Smyth v. Strader/Concurrence Catron

Mr. Justice CATRON.

In this case, my opinion is founded on considerations that differ so much from those proceeded on in the principal opinion, that I am under the necessity of stating my own views, or of dissenting, which I am not prepared to do.

In the first place, Stevenson had been one of the firm of Strader, Perrine, & Co. He made the note payable to himself, and signed the name of the firm to it. Being both a maker and the payee, the note was void on its face, or at least could have no legal effect; when negotiated, that is, when it was indorsed by Stevenson, and sold to Stinson & Campbell, it could only become a binding instrument in their hands on Strader, Perrine, & Co., as Stinson & Campbell could enforce payment. The time of negotiation, therefore, is the true date of the note.

It is in proof, that the firm of Strader, Perrine, & Co. was dissolved on the 23d of April, 1836, and that the usual advertisement was then made of the fact. This bound all persons who had not had previous dealings with the firm; nor is there any proof found in the record, showing that either Stinson & Campbell, or Smyth, the plaintiff, had had any such dealings. If the note was negotiated, therefore, to Stinson & Campbell, after the dissolution of the partnership, it was void, and does not bind Perrine, inasmuch as Stevenson had no power to bind him.

2. Perrine is proved to have withdrawn from the firm in December, 1835. But as no regular notice was given of this fact, it rests on him to bring home knowledge of it to the holder of the paper. If Stinson & Campbell had knowledge, when they took the note from Stevenson, then they could not have recovered from Perrine on it.

So again, if Stinson & Campbell took the note from Stevenson in discharge of the individual debt of the latter, they could not recover from Perrine, whether he was or was not a partner at the date of its negotiation. The proof of either of these events is imposed on the plaintiff. But having shown either of the two last circumstances, then the plaintiff is bound to prove 'under what circumstances, or for what value, he became the holder.' I need only refer to Chitty on Bills (9th ed.), 648, for the established rule. If the plaintiff fails to show, in such case, that he came by the note in the due course of trade, and before it fell due, then the defendant is entitled to a verdict.

3. In regard to the question of the competency of Strader's evidence, I have found much difficulty. The competency of Strader to depose, in the principal opinion, is held to be governed by the cases of United States Bank v. Dunn, 6 Pet. 51, and Bank of Metropolis v. Jones, 8 Pet. 12. In the one case, Carr, the first indorser, was introduced by the second indorser, Dunn, who was sued to make out a defence. In the second case, Jones, the indorser and defendant, introduces Mr. Blake, the maker of the note, to establish a defence; and, in each instance, this court held that the witness was incompetent to invalidate the negotiable paper to which he was a party; and the decision in Walton v. Shelley, 1 Term R. 296, was followed. Of this case, Mr. Chitty says (669),-'Though it was formerly held, that no party should be permitted to give testimony to invalidate an instrument he had signed, a contrary rule now prevails'; and refers to Bent v. Baker, 3 Term R. 36, and Jordaine v. Lashbrooke, 7 Term R. 601. 'The general rule is,' says Chitty, 'that it is no objection to the competency of a witness, that he is also a party to the same bill or note, unless he be directly interested in the event of the suit, and he be called in support of such interest; or unless the verdict, to obtain which his testimony is offered, would be admissible evidence in his favor in another suit.' This was the principle on which the cases of Bent v. Baker and Jordaine v. Lashbrooke proceeded. By the statute of 3 and 4 Will. IV., ch. 42, § 26, for the amendment of the law, the rule was enlarged, so as to let in parties to negotiable paper as witnesses for or against whom the verdict and judgment might be evidence, the statute providing that the record should not be evidence for or against them. And thus the law of evidence, in this regard, now stands in the courts of Great Britain. It is also settled, and had been, long before 1832, when the decision in the Bank of the United States v. Dunn was made, in a large majority of the States of this Union, in accordance with the principles laid down in Jordaine v. Lashbrooke, and Bent v. Baker; and the question now is for this court to determine how far the United States Circuit Courts, when acting in the States, shall enforce the doctrine laid down in Dunn's case, and which was very properly applied in that of Jones. The decision is,-'That no man who is a party to the note or bill shall, by his own evidence, invalidate it.' But suppose he is no party to it, and that his name has been put on it, or to it, by forgery, and he is called on by another to establish that the defendant's name was forged, as well as that of the witness, is he then competent? He gave no credit to the paper; and, if the evidence of all those who could prove the defence is cut off, by the mere name appearing, nothing more would be required to effectuate the fraud, than to put on the names of all persons who could prove the fraud. In such an instance, I feel sure the rule laid down by this court does not apply. Nor can I, satisfactorily to my own mind, distinguish the case put from one where a fraudulent note is made in the name of a firm, by one of the original partners, after the dissolution of the partnership, when he had no authority to use the name of those he attempts to bind. Indeed, it is difficult to say that Stevenson was not guilty of forgery, if he made the notes, and passed them off to Stinson & Campbell, after the dissolution of the partnership, in discharge of his own debt, and with the intention to defraud his former partners. In the cases that have heretofore come before this court, the witnesses proved in advance that they gave credit to the paper, by signing their names; and that they were, beyond dispute, parties to it, as well as the defendant.

The principle assumed in Walton v. Shelley is in violation of one of the most familiar and general principles of evidence known to courts of justice; that is to say, that any person of sufficient age and sanity can be a competent witness to depose in any cause where he is not directly interested in the event of the suit. To this rule there are exceptions, but they are almost uniformly favorable to the admission of the testimony, are of comparatively recent origin, founded on experience, and conducive to the due administration of justice in a high degree.

Again, the act of May 19, 1838, declares, that 'the forms and modes of proceeding in suits, in the courts of the United States (in States admitted into the Union since 1789), in those of common law, shall be the same in each of those States respectively as are now used in the highest court of original and general jurisdiction of the same.'

That the court below proceeded, in the admission of Strader as a witness, according to the modes of proceeding in the Circuit Courts of the State of Alabama, is not questioned. The method and manner of administering justice in the State courts is the mode referred to in the act of Congress, as I understand it; and I cannot resist the conclusion, that the modes prescribed by the act of Congress to the federal courts held in that State embrace the rules in regard to the competency of evidence; without evidence there can be no proceedings; rules for its admission are indispensable; these rules must be derived from some authority; from statutes they cannot be, and therefore Congress has said the State courts shall furnish them to the foreign tribunals administering, the laws there,-and this for the plain reason, that the measure of justice shall be the same in the foreign that it is in the domestic tribunals, and evidence is the measure of justice in great part.

There can be no objection to the competency of Strader because he was a party of record. The original writ issued against him and Perrine jointly; but Strader was not found, and a nolle prosequi was entered as to him, and Perrine was declared against alone.

I concur that the charge of the Circuit Court was erroneous in so far as it assumed that the instruments sued on were subject to the same equities in the hands of Smyth that they were when held by Stinson & Campbell. The courts of Alabama have construed the statutes of that State affecting negotiable paper, and held they did not apply to notes payable in bank; of which description are the ones sued on. The charge, therefore, violated the commercial rule, that the innocent indorsee takes the paper discharged of a previous infirmity.