ford has a great interest, if he is bound to pay the note to Taylor notwithstanding the payment of that bill.
The bill, the note, and the memoranda, were left with Stewart on the 16th October; the bill was payable 3d December. It was withheld till the 24th November, .and then forwarded to the Shannons, without stating that it did not belong to him. Stewart is proven to- have been indisposed, but “not so muchas to preclude his attention to business (see J. Sturgeon’s deposition.) The bill was paid on the 6th of December. Shannon says, in substance, that the bill was passed to Stewart’s credit, and “he thinks W. Stewart was notified of the fact;” and he says, that in some instances P. Shannon & Brothers accepted, as courtesy acceptors, bills drawn by Stewart to raise money for his firm; and that in some cases Stewart accepted kite bills for the Shannons; and that "there were open credits;” and that the New Orleans house was pushed for funds in 1839; and that he believed W. Stewart was indebted to the Shannons when that collection was made; and he states another important fact not referred to in the. opinion, “that after ,the 6th December, 1839, there were other hills on P. Shannon §• Brothers which W. Steioari, or his firm, had drawn, and which matured after said date.” In a subsequent deposition, taken at the instance of Stewart, it is true that he
L *347says he believes he was mistaken as to the fact that W. Stewart individually was indebted when the collection was made; that some Banks refused to take the name of one of Stewart’s partners, and that therefore Stewart drew in his individual name for the use of his firm; and that although the books of P. Shannon & Brothers showdd a balance against Stewart on the day the collection was made, that balance was created by charging him with some of his bills which he had drawn for his firm, and not for himself; and from first to last no account current between the two houses can be got. The plaintiff calls expressly and emphatically in his bill for the letters and accounts between these two houses, and charges that they, if produced, will exhibit the fraud and neglect of Stewart. Upon such facts the Chancellor thought there was neglect sufficient to bind Stewarl, and this Court disagrees with him. Knowing how different minds view the same facts, I would not, under ordinary circumstances, have considered it worth the effort to ask a re-hearing when the Court was so clear on a mere question of fact, as to reverse a cause upon it alone. But it appears that no letters of Stewart to Ford were read at the hearing which were not indorsed by the Clerk at the time they were filed. They appear to have been read without objection below ; and this Court, in regard to them says, “there is no proof in relation to them, nor are they referred to in the pleadings. Upon papers thus appearing in a cause we should hesitate to base a decree;” and after commenting on their effect as evidence, the Court recurs to the subject in these words, “more especially appearing in the record as they do ;” thereby showing that the influence operating on the mind of the Court was not so much the evidence as this circumstance upon which the Court was dwelling. It is conceded that Clerks ought to indorse papers filed : but suppose they are not indorsed although filed, whose fault is it, that of the Clerk or the party?
The bill alledged that “Stewart equivocated with and about, and concealed from said Taylor and your orator the facts in relation to his said trust,” and “that Stewart was in due time notified of the payment,” &c. Suppose-*348that before or even at the hearing, two of his letters were offered, and objected to for want of proof, a Court of Equity might have given time to have the hand writing proven, if the letters were material to the justice of the case — then the defendant would have gained nothing by the objection. The record shows no objection to them; and this record has higher evidence that they were read than the Clerk’s indorsement; this Court has the indorsement of the Judge; and it is respectfully insisted, that after the commentary of the Chancellor on those letters, (which is made part hereof, marked O,) there can be no question left upon the subject of their having been filed and read. To deny or refuse assent to the fact that those letters were read at the hearing, it is respectfully contended, is to subvert that confidence and regard which is due, at all times, to the records and proceeding of the Courts of all enlightened countries. If the Judge decides a case, heard and submitted, and in his opinion, made part of the record, comments at great length upon a deposition or a deed, ora letter, can it be that an appellate tribunal would listen, for a moment, to ap objection that the deposition, deed or letter was not read, especially when it appears, that during the residue of the term no application was made to the Court on the subject? Will this Court reverse the presumption that what is done in Court is done rightfully, (4 Monroe, 82,) and assume, without any thing whereon to base the assumption, that the Court has decided upon matters not in the cause? I trust not; and I trust that upon mature consideration, this Court will recede from the position, that any doubt can be raised in this Court, upon the fact whether the letters were read, after such an emphatic indorsement of them as they have in the Chancellor’s opinion, spread on this record. The fact that they were read as evidence, being conclusively established, and there being no objection to them, I had supposed that it was settled by an unbroken series of decisions, not to be lightly overthrown, that no exception to them as evidence, can be raised or allowed in the Appellate Court. On this point at least, we are not at sea without rudder or compass; we have “precedent, adjudged cases and authority” directly in point: (Hardin, *349184; 1 Bibb, 526; 2 Marshall, 66.) From the stress laid upon this position, (the error of which it is believed will be seen,) there is reason to apprehend that the decision has been too much influenced.
From the amount of important business before the Court when this case was disposed of, the counsel can well account for the error into which the Court, as he humbly conceives, has hastily fallen: but he has no apprehension that any pride of opinion will operate on this Court, to make it consecrate error, if, upon examination, any error shall be found to exist. I take it then, that those letters were read, without objection, in the inferior Court, and that they are evidence in this cause, that Stewart wrote those letters to Nicholas W. Ford; they are clearly competent and applicable to the issue.
As to the effect of them, conceding that such letters were written, I claim that they, in connection with the other evidence, do show' that the opinion of the Chancellor ought not to have been reversed.
A ie-hearing is most respectfully asked.
Garnett Duncan. .
Replication on the part of Taylor,
October 30.
By Messrs. Loughborough & Field.
The counsel for Taylor will not discuss the question, whether a case in equity may not be decided without a precedent in point. The facts presented may be novel, their combination peculiar, and yet the Court urged, as in this case, by a party who insists that he is discharged from a debt, will consult the principles of equity, and determine from them whether the claim should be sustained.
The Judge of the inferior Court had decided J. C. Ford’s discharge. That there is no precedent sustaining his decree, is, upon its revision in this Court, a consideration of some importance; and though the want of an author, ity may not show the decree to be wrong, yet the deficiency makes it the duty of 'the revising Court to consult the principles applicable to the case, and guided by them., to decide it. In this it cannot be said that there is any *350privilege of an arbitrary discretion, so long as it shall remain true, that by the constitution of the human mind, the conclusions of the judgment are wholly independent of the dictates of the will.
The petition arrays alledged advantages to Taylor by the arrangement, in respect to, the bill. What are they? The two Fords are firmly bound, by a direct,obligation, now due: can they be more strongly bound by a bill for the amount, with their names upon it? Is Taylor more secure by the bill then by the note? The petition supposes a suit upon the note, and the delays of a collection by law. But why is the presumption of a suit upon the note to be indulged? The law does not declare it, and throughout the petition J. C. Ford is treated as a man of large means, who would not wish to incur the cost of a hopeless defence ; and surely the verbal statement of either or both of the Fords, that the bill would be honored, cannot, in the eye of the law, be a gain to Taylor. It was valueless.
But the petitioner says, Taylor obtained the legal rate of interest by the bill. Had he not that by the note? It was due, and by nature, bore interest. Taylor had interest in any event.
An allowance for exchange is spoken of. The debt to Taylor was payable in Kentucky. All that he sought was payment here, with interest, and upon the whole arrangement, that was all he was to get. Had he received more he might have been compelled to refund it.
Is it a mistake to say that a bill with the names of the two Fords only upon it, was not any further or better security for the debt than the note of the same parties? And is the hope, or even the express assurance of those parties, that a distant stranger would accept the bill, in any legal or even practical view of the matter, an additional security to Taylor? As little it seems, in reality, as what is called “an equitable tiansfer” of funds, of the existance even of which, in the hands of the drawee, Taylor had no certain knowledge.
Upon the merits of the case, the argument of the petition rests upon the proposition of a fact, not tobe found in the record. It asserts that the bill was delivered to Ta y *351lor; and upon this, with the allegations of a contract between Taylor and the Fords, in respect to the bill, cornpíete so far as J. C. Ford was concerned, the complaint is, that Taylor, by the arrangement with Stewart, made a novation to the prejudice of J. C. Ford.
A thorough scrutiny of the record will fail to discover, any proof that Taylor ever was the holder of the bill; on the contrary, the inference, from what is said by the Fords themselves, seems irresistible, that, the bill passed from J. C. Ford, by the hands of N. W. Ford, to Stewart.
The allegations of the bill of N; W. Ford cannot.properly be taken as evidence against Taylor. That bill was filed against Stewart, and as to him, Taylor’s interest was with the complainant. Taylor was not particularly, assailed in the bill nor put upon his defence. The prayer of the bill was for relief against Stewart. It would be a surprise upon Taylor, now to hold that his not answering the statements of the complainant against Stewart, was an admission of their statement, in all their consequences, as against him. But it is not alledged by N. W. Ford, that the bill of exchange was delivered to Taylor; nor does J. C. Ford say, in either of his answers, that the bill was ever delivered to Taylor. In his answer to N. W. Ford’s bill, he merely says'he indorsed the bill on the terms in the paper of October 16,1839; and he does not even say that this paper was delivered to Taylor. He states that he sent it to him; that is, most probably, IN. W. Ford brought him the paper which he signed, and then indorsed the bill, and handed both to his brother, who was the negotiator in the whole affair, as plainly appears ; and the signing was done at the house of N. W. Ford. In his answers to the cross bill, J. C. Ford says, the paper of October 16, was signed and delivered (by whom? To whom?) for the purposes .therein expressed. , .
This is the extent of the allegations of the Fords as to the delivery and custody of the bill. * If it had béen, in fact, passed to ^nd received by Taylor, upon his undertaking to collect it, would it not have been positively and certainly charged? It does not appear that Taylor and J. C. Ford ever had an interview upon the subject of the *352debt. If, when J. C. Ford indorsed the bill, he handed it to Taylor, is it to be doubted that it would have been plainly so stated?
When the bill is next observed, we find it passing into the hands of Stewart. From whom did it so pass? If Taylor had held it, he would probably have indorsed it. The correct view of the transaction is, thatN. W. Ford, holding his own bill, on which he had obtained his brother’s indorsement, leayes it with Stewart for collection, and instructs him, when the money is collected, to pay Taylor the amount of his note; Taylor, on his part, leaves the note with Stewart, and by express direction of the parties, the note is not to be delivered to Ford until Taylor, in person, (for his receipt is to be given,) has received the principal and such interest as may have accrued at the time of payment. Is not this whole arrangement inconsistent with the fact, (which the parties have not ventured to alledge,) that Taylor was the holder of the bill?
Of what consequence is it that the direction to Stewart begins, “we leave with you,” &c. and ends with the names of Taylor and Ford? If joint in its language, it is several in its meaning and effect.
It does not clearly appear, that Taylor ever had posses, sion of the paper of the 16th October; and however this may be, is the recital in the paper that the bill is passed to Taylor to be of any avail if the fact be that he never had it? Upon what principle shall he be estopped by an untrue recital in a paper signed by the Fords? Shall J. O. Ford escape by the fact, that Taylor’s counsel drew the paper in the expectation that the bill would be delivered to Taylor, when Ford does not prove or even alledge that when he indorsed the bill he handed it to Taylor, or that N. W. Ford, who procured his indorsement, did so.
Had Taylor received the bill to collect, directly or in. directly, from J. C. Ford, there would have been some ground for the position that the subsequent transaction with Stewart was a “novation” which discharged him.
J. C. Ford gave the bill, with his blank indorsement, . to his brother. If he does not pass it to Taylor as pro*353vided in the memorandum of the 16th October, but puts it in the hands of another person for collection, can the indorser say that the transaction was completed, so far as he is concerned, by indorsing the bill? J. C. Ford, the indorser, hands the bill, not to Taylor, who was to be the indorsee, but to the drawers. Something is yet to be done. The bill is where it started. The drawer, instead of giving the bill to the indorsee, placed it in the hands of an agent for collection. If it be said be did this with the assent of Taylor, (who is passive, and says only when he gets the money he will give up the note,) did he not do it, also, with the consent of J. C. Ford, who committed the bill indorsed in blank to him? Shall not the authority of J. C. Ford for what was done afterwards be a proper and legal implication? If N. W. Ford had sold to a stranger the bill indorsed by his brother in blank, would not the indorsee have been bound to the purchaser? Thus, the transaction with Stewart was the completion of that which had started as a plan for paying off the claim of Taylor; a plan too, which, in the beginning, the Fords united in assuring Taylor “should, in no wise affect” their liability on the note which he held.
The principles of equity mentioned in the petition, regulating the discharge of sureties in consequence of the transfer by the creditor of collaterals, deposited with him by the principal debtor, do not apply to this case. Here the creditor never had the bill which was intended fora collateral.
The case of Norton vs Roberts, decides nothing applicable to this ; nor do the general conclusions deduced by the petitioner from that and the other “very numerous” cases adverted to, influence the legal consideration of the peculiar facts of this case. Here the first act is an assurance by the surety, that what is proposed to be done shall not affect his liability — in effect a declaration, that as to that matter he will be a principal debtor.
But if the doctrines stated by the petitioner, as to the discharge of a surety where the creditor has received no new consideration, or where his hands are not tied, were applicable to this case, the recent cases of Brinegar vs Phillips, (1 B, Monroe, 283,) and Tudor vs Goodloc, *354(1 B. Monroe, 322,) might be referred to, to show them erroneous in the extent to which they are advanced.
Of what moment, as to the liability of J. O. Ford, is the inquiry, whether Taylor had not lost the right of proceeding against N. W. Ford until the maturity of the bill; and whether J. C. Ford could have attached his principal’s property if he has expressly stipulated that the making, and even the taking of the bill by Taylor should not, in any way, affect his liability? And of what avail, in application to the facts' of this case, are decisions founded only on the relation of a surety, when he has made no such agreement?
The cases may have established that the bad faith of the creditor, or his mismanagement of collaterals, may discharge a surety who became such on the faith of those collaterals ; here the surety is already bound for the debt. He says he will remain so bound until, upon a bill which the principal now makes, the creditor shall get his money. That bill the creditor never gets ; and though paid, the money never is received by him. J. C. Ford is a surety for the debt, not merely a guarrantor of the bill. To. entitle him to a discharge, it is obviously incumbent on him to show that Taylor got the money, or that he got the bill and the money was lost by his fault or neglect, or that of his agent. Taylor was not trusted with the note and the bill at the same time, nor was it intended he should be. Stewart was certainly the agent of N. W. Ford, and (by the relation of the parties) of J. C. Ford for the collection of the bill. Ford’s original bill, in this case, is founded upon that agency.
The bill was to be paid, and was paid, with the money of N. W. Ford, and J. C. Ford has lost nothing but the chance that his principal’s money would be applied in paying the principal’s debt — a chance too not in his contemplation when he became the surety.
Loughborough & Field.
*355Response,
By Judge Breck.
October 31.
The petition for re-hearing, by the counsel of Stewart, has been duly considered, but without producing any change in the opinion of the Court.
. We are entirely satisfied that the proceeds of Ford’s bill were placed, by the Shannons, to the credit of Stewart. Such is the testimony of P. C. Shannon, and there is nothing in the record showing that any other disposition was made of them. Stewart denies, in his answer, that he was owing the Shannons any thing when the bill was paid, but he does not show the state of his accounts with them when he filed his answer; nor does he deny that, independent of the proceeds of the bill, he was then indebted to them. He exhibits with his answer, the communication from Josephs or Chinn, showing “that the amount of $1542 04, was placed to his credit upon the schedule of their (the Shannons,) affairs;” he does not controvert that this was the true amount. It is true he says he had frequently applied for a statement of his accounts, but without success. It should be recollected that Stewart was, himself, a merchant, and ought and must be presumed to know the exact state of his accounts-with the house of Shannon & Brothers.
We are still, therefore, of opinion that Stewart, in effect, received the benefit of $717 96, of the proceeds of Ford’s bill, and to that extent should be held answerable. What interest Stewart had in the house of Myerle, Stewart & Bland, and how accounts stood between that house and the house of Shannon & Brothers, we have not deemed it necessary to inquire.
The petition for re-hearing is overruled.
The Court has, also, attentively examined and considered the petition of the counsel for the defendants, the Fords. It is deemed unnecessary to go into a re-argument of the facts; so far as it relates to the controversy between J. C. Ford and Taylor, the replication of the *356counsel of the latter, goes very fully into the hots and merits of that branch of the case, and renders unnecessary any additional response.
We would merely remark, that although the ansrver of J. C. Ford may not expressly state that the bill was to be passed to Taylor, yet we think it clearly authorizes such an inference.
So much of the petition as relates to the controversy between N. W. Ford and Stewart, and as refers to the letters from Stewart to Ford, and upon which great reliance seems to have been placed, will be briefly noticed. That these letters were genuine, or in other words, writtenby Stewart, it was certainly not our intention, in the opinion rendered, nor is it now, to question. That they were before the Chancellor when he wrote his learned opinion, we surely could not doubt;; for although not indorsed by the Clerk, except by certifying that they “appear in the cause without indorsement or by whom fried,” yet, as remarked in the petition, they are most emphatically indorsed by the Chancellor. But as they were not made exhibits, and in no way referred to in the pleadings ; not proved — not fded by consent of parties — nothing indicating when or by whom filed, or that the attention of Stewart or his counsel had, in any way, been directed to them, this Court was of opinion, and still is, that they were not, under such circumstances, entitled to the same weight and consideration as if they had been made exhibits, or had appeared so to have come into the cause as obviously to direct attention to them, or as they would have been, had an abortive effort been made to explain their seeming inconsistency.
But even if it appeared that they had been regularly filed, and were free from every thing in any manner tending to impair their force and weight, we are still of opinion, they do not furnish sufficient evidence to convict Stewart of fraud. Stewart denies, in his answer, that he received any intimation of the payment of the bill till the 12th January, 1840;- “be denies that he equivocated with, about or concealed from complainant the facts in relation to said bill.” If at the date of the letters,' he *357had received information of-the payment of the bill, then these statements in his answer are false.
Now Stewart was, at the time, a merchant of high character for truth and integrity, and upon this point the testimony, certainly, as to N. W. Ford, is conclusive. He was selected by him as his agent in this business, for the very reason that he was trustworthy. Can it then be presumed, that a man of such character, and without any conceivable motive, should have written to Ford these letters, fraught with falsehood and fraud, as they are said to be, unless based upon the information, as to the bill, which he had received from New Orleans? We think it far more probable, and it is certainly more charitable to suppose, that Stewart was deceived by the Shannons, whose conduct in the transaction, proves them faithless. Such a reasonable supposition at once relieves Stewart, before that time esteemed by the complainant as a man of integrity and honor, from the imputation of falsehood, fraud and perjury, for of all this he must be guilty, if he wrote these letters, with the knowledge that their contents were false.
Upon this branch of the subject, we are entirely satisfied with the opinion rendered, and the petition is, therefore, overruled.