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Downey v. Hicks.

informed of what has been done, he does not object thereto, he is presumed to ratify the acts, and is bound thereby.”

That, “ if Downey received the certificate, conditioned that he would receive the money in discharge of the debt, if the bank should pay it, then Downey was bound to use reasonable diligence to collect the money due on the certificate. Reasonable diligence consists in such exertions as a prudent man would use in his own case in the collection of the certificate; and if Downey failed to use such diligence to collect the money, the defendants are not liable, and the jury should find for the defendant."

In ordinary transactions, a check on a specie-paying bank, payable on demand, is payment. And, if the holder of the check present it to the bank, and direct the amount to be , laced to his credit as a deposit, and the bank should fail, the loss would be the depositor's. The deposit was at his option and for his benefit. But the transaction of Downey and Hicks was not of this character. Doctor Hicks, who acted for Downey, was not authorized to make the arrangement; "he acted, in his own language, “ without authority, as the friend of the plaintiff.” There was no money, in fact, deposited in the bank. It was indebted to J. T. Hicks and Arnold, who were in partnership, in a large sum; and, to pay Downey, Hicks drew a check for the amount, which was charged to his account in bank, and a certificate of deposit for the same amount was given to Downey. This arrangement was strongly recoinmended by the debtor, Hicks, to his brother, the friend of Downey. Eight per cent. was allowed on the certificate of deposit, which was payable in ten months.

A note of the debtor himself, or of a third party, is never considered as a payment of a precedent debt, unless there be a special agreement to that effect. Had Downey received the certificate of deposit himself, it could not have been considered a payment unless it was so agreed. The transaction, in fact, was only a dealing with credits. No money was drawn from the bank, or deposited in it. By the certificate, the credit of the bank was given in addition to the credit of the original debtor. Such a transaction, without a special agreement to receive the certificate in payment, would make it a collateral security.only. A receipt for the amount, executed at the time, would not affect the question. In this view, it was error in the court not to give the first and second instructions asked by the plaintiff, unless the charge given substantially embraced the points stated.

In the charge given it is nowhere stated that, to make the certificate of deposit a payment, there must be an agreement to that effect. The jury are informed that, where an agent exceeds

Downey v. Hicks.

his authority, or acts without authority, the principal is not bound, unless he ratify such acts. But the jury are not informed what amounts to a ratification. They are told, where acts are done, co which the principal is informed if he does not in a reasonable time object thereto, he is presumed to ratify the acts, and is bound t'iereby.

This, in all probability, misled the jury. Doctor Hicks, in receiving the certificate of deposit, did not pretend that he was authorized to receive it — much less that he was authorized to receive it as payment. The receipt of the certificate, under such circumstances, by Downey, without any express agreement on the subject, could not operate as payment. In this respect, therefore, unless such an agreement was shown and connected with this part of the charge, it was erroneous.

The jury were instructed that, if the certificate was received on condition the deposit, if paid by the bank, should be applid as payment, Downey was bound to use reasonable diligence. But the jury were not informed what that kind of diligence was, except," that it consisted in such exertions as a prudent man would use in his own case in the collection of the certificate.” Where a note is received as collateral security, and this certificate of deposit is only the obligation of the bank, and does not, in principle, in this respect, differ from a note, the holder is not bound to active diligence. If the note have an indorser, and it matures in his hands, he may be bound to take such steps as shall charge the indorser as a bank is bound, where a note is sent to it for collection. But he is not bound to bring suit. He is only chargeable with a negligence, which shall operate to the injury of the owner of the paper.

As, in less than three months from the date of the certificate of deposit by the showing of the defendant, the post-notes of the bank answered him no valuable purpose in satisfying the demands against him, there is no ground to allege that the de. fen tant suffered by any want of diligence in the plaintiff. The ba. k was insolvent, if not when the certificate was given, before it became due. The above instruction was erroneous.

We think the court erred, also, in refusing to give the third instruction, as prayed by the plaintiff

. If the evidence showed, after the maturity of the certificate, that Hicks & Arnold, or Hicks, admitted their liability to make it good, the jury should have been told by the court, that if they believed such an admission was made, it conduced to prove that the certificate was not taken in payment.

For the above reasons, the judgment of the Circuit Court is reversed, and the cause is remanded for further proceedings.

Mr. Justice DANIEL and Mr. Justice GRIER dissented.

Downey v. Hicks.

Mr. Justice DANIEL, (Mr. Justice GRIER concurring.)

It is my opinion, that the judgment of the Circuit Court, in this case, should be affirmed, upon the questions raised in the argument, 1st, upon the sufficiency of the finding by the jury, as being responsive to all the issues, or otherwise ; – 2dly, as to the admissibility in evidence of the release to Arnold, in the absence of the subscribing witness to that release, there is an entire concurrence amongst the Judges. But with the views announced as those of the court with respect to the authority and the’acts of Doctor Hicks, as the agent of Downey, and as to the consequences deducible from those acts, I am constrained to disagree.

And here I must remark, that, according to my apprehension of the evidence upon the record, as to the authority vested in Doctor Hicks, as agent, and his acts under that authority, and with respect to the conduct of Downey, as principal, in confirmation of those acts, — that evidence has not been accurately stated. It is said by the court, that Doctor Hicks did not act as the agent, but merely as the friend of Downey. There seems to be some difficulty, and even confusion, in this attempt to discriminate between these two characters. True it is, that the agent, however confided in, does not always prove the best friend of his principal; but it is equally true, that the principal would rarely select, as his agent, one whom he regarded in any other light than that of a friend. But the record, according to my apprehension of the evidence, discloses the most ample and explicit authority to Doctor Hicks, to settle the claims of Downey upon the firm of Hicks & Arnold, and exhibits instructions equally clear to Doctor Hicks, to transmit to Downey the amount which this agent, upon the settlement made by him, should ascertain to be owing from Hicks & Arnold to Downey. The record discloses these further facts: 1. The settlement made by Doctor Hicks with Hicks & Arnold; 2. The drawing of a check by these persons in favor of Doctor Hicks, the agent, upon the bank at Natchez, for the amount ascertained to be due to Downey; 3. The presentation of that check by the agent, at the bank at Natchez; 4. The proffer by the bank, of payment in specie of the amount of the check; and the express agreement of the agent with the bank, to commute that check and proffer of immediate payment in money for a certificate of deposit, or post-note, pay . able at a deferred period, bearing an interest of 8 per centum. So much, then, for the acts of the agent in virtue of the authority originally vested in him; and if there could arise a doubt as to their validity, that doubt could apply only to the transmutation of the demand for the money into a certificate of deposit, or deferred payment, bearing interest. But, supposing

Downey v. Hicks. there had been room for doubt in this respect, on the ground that the agent had transcended his power, that doubt must be entirely dispelled when the conduct of the principal is considered. Upon being informed, by the agent, of the measure he had taken, and upon having the certificate transmitted to him, the principal said, in reply, that although he would have preferred a payment down in money, yet as the agent had acted for himself as he had done for his principal, he could not find fault with the arrangement. He expressed no apprehensions as to the prudence or safety of the arrangement, but ratified it expressly; and in fact the proof is clear, that at the time, and for some months after, the bank was paying specie; and that its certificates, like the one in question, commanded a premium in the market. In this mode was the entire proceedings of the agent explicitly ratified.

If this apprehension of the testimony be correct, then it is difficult to conceive how the jury could have been misled by the instructions which were given them by the court. Indeed this court, so far as those instructions covered the relation of principal and agent, have not questioned the correctness of those instructions. But it is said, that the court erred in the opinion it expressed upon the subject of the diligence requisite in the application for payment of the certificate of deposit. Let it be conceded that this opinion of the court upon the subject of reasonable diligence was not the law; still it should not affect the decision in this case, because that opinion had no connection with the true character of the case, which depended upon a phase of the evidence to which that instruction had no application, and could not influence. If the agent of Downey was authorized to settle, and had settled with the debtors of Downey, and the latter had accepted from his debtors what he acknowledged was payment, at this point, the transaction closed; and unless the parties making payment could be affected by showing fraud or bad faith, the whole matter was terminated by the agreement between the parties. Downey had an indisputable right to receive payment in any medium he might choose, and it is not in the power of a court to control his first choice and give him the right to a second, or to visit, upon those who have applied their means to his satisfaction, and by so doing prevented them being available to themselves to any other possible purpose, the mischiefs resulting from his choice.

But it is said by the court, that Hicks & Arnold, subsequently to the failure of the bank, admitted their liability to Downey for this demand. Here, again, I conceive that the evidence in this cause has been greatly misapprehended, and that a correct understanding of the testimony will show that the

De Lano e: al. v. Moore et al.

admission which has been brought to bear upon this transaction, related to a posterior and wholly different liability of the same parties — to a transaction in which Hicks and Arnold had deposited a certificate of deposit of this bank as collateral security for a debt from Arnold, and that security turning out not to be available, they held themselves bound to satisfy the demand it was designed to secure. This subsequent transaction had no connection whatever with that in which the check in question was given, and on which payment in money was proffered, but for which the certificate of deposit was, by express agreement of the agent, ratified by his principal, taken in full satisfaction.


This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the Southern District of Mississippi, and was argued by counsel. On consideration whereof, it is now here ordered and adjudged, by this court, that the judgment of the said Circuit Court in this cause be, and the same is hereby, reversed with costs, and that this cause be, and the same is hereby, remanded to the said Circuit Court, with directions to award a venire facias-de novo.

Philip H. DE LANE, JOHN M. CHILES, Martha C. Chiles, John


Where an antenuptial contract was alleged to have been made, and the affidavits of

the parties claiming under it alleged that they never possessed or saw it; that they had made diligent inquiry for it, but were unable to learn its present existence or place of existence; that inquiry had been made of the guardian of one of the children, who said that he had never been in possession of it, and did not know where it was; that inquiry had been made at the recording offices in vain, and that the affiants believed it to be lost; secondary proof of its contents ought to have

been admitted. Whether recorded or not, it was binding upon the partics. If recorded within the

time prescribed by statute, or if reacknowledged and recorded afterwards, notice

would thereby have been given to all persons of its effect. If it was regularly recorded in one State, and the property upon which it acted was

removed to another State, the protection of the contract would follow the property

into the State into which it was removed. But where no suit was brought until eight or nine years after the death of the hus.

band, and then the one which was brought was dismissed for want of prosccution; another suit against the executors who had divided the property, comes too late,

Trus was an appeal from the District Court of the United States for the Middle District of Alabama. VOL. XIV.


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