
    Higby, Plaintiff and Respondent, v. The New York and Harlem Railroad Company, Defendants and Appellants.
    1. Receiving from the president and agent of a corporation, on applying to him, as such agent, for payment of a sum then due from the company; part cash and the balance in a note, at thirty days, made by a firm of which such president is a member: and the giving of a receipt that the whole sum so due has been received, will not operate as payment by the company of the sum for which the note was taken, unless it was expressly agreed at the time, that it should be received as actual payment.
    2. The fact that such president and agent was, at the time of giving the note, largely indebted to such company, and was subsequently credited by the company, in account, as having paid the whole sum due, is no answer to such an action; the company not having in fact been actually prejudiced thereby.
    3. Such a receipt will not exclude parol evidence, in an action against the company to recover the sum for which the note was given, (it not having been paid at maturity,) of what was said at the time of taking such note, to induce the creditor to take it.
    4. The declarations of the parties to the transaction, at the time of making it, are competent evidence, although one of them was the clerk of such president; he acting at the time for such president as his clerk and agent, the president not being personally present.
    (Before Bosworth, Hoffman and Pierrepont, J. J.)
    Heard, June 23d;
    decided, October 9th, 1858.
    
      This is an appeal by the defendants, from a judgment entered against them on the report of B. D. Silliman, Esq., as referee.
    The action is brought by William B. Higby, plaintiff, as assignee of Stewart & Baylies, against the New York and Harlem Railroad Company, defendants, to recover a balance alleged to be due from the latter, for work and labor done for them, by Stewart & Baylies, under a contract dated the 15th of July, 1853.
    By this contract, Stewart & Baylies agreed to perform certain labor for the defendants, in the construction of an additional track of defendants’ road, at an agreed price, the payments “to be made monthly on the estimate and certificate of the engineer, retaining fifteen per cent out of each certificate until the whole work is completed to the satisfaction and acceptance of the engineer, at which time the fifteen per cent thus retained shall be paid.”
    The plaintiff claimed that a balance of $3,500, with interest from the 30th of July, 1854, was due on estimate No. 10, which estimate was made June 20, 1854, and that Stewart & Baylies’ claim for such balance had been sold and assigned to him.
    That estimate was...........................$7,866 70
    Retain 15 per cent,.......................... 1,180 00
    Balance to be paid,..........................$6,686 70
    The defendants claimed that the $6,686.70 had been paid on the 27th of June, 1854, as follows: Cash $3,186.70, and the note of R. & Gr. L. Schuyler at thirty days for $8,500.00. On the trial, to prove the alleged payment, A. J. F. Vanderventer, the cashier and bookkeeper of R. & Gr. L. Schuyler, was called as a witness and testified, that Mr. Baylies, on the 27th of June, 1854, called at the office of Geo. L. Schuyler, the president of the company, “to get the money on the estimate due 20th June, 1854. The amount was $6,686.70. The amount was paid partly in cash. When Mr. Baylies came to collect the money on that estimate, there was not enough money on hand to make out the full amount. I proposed to Mr. Baylies to pay him the balance in note, as Mr. Robert Schuyler requested, which was $8,500. Mr. Baylies said he would do that, and took the note at thirty days from the 27th June, 1854. The amount paid him .in cash was $3,186.70.
    
      “Q. What was said at this time by Mr. Baylies on the subject of the payment of the estimate or talcing a note for part thereof? Question objected to by defendants’ counsel on the ground that Baylies’ declarations are not evidence, unless the president of the company was present. The objection was overruled, and the defendants’ counsel excepted.
    
      “A. Mr. Baylies said, if the company had not the money, that he would take a note for the balance with interest added.
    “ Q. Was anything said by Mr. Baylies or by you as to the kind of note or whose note? Same objection as above, overruled, defendants’ counsel excepted.
    
      “A. I proposed to give R. & Gr. L. Schuyler’s note to the order of Stewart & Baylies, and such note was taken by Mr. Baylies. This is the note (note produced by plaintiff’s counsel) it was filled up by me.
    “Plaintiff’s counsel then offered to surrender the note to the defendants and produced it for that purpose.”
    The note, when so produced, was indorsed thus:
    “Stewart & Baylies.”
    “Pay H. Meigs, Jr., Esq., cashier, or order.
    “W. R. Higby.”
    The defendants proved, that in the month of June, 1854, R. & Gr. L. Schuyler owed them over $200,000. That they charged to the defendants on the 27th of June, 1854, $6,686.70, as having been paid for them to Baylies & Stewart, and that such charge was contained in an account which the Messrs. Schuyler rendered to them on the 30th of June, 1854. That the defendants credited the whole charge to the Schuylers, and after such credit was made, the Schuylers remained indebted to them $278,000. Stewart & Baylies assigned their claim against the defendants to plaintiff, January 15, 1856.
    The referee reported that “he finds as matters of fact that the contract mentioned in the complaint was made between the defendants and Stewart & Baylies; that, on June 27, 1854, there was due to the latter from the defendants, on said contract the sum of $6,686.70; that, at the date last mentioned, Mr. Baylies for said Stewart &'Baylies) called for payment of the sum at the-office of Messrs. R. & Gr. L. Schuyler, one of the members of said firm was, at the same time, the President of the defendants; and that said firm, under an agreement with the defendants, kept the accounts and paid the bills for the work under said contract; that they were furnished with funds therefor by the defendants, who were largely in advance to them at the time over and above the amount of the bill, payment of which was so demanded by Stewart & Baylies.
    “The previous payments to Stewart & Baylies, under the contract, had been made by R. & Gr. L. Schuyler.
    “I find, that when Mr. Baylies called to collect the amount so due, Mr. Robert Schuyler (through his clerk, A. J. F. Vanderventer) represented to him that there was not money enough on hand to make out the full amount, and proposed to pay him three thousand one hundred and eighty-six dollars and seventy cents in cash, and to pay the balance three thousand five hundred in the note9of R. & Gr. L. Schuyler to the order of Stewart & Baylies; that Mr. Baylies then said if the company had not the money he would take the note for the balance, as proposed, with the interest added, which was, done accordingly, and the sum of three thousand one hundred and eighty-six dollars and seventy cents was at the same time paid to him in cash, and he thereupon gave a receipt in the words following:
    “ ‘Received, New York, June 27, 1854, from Greo. L. Schuyler, President N. Y. & Harlem R. R. Company, sixty-six hundred and eighty-six dollars and seventy cents for estimate No. 10, June 20, 1854, double track from Allen’s Bridge to White Plains.
    “‘$6,686.70.
    “ ‘(Signed,) Stewart & Baylies.’
    “The cash payments of three thousand one hundred and eighty-six dollars and seventy cents, and the note constituted the consideration for which the receipt was given.
    “ The note was not paid at maturity (and was produced on the trial by the plaintiff to be surrendered).
    
      “ The assignment of the claim on which this action is brought, was made by Stewart & Baylies to the plaintiff.”
    The report then states the opinion of the referee, in relation to the law upon these facts; cites various authorities and concludes thus:
    “ For these reasons, my conclusion of law is, that the plaintiff is entitled to recover from the defendants the sum of thirty-five hundred dollars, with interest thereon from July 30, 1854, which said sum and interest at the date of this, my report, amount to forty-two hundred and forty-five dollars and five cents, for which last mentioned sum, I direct judgment to be entered for the plaintiff and for the costs of this action.
    “ Dated, August 11, 1857.”
    To this report the defendants’ counsel excepted.
    “ First. That the referee decides wrongfully that Stewart and Baylies did not accept the note of R. & G-. L. Schuyler for $3,500 and $3,186.70 in cash, in full payment and satisfaction of the amount due to them upon estimate No. 10, mentioned in his report.
    “Second. That the referee erred in deciding that there was no evidence that Stewart and Baylies had negotiated the note of R. & Gr. L. Schuyler for $3,500.
    “Third. That the referee erred in deciding that the plaintiff is entitled to recover from the defendants the sum of $3,500 with interest from the 30th day of July, 1854.”
    From the judgment entered on the report, the defendants appealed to the GreneraFTerm.
    
      G. W. Sandford, for the appellants.
    I. The note was received by Stewart and Baylies as cash in payment of the estimate, and a receipt given for the whole amount to the defendants.
    Stewart and Baylies show by their receipt, that they intended to discharge the defendants, and look to the note as payment.
    IL The note was not negotiated to Stewart and Baylies by the defendants. They elected to take the note, and discharge the defendants.
    III. The referee, therefore, decided erroneously, that the note was not received in payment.
    
      TV. The note was indorsed by Stewart and Baylies to the plaintiff was protested while in his possession, and was produced by him on the trial. In the absence of other testimony, it is evidence of its absolute negotiation to plaintiff.
    V. The case of Tobey v. Barber, upon which the referee bases his decision, is not in point. The present suit is an attempt by the indorsee of the note (Higby) to collect a note which he took upon the credit of the drawers and indorsers from parties not upon it.
    YI. The receipt is evidence, that the note was taken in payment of the estimate,' and is not rebutted. The negotiation of the note, is conclusive evidence that they received it in payment.
    VII. The referee improperly admitted the testimony of Baylies’ declarations, and of Vanderventer’s declarations.
    VIH. The report of the referee should be set aside.
    
      James S. Sandford & O. N. Emerson, for respondent.
    I. The receipt of June 27th, 1854, was a technical receipt, containing not a word implying a new contract, between the party making it and the party to whom it was given; and it may be explained by parol. Had it contained words that literally implied a contract, “to discharge,” &c., still it is open to explanation and qualification, and may be set aside upon the same ground that a Court of Equity would set aside a contract for “fraud,” “surprise,” “mistake,” or “failure of consideration.” (1 Gfreenl. Ev., § 805; Fuller v. Crittenden, 9 Conn., 406; Tobey v. Barber, 5 Johns., 72; Johnson v. Weed, 9 Johns., 310.)
    II. To sustain the defense of payment by the acceptance of a noté of a third person, it must be conclusively shown:
    1. That it was the voluntary act of the creditor, made with a full knowledge of the effect of the acceptance, and not forced upon him by necessity, when nothing else could be obtained.
    2. That it was expressly agreed to be received by the creditor, as a payment, and full satisfaction. (Noel v. Murray, 3 Kern., 168, and cases cited; Johnson v. Weed, 9 Johns., 310; Owenson v. Morse, 7 Term R., 66; Puckford v. Maxwell, 6 id., 52; Graves v. Friend, 5 Sandf., 568; Whitbeck v. Van Ness, 11 Johns., 409; Waydell v. Luer, 3 Denio, 410; Arnold v. Camp, 12 Johns., 409.) The apparent conflict of the authorities in Maine and Massachusetts, with the whole current of decisions in this state, is rather apparent than real. It is rather a question of presumption, or burden of proof. (Butt v. Dean, 2 Met., 76.) In New York it has been held that the burden of proof (in the absence of evidence of an express contract, superadded to the technical “receipt of payment,”) is on the defendant, to show that the note was taken as payment, or accord and satisfaction. ( Cases cited, supra!)
    
    III. If this had been the note of the defendants instead of the note of a third party, it still would only have been prima facie evidence of payment, and liable to be rebutted by showing its dishonor; unless expressly received as payment, or the same was outstanding. (Rolt v. Watson, 4 Bing., 273; 2 Greenl. Ev., § 520; Butler v. Haight, 8 Wend., 535; Byles on Bills, in notes, p. 304.)
    IV. There is nothing in the form of the receipt, or in the language used by Baylies in his transaction with the clerk, or in the subsequent conduct of the holders of the note, from which an absolute discharge of the debtor corporation can be implied, much less any evidence of an “ express agreement ” to that effect.
    1. Payment under the contract, was to be made monthly, and at the solicitation of the clerk, Baylies extends the time of a portion of one payment, thirty days.
    2. It seems evidently received as collateral, and merely an extension of the time of the monthly payment.
    3. It was not, in fact, a full payment under that estimate No. 10, for 85 per cent only was provided for.
    4. It was taken to accommodate the treasury as a favor to the debtor to allow him to provide funds ; and is rather to be viewed as an adjustment and accounting upon the estimate than an accord or satisfaction.
    5. There is no evidence, that the note was ever negotiated. A blank indorsement, with possession on the part of indorser who is also payee, is only evidence of an indorsement for collection. (Story on Bills, passim!)
    
    V. The defendants cannot defeat the claim of the plaintiff by crediting the note to the account of the Messrs. Schuyler. It is not even pretended that plaintiff consented to such arrangement or even knew of it. In every aspect it was “res inter alios actos.” (Ohasey. Smith, 5 Vermont, 556.) And in this view, the evidence given as to the state of accounts between Messrs. Schuyler and the Company, was entirely immaterial, if not incompetent. Any conclusion derived from the state of these mutual accounts, presupposes an agreement expressly made on the part of Baylies to receive the jiote as an absolute payment, and there is no evidence to authorize such a presupposition. (Evidence of Vanderventer, passim.)
    
    VI. The second exception of defendants’ counsel is not warranted by a fair construction of the referee’s report. He did not decide, “ that there was no evidence that Stewart and Baylies had negotiated the note,” but that “the evidence was incomplete, and, so far as offered, was equally consistent with an indorsement for collection.” Upon a review of the evidence, this Court can draw no different conclusion. It is further submitted by plaintiff, that even if such indorsement had been made for the purpose of realizing the money upon the note (by a discount or otherwise), the fact is sufficient and controlling, that the purpose failed, and the note is offered for cancellation or for the use of defendants. (Kean v. Dupesne, 3 Serg. and R., 233.)
    VH. It is -submitted that upon the facts and the law of the case, the report of the referee should be sustained and confirmed.
   By the Court.

Pierrepont, J.

—Stewart & Baylies having done their work, the amount claimed in estimate Ho. 10 was due. It has not been paid in money, nor has it been released by any formal- instrument. . The defendants have received the consideration upon which this action is founded, and for it they have paid nothing. The fact that Schuyler charged the company with this note, makes no difference in the present case; he was their debtor to a large amount at the time, and they parted with no new consideration in consequence of such charge.

To make the receipt of Schuylers’ note operate as payment pro tanto, it was necessary for the defendants to show an agreement to take it as actual payment.

Merely taking it and giving a receipt in full is not alone sufficient to establish such agreement. (Tobey v. Barker, 5 J. R., 70; Johnson v. Weed, 9 J. R., 310; Noel v. Murray, 3 Kern., 168.) The facts, therefore, are correctly found by the referee, and he has drawn therefrom a just conclusion of law.

The receipt given did not preclude an inquiry into the agreement actually made, in respect to the terms on which the note was taken; and it follows that what Yanderventer said at the time on that point, was competent evidence. (Johnson v. Weed, supra.)

The terms of the agreement, if one was made, are to be determined upon a just consideration of what the parties to the transaction said at that time. There was no error in the admission of the evidence.

Judgment must be affirmed, with costs.

Judgment affirmed. 
      
       See Purchase v. Mattison, ante p. 310.
     