Sprigg v. Bank of Mount Pleasant (35 U.S. 257)

In error to the circuit court of the United States for the district of Ohio.

The defendant in error instituted, in the circuit court, an action of debt on the following obligation, executed by the plaintiff in error, and others.

'Know all men by these presents, we, Peter Yarnall & Co., Samuel Sprigg, Richard Symms, Alexander Mitchell and Z. Jacobs, as principlas, are jointly and severally held and firmly bound to the President, Directors and Company of the Bank of Mount Pleasant, for the use of the said Bank of Mount Pleasant, in the just and full sum of 2100 dollars, lawful money of the United States; to the payment of which sum, well and truly to be made to the said president, directors and company, for the use aforesaid, within sixty days from the date hereof, we jointly and severally bind ourselves, our heirs, &c. firmly by these presents. Signed with our hands, and sealed with our seals this 20th of February, A. D. 1826.

'PETER YARNALL & CO., [SEAL].

'SAMUEL SPRIGG, [SEAL].

'RICHARD SYMMS, [SEAL].

'ALEXANDER MITCHELL, [SEAL].

'Z. JACOBS, [SEAL].'

To the declaration on this obligation, the defendant pleaded the general issue, and six special pleas. The questions which were discussed and decided by the court, were presented on the second plea and sixth.

The second plea was as follows:

2. And for further plea in this behalf, by leave of the court here for that purpose first had and obtained according to the from of the statute in such case made and provided, the said Samuel, by his said attorney, comes and defends, &c., and says, that the said plaintiffs ought not to have or maintain their action aforesaid against him, because he says that the President, Directors and Company of the Bank of Mount Pleasant constitute an incorporated banking company, located at Mount Pleasant, in the county of Jefferson, in the state of Ohio, doing and transacting business in the usual manner of a bank; and that the said 2100 dollars, mentioned in the said writing obligatory, was a loan made by the plaintiffs as such banking company, in the ordinary way of making such loans at said bank, to the said Perter Yarnall & Co., and for their accommodation; and that the said writing obligatory was given to said bank for the sole and only purpose of securing the payment of the said loan at the expiration of thirty days from the date thereof, and that the said Samuel Sprigg, as also the said Richard Symms, Alexander Mitchell and Z. Jacobs, were in truth and in fact securities for the said Peter Yarnall & Co., for the payment of the said loan in sixty days as aforesaid, and were so received and treated by the said plaintiffs; and that the said Peter Yarnall & Co. received for their own exclusive benefit and accommodation the entire amount of the said 2100 dollars, and were so entered and charged on the books of the plaintiffs, in their said bank; and the defendant further avers, that at the time the said writing obligatory became due, to wit, on the 21st day of April, Anno Domini 1826, the said plaintiffs, for and in consideration of 22 dollars 48 cents, paid by the said Peter Yarnall & Co. to the said plaintiffs for the discount or interest in advance on the said 2100 dollars, for sixty days then next following, undertook and agreed with the said Peter Yarnall & Co., without the knowledge or consent of the said Samuel Sprigg, Richard Symms, Alexander Mitchell and Z. Jacobs, or either of them, to give a further credit on the said loan of sixty days and to extend the time of payment thereof for sixty days, from and after the said 21st day of April last aforesaid; and the defendant avers that the said plaintiffs did give to the said Peter Yarnall & Co. the further credit and time of payment thereof for sixty days as aforesaid, and without the knowledge or consent of the said Samuel Sprigg, Richard Symms, Alexander Mitchell and Z. Jacobs, or either of them, and against their will; by means whereof the said Samuel Sprigg says that he is discharged from all liability on or by virtue of the said writing obligatory; and this he is ready to verify: wherefore he prays judgment, &c.

The sixth plea was:

6. And for further plea in this behalf, by leave of the court here for that purpose first had and obtained, according to the form of the statute, the said Samuel, by his attorney, comes and defends, &c., and says that the said plaintiffs ought not to have or maintain their aforesaid action against him, because he says that the said plaintiffs are an incorporated banking company, doing and transacting business in the usual way and manner of banks, and that the said 2100 dollars mentioned the the said writing obligatory in the plaintiff's declaration described, and of which oyer is craved, and the same is set out in the said Samuel's first plea, was a loan made by the said plaintiffs at their banking house, in the town of Mount Pleasant, in the said county of Jefferson, in the usual way of making loans at said bank, to and for the sole benefit and accommodation of Peter Yarnall & Co., the first obligors in said writing obligatory; and that the said writing obligatory was given to the said bank for the sole and only purpose of securing to said bank the payment of the said loan so made to the said Peter Yarnall & Co. as aforesaid, in sixty days from the date thereof, and that the said Samuel Sprigg, Richard Symms, Alexander Mitchell, and Z. Jacobs, were, in truth and in fact, merely securities of the said Peter Yarnall & Co. for the payment of the said loan in sixty days as aforesaid; and were so received and accepted, and treated throughout by the said plaintiffs, in all the transactions in said bank relating to said loan; and the said Samuel avers that at the time the said writing obligatory became due, to wit, on the 21st day of April, Anno Domini 1826, the plaintiffs, in consideration of 22 dollars 40 cents, paid to them by the said Peter Yarnall & Co. for the discount or interest in advance on the said 2100 dollars, for sixty days then next following, undertook and agreed with the said Peter Yarnall & Co., without the knowledge or consent of the said Samuel Sprigg, Richard Symms, Alexander Mitchell and Z. Jacobs, or either of them, to give, and then and there did give to the said Peter Yarnall & Co. the further credit and further time of payment of the said loan and the said writing obligatory for sixty days, from and after the said 21st day of April aforesaid; and the said Samuel further avers that afterwards, to wit, at the expiration of the said sixty days, further credit and time of payment as aforesaid, and at the expiration of each and every sixty days successively thereafter until the 24th day of March, Anno Dommini 1829, the said plaintiffs did receive at their bank in the said town of Mount Pleasant, of and from the said Peter Yarnall & Co., the sum of 22 dollars 40 cents, for he discount or interest in advance of the said loan of 2100 dollars, and at each consecutive day of discount and payment of interest in advance as aforesaid, until the said 24th day of March, Anno Domini 1829, that said plaintiffs did, without the knowledge or consent of the said Smauel Sprigg, Richard Symms, Alexander Mitchell and Z. Jacobs, or either of them, and in consideration of the said sum of 22 dollars 40 cents so paid to them by the said Peter Yarnall & Co. on each of the said days of discount, and payment of interest in advance as aforesaid, agreed with the said Peter Yarnall & Co. to give, and did then and there give to the said Peter Yarnall & Co. the further credit and time of payment of said loan of sixty days, from and after each consecutive day of discount and payment of interest in advance as aforesaid, until the said 24th day of March aforesaid; and the said Samuel further avers that afterwards, to wit, on or about the said 24th day of March, Anno Domini 1829, the said Peter Yarnall & Co. failed in business, became insolvent, and unable to pay their just debts, and that the said Samuel Sprigg, Richard Symms, Alexander Mitchell and Z. Jacobs had not, nor had either of them any notice of the non payment of the said loan, or of the outstanding of the said writing obligatory from the time the same became due, to wit, on the 21st day of April, Anno Domini 1826, until after the failure and bankruptcy of the said Peter Yarnall & Co. as aforesaid; by reason whereof he, the said Samuel, says he ought not to be charged with the said debt, or any liability on or by virtue of the said writing obligatory; all which he is ready to verify: wherefore he prays judgment, &c.

To the second and sixth plea the plaintiff replied, that the said Samuel Sprigg, together with Peter Yarnall & Co., Richard Symms, Alexander Mitchell and Z. Jacobs acknowledged themselves to be jointly and severally held and firmly bound, as principals, to the said President, Directors and Company of the Bank of Mount Pleasant, for the use of the Bank of Mount Pleasant, in the sum of 2100 dollars as aforesaid.

The defendant demurred to this replication.

The circuit court gave judgment for the plaintiff on the replication to the second and sixth pleas; from which judgment the defendant prosecuted this writ of error.

The case was argued by Mr Ewing, for the plaintiff in error; and by Mr Cannon, for the defendant.

Mr Ewing stated that the suit arose out of the banking transactions of the defendant in error, in which, in order to get rid of the difficulties attending on loans on promissory notes, the form of a single bill had been adopted. Upon such an instrument the bank extended the credit given to the borrower, without surrendering the obligation; and they supposed it might be done without impairing the liability of any of the parties to the instrument. This is denied. The real borrowers of the bank were Peter Yarnall & Co. Had the other parties to it known that the time for the payment of the debt was extended, they could have protected themselves. The defendant below had a right to show these facts, and this was the object of the pleas.

He contended that the plaintiff in error should not be estopped to plead his second and sixth pleas, because they are not necessarily in contradiction of his bond. He may have signed the bond 'as principal;' and yet all the facts set forth in the plea, which show him to be a surety for the payment of the money, may be true.

If the plea be not necessarily inconsistent with the bond, the party is not estopped to plead it.

The legal effect of the instrument is in no wise changed by the insertion of the words 'as principal' in the bond. All joint and several obligors are principals, unless the contrary appear. 4 Ves. 824; 3 Atk. 91.

One of several joint and several obligors may plead, that he is but surety. Bank of Steubenville v. Carroll's Administrators, 5 Hammond's Rep. 207; Paine v. Packard, 13 Johns. Rep. 174; King v. Baldwin, 2 Johns. Cha. Rep. 554; S.C.. 17 Johns. Rep. 394.

He also contended, that the third and fifth pleas are good. They set forth, in substance, that this was a banking transaction; that Sprigg was but surety for the loan: and that the plaintiff, by agreement, founded on a money consideration, did, on the day the bond became due, give Yarnall & Co., the principal debtor, further time to make payment; and this without the knowledge or consent of the surety.

These pleas are certain to a common intent. By a fair construction of their several clauses, they sufficiently set forth all these facts. H. Black. 530; Doug. 158; 1 Saund. 274, n. 1.

The avernment of the new contract, to give time, is good, without showing whether it was agreed in writing or by parol. It will be intended that the agreement was valid. 2 Saund. 305, n. 13.

A bond under seal may be waived or postponed before breach, by entering into a new contract by parol. United States v. Howel, 4 Wash. C. C. R. 622; 2 Ves. Jun. 542; 2 Randolph 333; United States Bank v. Hatch, 6 Peters 258; 16 Johns. Rep. 71; 8 East's Rep. 576.

Mr Cannon, for the defendant.

The obligation on which the suit was instituted, was taken in the form in which it was executed, to avoid the difficulties which the plaintiff in error endeavours to raise by the pleadings. The bank, not desiring to limit the loan to the period stated in the obligation, and yet desirous to avoid the difficulty which an extension of the loan, without a new obligation, would create; have taken from the parties an acknowledgment, under seal, that each is bound severally as well as jointly. The question to be decided by this court is, whether this is an estoppel to the allegations in the pleas. If the court shall decide that such is the effect of the instrument, they will affirm the judgment of the circuit court.

He denied that any case can be found in which, where a party to a sealed instrument has declared himself a principal, he can claim that he was only a surety. None of the cases referred to by the counsel for the plaintiff in error sustain the position.

After a particular examination of the cases cited by Mr Ewing, Mr Cannon cited Hunt v. The United States, 1 Gallison's Rep. 30. To establish the doctrine of estoppel, as applicable to the case, he cited Chitty on Plead. 636; Williams's Rep. 9; Chitty's Equity Dig. 393; 1 Saunders 316; 7 Cranch 223.

Mr Justice THOMPSON delivered the opinion of the Court.