Smith v. National Bank of Sayre

Opinion by

Head, J.,

At the conclusion of the trial the learned judge below directed á verdict for the plaintiffs. Upon this verdict judgment was subsequently entered and the defendant appeals.

The plaintiffs sue to recover from the defendant the sum of about $600 which they had paid. It is not denied that at the time this payment was made to the bank the latter owned and held a note dated April 1, 1909, for the sum of $2,000. This note was payable on demand. Ac*374cording to its face the present plaintiffs were the makers of that note. It is not denied that the bank paid full consideration for it and that the whole amount of that consideration was received by the plaintiffs, the apparent makers of the note. It is further an undisputed fact that after the bank had carried that note from the day of its-date until February, 1910, the plaintiffs on the latter date made the payment, which they now seek to recover back, as a partial payment on account of that note and the accrued interest. At the same time they executed and delivered another note in the same form to the bank for the balance of about $1,400 and lifted the note first mentioned. On the face of the papers then the plaintiffs had voluntarily paid to the bank a portion of a debt for which they were liable and had given a new note for the balance of it. Thus far the facts furnish no foundation whatever for any recovery by the plaintiffs.,, Their entire case, as their own statement of claim clearly shows, rested on their ability to produce evidence to go behind the note as it was made and establish the fact that in reality they were not the makers of the note at all but only sureties or guarantors for one Ashton. Evidence for this purpose was offered and it tended in some degree at least to prove the following facts:

At the time of the transaction under investigation, Ashton had a contract for the construction of a building. The plaintiffs were his subcontractors. They had so far executed their contract that Ashton had become indebted to them in a sum in excess of $2,000. Thus far the bank was a stranger to the situation and in no way responsible to the plaintiffs for the debt that was due and owing to them. Ashton was unable to make the payment that was demanded and, as alleged, was unable on his own credit to secure any further money from the bank to which he was already indebted. The plaintiffs further offered proof that at a meeting between themselves, Ashton and the cashier of the bank, it was in fact agreed that the bank would lend $2,000 to Ashton and regard him as the *375primary debtor, no difference what form the obligation might take. They further testify that the bank, for its own purposes, suggested that the note be drawn so as to show the plaintiffs the makers of it, whereas in fact they were to be but sureties or guarantors whilst Ashton in turn, who was the real maker, was to appear but in the aspect of a surety or guarantor.

The evidence further tends to establish that as part of the same transaction Ashton signed an order on the parties who were erecting the building or made an assignment of the sum of $2,000 in their hands which would be next payable to him under his contract with them. This paper could not be produced at the trial, and again parol evidence was required to enable the jury to ascertain its contents. Whatever was the real nature of that instrument may or may not be of some importance in the ease. That it was given to the bank as collateral for something appears to be agreed. It is the contention of the plaintiffs that it was in fact collateral put up by the maker of a note, and that as a consequence the bank was legally obliged to so use it as to bring about the payment of the obligation by the real maker in relief of the indorsers or guarantors. It is equally clear that if that collateral was put up by the guarantor to strengthen his own guaranty, the plaintiffs would have no equity to insist that it should be used in relief of their primary obligation as the makers of the note.

In a word then, it is apparent that the controlling question in the case is the ascertainment of the real relation of the plaintiffs to the note upon which the payment was made, and that, under the circumstances most favorable to the plaintiffs, must be a question of fact depending on the oral evidence of the witnesses. Their contention is opposed by the paper itself which they executed. The fact that their position became no worse by making the note because they received the proceeds of it is to be duly considered. If it should be determined from all of the evidence that the transaction was in fact what it purported to be on the papers, it is difficult to see what stand*376ing the plaintiffs would have to recover from the bank at all. If, however, it can be made to appear by competent and sufficient evidence that, with the knowledge and assent of the bank, Ashton, notwithstanding the paper, was to be regarded as the maker of the note and that these plaintiffs were to be liable only as sureties, then it may well be that the law would require the bank to so use any collateral placed in its hands by Ashton, the real maker, as to relieve the indorsers from their secondary liability. If Ashton be found to be the real maker of the note, the paper which he signed would, in any event, be express authority for the bank to do what it was probably obliged under the law to do without the paper, viz., to charge up the note against the first deposit made by him of money from his building contract referred to in the assignment or order.

The fact that no formal demand had been made of the apparent makers of the note by the bank was a matter of no importance. The note was payable on demand and due at any time the bank chose to consider it due. A suit upon it would have been a good demand, and a charge of it up to the account of one liable for it would be likewise a good demand.

The plaintiffs will further have to confront the question whether in any event their payment was not strictly a voluntary one. There is but little evidence in the record as now made up on that subject. There is certainly nothing to show that it was made under duress actual or constructive. If it was made under such a mistake of fact as would be adequate in the law to prevent the usual consequences of a voluntary payment, there is nothing on this record to warrant the learned trial court in determining that as a question of law.

Whilst we are of opinion therefore that the learned judge fell into error in directing a verdict for the plaintiffs, it seems to us apparent also that the record was in no proper shape for the entry of a judgment for the defendant n. o. v. There was evidence which, if credible, might warrant a *377jury in determining that the real transaction between the parties was altogether different from that which appeared on the face of the papers as they were made. If that be found, then the relative rights and obligations of the parties would be dependent on the transaction as it was made to appear by the evidence.

Having concluded that the case must go back for another trial, we can see no benefit in considering in detail the numerous assignments of error, most of which would not be likely to arise when the case is tried along the lines pointed out in this opinion. The first, second, third, fourth and fifth assignments to the charge of the court directing a verdict for the plaintiffs are sustained.

The judgment is reversed and a venire facias de novo awarded.