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U.S. Supreme Court

Bank of the United States v. Dunn, 31 U.S. 6 Pet. 51 51 (1832)

Bank of the United States v. Dunn

31 U.S. (6 Pet.) 51


It is a well settled principle that no man who is a party to a negotiable instrument shall be permitted by his own testimony to invalidate it. Having given it the sanction of his name and thereby added to the value of the instrument by giving it currency, he shall not be permitted to testify that the note was given for a gambling consideration, which would destroy its validity.

The case of Renner v. Bank of Columbia, 9 Wheat. 587, cited and affirmed.

Parol evidence maybe admitted to explain a written agreement where there is a latent ambiguity, or a want of consideration may be shown in a simple contract, or to defeat the plaintiff's action, the defendant may prove that the note was assigned to the plaintiff in trust for the payee.

It is competent to prove by parol that the guarantor signed his name in blank on the back of a promissory note and authorized another to write a sufficient guarantee over it.

In Pennsylvania there is no court of chancery, and it is known that the courts in that state admit parol proof to affect written contracts to a greater extent than is sanctioned in the states where a chancery jurisdiction is exercised.

The liability of parties to a bill of exchange or promissory note has been fixed on certain principles which are essential to the credit and circulation of such paper. These principles originated in the convenience of commercial transactions, and cannot now be departed from.

An agreement by the president and cashier of the Bank of the United States that the endorser of a promissory note shall not be liable on his endorsement does not bind the bank. It is not the duty of the cashier and president to make such contracts, nor have they the power to bind the bank except in the discharge of their ordinary duties. All discounts are made under the authority of the directors, and it is for them to fix any conditions which may be proper in loaning money.

In the circuit court, the Bank of the United States instituted an action of assumpsit against John O. Dunn, as endorser of a promissory note drawn by John Scott, in the following words:

"$1,000 -- Sixty days after date I promise to pay John O. Dunn or order one thousand dollars for value received, negotiable and payable at the United States Branch Bank in Washington."


"Endorsed J. O. Dunn -- Overton Carr"

The signatures of the parties to the note were admitted, and notice of a demand of payment of the same at the bank

Page 31 U. S. 52

and of the nonpayment were proved to have been regularly made and given.

The defendant offered as a witness Overton Carr, the endorser of said note, who testified that before he endorsed the same, he had a conversation with John Scott, the maker, and was informed by him, that certain bank stock had been pledged, or was to be pledged, by Roger C. Weightman, as security for the ultimate payment of the said note, and that there would be no risk in endorsing it. That the witness then went into the room of the cashier of the plaintiffs' office of discount and deposit at Washington, and found there the cashier and Mr. Thomas Swann, the president of the said office, to whom he communicated the conversation with Mr. Scott and from whom he understood upon his inquiry that the names of two endorsers, residing in Washington, were required upon the said note as a matter of form, and that he would incur no responsibility (or no risk) by endorsing the said note. He did not recollect the conversation in terms, but such was the impression he received from it. That he went immediately to the defendant and persuaded him to endorse the note by representing to him that he would incur no responsibility or no risk in endorsing it, as the payment was secured by a pledge of stock, and to whom he repeated the conversation with Mr. Scott and the president and cashier. That no other person was present at the conversation, the terms of which he does not recollect, but that the impression he received from his conversation with the president and cashier and with Scott, and which impression he conveyed to the defendant, was that the endorsers of the said note would not be looked to for payment of it until the security pledged had been first resorted to, but that the said endorsers would be liable, in case of any deficiency of the said security, to supply the same. That neither this witness nor Mr. Dunn was at the time able to pay such a sum, and that both endorsed the note as volunteers, and without any consideration, but under the belief that they incurred no responsibility (or no risk) and were only to put their names upon the instrument for form's sake. To which evidence the plaintiffs by their counsel objected, but the court permitted it to go to the jury.

The plaintiffs then offered as a witness, Richard Smith, the

Page 31 U. S. 53

cashier of their office of discount and deposit aforesaid, who was summoned on the part of the defendant and who testified that he has no recollection of the conversation mentioned by the said Carr, but that no stock was ever pledged for the payment of the said note. That Roger C. Weightman had give to the said office a guarantee that he would pay the said note in case the parties to the same should fail to do so, after all legal and proper measures had been taken to procure the payment of it by them. That he is certain that nothing was said either by him or by Mr. Thomas Swann in his presence as to the endorsers' not being held liable for the payment of the said note. That it was contrary to the practice of the said office to take endorsers on notes who were not to be held liable. That the president and himself conjointly nor either of them were authorized to give any such exemption to endorsers or to determine who should be taken as endorsers on notes. That this was the province of the board of directors alone unless when they appointed a committee of the board for that purpose. That the guarantee aforesaid was given by the said Weightman after the note had been made and endorsed.

Mr. Smith, upon cross-examination, having stated that he was a stockholder in the bank, the court rejected his testimony, and instructed the jury that it was not evidence.

The plaintiffs' counsel then offered to swear Mr. Swann, who had been summoned as a witness on the part of the defendant, but the defendant's counsel objected to his competency for the same reason, which objection the court sustained, to which the said plaintiffs by their counsel excepted, and also to the admission of the testimony of Mr. Carr and the rejection of Mr. Smith's testimony.

The jury found a verdict for the defendant, and judgment in his favor was entered thereon.

The plaintiffs prosecuted this writ of error.

Page 31 U. S. 55

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