HUMPHREYS v. THIRD NAT. BANK OF CINCINNATI, OHIO, 75 F. 852

TAFT, Circuit Judge, after stating the facts as above, delivered the opinion of the court. The finding in favor of the plaintiff below was a finding which involved mixed questions of law and fact, and it was general in its form. It is well settled that in such a case nothing is open to review in this court except the rulings of the trial court in the progress of the trial, and that such rulings do not include the general finding of the circuit court, which performs the office and has the effect of a verdict of a jury; that is to say, it is conclusive as to the facts found.

The strictness with which this rule is enforced is clearly set forth in the opinion of Judge Burton speaking for this court in Insurance Co. v. Hamilton, 22 U. S. App. 386, 11 C. C. A. 42, and 63 Fed. 93, where all the decisions of the supreme court upon the subject are fully reviewed. This practice in the federal courts of appeal differs from that in the state courts of this circuit where it is open to counsel on writ of error by exception to a general finding to raise the question in the appellate court of the sufficiency of the evidence as a matter of law to sustain such finding.

We fear that this difference in the practice is not sufficiently well known to counsel, and we think that their attention should be especially directed to the very technical and severe rule of the federal appellate courts in this respect.

When a party in the circuit court waives a jury, and agrees to submit his case to the court, it must be done in writing; and if he wishes to raise any question of law upon the merits in the court above he should request special findings of fact by the court, framed like a special verdict of a jury, and then reserve his exceptions to those special findings, if he deems them not to be sustained by any evidence; and if he wishes to except to the conclusions of law drawn by the court from the tacts found he Should have them separately staled and excepted to.

In this way, and in this way only, is it possible for him to review completely the action of the court below upon the merits. A general finding in favor of the party is treated as a general verdict. A general verdict cannot be excepted to on the ground that there was no evidence to sustain it. Such a question must be raised by a request to the court to direct a verdict on the ground of the insufficiency of the evidence.

If the views which the court takes of the law are deemed to be prejudicial to a party, he is required to except to the charge at the time that it is delivered, indicating those parts of it to which he objects. Where a cause is submitted to the court, however, the court cannot, in the nature of things, charge itself, and therefore no opportunity is presented to the party objecting to the views which the court entertains of the law to take his exceptions, unless he procures special findings of fact to be made and special conclusions of law to be drawn therefrom.

We regret that in a number of cases brought before us the submission of a law case to a court upon stipulation has proved a trap to counsel in this court, and we say what we have with the hope that it may direct the attention of those who shall bring cases here in the future to the fact that great care must be taken in the preparation of a case for error proceedings, when no jury intervenes. The result in this case is that the general finding in favor of the plaintiff cannot be disturbed, because it involves a mixed question of law and fact, and is not reviewable here.

We can only examine the rulings of the court on the evidence as shown in the bill of exceptions. The first assignment of error is based on the. refusal of court to allow the defendant below, after he had stated that he was insolvent at the time he made the agreement, to state whai the amount of his debts was, and that of his liabilities. It was possibly relevant to show that Humphreys was insolvent to explain the position of the parties in making the agreement, but we think the extent of his insolvency was a circumstance altogether too remote to have any bearing on the issues in the case.

The second and third assignments of error were based on the refusal of the court to allow Humphreys to testify that he had procured the money with which to pay the credits on the compromise notes from his brother and his mother, and that he had'agreed to repay them for these advances. It is claimed that these facts were important, as tending to show that Humphreys had changed his position in making the payments. We do not think that the claim is tenable. It is entirely immaterial where or how he procured the money with which to make the payments.

The payment itself was a sufficient change of position to sustain an estoppel, if otherwise it could be sustained; and the fact that in making such payments he borrowed the money from some one else does not add to the force of the estoppel. The fourth, fifth, and sixth assignments of error raise the question whether the court made an error in permitting the plaintiff bank to tender a release of the mortgage or deed of trust of the land company in accordance with the agreement of compromise, and to tender the compromise notes back to Humphreys.

We think that there was no reversible error in the course which the court took, because we think that, whether it was competent or not to make the tenders which were made in open court, on the admitted facts of the case the plaintiff was entitled to recover without respect to these tenders, and the tenders were unnecessary to sustain the plaintiff’s cause of action. This view requires us to consider the merits of the case and the main defense pleaded by the defendant below to the suit. ■ That defense was treated by the court below as accord and satisfaction.

The counsel for the plaintiff in error (the defendant below) insist that it is not the defense of accord and satisfaction, but it is what they call the defense of waiver, election, and estoppel.

Their contention is that it was the duty of the bank, when the compromise notes fell due and were unpaid at that time, either to have recourse to the original indebtedness, and indicate to the defendant that it proposed to hold him upon that, or else to elect to proceed on the compromise notes; that it did elect to proceed on the compromise notes, thereby waiving its right to have recourse to the original indebtedness, and estopped itself from doing so thereafter, because the defendant was thereby induced to «make payments upon the compromise notes as the only indebtedness upon which he could he held liable.

In our opinion, tins defense, under the agreement of compromise, is untenable. By Hie terms of that agreement the hank contracted to receive in full of its claim 25 per cent, of the amount evidenced by two compromise notes for $.‘1,000 each, due respectively in 00 days and 12 months. The notes were secured by a deed of trust or mortgage of land in West Virginia, which authorized the Tliird National Bank to sell and convey 1 ho same upon the failure to pay said notes, or either of them, at maturity.

It was further agreed that the bank might hold the original notes, and, upon the failure of Humphreys to pay the two notes in full at their maturity, the amount which might have been paid on those notes by Humphreys, or by the sale of the real estate, should he applied as a credit upon the original indebtedness, and that the bank should have the rigid; to enforce the full payment of the balance due on tbe original debt against Humphreys. We think the meaning of this agreement is plain.

It is that, if Humphreys did not pay the compromise notes, the security which he had given to pay them, and the partial payments he might have made on than, should inure to the bank for its benefit in the collection of the original indebtedness, and should -be applied thereon. If both notes were unpaid, the bank had the right to enforce the security. It also had the right to have recourse to the original indebtedness. It necessarily followed, therefore, that the amount realized on the security could be applied on the original indebtedness.

The bank did not at once have recourse to the original indebtedness when the two compromise notes were unpaid at their maturity. It permitted Humphreys to go on, and make payments on those notes, and urged Mm to take them up. As long as the bank occupied this position, it did waive the right to have recourse to the original indebtedness; that is, it postponed the time beyond the maturity of the compromise notes within which Humphreys, by paying the same, could make accord and satisfaction; but it did nothing more.

It did not, by its leniency to Humphreys, forfeit the right, ultimately reserved to it in the contract, of returning to the original indebtedness should Humphreys not pay the compromise notes.

Possibly — though we do not decide this — the bank might be held, by reason of its acceptance of a credit upon the compromise notes after maturity, to an obligation to give Humphreys a reasonable time thereafter within which-to pay those notes and to complete satisfaction of the accord; but, instead of paying the compromise notes in full, Humphreys permitted 18 months after the last payment on the notes to go by, and then the bank sued him on the original indebtedness. There was a delay of nearly two years longer, and then the. bank brought a second suit on that indebtedness.

It was not until eight months after the second suit that Humphreys tendered payment of the compromise notes. This was certainly not payment of them within a reasonable time, even if the dealings between the parties were such as to require the bank to give to Humphreys a reasonable time for the payment of the compromise notes after the last credit on them, before recurring to the original indebtedness. Humphreys’ final tender was, therefore, without effect.

When the bank recurred to the original indebtedness, the deed of trust, by virtue of the agreement of compromise, the terms of which had not been changed except by an extension of the time within which Humphreys might ha^e completed the accord and satisfaction, became applicable as security to the original indebtedness. Hence there was no obligation of the bank to tender a release of the deed of trust as a condition of recovery oh the original notes. Nor was it necessary, as a condition of recovery on the original notes, that it should tender back the compromise notes.

The contract of compromise did not require it. Recourse to the original indebtedness by the bank was not a rescission of any existing contract, but it was merely the pursuit of an express remedy accorded to the bank on the face of the compromise agreement. It is true that, as soon as the compromise notes ceased to perform their office, Humphreys was entitled to have them from the bank, and that he might, in an equitable form of action, possibly compel their delivery to him.

But we are clearly of opinion that there is no analogy between the case at bar and those cases where a party’s right of action resting on rescission of a contract cannot be asserted until all that has been received under the contract is tendered back. We fully concur with the court below in the view that the defense here was only one of accord and satisfaction, and that there is not any ground whatever for the Haim of waiver, election, and estoppel. In Haggerty v. Simpson, 1 E. D.

Smith, 67, a creditor had judgment, and it was agreed that, if certain compromise notes secured by indorsement were paid as they became due, satisfaction of the judgment would be acknowledged; and that, if either of the notes should not be paid at maturity, the partial payments on the notes should be credited on the judgment, and the judgment should remain in full force for the balance. The notes were not paid as agreed, but the plaintiff extended the time* of payment. They were not paid at the time to which they were extended.

Plaintiffs then proceeded to enforce the judgment, and a few days after they took the proceedings the defendant offered to pay the balance due on the compromise notes and to stay the proceedings. The court refused relief to the defendant, saying: “I am not aware of any principle of law or equity upon which it can bo reasonably urged that the plaintiffs were not at full liberty to treat the privilege theretofore enjoyed by the defendant as at an end, and no precedent: or authority in a like case is furnished us for such a claim.

The agreement was a liberal one towards the defendant, and its strict enforcement is in no sense penal. He owed the whole debt. In law and in equity he still owes the whole debt, save the payments already made. * * * The defendant suffers no punishment. At most, he only fails to obtain an advantage for which he has paid nothing, which he was not bound to pay independent of the agreement. Here is no hardship nor oppression to be relieved against. * " * All he pays goes in extinguishment of his debt, and if he fails to receive the release which he anticipated it is his own fault. The agreement is still

an act of liberality, and not of justice; and if the opportunity to avail himself of the plaintiffs’ liberality is gone, they are, nevertheless, just, though they collect the whole balance due. The condition on which they agreed to be generous is broken, and justice is all he can ask. Besides, the ground on which courts of equity interfere to relieve against forfeitures is not that, if such interference be withheld, the anticipated profits of an agreement will not be realized. But it is that otherwise the party will suffer an unconscionable loss.

Courts interfere to prevent oppression, which it is against equity and good conscience to allow, and not to restrain what, independent of the broken contract, is just in itself.” In Simmons v. Clark, 50 Ill. 96, a judgment creditor and his debtor made an agreement by -which the debtor agreed to pay two compromise notes and the creditor agreed to release the judgment, which was for a much larger amount, on the payment of those notes. The court held that the agreement, properly construed, was that the payment of the notes was to operate as a satisfaction of the judgment.

The debtor made partial payments upon the notes, and the creditor, after the maturity of tlie notes, received further payments; but the court hold that the acceptance of those further payments did not affect his right to enforce the collection of Ms judgment. The supreme court of Illinois treated the question, as we do, as one of accord and satisfaction. It is well settled that an agreement by a creditor to receive something different from that which is owing in full settlement of his claim does not make a good plea in bar unless the agreement has been fully performed. Clifton v.

Litchfield, 106 Mass. 31; Kromer v. Heim, 75 N. Y. 574; Hawley v. Foote, 19 Wend. 516; Hall v. Flockton, 16 Q. B. 1039; Bayley v. Homan, 3 Bing. N. C. 920; Wray v. Milestone, 5 Mees. & W. 21; Ex parte Gilbey, 8 Ch. Div. 248; Clarke v. White, 12 Pet. 178; In re Hatton, 7 Ch. App. 726; Early v. Rogers, 16 How. 599; U. S. v. Clarke, Fed. Cas. No. 14,812. The last assignment of error which we deem it necessary to notice is the exception based on the introduction of (lie evidence of Mr.

Paxton with reference to the Brown county suit, brought by the Third National Bank against the Boyd Manufacturing Company, the maker of the note and the first indorsers.

Humphreys, the defendant, was not a party to this suit,'but the contention of his counsel was that, as between him and the bank, the judgment of the Brown county court was res judicata as to the amount of the debt; and also that the course of the bank in that case was an election to treat the notes of Humphreys as a full payment of 86,000 on the debt, though the notes were only partially paid.- It did not appear upon the face of the judgment what credits had been allowed, and it was with-reference to the allowance of the credits that the judgment was relied upon as res judicata.

Whether the judgment could have any such effect between the parties to this suit, or whether, as claimed, it ought to have a prima facie effect, we do not decide. Conceding either of these claims, it was certainly competent, where the facts did not appear upon the face of the judgment itself, to introduce oral evidence to show how the credits in the judgment came to be allowed, and what they were allowed for. Cromwell v. County of Sac., 94 U. S. 351; Russell v. Place, 94 U. S. 606; Packet Co. v. Sickles, 5 Wall. 580. The judgment of the circuit court is affirmed, with costs.