Court Opinion

ID: 6575980
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:34:20.073554+00
Date Added: 2024-06-11T15:57:06.002778
License: Public Domain

Waite, J.
The only ground upon which a new trial, in this case, is ordered, by a majority of the court, is, that the court below did not instruct the jury, that the defendant was estopped, by his admissions, from showing the fraud of Mer-rills, in procuring his acceptance. The court, however, did instruct them, that he was so estopped, unless the acceptance and admissions were obtained by fraud,in which case he might show that fraud ; and if they had been so obtained, and Platt purchased ignorant of that fraud, the plaintiff was entitled to recover all that Platt had actually paid for the bill.
After a careful consideration of that instruction, I have not become satisfied, that it was wrong, upon principle or authority.
It was conceded, on the trial, that the plaintiff became the holderof the bill, after it became due and was dishonoured, and consequently, acquired only the rights which belonged to Platt. For convenience, therefore, we may treat the suit, in the same manner as if brought in the name of Platt, and have only to ascertain his rights, and those of Merrills and the defendant.
And first, what were the rights of Merrills ? The defendant’s claim was, that he obtained the acceptance, by fraud and •without consideration. Such a defence, if true, would have been fatal to his action. His cause could not stand, for a single moment, in a court of justice. “ The drawer of an accommodation bill,” says Lord Denman, “ is in the same situation as the acceptor of a bill for value. He is the person ultimately liable.” Lazarus v. Cowie, 3 Adol. & Ellis, N. S. 464. (43 E. C. L. 822.)
*161The same result would follow, had he indorsed the bill without consideration, and then have brought an action, in the name of the indorsee, for his benefit. “ If,” says Chief Justice Eyre, “ it can be proved, that the holder gave no value for the bill, he is in privity with the first holder, and will be affected by every thing which would affect the first holder.” Collins v. Martin & al. 1 Bos. & Pul. 651.
So had he received for 1 his indorsement but a-part of the consideration, the indorsee would be a holder for value, to the extent of the consideration paid ; but for the balance, he would be in the same situation, as if he had paid nothing for the bill. In an action upon it, he could recover the amount actually paid, but nothing for the benefit of Merrills, the in-dorser. Stalker v. McDonald & al. 6 Hill 96. Edwards v. Jones, 7 Car. & Pa. 633. (32 E. C. L. 665.) Jones & al. v. Hibbert, 2 Stark. R. 304. Brush v. Scribner, 11 Conn. R. 388.
These principles are so familiar, and have been so fully recognized by this court, in the case last cited, that I need only refer to the very elaborate opinion there given, in full confirmation of these positions. That case so strongly resembles the present, in all its essential features, that it may be well to examine it, for the purpose of applying the principles there settled, to the present case.
Scribner made a promissory note payable to his own order, indorsed it in blank, and then delivered it to one Stevens, for the purpose of having it discounted, for his benefit. Stevens, in violation of the trust reposed in him, sold it to the plaintiffs, who were ignorant of the fraud of Stevens, and applied a part of it in payment of a debt which he owed them, and for the balance received cash and goods for his own use. In an action upon the note, no claim was made, that the plaintiffs were not entitled to recover the amount paid in cash and goods. The controversy was, whether they could recover that portion applied in payment of a preexisting debt of Stevens.
The transfer, in that case, as in the present, was made in the state of New-Tork, and consequently, was to be governed by the laws of that state. The decision was ultimately made in favour of the plaintiffs, upon the ground that the case did not show, what those laws were, or that the question as to *162their effect, had been properly made in the court below. But it was conceded in the opinion given, that if it had been shown that the laws of New-York were as claimed by the defendant, and the question as to the effect of them, had been properly made, the decision would have been different.
The court held, that, as the case was presented, it must be governed by our laws ; and as by them a payment of a precedent debt stood upon the same ground as payment in cash, the plaintiff was entitled to recover the whole amount of the note. Some doubts were then entertained, whether the law of the state of New-York, upon that subject, was different. But such doubts must now be considered as removed, by a very recent decision. Stalker v. McDonald & al. 6 Hill 93.
The case cited from our reports, in my opinion, very satisfactorily shows, that the plaintiffs were entitled to recover all that they had actually paid for the note, and nothing more.
Let us now examine the present case. Platt testified upon the trial, that when he purchased the bill of Merrills, he paid him six hundred dollars in cash, gave him credit on book for four hundred dollars, and for the balance gave him a certificate for a tract of land in Mississippi, which certificate was afterwards returned to him, for the purpose of enabling him to make some enquiries respecting the land, and was then in his possession.
Upon this evidence, the court instructed the jury, that the plaintiff was entitled to recover all that Platt had actually paid for the bill. Under this instruction, the jury found, that he had actually paid but six hundred dollars. They doubtless held, that under the law of the state of New-York, as settled by a decision of the highest court, the credit on book did not make Platt a holder_/or value for that part of the bill; and as to the transfer of the government certificate from Platt to Merrills, and from Merrills back to Platt, it was, under the circumstances, equivalent to the payment of nothing.
The question as to the amount actually paid for the bill, was one wholly and exclusively within the province of the jury ; and the correctness of their verdict cannot be reviewed upon this motion. Taking their verdict to be true, that Platt has paid but six hundred dollars for the bill, if he is permitted to *163recover more, for whose benefit will it be 1 Clearly for that of Merrills.
If the present verdict stands, then Merrills has paid nothing on book, and has acquired no title to the Mississippi land. But if a new trial is granted, and a recovery is had for the full amount of the bill, then the four hundred dollars on book is paid, and Merrills, if living, would be entitled to the land. All that can be recovered beyond the amount of the present verdict, would enure directly for the benefit of Merrills, if he were living.
But we have already seen, that it is a settled rule of law, that if Merrills obtained the defendant’s acceptance, by fraud, and without consideration, he can never recover any thing upon it, either directly in his own name, or indirectly in that of any other person. It seems to me, therefore, that the effect of granting a new trial, will be, to enable him, if he were now living, to evade that sound and just rule of law.
It is true, the case shows, that Merrills, since the transfer, has died insolvent. But it has not been even claimed in the argument, that his death or insolvency will vary the rights of Platt.
And then as to the estoppel. The law in relation to estop-pels in pais, is correctly laid down, by Justice Bronson, in Dezell v. Odell, 3 Hill 222. “ Before the party is concluded, it
must appear, first, that he has made an admission clearly inconsistent with the evidence he proposes to give; secondly, that the other party has acted upon that admission ; and thirdly) that he will be injured, by allowing the facts stated in the admission, to be disproved.
These principles apply, so far as the interests of Platt are alone concerned. I must fully admit, that if he has been induced to part with his property, relying upon the truth of the certificates, and representations of the defendant, he is not to suffer. And this upon the familiar principle, that where one of two innocent persons are to suffer, by the fraud of a third person, the loss must fall upon him, who furnished the means by which that fraud was committed.
Platt, therefore, if he acted in good faith, in the purchase of the bill, is entitled to recover all that he has paid for it, and no more. This the jury, by their verdict, have already awarded to him.
*164But this doctrine of estoppel can never be made ’available - for the benefit of Merrills. He has never acted, at least honestly, upon the admissions of the defendant. He has parted with no property, relying upon the truth of them ; nor will he be injured, by them, unless it be an injury, to deprive him of the power of cheating the defendant.
If, therefore, a recovery in the present case, beyond the amount of the present verdict, will operate for the benefit of Merrills, or his estate, then the question is, not whether Platt can say to the defendant, you are estopped, by your admissions, so far as my rights are concerned — but whether he can also say, you are estopped, so far as the rights of Merrills are concerned. This, in my opinion, would be giving an effect to the law of estoppel, without precedent.
It seems to have been conceded, that if the defendant had been induced to sign an admission, in consequence of its having been falsely read to him, he might show the fraud. But much stress is laid upon the circumstance that he knew the admission was untrue. But admissions of that kind do not always conclude a party.
The maker of a promissory note, who acknowledges in it, that he has received value for his promise, is not estopped, by his admission, from showing that in fact he received none. The object of such an admission, is, to save the necessity of proving a consideration for the promise on the trial. Raymond v. Sellick & al. 10 Conn. R. 480. So the grantor, who acknowledges in his deed, under his hand and seal, that he has received the consideration, is not estopped, in a suit after-wards brought for the consideration money, from showing that in fact he never received it. The object of such an acknowledgment is to prevent a resulting trust. Belden v. Seymour & al. 8 Conn. R. 304. And in the present case, the defendant claimed, that the admission was obtained under a pre-tence that it was only necessary to prevent the operation of the usury laws, upon a transfer of the bill, but was in fact obtained by Merrills, to enable him to carry out his fraudulent purpose of cheating the defendant.
However, I do not apprehend, that the circumstance last alluded to, can make any difference in the case. When the defendant accepted the bill, he virtually said to the world, that he accepted it upon adequate consideration; and every *165bona fide holder, taking the bill before it becomes due, without knowledge of any infirmity in it, has a right to hold him - estopped, by that omission, so far forth as he had paid value for the bill, but no further. ‘‘The acceptance,” says Chief Justice Tindal, “binds the acceptor conclusively, as between him and every bonafi.de holder for value,” Robinson v. Reynolds, 2 Adol. & Ellis, N. S. 211. (42 E. C. L. 642.) Platt, therefore, without any other admission, had a right to hold the defendant concluded from preventing a recovery of the amount he had actually paid.
The admissions subsequently made by the defendant, were substantially the same as made by him upon his acceptance, and are to have the same, and no greater, operation. ►
Had the negotiation of the bill been made in this state, so as to be governed by our laws, Platt would be entitled to recover, not only for the money paid, but the amount credited on book. But having been made in the state of New-York, a different rule applies. That payment did not constitute him a holder for value, as against an acceptor, who has received no value for his acceptance, or has been induced to give it, by fraud. Whether any thing was actually paid, by means of the government certificate, was a question belonging wholly to the jury ; and they have passed upon it.
Upon the whole, therefore, I cannot see why perfect justice has not been done.
As to the other questions involved in the case, I concur in the opinion given by the majority of the court.
New trial to be granted.