Burnham v. Wilbur — 20 N.Y. Super. Ct. 169

Majority

p. 169

Gordon Burnham, Plaintiff and Respondent v. Jeremiah Wilbur, Defendant and Appellant.

Headnote

1. Where a complaint alleges that the plaintiff and four of the defendants being directors of a corporation therein named, for the purpose of enabling said company to raise a sum of money for the prosecuting of its business, by means of the notes of the company , to he indorsed by some of said directors, agreed, by a written and sealed agreement, signed by said five directors, to and with each other, to join and unite with such of said directors as shall become liable on any note so made and indorsed for the accommodation of said company, in paying such liability and to share alike with such directors in any such liability ; and also alleges that the plaintiff subsequently, under said agreement, indorsed four several specified notes for said company which he was compelled to pay, and that the defendants refuse to pay to the plaintiff their aliquot shares of the amount of said notes ; and the latter allegations are put at issue by the defendants’ answer, and the plaintiff proves that he subsequently indorsed said notes for said company and was compelled to pay them, it is competent for them to show by parol that such notes were not indorsed by the plaintiff under the alleged agreement, hut were indorsed under a subsequent contract between the plaintiff and some other directors of said company of the one part, and the said company of the other part.

2. Resolutions passed at meetings of the board of directors of said company, including the plaintiff, held subsequent to the alleged agreement, in connection with other evidence tending to prove the defense, are competent evidence for that purpose.

3. The defendants may show, on the alleged agreement being produced, and that their signatures thereto are genuine, that they never delivered said agreement, but signed it on the express condition and understanding that it was not to be delivered as an executed instrument, until it was signed by all the directors of the said company, and that all of the directors had not signed it.

(Before Hoppman, Pierrepont and Robertson, J. J.)

Heard June 16,

decided June 30, 1860.

Appeal by the defendant, Wilbur, from a judgment against him, rendered on a trial had June 21, 1859, before Mr. Justice Hoffman, without jury.

The suit was commenced March 1, 1858, by Gordon Burn-ham, as plaintiff. John C. „ Mallory, Nathan T. Carryl, Edmund Coffin, Jeremiah Wilbur and the Clinton County Coal

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Company, of Pennsylvania, are named in the summons and complaint as defendants.

The complaint states, that the plaintiff, Mallory, Carryl, Coffin and Wilbur, on the first of December, 1855, were and since have been, directors and stockholders of the Clinton County Coal Company, of Pennsylvania,. a corporation created by law in that State.

That about the first of December, 1855, this company became embarrassed, and “ it became necessary for the said parties to raise a large sum of money for the purpose of promoting the operations of said company,” &c. That on or about the 1st of December, 1855, the five persons above named, “ for the purpose of raising money for the purpose aforesaid,” severally signed a written and sealed agreement, a copy of which is set forth.

This agreement is dated December 1,1855, and purports to be signed by these five stockholders only. It recites that said company “ desires to raise a sum of money for the purpose of prosecuting” its operations; that “it has been proposed that certain of the directors * * shall lend the company their notes, indorsed by certain others of said directors, or indorse the notes of said company, for the purpose of raising said sum of money;” and then states, that “we, the undersigned, directors of said company, hereby mutually agree and covenant to and with each other, * * * that all notes and indorsements made as aforesaid, * * shall be equally binding upon each and all of the undersigned as between ourselves, # * that in case the said company neglect or fail to assume and pay, at maturity, each and every (such) note or bill, to join and unite with them the said directors who shall have become liable on any note or bill given, drawn, indorsed or accepted for the accommodation of said company, in paying and meeting such liability, and to share and share alike, with said directors in all such liability. It being our intent and meaning to all bear and share equally, any and all responsibility assumed in raising the money for said company, and to pay in equal proportions any and all amounts that may have to

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be borne or paid by any one or more of the undersigned, in raising money for said company.”

The complaint then avers that the plaintiff, “under and by virtue of said agreement, * * * indorsed the notes of said company to a large amount; that said indorsements were so made by plaintiff to enable said company to raise money for the purpose of prosecuting its operations, as contemplated and mentioned in said agreement;” that the company procured these notes to be discounted, and used the proceeds for the purposes aforesaid.

That each of the defendants “had due notice of all said indorsements made by said plaintiff as aforesaid.”

That of the notes so indorsed, the company failed to pay the following notes, each drawn at sixty days, viz.: one dated April 22, 1857, for $5,000, due June 24, 1857; one dated July 20, 1857, for $5,000, due September 21, 1857; one dated August 17,1857, for $5,000, and due October 19, 1857; and one dated September 25, 1857, for $4,300,- and due November 27, 1857.

That the plaintiff, by reason of so indorsing, was compelled to pay and did pay, on the 21st of July, 1857, $2,513.12; on the 25th of September, 1857, $388.21; and, on the 3d of December, .1857, the sum of $8,459.35.

That the notes of August 17, and September 25, 1857, were indorsed by the plaintiff and the defendant Coffin, jointly; and the $8,459.35, was paid to take up these two notes.

That the company is embarrassed, and payment of these moneys cannot be collected from it; that Coffin is reported to be insolvent and unable to contribute; and that the defendants neglect to pay, wholly or in part, their respective shares of said moneys, although payment has been demanded of them.

It prays that the “ defendants may be adjudged to contribute and -pay * * their proportion of such moneys; ” and, in case either is unable “to pay the whole of their ratable shares, that the other of said defendants may be compelled to pay to the plaintiff their ratable proportion

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of such deficiency,” and generally, for such other or further relief as may be just.

The defendant Wilbur alone answered the complaint.

This defendant, in his answer, says, he “ admits that on or about the 1st of December, 1855, an agreement was entered into between some of the directors of said Coal Company, and among them the plaintiff and this defendant, in respect to aiding said company at that time. But he has not sufficient recollection, knowledge or information to form a belief, that he executed an agreement of the same tenor in all respects as that set forth in the complaint.”

That he thinks the agreement signed by him was unsealed.

The answer puts at issue the allegation, that the plaintiff, under and by virtue of said agreement, indorsed the notes of the company to a large amount, and in it “he denies that he had notice thereof.”

It denies that the plaintiff indorsed the four notes in the complaint particularly described, “under and in pursuance of, and by virtue of said agreement, and says that said agreement was not then in force.” And “that at the commencement of this suit there was no note or indorsement made under said agreement, remaining unpaid by said company.”

It avers that the liabilities assumed by the plaintiff, and for which he seeks to recover in this suit, “ were assumed on other and different considerations, and "not under' said agreement; and the plaintiff, or some one for him, received security, by mortgage, for his engagements for said company.”

It puts at issue the allegations of payments, stated in the complaint “to have been made by the plaintiff.”

At the trial, such an agreement as is described in the complaint, and purporting to be signed by the plaintiffs, Wilbur, Mallory, Carryl and Coffin, was produced, and the genuineness of the signatures thereto was proved by Carryl, who was treasurer and secretary of the company in 1855 and 1856. It had ten seals affixed to it.

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The plaintiff proved that some twenty notes, the particulars of which were stated, were made by the company, from time to time, commencing December 12, 1855, and ending September 25, 1857, some of which were payable to the order of Coffin, and others to the joint order of Coffin and Burnham, and were indorsed by Coffin and Burnham for the accommodation of the company. The defendant excepted to the decision, admitting evidence of notes payable to the joint order of Coffin and the plaintiff. The plaintiff also proved that the company procured them to be discounted, and used the proceeds in its business. Among such notes were four, corresponding in terms with the four notes particularly described in the complaint, each of which is .drawn payable “to the order of Edmund Coffin and Gordon Burnham.” Coffin stated that the company did not pay the three notes of July 20, August 17, and September 25, 1857, but did pay the note of April 22,1857. Evidence was given tending to.show that all these notes were discounted by the American Exchange Bank for the company, and that the plaintiff paid such of the notes as were protested.

There was annexed to the said agreement of December 1, 1855, a paper writing of the same date, signed by the president and treasurer of the company, by which they “ agree to and with the' other directors of said company, parties to the foregoing agreement, that we will hold for ■the benefit of the Directors, parties thereto, all the unsold stocks and bonds now belonging to said company, as collateral security for the payment at maturity of any and all notes or indorsements that may be made under the foregoing agreement.”

The court allowed this “ to be read, if followed up by proving that the securities named in it came.into the hands of Mr. Burnham, the plaintiff.”

When the plaintiff had rested, the defendant called said Edmund Coffin as a witness, and asked the question, whether the agreement of December 1, 1855, “was to have been executed by any other directors, or otherwise, besides those

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who had signed it.” On objection, the court excluded any answer to the question, on the ground that the defendant was thereby attempting to vary, by parol evidence, a written and sealed agreement, and add to it a condition not expressed in it. The defendant excepted to the decision.

The defendant was sworn in his own -behalf, and testified that he did not sign the agreement when the plaintiff did, and had not seen it since he signed it until the trial. He was asked “whether he signed it with the understanding and information that the other directors were to sign it, and in reference to the resolution of the Board of Directors of November 12, 1855.”

It had been previously proved that there were, in all, ten directors.

Edmund Coffin also testified “ that he was a director of said company in November, 1855, and subsequently. That he was present at a meeting of the Board of Directors, at which plaintiff was present, when the matter of raising money was brought up. Being asked whether there was any action on the part of the company, prior to the execution of the agreement, as to raising money, and any resolution of the Board, prior to the execution of the ageement, on that subject, and as to the amount to be raised,” the question was objected to by the plaintiff, and excluded, and the defendant excepted.

A resolution of the Board of that date was produced and proved, and offered in evidence, and excluded, and the defendant excepted.

By that resolution it was resolved “ that the president and. secretary be authorized to borrow any part of $20,000, as it may be wanted, to meet the liabilities of the company, on the security of the remaining bonds and stock of the company, *- # * or if money cannot be had on these securities, then they shall be authorized to use the names of all the members of the Board for such purpose,” &c.

The plaintiff and defendants were present at that meeting.

The witness Coffin was also asked, “ whether any of the. indorsements . of himself and Burnham, were made .in refer

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ence to or under that agreement of December 1, 1855 ?” Plaintiff objected to the question; the court excluded it, and the defendant excepted.

He was also asked, “ whether he with five other directors of said company, the plaintiff being one, in 1857, assumed the floating debt of the company, including these indorsements ;” and in connection with this question the defendant “ offered to prove by the said witness, and by resolutions passed by the Board of Directors, including the plaintiff, on the 16th of April, 21st of July, first of August, and 23d of September, 1857, that the plaintiff, E. Coffin, T. C. Durant, J. 0. Mallory, N. T. Carryl, and G. Crane, six of said directors, for whose security a judgment was confessed by the company, assumed the floating debt of the company, composed of the indorsements in question, and other things ; and that in consideration thereof, the judgment was given, and the shares of the floating debt were equalized among them, a small sum of money being paid to Mr. Burnham for that purpose, and other sums among the other five.” On the plaintiff's objection, this evidence was excluded, and the defendant excepted.

The resolution of the 16th of April, recites that “ the present embarrassed financial affairs of the company were then considered by the board, * * * and a general

understanding was agreed upon in regard to raising money on individual responsibility, to carry forward the operations of the company until such time as money can be obtained from sales of coals and other resources of the company, sufficient to meet current expenses;” and that the six directors last named, “ agreed to assume the responsibility of $5,000 each, besides undertaking to make up their pro rata share of the remainder to the extent of $50,000 in all; that is, making the floating debt of the company not to exceed that sumand then declares (inter alia) “that the officers of the company execute a mortgage of all the rolling stock, * * * &c., for the purpose of securing the persons who have loaned their names to the company,” &c.

The resolution of July 21, recites, “ that about $42,000

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floating debt was carried by the loans of money and personal liability at bank, etc., of six of the members of the present and late Board of Directors,” (being the six before named,) and after reciting other matters, adds, “ thus leaving a balance of about $50,000 floating debt to be carried by the board,” and then declares, that “ the president and secretary be authorized to execute any order, conveyance, or other instrument in writing, submitted to them by the executive committee, for the purpose of paying or securing the future payment of the various loans made or to be made to this company, or liabilities incurred or to be incurred for the company by the directors.”

■ The resolution of August 1, authorizes the president and officers of the company “ to sign a warrant of attorney, or do such other acts as may be necessary for the purpose of entering judgment against the company, in the county of Clinton, and State of Pennsylvania, for an amount sufficient to secure the advances made to the company, or liabilities incurred by way of indorsement or otherwise, by the directors,” &c.

By the resolution of the 23d of September, 1857, it is declared, “ that a judgment and execution be executed by the proper officers of this company, in favor of Gerard Crane, if'necessary, covering the property of the company not mortgaged to David Hoadley, for account of the bondholders, as security for the amount of moneys advanced by six of the directors, amounting to nearly fifty thousand dollars in all.”

Two paper writings marked Exhibits (No. 3 and No. 4,) being shown to the witness, the defendant “ offered to prove by the witness that Exhibit 3 was a statement of account between the witness and the plaintiff made up about August ■ 1, 1857, respecting their indorsements for and cash loans to said company; that Exhibit 4 showed the adjustment between said six directors, including the plaintiff; the amount of money paid by some to others of them including the plaintiff, to equalize the floating debt of the company among them, bringing the share of each to $8,000.” On

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plaintiff’s objection, this evidence was excluded, and the defendant excepted.

These two exhibits represented that Burnham’s loans and liabilities then exceeded $8,000 by the sum of $371.55, and Coffin’s by the sum of $621.55.

Coffin also testified, that, “ at the request of witness while out of town,” Wilbur paid the note of April 22, 1857, for $5,000; that the witness afterwards refunded the money to Wilbur, and the plaintiff paid to witness half of that sum. In Exhibit 3, Coffin & Burnham are severally credited with the sum of $2,500, under date of June 24, 1857, (the day said note matured,) as “ money borrowed;” and the money therein stated to have been loaned by each of them with interest to August 1, 1857, is $3,634.57.

The witness Coffin, was not allowed to testify whether the agreement of December 1, 1855, “was ever referred to or mentioned between him and the plaintiff in reference to their indorsements or otherwise, until about the time of the commencement of this suit,” and the defendant excepted to the decision.

The defendant, on being examined in his own behalf, testified that he became treasurer in July, 1856, and “ that the plaintiff was one of the executive committee of the board.”

“Being asked whether he had any knowledge or notice from the plaintiff or Mr. Coffin, or any one else, that any indorsements of paper of the company were made under the agreement of December 1, 1855,” the question was objected to by the plaintiff and excluded, and the defendant excepted.

The defendant offered in evidence the record of a judgment confessed by said company to Gerard Crane, on the 24th of September, 1857, in the court of Common Pleas for the county of Clinton, in the State of Pennsylvania, on a bond in the penal sum of $100,000, conditioned to pay the sum of $50,000, in eight days after the date thereof; also the record of an execution thereon issued the same day, to the sheriff of said county; and “in connection

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. therewith, proved the execution o'f and offered in evidence a declaration of trust, of the purposes for which said judgment was confessed.”

On plaintiff’s objection, the evidence was excluded, and the defendant excepted.

The declaration of trust recites, that said bond was executed “ with the intent to indemnify and secure” the said six directors for the loans and liabilities therein mentioned; and also recites that Burnham and Coffin each loaned the company August 1, 1857, the sum of $3,634.57; that Burnham and Coffin were indorsers of a note made by the company for $5,000, dated July 20, 1857, and of a note for $5,000, dated August 17, 1857, each drawn at sixty days; and also recites that Crane holds said bond, “and also the warrant of attorney thereto annexed,” in trust to enter up judgment, issue execution and levy it with all convenient speed; and out of the proceeds of sales, to repay to each of said six directors, (naming them,) all the sums of money loaned or advanced to said company, as aforesaid, and “pay, discharge and remove, all liability or indebtedness assumed or incurred by either and all of said indorsers by reason of said indorsements, and repay all sums by them advanced for or on account of said indorsements.”

The judge found as facts, that the allegations in the complaint were true, (the terms in which they were stated being in substance like the averments in the complaint,) and that the plaintiff made the payments therein mentioned, amounting in the aggregate to $11,360.68 ; and held as a conclusion of law, that the defendants Wilbur, Mallory, Carryl and Coffin, were each severally liable to the plaintiff for the one-fifth part thereof, with the interest thereon.

Judgment having been entered accordingly, the defendant Wilbur appealed from it to the general term.

The appeal was first argued at the February general term, 1860, before Bosworth, Ch. J., and Robertson, J., who were unable to agree, and ordered a re-argument. They

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severally delivered written opinions, the former in favor of reversing, and the latter in favor of affirming the judgment. The opinion of the chief justice was as follows :

Bosworth, Ch. J. —The complaint avers that the plaintiff indorsed the notes of the company to a large amount, and among others, four notes particularly described; “ that said indorsements were so made by the plaintiff to enable said company to raise money for the purpose of prosecuting its operations, as contemplated and mentioned in said agreement,”—viz., the agreement of the first of December, 1855.

“ That said defendants, and each of them, had due notice of all of said indorsements made by said plaintiff as aforesaid.”

The answer of Wilbur denies that the plaintiff indorsed said four notes “ undyr and in pursuance of, and by virtue of said agreement,” and says that said agreement was not then in force, nor in the possession of the plaintiff; and it denies that the defendant “had notice” that plaintiff had indorsed said notes.

These allegations raise a material issue. One of the said four notes is dated the 22d of April; one the 20th of July; one the 17th of August, and the other the 25th of September, 1857.

The sums which the plaintiff alleges he was compelled to pay by reason of such indorsements, are : $2,513.12 on the 21st of July, 1857; $388.21 on the 25th of September, 1857; and $8,459.35 on the 23d of December, 1857.

The earliest of these notes in date, was made nearly seventeen months after the agreement of the first of December, 1855.

No evidence was furnished that they were indorsed.under that agreement, or for purposes contemplated by the parties to it, beyond the mere fact they were indorsed for the accommodation of the company.

It was proved, it is true, that the plaintiff indorsed a note as early as the 15th of December, 1855, and eighteen

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other notes subsequently. But it was not proved that any subsequent note was indorsed and discounted, and its proceeds used'to take up a note of an earlier date; nor that any subsequent note was indorsed to renew one previously indorsed. The case states that the company paid at maturity all of the notes which the plaintiff indorsed, except the notes dated July 20, August 17, and September 25, 1857.

The defendant offered evidence which he insisted would tend to show that these indorsements were not made for purposes contemplated by the agreement of December 1, 1855, and for that purpose offered in evidence the resolution of the 12th November, 1855, which was excluded.

The agreement recites that the company “ desires to raise a sum of money,” &c., and that “ it has been proposed that certain of the directors shall lend the company their notes, indorsed by certain others - of said directors, or indorse the notes of the company, for the purpose of raising such sum of money.” It then states the agreement of the parties to it, and declares it to be their intent and meaning that all shall share equally any responsibility “ assumed in raising the money for said company,” and bear in equal proportions any and all amounts “ paid by any one or more of the undersigned, in raising money for the company.”

The agreement had ten seals attached to it, ten being the whole number of the directors, but only five signed it.

The agreement had attached to it a paper writing of the same date as the agreement itself, signed by the president and treasurer of the company, and purporting to be an agreement between them and “ the other directors of said company, parties to the aforegoing agreement;” that the “ unsold stock and bonds now (then) belonging to said company,” should be held as collateral security for the payment of indorsements to be made under such agreement.

Looking at' those two papers and the resolution of November 12, 1855, the natural conclusion from reading them would be, that they all related to the same matter,

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and that the resolution was the basis of the whole; was the inducement to the agreement to indorse, and the authority for the agreement signed by the president and treasurer.

I think it was competent for the defendant to show that the sum of money mentioned in the agreement and the resolution, was one and the same sum; and that both documents referred to the same precise subject matter. One and the first important step in this line of proof, was the resolution itself. I think it was erroneously rejected.

Edmund Coffin, who indorsed all of the four notes in question, and also all of the other notes which the plaintiff indorsed, and indorsed them jointly with him, “ was asked whether any of the indorsements of himself and Burnham were made in reference to or under that agreement of December 1 ?” The question was objected to by plaintiff’s counsel, and excluded, and defendant’s counsel excepted.

What the ground of objection was, the case does not state. The fact to which the question related, it was competent for the defendant to prove. That the indorsements were made under that agreement, or to promote the objects which it was made to secure, or, in other words, to raise the money mentioned in it, it was essential that the plaintiff should prove. It was the defendant’s right to disprove it.

The judge has found as facts, “that said indorsements were made by plaintiff for the purposes mentioned in the agreement;” and “that the defendant, Wilbur, had due notice of such indorsements.”

The question could only be excluded on the ground that it was leading. It was held in Budlong v. Van Nostrand, ( 24 Barb. 27 ,) that when the objection relied upon is to the form of the question, that ground must be specified, and if it be not done, the exclusion’ of the question will be error, if the matter of the question is competent. (See, York v. Pease, 2 Gray, Mass. R. 282.)

It has also been held, that a general objection to a series of letters offered in evidence is properly overruled, if any one of the series is competent for any purpose; and that

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on a review of the trial, it cannot be objected that the judge should have limited the effect of such letters as'evidence, to the particular purpose for which they or any one of them was properly admissible. (Day v. Roth, 18 N. Y. 448 .)

So, where one objected, generally, to the reading of an instrument in evidence, (which was admitted,) and the certificate of its proof or acknowledgment was so defective, that if objected to on that ground it should have been excluded; it was held that such objection could not be taken on the appeal, but should have been specially stated at the trial. (Mabbett v. White, 2 Kern. 442.)

Other rulings indicate that this question was overruled, on the ground that the matter sought to be proved was incompetent.

The paper signed by the president and treasurer (dated December 1, 1855,) was allowed to be read, subject to the condition that it “was followed up by proving that the securities named in it came into the hands of Mr. Burnham, the plaintiff.”

And the judge also excluded evidence offered to prove that, in 1857, six directors (the plaintiff .being one), “ assumed the floating debt of the company, including these indorsements,” pursuant to and under resolutions passed by the board of directors April 16, July 21, August 1 -and September 23, 1857.

The resolution of April 16 declares that Burnham, Coffin, and four other directors who are named, “ agreed to assume the responsibility of $5,000 each, besides undertaking to make up their pro rata share of the remainder, to the extent of $50,000 in all—that is, making the floating debt of the company not to exceed that sum,” &c.

This resolution is six days earlier in date than the note of the 22d of April, the first of the four in question, and each of these four notes is indorsed by Coffin and Burnham jointly.

It further appeared, that the defendant, at the request of Coffin, paid the note of the 22d of April, at its maturity,

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(June 24, 1857,) and Coffin subsequently refunded the money to Wilbur, the plaintiff furnishing half of it.

The defendant also offered evidence (which was excluded) to show, that on the first of August, 1857, there was an adjustment between the said six directors, of the amounts of the liabilities incurred and moneys paid by them severally, under the agreement recited in the resolution of the 16th of April; and, that on such adjustment, the plaintiff was paid in cash $371.55, in "order to make the amount assumed and paid by him just $8,000—that being the amount assumed by each of the six, making $48,000 in all.

The $2,500, credited to Coffin, and the like amount credited to Burnham, under date of June 24, 1857, in Exhibit 3, might have been shown, had not the offered evidence been rejected, to have been the sum which they severally advanced to take up the note of April 22, 1857, for $5,000, maturing that day.

The declaration of trust of September 7, 1857, which was offered by the defendant and rejected by the judge, states that the bond mentioned in it was made to secure, inter alia, the notes of July 20, and August 17, 1857, for $5,000 each, (being two of the four notes in question,) and to secure a -loan made by Burnham to the company, on August 1, 1857, of $3,634.67.

All the evidence so offered and rejected, was admissible and competent upon the question whether the indorsements of the four notes named in the complaint were made under and with reference to the agreement recited in the resolution of the 16th of April, 1857, or under that of December 1, 1855.

The resolution of the 21st of July, imports that the floating debt to be carried as provided for by that of April 16, was $50,000; and the resolutions of August 1, and September 23, 1857, are directed to securing these six directors ; and that of September 23, speaks of the securities which they authorize to be given, “ as security for the amount of moneys advanced by six of .the directors, amounting to nearly $50,000 in all."” The declaration of

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trust, offered in evidence, clearly identifies the two notes of July 20, and August lY, for $5,000 each, as part of this $50,000. These resolutions (as the plaintiff was present when each of them was passed) and the declaration of trust, furnish some evidence that the indorsements upon the three of the four notes in question first made, were made under the agreement recited in the resolution of April 16, 185Y, and not under that of December 1, 1855.

Whether they were in fact made under the one or the other, is a" vital question in this controversy. I think the evidence was erroneously excluded.

The complaint alleges and the answer denies, but the judge found, “ that the defendant, Wilbur, had due notice of such indorsements ;” that is, of the indorsement by the plaintiff of the four notes in question, for the purposes mentioned in the agreement of December 1, 1855.

No witness testified that he had such notice; and the defendant, Wilbur, was not permitted to testify that he was never notified,, by the plaintiff or any one else, “ that any indorsements of paper of the company were made under the agreement of December 1, 1855.”

And, Coffin was not permitted to testify whether the agreement of December 1, 1855, “was ever mentioned between him and the plaintiff, in reference to their indorsements or otherwise, until about the time of the commencement of this suit.”

I think it quite obvious that all the offered evidence which was rejected, was rejected on the ground that the subject matter of it- was irrelevant and incompetent, and not on account of anything relating solely to the form of the question or the quality of the evidence; and, that, for the reasons already stated, the judgment should be reversed and a new trial granted, with costs to abide the event.

The cause was re-argued at the' June general term, 1860, before Hoffman, Pierrepont and Robertson, J. J.

G. C. Goddard, for Appellant,

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Argued the propositions following, viz :

I. The evidence offered, to show that the other directors of the company were to have' signed the agreement, and that Wilbur signed it with that understanding, or on that condition, was admissible; and the exclusion of it erroneous.

II. The resolution of the Board of Directors, of November 12, 1855, preceding the execution of the agreement on which the action is brought, was admissible, and its exclusion erroneous.

III. . Those who indorsed notes under the agreement of December 1, (had it been completely executéd and delivered,) were secured by the paper annexed to it, of the same date, by which the unsold stock and bonds of the company were pledged “as collateral security for the payment at maturity of any and all notes or indorsements that may be made under the foregoing agreement.” These were afterwards sold, and applied to pay the obligations of the company. No obligations were proved except these notes.

IV. The evidence of notes indorsed jointly by Coffin and Burnham was not admissible.

V. The offer to prove by parol that these indorsements were not made under the agreement, was admissible, and its exclusion erroneous.

VI. * The resolutions of April 16, July 21, August 1, and September 23, 185Y, and the evidence offered in connection with them, were admissible.

■ VII. The whole case shows that the agreement of December 1 was never acted upon, or treated as a binding agreement ; supporting the idea that all were to have signed it.

F. G. Burnham, for Respondent,

Insisted that no error was committed at the trial, and submitted full points in which his several positions, were elaborately argued.

—When the case was settled by me, I felt great doubts whether the rulings, the subjects of some of the present exceptions, were correct. I am upon this argument, satisfied they were not.

A material question in the case is, whether the agreement on which the action is founded, was not executed by the defendant and the four who signed with him, on the express condition and understanding that all the directors were to unite in it, and that it was inoperative as a contract at all, until that condition was complied with. It is true, as contended, that an instrument may be so worded as to show, that although it was expected to be signed by others, yet, those who do sign, become bound, notwithstanding the omission of the others. But the present agreement does not make out a case of such a character. The testimony to establish the condition precedent,' was therefore admissible. The proffered evidence also which tended to define the extent and time of the duration of the liability to be incurred, was not inconsistent with the agreement, and ought to have been allowed.

The evidence, noticed under the 1st, 2d, 5th and 6th points of the defendant as excluded, ought to have been admitted under the views of the case I now take.

The error committed below in the early part of the trial, of treating the sealed agreement as not open to any explanation of its conditional execution and extent, pervaded the remaining rulings of the judge, which were in general consistent with this ruling, and were erroneous, because of that original error.

I think there must be a new trial with costs to a^ide the event.

—The complaint in this action alleges, that on or about the first day of December, 1855, the plaintiff and the defendants, jointly and severally, made and executed, under their respective hands and seals, a certain agreement, which is set forth therein in hac verba.

Dissent

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The defendant Wilbur -alleged in his answer, that on or about the 1st of December, 1855, some agreement was entered into between some of the directors of a company, mentioned in the complaint, and among them the plaintiff and the defendant, to aid the company at that time, but he had no sufficient recollection, knowledge or belief, whether he executed an agreement of the same tenor in all respects as that set forth in the complaint; that according to his recollection and belief, the agreement, so signed by him, was not sealed; he denied, however, that the plaintiff indorsed certain notes, in the complaint mentioned, under and inpursuance and by virtue of said agreement, and averred that said agreement was not then in force or in possession of the plaintiff; he also alleged that the liabilities assumed by the plaintiff for such company were not assumed under such agreement.

It would be a strained construction which should make . these allegations in the answer either an admission or denial that the defendant signed or executed the identical instrument named in the complaint, being a matter as to which the plaintiff was entitled, to a positive admission or denial, within the defendant’s own knowledge. On appeal, this court cannot deprive the plaintiff of the right guaranteed under the Code, that what he has alleged in his complaint, and is not properly controverted in the answer, is admitted and cannot be controvered on the trial.

But if the admissions in the answer are more closely examined, they will be found to concede the execution by the defendant of some written instrument between him, the plaintiff and other directors of the company, to aid the company, but deviating in some respects from that set forth in the complaint. Not a word is said of any conditional execution, or contingent liability.

On the trial, the defendant Wilbur was asked whether he signed such agreement with the understanding and information that other directors were to sign it, and whether he signed it in reference to a resolution of the Board of Directors passed November 12,1855. This question was objected

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to and excluded under an exception. Another witness (Carryl) was asked whether the agreement was to have been executed by any other directors, or otherwise, besides those who had signed it; which question was also excluded. It is assumed that the answers to these questions, in the affimative, would have shown that the agreement was executed and delivered by the defendant, upon condition' that others should sign it also. I do not see how that can be the result. There is a marked difference between signing a paper with the information that it was -to be signed by others, and delivering it when signed to take effect as the deed of the party only upon condition that others signed it.

Moreover, this instrument purports on its face to be the deed of those who signed it; not of any named persons. Until signed, the intended parties to it were- not designated, and when signed, the persons so signing manifested conclusively their intention to become parties. Such signing would be the means of causing all others who signed it to believe that the subscribers had become parties, and thereby entitled to be indemnified for their own liability, and bound to contribute to that of others who should become so. It contains, substantially, a declaration in the body of the instrument, that it shall become binding, on every one who signed it, by virtue of the signing alone, whatever condition such person might verbally attach to the effect of his signature; and no man can attach to the delivery of an instrument, a condition excluded by its terms. In the case of The United States v. Leffier, (11 Pet. R. 86) if the names of the parties had been inserted in the bond, which does not appear by the report, there was nothing to prevent other names from being added, or any of those whose names were inserted, from annexing a condition to their delivery of the instrument that others should sign also. In the case before the court, they became parties merely by signing, and then absolutely and unconditionally.

But were the fact such as the defendant sought to have inferred from the testimony, he must have known it when

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he put in his answer; or when he sought to avail himself of it on the hearing, he should have moved to amend, upon furnishing an excuse for not stating it in the first instance if he could; but it defeats every object of pleading in an action, to allow parties to offer evidence of a cause of action or defense not contained in the pleadings.

The agreement containing the covenants sued upon in this action, recites a desire by the Clinton Coal Company, of Pennsylvania, to raise a sum of money to prosecute their operations, and a proposal to raise such sum by the loan of the notes of certain of its directors, indorsed by others, none of whose names are mentioned, and by the indorsement of its own notes by such directors. It does not specify the amount of such money, or when, how, or by whom, such proposal was made and accepted.

By such agreement, those who are therein described as “ the undersigned directors of such companycovenant with each other, mutually, that the notes and indorsements made as therein recited, should, as between themselves, be equally binding upon all of them; and that those who did not sign such notes, or give such indorsements, should unite with those who should become liable on any note or bill given by any of such directors, in meeting and sharing such liability. It also, finally declared, that it was its true intent, that all should bear equally any responsibility assumed in raising money for such company, and pay in equal proportions any amount paid by any of “the undersignedin raising such money.

If there was any. ambiguity in such instrument as to the amount of money to be raised, or the extent of the notes to be given, it was patent on its face, it was not fixed therein; nor was there any reference made in it to any other instrument or fact by which it could be rendered more certain what sum the signers had in their minds. The terms of this instrument are as general as possible, and the closing declaration of the intent of the parties to it, is to pay in equal proportions, all amounts paid or borne by any of the signers of it in raising money for the company. It was

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urged, on behalf of the defendant Wilbur on the trial, that such general words were limited by the recital that the company were desirous of raising a sum of money; that this meant some particular sum, and that parol evidence was admissible to prove what particular sum they were desirous of raising. The sole evidence offered for the purpose was a resolution of the Board of Directors of such company, passed on the 12th of November, 1855, authorizing the president and directors to borrow any part of $20,000 to meet the liabilities of the company on certain securities, if possible, or if not, to use the names of all the directors for the purpose. At that meeting only the plaintiff and defendant, and no other directors, were present. This resolution was excluded under an exception, and I think properly. What the sum of money was which it was intended by that instrument that the company desired to raise, was not established by proving that it passed a resolution to raise a specific sum; there was abundance of time between the passage of the resolution and the execution of the covenant for all parties to have agreed to change the amount in their own minds and leave the expression of it indefinite; and to prepare an instrument to be signed by those only who chose to make it indefinite. The law assumes that down to the moment of executing an instrument, there is room for a change of intention, so as to merge, as it is termed, all previous negotiations in the contract as executed. (Parkhurst v. Van Cortlandt, 1 J. C. R. 282, Greenl. on Ev. § 215.) When executed, it is to be interpreted by fixed rules of construction and interpretation, one of the oldest and best settled of which is, that if there is an ambiguity on its face, it cannot be rendered certain by parol evidence. (Cow. & H. Notes to Phil, on Ev. Pt. II, p. 528, n. 271, and cases cited.) I cannot understand how any subject matter of a contract can be rendered more indefinite than by prefixing the indefinite article to it without any further description. Suppose the extrinsic evidence had shown that the company had been desirous of raising two sums, how would the latent ambiguity thus

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created be determined ? Would it be by the declarations of each party at the time of signing the instrument ? In such case, different parties might prove that they understood different sums to be intended, or else the court would be compelled to pass upon the conflicting evidence of negotiations preceding a contract. The law intends to guard against the confusion which would then arise by confining the parol testimony, which is to aid in understanding sealed instruments, to that which furnishes data for the interpretation of the words actually used, and excluding that which merely proves by their declarations or otherwise, what the parties meant by such instrument. The court is entitled to know all that the parties may be supposed to have known in regard to the subject matter of the contract; thereby to discover the sense in which they were entitled to understand its language; further than that it is not authorized to go. The knowledge that some of the directors of this company had resolved to raise a sum of money, was not necessary or relevant to show what sum of money each of the parties to the covenant in suit had in their minds when they signed it. It did not serve to interpret it, as no reference was made which confined the sum in the covenant to that mentioned in the resolution. It was 'clearly inadmissible, unless the principle is to be adopted, that a sealed instrument is not the sole repository of the intention of a party to it, but merely part of general evidence óf it, of no more weight than other parol evidence.

It was claimed on the part of the defendant, that the first notes indorsed by the plaintiff, were paid by the proceeds of the sale of certain bonds and stock which the president and treasurer of the company, two of the defendants, (Mallory and Oarryl,) agreed to hold as collateral security, for the payment at maturity, of any and all notes or indorsements that might be made under the agreement in controversy; and that after such sale and payment, the plaintiff could not make the defendants liable for any new notes indorsed by him; and to sustain this exemption from

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liability, the defendant offered in evidence an instrument dated on the same day as the agreement in suit, and annexed to it, signed by the president and treasurer of the company, in which they agree with the directors, parties to such agreement, to hold for their benefit all unsold stock and bonds then belonging to the company, as collateral security for the notes made or indorsed under such agreement. I do not see any mode by which the continuing guaranty of that agreement ^ could be reduced thereby, even had there been the same parties to both.

The defendant Wilbur, also attempted to prove on the trial, a species of novation of the original agreement by another, in 1857, between the plaintiff, three of those who had executed it, (Mallory, Carryl and Coffin,) and two others, (Durant and Crane,) agreeing to assume the floating debt of the company, including the indorsements in question. This agreement is claimed to be shown by resolution of such parties, passed at various meetings of them as directors of such company, by a confession of judgment by the company, to secure the parties assuming such debt, and the payment of certain sums by the parties to each other to equalize their liabilities under such supposed agreement. The resolutions were passed at four meetings of the directors, held in April, (on the 16th,) in July, (on the 21st,) in August, (on the 1st,) and September, (on the 23d.) At the April meeting, a general understanding is recited in the minutes to have been had to raise money for the company on individual responsibility until coal was sold or other resources reached; each of five of the six persons supposed to be parties to such agreement, agreeing to assume $5,000 each, and make up their prorata share of the remainder to the amount of $50,000. The July resolution authorized the president to secure any person becoming liable as security, by any order, conveyance or instrument in writing; the August resolution authorized the officers to allow judgment to be entered by confession to secure advances to, or liabilities for the company; and the September resolution authorized the confession in favor of

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Crane, one of the parties to such agreement, for moneys advanced, amounting to $50,000.

It was claimed that such evidence, if admitted, proved an assumption by the six parties to such resolution, of the floating debt of the company, “ composed of the indorsements in question,” and other matters. Every note, for whose .payment the plaintiff seeks indemnity, was dated after the April resolution, two of them after the August meeting, and one after that in September, while the whole agreement is claimed to have been made on the 16th of April, before any such indorsements were made, so that such resolutions become in fact immaterial.

The defendant Wilbur, also offered in evidence, the record of the judgment so authorized to be confessed to Crane, in September, 1851, and a declaration of trust by Crane. This declaration recites, that the judgment was given to indemnify the plaintiff for a loan in August, 1851, of upwards of $3,600, and three of the defendants,in various sums; also two notes indorsed by the plaintiff and one of the defendants, for $5,000 each, dated in July and August, 1851,'(being two of the notes in controversy in this action;) also a note indorsed by one of the defendants for $500 in June previous; and that the proceeds of such judgment were to discharge such liabilities.

There were also other instruments offered in evidence, one being an agreement between the plaintiff and a bank, in relation to the securing by him, of the notes which form the subject of_controversy here, then held by such bank; and another, an assignment executed in pursuance of such agreement. There was also a written statement offered in evidence exhibiting the amount of money lent by the plaintiff and one of the defendants before August, 1851, amounting to $3,600, and also the giving by them of their notes, dated respectively, 24th, 25th, and 29th of August, the first" for $5,000, the second and third each for $2,500; also another showing the amount paid to equalize the debt in April, 1851. The bearing' of these papers on the case, I have been unable to perceive; and I therefore think they were

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properly excluded as well as the resolutions of the directors, the entry of the judgment, and declaration of trust before mentioned.

The liability of the defendant Wilbur, remained, under the agreement -of 1855, whatever notes composed part of any floating debt assumed in 1857; unless the responsibility of the plaintiff was discharged by the securities then taken. Any such assumption was but among the directors - themselves, and when any of them discharged their own ■liability, that of any of those who signed the agreement of 1855, immediately arose. The plaintiff neither released the company nor gave them time, nor otherwise did anything to increase the responsibility or impede the rights of the defendant. I cannot see why the plaintiff was not at liberty to take every step and amass every security he could to protect himself, provided the defendant’s rights were not affected.

Notes drawn by the plaintiff and Coffin jointly, are clearly within the agreement of 1855, which does not limit the mode of assuming the liability therein specified, except that it must be by making, accepting, or indorsing notes or bills of exchange. The defendants too are each responsible to the plaintiff for their share of what he was obliged to pay, without reference to the liability of Coffin. . They inay be entitled to be reimbursed by the latter, but that cannot alter the plaintiff’s rights under the covenant. Coffin may be liable to the plaintiff for one half of the note by joining in it, but the other defendant’s liability arises solely from the covenant.

I have been unable to find any error in the admission or rejection of evidence, or rules of law applied at the trial, and must dissent from the conclusions of my brethren, as I think the judgment should be affirmed with costs.

Judgment reversed and new trial granted, with costs to abide the event.

Cases cited

Day v. Roth 18 N. Y. 448 N.Y. p. 182