Ellis and others v. Bervellier.

although Ellis & Vallette executed a release to Justice from IN BANK. all liability to them for costs incurred or to be incurred by the suit.

The error assigned is, that the Court of Common Pleas erred in rejecting the testimony of the witness.

Charles Fox, for Plaintiffs' in Error.

I maintain that Justice stood perfectly indifferent in this case. Having indorsed the draft to Ellis, he would, it is said, be liable to Ellis, on his indorsement, as a warrantor in case the suit went against him; but, if Bervellier lost the suit, he would have had the right to recover against Justice, so that the latter stood perfectly indifferent as to the result of the suit. He could neither gain nor lose by the event. The record, in this case, could not be used for or against Justice in a suit by Bervellier v. Justice; and there can be no doubt but what Bervellier could maintain a suit against Justice and against all parties who converted the draft, if he could maintain it against Ellis & Vallette-so that, according to my apprehension, Justice stood perfectly indifferent, as to interest, and this, I take it, is the test as to the competency of a witness. The case of Canal Bank v. Bank of Albany, 1 Hill's Rep. 289, cited by Messrs. Brough & Zinn, establishes the principle for which I contend.

As to the liability of Justice, as an indorser merely, the Court perceive Justice is not even liable at all in that capacity, because the bill was paid. He could only be made liable indirectly, by a protest and notice. The only interest, therefore, which he could possibly have in the matter, is on account of the implied warranty of title.

In 9 Pick. Rep. 182, it is held, a party is not incompetent on the ground of his liability as a warrantor, if he would be liable to others, to the same extent, notwithstanding the result of the suit.

Dec. Term 1846.

IN BANK. Dec. Term,

1846.

Ellis and others v. Bervellier.

In 5 Pick. Rep. 447, in an action against an attorney for money collected, the debtor was admitted as a witness to prove he had paid the debt to defendant, because he was liable to the plaintiff whether he succeeded in that suit or not.

In the case of Larbalestier v. Clark, 1 B. Adol. 899; 20 Com. Law. Rep. 899, a witness, who had sold the wine to the defendant, was excluded on the supposed ground of his liability as warrantor, but afterwards a new trial was granted because of the error of the Court in excluding the witness. The argument was, that, if the plaintiff recovered, the witness would be liable to pay not only the value of the goods, but, also, the cost of the action; but the Court said, he would not be liable for costs unless he had been guilty of fraud, and they say such has been the law since Jones v. Brooke, 4 Taunton Rep. 460; cited, also, in Greenleaf's Ev. note to 444.

Now, the Court will perceive the reason why a warrantor, like a surety, is rendered incompetent, is because he is liable, not only to the value of the article sold, but, also, to the costs of the suit. Hence, if this liability is removed by a release for the costs, he stands perfectly indifferent; for he is as much liable to the real owner as he is to the person to whom he has warranted, and where the interest is balanced, the witness is competent. Greenleaf's Ev. 445, sec. 399.

Where the witness was liable for costs, but said he was indemnified for the costs and considered he had ample security, he was held competent; so where he has funds to indemnify him. Greenleaf's Ev. sec. 420; 7 Cow. Rep. 358.

Now, in this case, all right to recover any costs for which Justice could be liable in this case, was released by Ellis & Vallette, so that he was as much liable to the plaintiff as to the defendants, and the witness stood as liable to one party as to the other, and was, therefore, disinterested.

In Cutter v. Rathbun, 3 Hill, 577, a person had bought goods, representing himself to be the agent for Bennet, and made a note in Bennet's name without authority. In an action of replevin for the goods, Bennet was held a competent witness

Ellis and others v. Bervellier.

Dec. Term, 1846.

to show he gave no authority, because the record could not be IN BANK. used by him as a bar, or used in a suit against the witness on the note.

So, in 4 Taunton, 18, a witness was held competent to prove that he received the property from the plaintiff, as security for money due, and that, according to an agreement with the plaintiff, he sold the property to the defendant, because the verdict could not be used for or against him. This is a case directly in point. 4 Barn. & Ald. 410.

So, in this case, Justice was a mere agent for the plaintiff. He sold the bill for the plaintiff, and as his agent, without any compensation, or expectation of any; and the plaintiff confirmed the sale by receiving the money, or part of it. This was the fact offered to be proved.

The Court also erred in supposing Justice was liable as indorser. There was not, and could not be any liability as indorser, because the draft was paid. The liability as indorser, originally, was contingent, depending on the fact whether the draft was paid. In this case the draft was paid, and this was the ground of the action, that Ellis & Vallette had obtained the money for the draft, which was the conversion complained of. He could not be liable as indorser, because to be liable in that capacity the draft must have been protested, and he notified of the fact.

But even admitting that Justice was liable on the draft, and this had been an action on the draft by the holder, and there had been affirmative proof that he had been made liable by notice, still, I maintain, the mere fact of his being liable as indorser would not have prevented him from being a competent witness. This doctrine is now well settled, both in England and America. This doctrine is reviewed and settled, in The Farmers' and Mechanics' Bank of Michigan v. Griffith, 5 Hill, 476. The Court say: "Perhaps it might be doubted whether the witness ought to be excluded, even if his liability 'as indorser had been shown, for, by fixing the debt upon the 'defendant, he does not discharge himself. If he is liable, the

Ellis and others v. Bervellier.

IN BANK. plaintiff may prosecute him, as well as the defendant, and

Dec. Term, 1846.

prefer to take execution against him; or the maker may be 'insolvent, so that his interest would be contingent." 5 Wendell, 181; 19 Com. Law Rep. 256; 3 Hill, 577.

Again: Is it certain that an indorser of a draft does, in fact, warrant all the previous indorsements not to be forgeries? I know it is held that the indorser does, in fact, guaranty the bill shall be paid by the acceptor. But is there any guaranty operating after the bill is, in fact, paid? I know it is in general laid down, in the elementary books, that the indorser guaranties the genuineness of the previous indorsements; and yet, I believe, this question is not so well settled as is sometimes supposed. On the contrary, in the East India Co. v. Tritton, 3 Barn. & Cress. 280; 10 Com. Law Rep. 82, the Court held that an indorser does not warrant the genuineness of the previous indorsements; and, in this case, they decided there could be no recovery, by the acceptor, against the party who had indorsed the bills and received the money, as they only acted as agents of their principal, although their name was, in fact, on the back of the bill. The bills had been paid in that, as in the present case. If this decision is a correct exposition of the law, there could be no recovery at all against Justice, by Ellis & Vallette, and of course he was a competent witness.

Brough & Zinn, for Defendant in Error.

In the language of the bill of exceptions, the witness was offered to prove that he sold the bill in question to the de'fendant Ellis, for the plaintiff, and at his request, and as his agent." We submit that he was clearly incompetent for this purpose; for that,

First: The indorsement of the witness being unconditional -the fact of agency no where appearing upon the paperand there being no ambiguity, parol testimony is inadmissible to vary the legal import of the instrument. Stackpole v. Arnold, 11 Mass. Rep. 27; Shankland v. Corporation of

Ellis and others v. Bervellier.

Washington, 5 Peters' Rep. 390, 394; Stone v. Vance et al., IN BANK. 6 Ohio Rep. 246.

Second: That a party to a negotiable instrument, though he may be called to prove facts subsequent to the indorsement, and which destroys the title of the holder, is not competent to prove any circumstance preceding or concurrent with the indorsement, in order to work such a result. Stone v. Vance et al., 6 Ohio Rep. 246.

Third: That the witness was incompetent from interest. He is an unconditional indorser of a bill of exchange; and, therefore, a new drawer a warrantor of title in himself, and impliedly so of the genuineness of all preceding indorsements. Chitty on Bills, 636; Story on same, 247, sec. 225.

It is scarcely necessary to multiply authorities to a point so well settled, and to shake which the counsel for plaintiff has cited but a single case, The East India Co. v. Tritton, 3 Barn. & Cress. 280; 10 E. C. L. Rep. 82. And this case, the Court will observe, is widely different from the one at bar. It was an action of assumpsit, by the acceptors, to recover of the party to whom money was paid, upon the ground that the indorsement to the payee was not regularly made. That indorsement had been made by virtue of a power of attorney, which was subse quently adjudged insufficient for the purpose. In deciding a case where money was paid under a mistake of law, a doubt is expressed as to the liability of preceding indorsers, and nothing more. This will scarcely suffice to unsettle the general principle, which the plaintiffs' counsel admits runs through all the elementary books.

It is claimed, however, that if such liability exists, it is terminated by the payment of the bill, and that such payment, in this case, has been made. It is true that Rogers & Co. paid the bill, and to that extent, as between Justice and Ellis & Vallette, the undertaking of the former is performed. But his warranty of title, and of the genuineness of Bervellier's indorsement, is not thereby released. The counsel for plaintiff appears to overlook the fact, that the bill has been paid on a forged in

Dec. Term,

1846.