■^ ■ MANUfACrUREO BY E. C. MCCULLOUGH & Co . MANILA. THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LEADING AND SELECT AMERICAN CASES IN THE LAW OF BILLS OF EXCHANGE, PROMISSORY NOTES, AND CHECKS ARRANGED ACCORDING TO SUBJECTS. " WITH NOTES AND REFERENCES. BY ISAAC F. REDFIELD AND MELVILLE M. BIGELOW. BOSTON: LITTLE, BROWN, AND COMPANY. 1871. Entered according to Act of Congress in the year 1871, by ISAAC F. KEDFIELD AND MELVILLE M. BIGELOW, In the office of the Librarian of Congress at Washington. IS7I /si I CAMBRIDGE : PRESS OF JOHN ^VTLSON AND SON. c? PREFACE. In preparing this volume, the editors have first endeav- ored to present the history of commercial paper throughout its usual stages; and then to illustrate such collateral branches of the general subject as are of practical impor- tance. The cases as far as the subject, " Discharging Indorser or Drawer," p. 544, are arranged by topics in the order of progression which bills and notes usually follow in the course of business. At this point the cases upon collateral subjects begin, and continue through the book. The editors have aimed to present the largest possible number of valuable cases, and to illustrate as wide a range of topics as space would permit. Upon subjects involved in conflict, decisions presenting the diiferent rulings have been selected as principal cases ; and to these have been added notes, citing the authorities which have followed or rejected the doctrine of the respective cases, and stating the general current of adjudication upon the subject. The preparation of the notes has been mainly the work of Mr. Bigelow ; and the editors have sought to present their annotations within the narrowest compass compatible with a full illustration of the subject of the work. They, like the principal cases, are selected matter ; embracing mainly the decisions which were deemed to be V35840 IV PEEPACE. of practical importance to the profcs.sion. It is hoped that the selection may prove satisfactory ; though it would be too much to exjject that no errors of judgment have been made. The opinions in many important cases have been pre- sented in full in the notes, in the belief that they would prove more acceptable than any annotations that could have been made in their place. In the citation of text-books in the notes, the original paging is uniformly referred to, unless otherwise indicated. The following additional references and citations should be made at the places designated : In the middle of p. 63, at the end of the paragraph in which Wilkinson v. Johnson is first cited, add, " But see Goddard v. Mer- chants' Bank, 4 Comst. 147." At the end of the same page, add reference to " Forgery," p. 643. At the end of p. 476, add reference to Commercial Bank of Albany v. Clark, p. 536, and note. Boston, March 25, 1871. ANALYTICAL INDEX. FORM AND REQUISITES. I. Thompson v. Sloan. (23 Wendell, 71. Supreme Court of New York, January, 1840.) PAGE Payable in Canada vioney. — A written promise, executed in New York, to pay in that State a certain sum in Canada money is not a negotiable note ; but if negotiable, parol evidence is admissible to show the meaning of the term " Canada money " 1 Note discussing the general question, when a note or bill may be said to be pay- able in money, and when not ; and citing many cases 6 II. WoRDEN V. Dodge. (•1 Denio, 159. Supreme Court of New York, January, 1847.) * Payable out of a particular fund. — An instrument by which a party promises to pay a certain sura at a stated time out of the net proceeds of ore to be raised and sold from a certain ore-bed, is not a promissory note, it being payable upon a contingency 7 Note referring to many analogous cases 8 III. Cook v. Satterlee. (6 Cowen, 108. Supreme Court of New York, August. 1826.) Additional directionx. — An order directed to the defendants to paj' to the plaintiff, or bearer, ninety days after date, §400 ; "and take up their note given to William and Henry B. Cook for that amount," is not a bill of exciiange, though accepted by the defendants 8 Note upon the same subject, referring to numerous cases 9 VI ANALYTICAL INDEX. IV. Kelley V. Hemmingway. (18 Illinois, 60-i. Supreme Court, June, 1852.) PAGE Certainty as to time of payment. — A writing promising to pay a certain sum when K. shall arrive at age, is not a promissory note, being payable upon a contin- gency which may never happen ; and it does not alter the case that K. actually lived to attain his majority 11 Note and digest of the cases 12 MAKER'S LIABILITY. I. Wallace v. McConnell. (13 Peters, 136. Supreme Court of the United States, January, 1839.) Note payable at pai-ticuJar place. No demand necessary upon maker. — In an action against the maker of a note payable at a designated place, no demand need be averred and proved ; if the maker was ready and offered, at the time and place, to pay, it is a matter of defence to be pleaded and proved by him . . 15 Note of reference 25 DRAWER'S LIABILITY. 25 ACCEPTANCE. I. Allen v. Suydam. (20 Wendell, 321. Court of Errors of New York, December, 1838.) Agent's duty to present for acceptance. — An agent who receives a bill of exchange, payable after date, for collection, which has not been accepted, is bound to present the same for acceptance without \mreasonable delay, or he will be liable to his principal for the damages which the latter may sustain by the agent's negligence. In case the debt is lost by the agent's negligence, the measure of damages is prima facie the amount of the bill ; but evidence of facts may be produced tending to reduce the recovery to a nominal sum In what cases presentment for acceptance is necessary 26 Note discussing the question and the cases 39 ANALYTICAL INDEX. Vll II. Spear v. Pratt. (2 Hill, 582. Supreme Court ot New York, May, 1842.) PAGE What constitutes acceptance. — If the drawee of a bill of exchange write his name across the face of tlie bill, this binds him as an acceptor ; and this too, though the statute requires aacei)tance to be in writing:, and signed by the acceptor or his agent 41 Note upon the same question and citing numerous cases 42 III. COOLIDGE V. PaYSON. (2 Wheaton, 66. Supreme Court of the United States, February, 1817.) Promise to accept. — A letter written within a reasonable time, before or after the date of a bill of exchange, describing it in terms not to be mistaken, and promising to accept it, is, if shown to the person who afterwards takes the bill on the credit of the letter, a virtual acceptance, binding the person who makes the promise ; and this too though it was drawn in favor of a person who took it for a pre-existing- debt 43 Note examining the cases upon this sulyect 49 TV. BoYCE V. Edwards. (4 Peters, 111. Supreme Court of the United States, January, 1830.) Promise to accept. Bill must be pointed out. — In order to bind as an acceptor one who has promised to accept a non-existing bill, the particular bill must be pointed out and described in terms not to be mistaken. Distinction between an action upon a bill as an accepted bill, and one founded on a breach of promise to accept 52 Note referring to many other cases 56 V. HORTSMAN V. HeNSHAW, (11 Howard, 177. Supreme Court of the United States, December, 1850.) What acceptance admits. — Tiio drawee of a bill of exchange cannot recover the amount thereof paid to a houa Jide holder, if the drawer put the bill into cir- culation bearing a forged indorsement of the payee's name. Acceptance admits the drawer's signature to be genuine, an<l tlie drawer, in such case, warrants the signature of tlie payee 57 Meacher v. Fort presented in full in note referring to many other cases ... 59 Vlll ANALYTICAL INDEX. VI. SCHIMMELPENNICH V. BaYARD. (1 Peters, 264. Supreme Court of the United States, January, 1828.) PAGE Acceptance supra protest. — If the drawees of a bill of exchange, refusing to lienor the bill, were bound to accept the same, tliey will not be permitted to change the relation in which they stand to the parties on the bill l)y a wrongful act. They can acquire no rights as the holders of bills paid supra protest, if they were bound to honor them in their character of drawees. When bound to accept. — A drawee, who has been in the habit of receiving con- signments from the drawer with whom he has an open account therefor, is not bound to accept bills drawn on him against a particular shipment, which bills the drawer in his letter of advice says may be charged in account, if the account actually show that the drawer had no funds in the hands of the drawee 64 YII. KoNiG V. Bayard. (1 Peters, 250. Supreme Court of the United States, January, 1828.) Acceptance supra protest by stranger. — It is no objection that a stranger has inter- vened as acceptor for the honor of an indorser ; or that his acceptance has been made at the request and under the guaranty of the drawee. But in such case the indorser may avail himself of all defences which lie could have made had the drawee accepted for his honor and then sued upon such acceptance 85 Note referring to other cases 87 VIII. The United States v. The Bank of the Metropolis. (15 Peters, 377. Supreme Court of the United States, January, 1841.) Acceptance by the United States. — The liability of the United States, on an acceptance by an authorized officer given to a bona fide holder is the same as that of a private individual. Conditional acceptance. — A bill drawn by a government contractor was " ac- cepted on condition that the drawer's contracts be complied with," and dis- counted by the defendants in due course of trade. Held, that forfeitures previously incurred, and advances previously made, were not covered by the condition 88 IX. Newhall V. Clark. (3 Cushing, 376. Supreme Court of Massachusetts, March, 1849.) Conditional acceptance. — An acceptance of the following order is conditional : " Please pay, &c., out of the amount to be advanced to me, when the houses I am now erecting on your land . . . are so far completed as to ANALYTICAL INDEX. IX liave the plastering done, according to our contract," &c. And if tlie work was never done by the contractor (tlie drawer), under the contract referred to, the event never occurred upon which the defendant by his acceptance bouufl liimself to pay. And it is iraniaturial tiiat this contract was subse- quently cancelled by the drawer and acceptor, if there was no fraudulent interference by the acceptor to prevent the completion of the work con- tracted for 104 Note referring to many cases 108 INDORSEMENT. I. Brown v. The Butchers' and Drovers' Bank. (6 Hill, 443. Supreme Court of New York, May, 1844.) Fonn of indorsement. — The following figures in pencil, on a bill of exchange, viz., " 1, 2, 8," in connection with evidence tending to show that the person who placed them there meant thereby to bind himself as an indorser, constitute a valid indorsement ; though it also appeared that he could write .... 110 Extended note discussing the cases 110 II. Camden v. McKoy. (3 Scammon, 437. Supreme Court of Illinois, December, 1842.) Indorsement hy one not a party. — If one not a party to a promissory note place his name on the back thereof, the payee not having indorsed it, he is to be regarded as a guarantor, and not as maker or surety ; and the holder has no authority to write over the name any thing which wouM render such person liable as an original promisor, in the absence of proof of intention .... 112 Note referring to other cases 124 III. Union Bank of Weymouth and Braintree v. Willis. (8 Metcalf, 504. Supreme Court of Massachusetts, October, 1844.) Indorsement by one not a jxirty. — If a person not a party to a note place Ins name upon the back of it at the time it was made, he is liable as maker ; and when the note is in the hands of a bona fide holder, the presumption in the absence of proof is that the name was placed upon it at the time it was executed . 124 Note referring to other cases 131 ANALYTICAL INDEX. ly. Hall v. Newcomb. (7 Hill, 41C). Court of Errors of New York, December, 1844.) PAGE Indorsement by one not a party. — . If one wlio is not a party to a promissory note place his name upon the back thereof, the payee not having indorsed it, lie is to be regarded as an indorser, and not as maker or guarantor 131 Note citing other cases 139 V. Sylvester v. Downer. (20 Vermont, 355. Supreme Court, March, 1848.) Indorsement by one not a party. — One who is not a .party to a promissory note, by placing his name upon the same, the payee not having indorsed it, ren- ders himself prima facie liable as maker ; but evidence may be received to show the real intention of the signer 139 Note referring to other cases 143 VI. Greenough V. Smead. (3 Ohio State, 415. December, 1854.) Indorsement by one not a party. — If one not a party to a note put his name on the back thereof, the note being subsequently indorsed by the payee below his signature, but not being intended for the payee, such party is to be regarded as an indorser ; but if the note were intended for the payee, the liability of such third person is that of ma^er or guarantor 143 Note and reference to other cases 150 VII. Rey V. Simpson. (22 Howard, 841. Supreme Court of the United States, December, 1859.) Indorsement by one not a party. — The defendants, W. M. and J. M., not parties to the note in suit, placed their firm name on the back of the note, at its inception, and before it had been passed or offered to the plaintiff, at the request of ^he other defendant, the maker, knowing that the note had not been indorsed by the payee, and with a view to give credit to the same, for the benefit of the maker : held, that W. M. and J. M. were original promisors with the maker ; evidence being admissible to show their intention . . . 150 Note presenting a summary of the conflicting cases 155,156 ANALYTICAL INDEX. XI VTTT. Leavitt v. Putnam. (3 Comstock, 494. Court of Appeals of New York, July, I80O.) I'AQB Indorsement after muturily. — Negotiable paper does not lose its negotiable char- acter by being dislionored ; hot even tiiough indorsed to a particular person without other words 156 Note 158 IX. Estabrook V. Smith. (6 Gray, 570. Supreme Court of Massachusetts, September, I80G.) Indorsement of Jinn note by partner in his oivn name. — An indorsement by one partner, in his individual name, to his copartner, the paper being payable to the firm or order, will not enable the indorsee to sue thereon in his own name 158 Note and reference to other cases 160 X. Stevens v. Beals. (10 Cushing, 291. Supreme Court of Massachusetts, October, 1852.) Indorsement by ivife irith consent of Iter husband. — A wife, with the consent of her husband, may indorse in her own name a promissory note made payable to her during coverture, and pass a good title to the indorsee 161 Note and reference to other cases 164 HOLDER FOR VALUE. L Bay v. Coddington. (5 Johnson's Ch. 54. Court of Chancery of New York, 1821.) Note delivered as security for contimjent liability. — A, the agent of B, received negotiable notes to be delivered to B, but delivered them to C, as security for responsibilities incurred by C in indorsing accommodation paper for him- self, A. C had not then become chargeable on his said indorsements. Held, that C was not a bona Jide holder for value, though lie did not know that the delivery of the notes to himself by A was fraudulent, but believed A to be tiie real owner of them 166 Xll ANALYTICAL INDEX. 11. Stalker v. McDonald. (6 Hill, 93. Court, of Errors of New York, December, 1843.) PAGE Paper takm as security for antecedent debt. — One who takes a note merely as col- lateral security for an antecedent debt, without aQvancing any thing upon it, or rehnquishing any security, is not a holder in the due course of trade . 169 III. Swift v. Tyson. (16 Peters, 1. Supreme Court of the United States, January-, 1842.) Paper taken in payment of pre-existing debt. — The bona fide holder of a bill of exchange, who has taken it before .maturity, in payment of a pre-existing debt, without notice of any equities between the drawer and acceptor thereof, will not be affected by such equities. Authority of the decisions of State courts. — The 34tli section of the Judiciary Act (1 St. at Large, 92), is limited to the laws of a State strictly local ; that is, to the positive statutes of the State and their interpretation by the local tribunals, and the rights and titles to things having a permanent locality, such as real estate. It does not apply to questions of general commercial law, such as bills of exchange and promissory notes 186 Opinion of Court in Atkinson v. Brooks, 26 Vt. 574, given in note .... 195 Note from American Law Register 202 Extended discussion of the more recent cases upon this and other analogous questions 208 TV. Pettee v. Prout. (3 Gray, 502. Supreme Court of Massachusetts, September, 1855.) Presumption of title. — In an action upon a note payable to A, or bearer, the production of the note by the plaintiff, B, is sufficient evidence of his title, though he is the general agent of A, who, the answer alleges, is the owner of the note. Equities. — One to whom a note payable to A, or bearer, is transferred before maturity,* takes it subject to no equities or rights of set-off which the maker might have against A 217 Reference to other cases 219 V. Way v. Richardson. (3 Gray, 412. Supreme Court of Massachusetts, March, 1855.) Presumption of title. — It is not competent for the defendant to deny that the plaintiff is the owner and holder of a note upon which he brings suit as such. ANALYTICAL INDEX. XIU PAGB without traversing the signature, or the indorsement, or the delivery of tiie note ; and in sucli case evidence is inadmissible to prove that the plaintiflF never owned the note, and never employed counsel to prosecute the action, and that he had no interest in the suit 220 VI. 'Davis v. McCready. (17 N. Y. [3 Smith], 230. Court of Appeals of New York, March, 1858.) Defence of breach of executory agreement. — It is no ground of defence to an action against the acceptor of a bill that the holder was informed that it was accepted in consideration of an executory contract, if he had no notice of its breach 222 Note 225 VII. Brewster v. McCardel. (8 Wendell, 478. Supreme Court of New York, January, 1832.) Postdated paper. — An indorsee for value of a postdated note may recover there- on, though he took it before the date at which it purported to be executed . 226 VIII. Bayley v. Taber. (5 Massachusetts, 286. Supreme Court, May, 1809.) Note void by statute. — Commercial paper declared ^oid by statute is void even in the hands of a bona fde holder for value ; and, therefore, where prom- issory notes were antedated to avoid a statutory prohibition, held, that in an action against tlie maker he could prove the actual date at which they were made and issued, even against an innocent indorsee 226 IX. Paton V. COIT. (5 Michigan [1 Cooley], 605. Supreme Court, October, 1858.) Illegal consideration. Burden of proof. — Whenever the consideration of negotiable paper between the original parties has been illegal, especially if it is as to them in violation of a positive prohibition of statute, proof of such illegality throws upon the indorsee the burden of proving that he took it bona fxle, and gave value for it 230 Note 234 XIV ANALYTICAL INDEX. X. Fowler v. Brantly. (14 Peters, 318. Supreme Court of the United States, January, 1840.) PAGE What sufficient to put the holder upon inquiri/. — A note made payable to the cashier of a bank, and drawn within a peculiar form to be within the usages of the bank, was sent to an agent to procure a discount at the bank. The note was rejected, and marked in pencil, with a mark employed by the bank, to indicate that it had been offered and refused. The agent then sold the note and applied the proceeds to his own use. Held, that the note on its face was sufficient to put the holder upon inquiry, and that he could not recover though he had no knowledge of the fraud 235 Note 239 XI. Goodman v. Simonds. (20 Howard, 343. Supreme Court of the United States, December, 1857.) Bona ^fide holder's claim only to he repelled by bad faith. — In an action by the holder of a bill of exchange placed by the drawer in the hands of the holder as collateral security for his debt, the following instruction was given to the jury : " That if such facts and circumstances were known to the plaintiff as caused him to suspect, or that would have caused one of ordinary prudence to suspect, that the drawer had no interest in the bill, and no authority to use the same for his own benefit, and by ordinary diligence he could have ascertained these facts," the plaintiff" could not recover. Held, that the instruction was erroneous, and that nothing short of bad faith in the holder would overcome his title ; and the burden of proof is upon him who assails the title to show such bad faith 239 Note collecting the early and recent cases upon this point 257 XII. Fisher v. Leland. (4 Gushing, 456. Supreme Court of Massachusetts, October, 1849.) Indorsee affected with notice. — One who has taken commercial paper by indorse- ment before it is due, with notice of fraud in its inception, is subject to the same defences, in an action against the maker, that could be raised against the payee to whom the fraud had attached. And the maker, against such indorsee, can give in evidence the fraudulent acts of the payee, and the admissions and confessions of the latter, while he was the holder of the note 258 XIII. Hascall v. Whitmore. (19 Maine, 102. Supreme Court, April, 1841.) Indorsee with notice claiming under holder tvithoiit. — One who purchases commer- cial paper for value, with notice of defect m its inception, from a bona fide ANALYTICAL INDEX. XV PAGE holder without notice, stands upon the rights of the latter, and may recover the amount of the paper 201 Note 202 XIV. Grant v. Ellicott. (7 Wenddl, 227. Supreme Court of New York, May, 1831.) Accommodation paper. ITohhr with notice. — In an action by an indorsee of a bill of exchange against the acceptor, it is no defence that the bill was accepted for the accommodation of the drawer, and that the indorsee had knowledge of the fact when he took the bill 263 Note 264 XV. Small v. Smith. (1 Denio, 583. Supreme Court of New York, October, 1845.) Fraudulent diversion. — One who purchases accommodation paper with knowl- edge that the terms and conditions on which the accommodation was given have been violated is not a bona Jide holder as agaiqst the party who lent his name for accommodation 264 XVI. Mohawk Bank v. Corey. (1 Hill, 513. Supreme Court of New York, July, 1841.) Accommodation paper. Diversion. — Where it does not appear that the accom- modation party had any interest in the manner in which his paper was to be applied, it is immaterial that it was not used according to agreement . . 267 Note 268 XVII. Stoddard v. Kimball. (6 Gushing, 4G9. Supreme Court of Massachusetts, October, 1850.) Misapplication. — In an action bj' the indorsee against the indorser who had in- dorsed the paper for the maker's accommodation, the indorser cannot raise the defence that the note was misajiplied by the maker, without showing that the plaintiff had knowledge of the misapplication. Amount of recovery. — If accommodation paper has been taken to secure a pre- existing debt of a less amount than that expressed on the face of the paper, the holder can recover against tlie accommodation indorser only the amount of the debt, if he (the holder) is not liable to any third person for any sur- plus 269 Note citing many other cases 270 XVI ANALYTICAL INDEX. XVIII. Baxter v. Little. The Same v. Harris. (6 Metcalf, 7. Supreme Court of Massachusetts, March, 1843.) PAGE Papei- overdue. Set-off. — When tlie first indorsee of a promissory note negotiates it after it is dishonored, and the second indorsee brings an action thereon against the maker or first indorser, the defendant cannot set off any claim wliicli lie lias against the first indorsee, except such as existed at tlie time of the transfer of the note to the plaintiff, although he had no notice of such transfer when he acquired his claim against the first indorsee 271 Note embracing opinion of Court in Britton v. Bishop, 11 Vt. 70, and reference to other cases 275 XIX. Knights v. Putnam. (3 Pickering, 184. Supreme Court of Massachusetts, September, 1825.) Usury. When maker can set up this defence. — Commercial paper which is vahd in its inception cannot be tainted with usury afterwards, except as between the immediate parties ; and therefore the maker of a note, vahd when exe- cuted, cannot raise the defence against an indorsee that the latter purchased the note of the payee at a usurious rate of interest 277 XX. Holmes v. Williams. (10 Paige, 326. Court of Chancery of New York, 1843.) Usury. — Where the holder and apparent owner of negotiable securities sells them at a discount, to a bona Jide purchaser, who has no knowledge of the purpose for which such securities were made, the holder representing such securities to belong to himself, and to be business paper, the transaction is not usurious, as between the vendor and purchaser, though the representations of the vendor were false, the paper having been made to be sold at usurious discount in the market 280 XXI. Cameron v. Chappell. (24 Wendell, 94. Supreme Court of New York, May, 1840.) Usury. — Acceptance of a bill in consideration that a shipment of wheat shall be made to the drawee by the drawer does not make the bill accommo- dation paper between the parties ; and such bill is not tainted with usury by the fact that the drawer afterwards procured it to be discounted at a rate of interest beyond that allowed by law 287 » ANALYTICAL INDEX. XVii PRESENTMENT AND DEMAND FOR PAY^SIEXT. I. MussoN V. Lake. (4 Howard, 262. Supreme Court of the United States, December, 1845.) PAGE Necessity of presentment. — The notary should present tlie paper when he de- mands pa3ment ; and tliis rule has not been changed by statute in Louisiana. Even if it had been there changed, as the defendant's contract was to Ije performed in Mississippi where the law merchant prevails in this particular, presentment could not be dispensed with. Protest, how far evidence. — A protest which only states that payment was de- manded, is not evidence to prove presentment 290 Note referring to other cases ^ . . . . 296 II. Renner V. Bank of Columbia. (9 Wheaton, 581. Supreme Court of the United States, February, 1824.) On what day jwesentment should be made. Usar/e of banks. — A custom of all the banks of the District of Columbia to demand payment and give notice to indorsers of commercial paper on the fourth day after the day of payment named, which has been uniformly followed for upwards of twenty years, and which was known to and understood by the defendant when he indorsed the paper, is to be considered as entering into the contract, so that demand and notice on the fourth day are sufficient to charge the indorser 297 Extensive note and references to otlier cases 306 III. Dana v. Sawyer. (22 Maine, 244. Supreme Court, April, 1843.) At what time of day presentment should be made. — When a bill or note is not pay- able at a place where there are established business hours, presentment for payment may be made at any reasonable hour of the day ; but presentment to the maker at near midnight, after he had retired to rest, is not a rea- sonable hour, and will not charge an indorser on notice, unless there was a waiver of any objection as to the time, or unless it appear that payment would not have been made upon a demand at a reasonable hour .... 310 Note and references to other cases 311 IV. Taylor v. Snyder. (3 Denio, 145. Supreme Court of New York, May, 1846.) Where to be made. — The place of date of a promissory note payable generally, is only prima facie the place of payment ; and though a note be made and dated b XVlll ANALYTICAL INDEX. in New York, if the maker then resided in Florida, and tlie holder knew this at the time the note was executed, and the maker has not chantiod his residence since tliat time, demand must be made of the maker in Florida in order to charge an indorser 313 V. Chicopee Bank v. Philadelphia Bank. (8 Wallace, CiL Supreme Court of the United States, December, LS69.) Paj/ahk at bank. Negligence of collecting hank. — Though commercial paper be physically in the bank at which it is payable, yet if the bank is ignorant of ' this by reason of the feet that the letter in whicli it was sent slipped through a crack in the cashier's desk and disappeared before it had been seen by him, then there is no presentment, even though the acceptor had no funds there, and di!l not mean to pay the bill. And such a disappearance carries* a presumption with it of negligence in the collecting bank, and throws the burden of proof upon the bank to repel this presumption. In the absence of such proof, the bank is responsible to the holder for the amount of the bill or note • . 322 Note and extensive discussion of the cases 326 PAYMENT. I. Wheeler v. Guild. (20 Pickering, 545. Supreme Court of Massachusetts, October, 1838.) Payment to one not authorized to receive it, and before maturity. — The plaintiff, holder of a note indorsed in blank, delivered it to B. and G., attorneys in partner- ship, to be held by them as collateral security for the payment of certain debts due from the planitiff to B. and G., and otlier persons ; and the note was placed among the private papers of G., by whom the business was trans- acted. Some time after payment Of the debts so secured, but before the maturity of the note, the maker paid to B. the amount due on the note, exclu- sive of interest, and took therefor a receipt signed by B. alone, setting forth that it was in full payment of the note, and that the note was to be deliv- ered up to the maker. Held, that as the note was not in fact delivered up to the maker, and as tlic right of B. and G. to transfer or collect the note had ceased upon payment of the debts for which it was pledged, and as the note was paid before maturity, the payment to B. did not operate as a discharge of the note ; and that the plaintiff might, notwithstanding such payment, recover the amount from the maker 331 Note discussing the cases and giving extracts from other opinions 388 ANALYTICAL INDEX. xix II. SwoPE V. Ross. (40 Pennsylvania State, 186. Supreme Court, 1861.) PAGE Paper not accepted discounted hy drawee before maturiti/. — Tlie drawee of a bill not accepted by him may discoimt the same before maturity and thus be- come holder of the paper. Such proceeding is not a payment, and the drawee can recover against the drawer at the maturity of the paper, upon taking the usual proceedings to charge him 340 Note • 343 III. Eastman v. Plumer. (32 New Hampshire, 238. Supreme Court, December, 1855.) Wrongful payment by principal debtor. Effect as to surety. — The defendant signed a negotiable note as surety for the principal maker. The note was indorsed in blank, and the indorsee called upon the principal debtor for payment. The latter brought the money, paid the amount, and received the note. In point of fact, this money paid by the principal had been furnished b}' a tliird jierson, who sent it to purchase the paper through the principal as liis agent, though this fact was unknown to the holder. This third person, the owner of the money, brought an action on the note against the defendant, the suret}^ Held, that tlie payment by the principal discharged the paper as to the surety, and that tlie action could not be maintained 343 Extended note embracing the opinion of the Court in Jones v. Broadhurst, 9 Com. B 173, and reference to other cases 345 PROCEEDINGS ON NON-PAYMENT. I. Burke v. McKay. (2 Howard, 06. Supreme Court of the United States, January, 1844.) Protest of promissory note. — It is not necessary in Mississippi, or by the general law merchant, that a promissory note should be protested by a notary, or that he should give notice of dishonor 355 Note 357 XX ANALYTICAL INDEX. II. Mills v. Bank of the United States. (11 Wheaton, 431. Supreme Court of the United States, February, 1826.) PAGE Form of notice. — Notice to an indorser is not defective by reason of not stating the name of the holder, or by reason of a misdescription of the date of the note in question, provided there was no other note payable at the same place and made and indorsed by the same parties. Nor is it fatal to the notice that it did not contain a formal allegation that payment was demanded at the bank when the note became due. It is sufficient that it states the fact of the non- payment of the note, and that the holder looks to the indorser for indem- nity. "Whether the demand was duly and regularly made is matter of evi- dence to be established on the trial 358 Note giving extracts from opinions and reference to other cases 362 III. Gilbert v. Dennis. (3 Metcalf, 495. Supreme Court of Massachusetts, March, 1842.) Form of notice. — Merf notice of non-payment, which does not express or im- ply demand and dishonor, is not such notice as will render the indorser Uable 863 Note giving opinion of the Court in Furze v. Sharwood, 2 Q. B. 888, and digesting other cases 871 lY. Munn v. Baldwin. (6 Massachusetts, 316. Supreme Court, March, 1810.) Manner of sending notice. Post-office. — Putting a letter into the post-office di- rected to the indorser of a bill of exchange, and containing notice of protest for non-payment, is sufficient, though it does not appear that the letter was ever received 376 Note 377 Y. Bowling v. Harrison. (6 Howard, 248. Supreme Court of the United States, December, 1847.) Notice to be given personally, when. — If the parties reside in the same citj^ or town the indorser is entitled to personal notice of the dishonor of the bill or note, either verbally or in writing, or a written notice must be left at his dwelling- house or place of business. Notice by tlie mail in such case is not sufficient. And a memorandum on a note, in these words : " Third indorser, J. P. Harrison, lives at Vicksburg," is not an agreement to receive notice through the post-office 378 Note discussing other cases and giving extracts from the opinions 381 ANALYTICAL INDEX. XXI VI. Chanoine V. Fowler. (3 Wendell, 173. Supreme Court of New York, August, 1829.) PAGE Bi/ whom notice should be r/h-iti. — Notice of dishonor cannot be given by a stran- ger ; it should be given by the holder, or by one who is a party to it, and who would, on the same being returned to him, have a right of action on it . 383 Extensive note giving references to otlier cases, and extracts from the opin- ions 384 VII. Simpson v. Tdrney. (5 Humphreys, 419. Supreme Court of Tennessee, December, 1844.) Intermediate parties. — Notice given by the holder of a promissory note to the second indorser too late to fix his responsibility, will not avail an intermedi- ate indorser, though it would have been in due time if given by him , . 386 Note 388 VIII. Bank op Alexandria v. Swann. (9 Peters, 33. Supreme Court of the United States, January, 1835.) When the notice shoidd be sent. — It is sufficient to charge an indorser that notice of the default of the maker of a note be put into the post-office early enough to be sent by the mail of the succeeding day. The holder is not required to give notice the day upon which the demand was made 388 Note containing opinion of the Court in Lawson v. Farmers' Bank, 1 Ohio State, 206 390 IX. Walker v. Stetson. (14 Ohio State, 89. Supreme Court, December, 1862.) Domicile. Where notice should be sent. — The fact that a drawer or indorser goes from the place of liis actual residence to another place to dispose of prop- erty, which occupies him for several weeks of time, does not make such town his place of business within the meaning of the rule upon the subject of notice, in the absence of all explanation as to the mode of doing the business, or of his relations to the post-office there 397 Note 404 X. Bank of Columbia v. Lawrence. (1 Peters, 578. Supreme Court of the United States, January, 1828.) Where notice shoidd be sent. — Actual notice to an indorser is not required ; due diligence only is necessary. Therefore, in the case of an indorser who XXn ANALYTICAL INDEX. PAGE lived in the country, two or tliree miles flistant from the place (G.) at which the note in question was payable, where he usually received his mail ; held, that notice left in the post-office at G., directed to him at that place, was sufficient to charge him 404 Note and reference to other cases 409 XI. Bank of Utica v. Bender. (21 Wendell, 643. Supreme Court of New York, October, 18;)9.) Diligence. Law and fact. — When the facts are all found, what is reasonable diligence is a question of law. Reasonable diligence, not excessive, required. — The holder of a bill inquired of the drawer, upon discounting the same, where the defendant, an accommoda- tion indorser of the drawer, resided. Notice was sent according to the answer given. Held, that this was reasonable diligence, nothing having occurred to lead the holder to distrust the information received, though the indorser actually lived in a different place from that named, and received his mail in a third 410 Note 413 EXCUSES OF PRESENTMENT AND NOTICE. I. Windham Bank v. Norton. (22 Connecticut, 213. Supreme Court, July, 1852.) Unavoidable accident. — Presentment of commercial paper must be made on the day on which it becomes due, unless it is out of the power of the holder, l^y the use of reasonable diligence, to present it. Failure of such presentment is excused by any inevitable or unavoidable accident, not attributable to the fault of the holder, provided he make presentment as soon thereafter as he is able 414 Note distinguishing Schofield v. Bayard, 3 Wend. 488 422 II. Juniata Bank v. Hale. (16 Sergeant & Rawle, 157. Supreme Court of Pennsylvania, June, 1827.) Death of maker. Indorser appointed administrator. — The death of the maker of a note before it becomes due, and the taking out letters of administration upon his estate by the indorsers and others, before the note arrived at maturity, do not dispense with the necessity of notice to the indorsers of non-paj'ment by the maker 423 Note examining Caunt v. Thompson, 7 Com. B. 400, and referring to other cases 428 ANALYTICAL INDEX. XXllI III. HoPKiRK V. Page. (2 Broekonbroiigh, 20. Circuit Court of the United States for Virginia, ISIay, 1822.) PAG E Drawimj willwut finids. — If tlie drawer have no funds in the hands of the drawee at the time of drawin<,^ and no right to draw, and has the strongest reasons to heiieve that his draft will not he i)aid, lie is not entitled to notice of dis- honor. Effect of war. — The effect of war is to suspend all commercial intercourse be- tween the countries engaged in it ; and therefore presentment and notice will he excused during the continuance of hostilities. But these steps should be taken within a reasonable time after the cessation of the war . . 430 Extended note and discussion of the cases, and containing opinion in House v. Adams, 48 Penn. State, 2G1 441-443 IV, McGruder V. Bank of Washington. (9 Wheaton, 598. Supreme Court of the United States, February, 1824.) Removal into another jurisdiction. — The removal of the maker of a note, before its maturity, into another jurisdiction from that in which the note was executed, will excuse the holder from making a personal presentment and demand 447 Note discussing analogous question 449 V. Lehman v. Jones. (1 Watts & Sergeant, 126. Supreme Court of Pennsylvania, May, 1841.) AhscondiiKj of the paijor. — If tlie maker of a promissory note absconds before the maturity of the note, this will excuse the holder from making present- ment at his last place of residence 450 Note and reference to otlier cases, and containing extract from oinnion in Pierce v. Cate, 12 Cush. I'JO 451 VI. Williams v. Bank op the United States. (2 Peters, 96. Supreme Court of the United States, January, 1829.) Absence of payor. — In an action against an indorser, it appeared tliat the notary called at his dwelling-house to serve notice of dishonor, and found the house shut up, the doors locked, and the family out of town (as he learned on in- quiry of the next neiglibor), upon a visit of unknown duration, lldd, that he had used due diligence, and that the indorser was liabld 452 Note and reference to cases 458 XXIV ANALYTICAL INDEX. VII. Barton v. Baker. (1 Sergeant & Rawle, 334. Supreme Court of Pennsylvania, April, 1815.) PAGK Insolvency. Assignment to indorser. — Tlioiigh the maker of a note was insolvent when the note was made and indorsed, and also when it fell due, and this I fact was known to the indorser, this will not excuse due notice of non-pay- ment. But if the indorser has received from the maker a general assign- ment of his estate and effects, notice is not necessary 4-58 Note and reference to other cases 461 Opinion in Watkins v. Crouch, 5 Leigh, 522 , , 463 VIII. Berkshire Bank v. Jones. (6 Massachusetts, 524. Supreme Court, September, 1810.)" Waiver of notice. Payable at bank. — Waiving notice by an indorser does not excuse the indorsee from making demand of payment ; but if the paper was payable at a designated place, and the indorsee was ready to receive pay- ment at the time and place, no further demand is necessary 468 Note and reference to other cases, and containing opinion in Union Bank v. Hyde, 6 Wheaton, 572 469 Also opinion in Coddington v. Davis, 1 Comst. 186 471 IX. SiGERsoN V. Mathews. (20 Howard, 496. Supreme Court of the United States, December, 18.57.) Promise to pay, ivhen a zvaiver. — If, before the maturity of a note, the indorser dispensed with a presentation of the note and demand of payment, and prom- ised to pay it or to provide for its payment at maturity, he cannot set up as a defence to a suit upon the note, that it was not presented for payment, and demand made therefor, when it was due, and that no notice of its dishonor was given. Or if, after the maturity of the note, the indorser promised the holder or his agent to pay the same, having at the time of making said promise knowledge of the fact that the note had not been presented for pay- ment, and that no demand had been made therefor, or notice of non-payment given, the indorser cannot now set up as a defence to the note, a want of such demand and notice 473 Note referring to numerous other cases 475 ANALYTICAL INDEX. XXV ACTIONS. I. Pearce v. Austin. (4 Wharton, 489. Supreme Court of Pennsylvania, March, 1839.) PAGE Who mmj sue. — One to whom negotiable paper is indorsed as agent for another, may bring an action upon the same in his own name ; unless such agent's possession is shown to be mala ^cle 477 Note and digest of tiie cases 478 II. Staples v. The Franklin Bank. (1 Metcalf, 43. Supreme Court of Massachusetts, March, 1840.) When action may be brought. — The maker of a promissory note is bound to pay it upon demand made at any seasonable hour of the last day of grace, and may be sued on that day, if he fail to pay on such demand. Post-notes, issued by a bank, are payable on demand made at any time on the last day of grace, after the known and usual hour of opening the bank for business, and may be put in suit on that day, if payment is refused . . . 480 Note and reference to other cases 490 III. Smith v. The Bank of Washington. (5 Sergeant & Rawle, 318. Supreme Court of Pennsylvania, 1819.) When action may be browjht. — Notice to an indorser of non-payment of a prom- issory note was put into the post-office on the 13th, and by the course of the mail could not reach him before the 19th. Suit was brought on the IGth, Held, that it was premature 490 Note referring to other cases 492 IV. OSBORN V. MONCURE. (3 Wendell, 170. Supreme Court of New York, August, 1829.) When action may be brought. — An action brought against the maker of a prom- issory note on the third day of grace is premature 493 Note referring to the contlict, and containing opinion in Smith v. Aylesworth, 40 Barb. 104 494 XXVI ANALYTICAL INDEX. EVIDENCE. I. Wells v. Whitehead. (15 Wendell, 527. Supreme Court of New York, July, 1836.) PAGE Production. Bill drawn in sets. — In a suit against the indorser of a bill of ex- change drawn in sets, the defendant may require the production of the iden- tical one of the set dishonored 498 Opinion in Downes v. Church, 13 Peters, 205, and other cases referred to . . 501 II. Bank of the United States v. Dunn. (6 Peters, 51. Supreme Court of the United States, January, 1832.) Evidence to vary Uahility of indorser. — Tlie indorser of commercial paper will not be permitted to show that his indorsement was intended to be merely formal ; and that he was informed by the payor that he would incur no responsibility by indorsing the paper, as its payment had been secured by a pledge of stock 503 III. Townsend V. Bush. (1 Connecticut, 200. Supreme Court, November, 181-1.) Competency of party to commercial paper to prove it invalid. — A party to a nego- tiable instrument, who is divested of interest, is competent to prove usury in the inception of the paper . 507 lY. Thayer v. Grossman. (1 Metcalf, 416. Supreme Court of Massachusetts, September, 1840.) When indorser competent to prove payment. — In an action by the indorsee against the maker of a note indorsed overdue, the indorser is competent to show payment before the note was indorsed 522 Note in regard to the conflict, and citing other cases 527 V. The Commercial Bank of Albany v. Strong. (28 Vermont, 316. Supreme Court, February, 1856.) Sufficiency of prorf. — A decision of the county Court, as to the sufficiency of certain proof, held, to refer to its cliaracter, or quality and competency, and not merely to its quantity or force, in convincing the mind. ANALYTICAL INDEX. XXVll When notice should be sciU. — A notice of the dislionor of a bill of excliiinf,'e, or promissory note, should be addressed to an indorser at the place of his resi- dence, unless he is shown to have a place of private business elsewhere. The office of a corporation, of which he is an officer (in this case the presi- dent), in a town diflerent from that in which he resides, will not, in the absence of i)roof, be re^'ardcd as his i)rivate business place ; and a notice ad<lresscd to him there will not be sufficient. Number ofwilness(.<i. — That a notice to an indorser was seasonably deposited in the post-office need not be proved by a sini^le witness. If more persons than one participated in the act, the testimony of all of them should be adduced. Consideration of tlie probability as to the manner in wiiicli the notice in the present case was directed and sent to the defendant; and of the testimony, in reference to its legal sufficiency, to prove that the notice addressed to the defendant as indorser, was put into the post-office, seasonably to chart^e him. 528 VI. The Commercial Bank of Albany v. Clark. (28 Vermont, 325. Supreme Court, February, 18oG.) Admissions. Notice. — A written admission by tlie indorser of a bill or note, that he received due notice of its dishonor, thouyh strong evidence, is not conclusive of the fact against him. He may show that the paper was signed under a misapprehension or mistake as to the bill or note referred to, and that no notice of the dishonor was, in point of fact, given. Contract. Estoppel. — Such a writing, in the present- case, held not to operate either as an admission for tlie purpose of a trial, as a contract, or as an estoppel in pais 536 Note discussing the cases 540 DISCHARGING INDORSER OR DRAWER. I. Sterling v. The Marietta and Susquehanna Trading Company. (11 Sergeant & Rawle, 179. Supreme Court of Pennsylvania, May, 1824.) Additional securiti/. — Taking a bond from a third person for the money due upon a note is no discharge of an indorser, unless it be so agreed; nor will pro- ceeding to judgment on the bond alter the case. Delaying suit. — Neither giving time to the maker, by forbearing to proceed to recovery on the pai)er by legal process ; nor delay to sue the indorser for several years, within the period of limitation, will operate as a discharge to the indorser ; provided no time was given before the indorser's liability was fixed 544 Note referi'ing to conflict, and citing other cases 546 XXVin ANALYTICAL INDEX. 11. Okie v. Spencer. (2 Wharton, 253. Supreme Court of Pennsylvania, December, 1836.) PAGE Additional security. Extension of time. — If the holder of a promissory note take a check upon a bank from the maker, dated six days after the maturity of the note, the check to be in full satisfaction of the note if paid, this oper- ates as an extension of time to the maker, and discharges an indorser . . 547 III. McLemore V. Powell. (12 Wheaton, ,554. Supreme Court of the United States, January, 1827.) Agreement for delay. — Mere agreement by the holder with the drawer of a bill of exchange for delay, made without consideration, and not commu- nicated to the indorser, does not discharge the indorser 551 Note containing opinion in Payne v. Commercial Bank, 6 Sm. & M. 24 . . . 554 Also opinion in Bank of Utica v. Ives, 17 Wend. 501 556 lY. Tiernan V. Woodruff. (5 McLean, 350. Circuit Court of the United States for Michigan, June, 1852.) Agreement for delay. Bankruptcy. — A bankrupt maker of a promissorj'^ note procured from his creditor two months' time, within which the right to sue on the note was suspended. The agreement was upon a valuable consid- eration. Held, no discharge to an indorser 558 Note containing opinion in Frazer v. Jordan, 8 El. & B. 303 560 V. Couch v. Waring. (9 Connecticut, 261. Supreme Court, June, 1832.) Judgment and execution against maker. Indorser sued for balance. — The holder of a promissory note sued the maker thereof, and obtained judgment, which was satisfied on execution. He then brought an action against an indorser to recover a balance of interest due on the note, not included in the judg- ment and execution. Held, that the effect of the former proceedings was to discharge the maker from further liability, and to preclude the holder from resorting to the indorser 563 VI. Newcomb V. Raynor. (21 Wendell, 108. Supreme Court of New York, May, 1839.) Release of first indorser. — If the holder of a promissory note release the first indorser this discharges the subsequent indorsers 568 ANALYTICAL INDEX. XXIX VII. Pannell V. M'Mechen. (4 Harris & Johnson, 474. Court of Appeals of Maryland, June, 1819.) PAGE Composition deed. Remedy against indorser reserved. — A made a negotiable note payable to B, wlio indorsed it to C, by whom it was indorsed to D. A and B made a composition deed with their creditors, and conveyed all their estate to trustees, among whom was C, and were discharged, with the proviso " that the said release shall not operate in favor of or be construed to release any persons or person who may be bound, &c., for A and B, or either of them, or who may have indorsed any note or notes drawn or in- dorsed by the said A and B, or either of them." Held, that C, who had received due notice of dishonor, was liable to D 569 Note containing opinion in Sohier v. Loring, 6 Cush. 537 574 VIII. Mayhew v. Boyd. (5 Maryland, 102. Court of Appeals, December, 1853.) Mortgage security sold without indorser's assent. — An indorsement of three notes was made, in consideration of the execution of a mortgage at the same time by tlie maker to the holder, by the terms of which the mortgagee was to sell the property only on default of the maker to pay the notes at their maturity. When the first note was due it was dishonored, but by the assent of all parties a new one was substituted in its place. Tlie mortgagee, after the original, but before the new note or any of the otlk^rs matured, sold the property with the assent of the mortgagor, but not of the indorser, applied the proceeds to pay the first two notes, and sued the indorser upon the third. Held, that the right to sell, which accrued upon the dishonor of the first note, was taken from the mortgagee by the substitution of the new one in its place, and the sale before the maturity of the latter was a viola- tion of the contract between the parties and discharged the indorser. General nde. — Any dealings with the principal debtor by the creditor which amount to a departure from the contract by which an indorser is to be bound, and which, by possibility, might materially vary or enlarge the lat- ter's liability without his assent, discharge the indorser. ....... 577 IX. Farmers' and Mechanics' Bank v. Rathbone. (26 Vermont, 19. Supreme Court, , 1852.) Distinction between hill for value and accommodation bill. — If a bill of exchange be drawn and accepted at a time when the drawer has an open account with the acceptor, for goods which he is in the course of sending to the acceptor for sale, and it appear to have been the understanding of the parties, at the time, that the bill was to be paid by the acceptor, and its amount be entered in the general account, it will be treated as a bill drawn for value, imposing upon the acceptor the primary obligation to pay it, and cannot be held an accommodation bill; and its legal character, in this respect, will not be XXX ANALYTICAL INDEX. affected by any alteration of the balance of the account, nor by the fact, afterwards ascertained, that the drawer was indebted to the acceptor at the time of the acceptance. The. release of the drawer, in such case, by the holder, will not discharge the acceptor, but will be treated as a relinquishment, merely, by the holder, of so mucli security which he had for the payment of the debt. Accommodation paper. Release of drawer. — An indorsee, for value, of a bill of exchange, who became such before its maturity, and in ignorance that it was given for accommodation, has a right to treat all parties thereon as liable to him according to their relative positions on the bill, and to regard the acceptor as the principal debtor, and the liability of the drawer as collateral ; and this right is unaffected by any subsequently acquired knowledge, that the bill was given for accommodation. In such case a release of the drawer, by the liolder, has no effect on the ultimate liability of the acceptor. And in this respect the rule is the same in equity as at law 581 Note referring to other cases 596 SURETYSHIP. I. Keith v. Goodwin. (.31 Vermont, 2G8. Supreme Court, November, 1858.) When surety hoklen as principal, as to guarantors. — When a person signs a note as surety for the makers and intrusts it to them, for the purpose of obtaining the money upon it, and they subsequently obtain further guarantors, upon tlie credit of all the signers, under the belief that they are joint principals, and in order to procure the money upon the note, such surety will be holden as a principal to indemnify the guarantors, if they are compelled to pay the note. Contribution. Stipulation for full indemnity. — One who signs a note as guar- antor or surety, others having before signed the same as sureties, may stipulate for full indemnity of each and all the former signers, or make that the condition of his own undertaking ; and in that case he will not be liable to contribute with the other sureties to the payment of the note. And the facts and circumstances attending the signing or the guarantj^ of payment of a note, may be sufficient to indicate as clearly as an express stipulation or condition, the terms of the undertaking 597 Note discussing the cases at length 603 Opinion in Deardorff t'. Foresman, 5 Am. Law Reg. N. s. 539 604 ANALYTICAL INDEX. XXXI BANK-BILLS AND 0TIIP:R PAPP]R TAKEN IN PAYMENT OF DEBT. I. Bayard v. Shunk. (1 Watts & Sergeant, !)2. Supremo Court of Pennsylvania, May, 184 .) PAGE Payment in bank-bills. — If a creditor receive current bank-notes in payment,- tliis discharges the debt; tliough, by reason of the failure of the bank, of wiiich botli parties were ignorant at the time, the notes were worthless when received 617 XL Ontario Bank v. Lightbody. (13 Wendfll, 101. Court of Errors of New York, December, 1834.) Payment in bank-bills. — If the holder of commercial paper receive bank-notes in payment of the same, the risk of the solvency of the bank \yhich issued the notes is upon him who gave them, in the abserfce of agreement; and therefore if the bank had actually failed or stopped paj-ment at the time the notes were received, and this was unknown at the time to* the holder, this will not constitute payment of his paper, though such bank-notes were current at the place where they were received, at that time 625 Note containing opinion in Fogg i'. Sawyer, N. H. 365, and citing other cases 684 III. The Phcenix Insurance Company v. Allen. (11 Michigan, 501. Supreme Court, July, 1863.) Payment by paper of third })arty. Duty of creditor. — Where a party receives a draft as conditional payment of a debt due him, his right of action upon the debt is suspended until the draft is properly presented tor payment and pay- ment refused. By receiving such draft, the creditor accepts the duty of doing every thing with respect thereto which is necessary to fi.\ the liability of the parties ; and the <iniis is upon him to show tliat he has performed that duty when he seeks to recover upon the original cause of action .... 637 Note referring to other cases 642 XXXll ANALYTICAL INDEX. FORGERY. I. Canal Bank v. Bank of Albany. (1 Hill, 287. Supreme Court of New York, May, 1841.) PAGE Recovery of money paid upon forged indorsement. Notice. — Money paid by the ac- ceptor of a bill to an innocent holder under a forged indorsement of the payee may be recovered, if seasonable notice of the forgery be given. . . 643 Note referring to other cases, and containing opinion in Merchants' National Bank v. National Eagle Bank, 101 Mass. 281 648 II. The Bank of the United States v. The Bank of the State of Georgia. (10 Wheaton, 333. Supreme Court of the United States, February, 1825.) Bank's own forged bills received as genuine. — If a bank receives from a debtor forged notes purporting to be its gwn, as genuine, and passes them to the credit of the debtor, who acts in good faith, the receiving bank is bound by such credit ; and it cannot recover -from the depositor and debtor the amount of the forged bills 650 Extended note and digest of the cases 661 Opinions in Mather v. Lord Maidstone, 18 Com. B. 273 661 In McKleroy v. Southern Bank of Kentucky, 14 La. An. 458 662 And in Belknap v. National Bank of North America, 100 Mass. 376 . . . 665 LOST BILLS AND NOTES. I. Pintard v. Tackington. (10 Johnson, 104. Supreme Court of New York, January, 1813.) IVhen owner may recover. — The plaintiff declared on a promissory note, pay- able on demand, and stated that the note had been lost or destroyed ; and the existence and contents of the note being proved, and it not appearing that the note was negotiable, or if negotiable, that it had been negotiated ; AeW, that the plaintiff was entitled to recover 671 Opinion in Blade v. Noland, 12 Wend. 173, and reference to other cases . . . 673 ANALYTICAL INDEX. XXXlll II. T(jWER V. Ai'i'LET(JN Bank. (3 Allen, 387. Suineme Court of Massachusetts, January, \H(j-2.) PAGE Bank-bills. Cirr.umstanti(d fviihnce of destruction. — The owner of bank-bills wliicli cannot be iilentitied or distinguislied from otlier similar bills, cannot maintain an action aj^ainst the bank which issued them, upon circumstan- tial evidence that they have been destroyed, and a tender of indemnity . . G74 Note referring to other cases GT'J III. Rowley v. Ball. (3 Cowen, 303. Supreme Court of New York, October, 1824.) No action at law on lost neijotiahle note. — An action at law cannot be sustained on a negotiable promissory note pa3able to bearer, by tiie owner, on proof . that the note was lost, though he show that it was lost after it became due. When the owner may sue at law 680 IV. FaLes V. Russell. (16 Pickering, 315. Supreme Court of ^Massachusetts, March, 1835.) Action at law 'maintainable on lost nccjotiahle paper. — AVhere a nejiotiable promis- sory note, indorsed in blank, was stolen from the holder before it was due, held, that he might recover the amount from the maker, in an action at law, on filing a bond sufficient for the maker's indemnification 683 Note referring to the conflict, and containing opinion in Thayer v. King, 15 Ohio, 242 686 V. Chewning V. Singleton. {2 Hill, Chancery, 371. Court of Appeals of South Carolina, December, 183.').) licmcdy in eiptili/. — A party who has lost a note pa^-able to bearer, although past due, may come into equity for relief The ground of jurisdiction is not only that he may give indemnity to the defendant, but that he must swear to the loss G88 Hopkins v. Adams, 20 Vt. 407, in note G'Jl YI. TUTTLE V. StANDISH. (4 Allen, 481. Supreme Court of Massachusetts, Septemlier, 1862.) Action at law. Indemnity. — The owner of a lost note cannot maintain an action at law against an indorser, in a case where a bond to indemnify XXXIV ANALYTICAL INDEX. i PAGE tlie (letbiidant against Leinu: called on a second time to pay the note would not afford to liim an adequate iirotection T 694 Note containing case of Smith r. Rockwell, 2 Hill, 482 697 VII. The Bank of the United States v. Sill. (5 Connecticut, 106. Supreme Court, July, 1823.) Commercial, paper cut in fialvcs. — If the holder of a bank-bill voluntarilj- cut it in halves, for the sole purpose of transmitting it by mail with greater safety, this will not affect his rights upon such bill. To entitle him to recover on the production of but one of the parts, he must show that he is owner of the whole, and account for the absence of the other part. The parts of a divided bank-bill are not separately negotiable. Notice bjj the payor of cut bills. — The board of directors of the Bank of the United States gave notice that the bank would not hold itself responsible upon any of its notes which should be voluntarily cut into parts, except on the pro- duction of all the parts ; which notice was published in all the newspapers of the city of Philadelphia, at which place said bank was located ; held, that the rights of a person in Connecticut, who subsequently became the owner of a note so cut' into parts, and who was in possession of one of the parts, and who had never received the notice, were not affected by the same 699 Martin v. Bank of the United States, 4 Wash. C. C. 253, in note 703 Hinsdale v. Bank of Orange, 6 Wend. 378, in note 706 LAAV OF PLACE. I. Aymar v. Sheldon. (12 Wendell, 439. Supreme Court of New York, October, 1834.) Bill drawn in one countrij and indorsed in another. — In an action by an indorsee against an indorser of a bill of e.xchange drawn in a foreign country, and indorsed and negotiated to the plaintiff in New York, the law of New York must determine whether the jiroper steps have been taken to charge the indorser 709 Note referring to numerous other cases and giving extended extracts from opinions of the Court 712 ANALYTICAL INDEX. XXXV CHECKS. I. Morrison v. Bailey. (o Ohio State, 13. Supreme Court, December, 1855.) PAGE Form. — The following draft is not a check : W. Q. & B. : Pay to B. on the 13th of July, '53, or order, three hundred dollars ; it being payable on a future day designated. It is one of the essentials of a check that it shall be payable on demand. Dai/s of (/race are not allowed on checks. Distinction between checks and bills of exchange 716 Extended note embracing opinions in Keene v. Beard, 8 Com. B. fx. s.) 372, and giving references to other cases #718 II. Mus.sEY V. Eagle Bank. (9 Metcalf, 306. Supreme Court of INIassachusetts, March, 1845.) Certification of checlcs. Inherent power of teller. — Evidence that tli.e teller of a bank, during all the time of his holding office, whenever the convenience of the bank or of its customers required it, certified that checks were " good," which were drawn on the bank by its customers, when funds to the amount of such checks were to the credit of the drawers, and that his so doing was, in some instances, known to the bank, and was not for- bidden, and that it was the usage of the tellers of other banks to do the same thing, does not warrant a jury to infer that the power of so doing was an original, inherent, implied power of the teller, as such. Usage. The u.sage of issuing certificates of deposit, by a teller of a bank, is not evidence to prove a usage of certifying checks. A teller of a bank, as sucli, has no authority to certify that a check is " good," so as to bind the bank to pay the amount thereof to any person who may afterwards present it ; and a usage for him so to certify a check, to enable the holder to use it at his pleasure, is bad 721 III. The Farmers' and Mecfianics' Bank of Kent County, Maryland, v. The Butchers' and Drovers' Bank. (16 New York [2 Smith], 125. Court of Appeals, September, 1857.) Certification of checks. — A bona fi'h- holder, for value, of a negotiable check certified to be good by the paying teller of the bank on which it is drawn, XXX VI ANALYTICAL INDEX. PAGE whose authority to certify is limited to cases wliere tlie bank has funds of the drawer to meet tlie check, can recover of tlie bank the amount of the check, though tlie drawer had no funds in the bank, and though the certi- fication by the toller was in violation of his duty, and for the drawer's accommodation 727 ^Merchants' National Bank v. State National Bank, in note 739 TABLE OF CASES REPORTED. [THIS TABLE INCLUDES THE CASES PRESENTED AT LENGTH TS THE NOTES.] PAGE Adams, Hopkins v 691 Adams, House v •443 Allen, Plifcnix Ins. Co. v G37 Allen V. Suydani and Boyd 26 Appleton Bank, Tower v 674 Atkinson v. Brooks 19/> Austin, Pearce ?' 477 Aylesworth, Smith v. 494 Aymar v. Sheldon 709 Baker, Barton v 4.")8 Baldwin, Munn v 376 Ball, Rowley v 680 Bank of Albany, Canal Bank r 643 Bank of Alexandria v. Sw.ann 388 Bank of Columbia i\ Lawrence 404 Bank of Columl)ia, Renner v 297 Bank of Georgia, Bank of United States v 6.0O Bank of Metropolis, United States i' 88 Bank of Ignited States v. Bank of Georgia 650 Bank of United States v. Dunn 503 Bank of United States, Martin r 703 Bank of United States, Mills v 358 Bank of United States r. Sill C.'.i;) Bank of United States, "Williams v 45i Bank of Utica r. Bender 410 Bank of Utica i". Ives H.JG Bank of Waslun<;ton, M'Gruder v 447 XXXVlll TABLE OP CASES REPORTED. PAGE Bank of Washington, Smith v 4'JO Barton v. Baker 458 Baxter v. Little 271 Bay V. Codflington 105 Bayard, Konig v 85 Bayard, Schimmelpennich v G4 Bayard v. Shiink Gl7 Bavley r. Taber 22G Beals, Stevens v IGl Belknap v. National Bank of North America 665 Bender, Bank of Utica v 410 Berkshire Bank v. Jones 468 Bishop, Britton v 275 Blade v. Noland 673 Bowling V. Harrison 378 Boyce and Henry i\ Edwards 52 Boyd, Mayhew v 577 Brantly, Fowler v 235 Brewster v. McCardel 225 Britton v. Bishop 275 Broailhurst, Jones v 346 Brooks, Atkinson v 105 Brown v. The Butchers' and Drovers' Bank 110 Burgess, Morrison v 716 Burke V. M'Kay 355 Bush, Townsend v 507 Butchers' Bank, Farmers' Bank v 727 Butchers' and Drovers' Bank. Brown v 110 Camden v. IMcKoy 112 Cimeron v. Chappell 287 Canal Bank v. Bank of Albany 643 Chanoine v. Fowler 383 Chappell, Cameron v 287 Chewning v. Singleton 688 Chicopee Bank v. Philadelphia Bank 322 Church, Downe v 501 Clark, Commercial Bank of Albany 536 Clark, Newhall v 104 Coddington, Bay v 165 Coddington v. Davis 471 TABLE OF CASES RKPORTFD. XXxix v.\t,i: Coit, I'aton v 2o() Commercial Bank of Alhaiiy v. Clark o.'jG Commercial Bank of Alhany r. Strong ,028 Commercial Bank of Xatcliez, Payne v ,0,')4 Cook V. Satterlee 8 Coolidge r. Paysou 4;j Corey, Mohawk Bank r 2(i7 Couch V. Waring o03 Crossman, Thayer r 522 Crouch, Watkiiis r .KJ.-j Dana r. Sawyer 310 Davis, Coddinirton r 471 Davis V. ]M'Creatly 222 Deardorft'w. Foresman 004 Dennis, Gilbert v ;3(33 Dodge, Wordeu r 7 Downer, Sylvester r 139 Downes i: Church 501 Diuin, Bank of United States r 503 Eagle Bank, Mussey v. 721 Eastman v. Plumei' 343 Edwards, Boyce v 52 Ellicott, Grant v 2(53 Estabrook v. Smith 158 Fales r. Kus.sell G83 Farmers' and ^lechanics' Bank r. Butchers' and Drovers' Ixuik . . 727 Farmers' Bank, Lawson v. otIO Farmers' and Mechanics' Bank i\ Bathbone 581 Fisher v. Leland 258 Fogg V. Sawyer 634 Foresman, Deardorff v G04 Fort, Meacher r . 59 Fowler v. Brantly 235 FowU'r. C'lianoino r 3S'6^ Franklin PKUik, Staples r 480 Frazer r. .Jordan 5 GO Furze v. Sharwood 371 xl TABLE OF CASKS REPORTED. PAGE Gilbert r. Dennis 3().'} Goodman, Keith c 597 Goodman v. Simonds 2.")9 Grant v. Ellieott -^63 Greenou<i;li i\ Smead 1-13 Guild, Wheelei- v .' . . 331 Hale, Juniata Bank v. . Hall v. Newcomb . . Harrison, Bowling v. . Hascall v, Whitmore Hemmingway, Kelley v Hensliaw, Horti^man v. Holmes v. Williams . Hopkins v. Adams , Hopkirk V. Page Hortsman v. Henshaw House V. Adams Hyde, Union Bank v. 423 131 378 2G1 11 57 280 691 430 57 443 469 Ives, Bank of Utica v 556 Jones, Berkshire Bank v 468 Jones V. Broadhurst 346 Jones, Lehman v 450 Jordan, Frazer v o60 Juniata Bank v. Hale 423 Keith V. Goodwin . Kelley v. Hemmingway Kimball, Stoddard v. . King, Thayer v. ^ . . Kniglits V. Putnam . . Kouig V. Bayard 597 11 269 686 277 85 Lake, j\Iusson v Lawrence, Bank of Columbia v. 290 404 TABLIO OF CASES REPOUTED. xli Lawson V. Farmers' IJaiik Leavitt r. Putnam . Lehman v. Jones Leland, Fisher i\ . . . Lightbody, Ontai'io liank r, Little, Baxter i\ ... Loring, Sohier v. . . . PAGE 1.50 4.0O 258 (',25 271 574 Maidstone. Mather r 001 Marietta, jfcc., Trading Co., Sterling v 544 Martin v. Hank of United States 703 Mather v. Lord INIaidstone 001 Mathews, Sigersou v 473 Mayhevv v. Boyd 577 McCardel, Brewster i' 225 M'Koy, Camden r 112 M'Connell, Wallace v 15 M'Cready, Davis v ' 222 M'Donahl, Stalker V lO'J M'Gruder v. The Bank of Washington 447 M' Kay, Burke w 355 M'Kleroy v. Southern Bank of Kentucky 002 M'Lemore v. Powell 551 M'Mechen, Pannell v 509 Meacher v. Fort 59 Merchants' National Bank v. National Eagle Bank 048 Merchants' National • Bank of Boston v. State National Bank of Boston 739 Mills V. Ba)ik of the United States 358 Mix, Shaylor r 382 Mohawk Bank v. Corey 2()7 Moucure, Osborn v 4'.»3 Morrison v. Burgess 710 Munn V. Baldwin 370 Mussey v. Eagle Bank 721 Musson V. Lake ' . . . . 290 Natipnal Bank of North America, Belknap v 005 National Eagle Bank, Merchants' National Bank r 048 Newcomb, Hall v 131 Newcomb v. Kaynor 508 y Slii TABLE OF CASES REPORTED. . PAGE Kewl.nll V. Clark 104 Noland, Blade v 673 Norton, Windham Bank v 414 Okie V. Spencer '. . . 547 Ontario Bank v. Lightbody 625 Osborn v. Moncure 493 Page, Hoi)kirk v. 430 Pannell v. M'Mechen 569 Paton V. Coit ; ... 230 Payne v. Commercial Bank of Natchez 554 Payson, Coolidge v 43 Pearce v. Anstin 477 Pettee v. Prout 217 Philadelphia Bank, Chicopee Bank V 322 Pha?nix Insurance Co. v. 'Allen 637 Piutard v. Tackington 671 Pluraer, Eastman v 343 Powell, M'Lemore v 551 Pratt, Spear v 41 Prout, Pettee v 217 Putnam, Knights v 277 Putnam, Leavitt v 156 Rathbone, Farmers' and Mechanics' Bank v 581 Ray nor, Newcorab v 568 Renner v. The Bank of Columbia 297 Rev I'. Simpson 150 Richardson, Way v 220 Rockwell, Smith v. ." 697 Ross, Swope V 340 Rowley v. Ball 680 Russell, Fales v.* 683 Satterlee, Cook v 8 Sawyer, Dana v 310 Sawyer, Fogg v 634 Schimmelpennich v. Bayard 64 TABLE OF CASES REPORTED, xHii rA(iE Sliaiwood, Furze v 371 Slmyloi- V. ]Mix .'5)S2 Sheldon, Aymar v • 7'>'J Slmiik; Hayard r G17 Sigerson v. Matliews 473 Sill, United States IJank r GUI) Sinionds, Goodman v 239 Simpson, Key r 150 Sim|).son v. Tiiniey 386 Singleton. Clicwiiing r 688 Sloan, Thompson r 1 Small /'. Smith 261 Smead, Greenongh r 143 Smith V. Aylesworth 494 Smith, Estabrook v 158 Smith V. Rockwell 697 Smith, Small v 264 Smith V. The Bank of Washington 490 Snyder, Taylor v 313 Si)hier v. Loring 574 Southern Iiatdv of Kentucky, M'Kleroy v 662 Spear and Patten v. Pratt 41 Spencer, Okie v 547 Stalker z', M'Donuld 169 Standish, Tuttle v 694 Staples V. Franklin Bank 480 State National Bank of Boston, Merchants' National Bank of Bos- ton V 739 Sterling v. The Marietta, ifcc. Trading Company 544 Stetson, Walker v 397 Stevens r. Beals Ifil Stoddard v. Kiml)all 269 Strong, Commercial liaidc of Albany v 528 Suydam, Allen i\ 26 Swami, Bank of Alexandria I' 388 Swift t'. Tyson 186 Swope V. Boss 340 Sylvester v. Downer i;i9 Taber, Bayley v 226 Tackington, Pintard r 671 Taylor v. Snyder 313 xliv TABLE OF CASES REPORTED. PAOE Thayer v. Crossmanli 5^2 Thayer v. King G86 Thompson v. vSloan et al 1 Tiernan v. Woodruff • •'"^58 Tower V. Appleton Bank G74 Tovvnseiul v. Bush 507 Turney, Simpson v 386 Tuttle V. Standish G94 Tyson, Swift v 186 Union Bank v. Hyde 469 Union Bank of Weymouth and Braintree f. Willis 124 United States v. Bank of the Metropolis 88 United States Bank v. Sill 699 Walker v. Stetson 397 Wallace v. M'Connell 15 Waring, Couch v 563 Watkins v. Crouch 463 Way V. Richardson 220 Wells V. Whitehead 498 Wheeler v. Guild 331 Whitehead, Wells V 419 Whitraore, Hascall v 261 Williams v. Bank of the United States 452 Williams, Holmes v 280 Willis, Union Bank of Weymouth and Braintree I' 124 Windham Bank v. Norton 414 Woodruff, Tiei-nan v 558 Worden v. Dodge . . 7 TABLE OF CASES CITED. PAGE PAGE Al)el V. Sutton 1(51 Andrews v. Pond 250 Aborn v. Bosworth (iSO Androscoggin Bank v. Kimball 245 Al)soloii r. Murks 160 Angel V. Felton 672 Adams v. Darin- 441, 44:3 Anonymous v. Stanton 441 , 442 V. JoIU'S 49, r>7 Appersou v. Union Ban k 446 r. Lulaiul 320, 449 Appleton Bank v. McGilvray 648 r. Otti-rback 307, 309 Arbouin v. Anderson 252 259 V. Soulu 211 Arlington v. Hinds 478 Addy V. Grix 110 Armot V. Union Bank 703 Adle V. Metoyer 59G Armstrong v. C'bristiani 375 Agra, In re, &c.. Bank 42, 51 V. Thruston 375 Alden v. Barbour 109 Arnold v. Dresser 296 476 Aldricb v. Jackson 636 V. Kinloch 375 V. Warren 234 V. Rook River, &c., R . Co 9 Alexander v. Bunbfield 746 V. Sprague 642 c. Byers 636 Arnot 0. Woodburn 276 V. Dennis 636 Arundel Bank v. Goble 654 17. McKenzie 736, 737 Asbpitel V. Bryan 215 V. Oakes 7 Astor V. Benn 715 Allaire v. Hartsborn 200, 207, 256, Atkinson v. Brooks 195; 203, 208, 270 211 256 Allen f. Ilolkiiis 509 V. Manks 7 109 c. Keuilile 713, 714 Attenborougb v. McKenzie ;!41 V. King 201, 202 203, 443 Attwood V. Rattcnbury 160 V. Merobants' Bank of New Attwood V. Mnnnings 736, 737 York 715 Aurora v. West 234 Allen V. Newbury 478 Austin V. Boyd 129 V. State B:ink 708 V. Burns 9 Allin V. Sliadbnrni! 478 V. Curtis 203, 211, 213 Allwood V. Iliseldon 462 Awde V. Dixon 604, 610 r. Ilazelton 158 Aver V. Hutcbins 250 Almy V. Reed 676, 695 Ayrey v. Fearnsides 14 American Bank v. Baker 576 Aymar v. Sbeldon 709, 714, 715 Amniidown v. Woodman 490 Amoskeag Bank v. Mt)ore 476 Anderson v. Drake ;>14, olO, 317, 321, Babcoek, In re 592 327 Baekiiouse v. Harrison .252 Andrews v. Baggs 108 Backus i'. Sbipberd 469 V. Boyd 462 Bacon v. Searles 349, 350, 351 i\ Franklin 13 Badeock i'. Steadmaq 607 V. Hart 214 Badger v. Tbe Bank of Cun ber- V. Herriot 715 land 747 xlvi TABLE OF CASES CITED. PAGE Badnall v. Samuel . 554 Bagnall v. Andrews 687 Bailey v. Bidwell 233 V. I'orter 443 Baily v. Smith 214 Bain r. Wilson 402 Baii'd V. Coi'liran 527 Baizley, J'Jx parte 425 Baker v. Birch 425 V. Bonesteel 636 V. Briggs 117, 128, 129 V. Dening 110 V. Flower 563 V. Walker 207. 255 Bancroft v. Hall 410 Bangs V. Moslier 550 Bank v. Flanders • 111 Bank, Tie The, &c. 213 Bank of Alexandria v. Swann 362, 363, 388, 392 Bank ot America ik Petit 462 V. Woodworth 316 Bank ofAujiUsta v. Earie 748 Bank of Burlington v. Beach 598 Bank of Chenango v. Hyde 598 Bank of Columbia v. Fitzhugh 307 V. Lawrence, 377, 382, 389, 399, 404, 532 V. Magruder 307, 410 Bank of Commerce v. Union Bank 62, 648, 662, 665 Bank of the Commonwealth c. Curry 612 Bank of Cooperstown v. Woods 363 Bank of England v. Xewnian 134, 669 Bank of Geneva v. Howlett 410 Bank of Georgetown v. Magruder 475 Bank of Ireland v. Beresford 216, 594 Bank of Kentucky v. The Schuyl- kill Bank _ 747 Bank of Louisiana v. Tournillon 410 Bank of Louisville v. Summers 674 Bank of the Metropolis v. The New England Bank 204, 207 Bank of Michigan v. Ely 51, 56 Bank of Missouri v. Hull 528 Bank of Natchez v. King 393 Bank of New York v. Vander- horst 211 Bank of Niagarh v. iNPCracken 677 Bank of Pittsburgh i'. Neal 257 Bank of the Republic v. Carring- ton 208. Bank of Rochester r. Gould 363, 370 Bank of Puitland v. Buck 183, 598 Bank of Rutland v. Woodruff 42, 51 Bank of Salina v. Babcock 172, 189, • 255, 268 Bank of Sanduskv v. Scoviile 172, 1S9, 268 Bank of Scotland v. Hamilton 28, 30, 34 Bank of South Carolina v. Flagg 328 r. flyers 462 Bank of St. Albans v. Farmers' and Mechanics' Bank 648, 664 Bank of St. Albans v. Gilliland 201 Bank of Syracuse t'. Hollistcr 495 Bank of the United States r. The Bank of Georgia 628, 636, 642, 644, 646, 64«, 650 V. Carneal 325, 328, 364, 370.376,399,409,410, 443 V. Davis 396, 745 V. Hatch 559, 563 V. Sill 680, 692, 699 V. Smith 16, 17, 23, 328, 443 V. United States 479 Bank of Utica v. Bender 399 V. Davidson- 411 V. Smith 303, 312 Bank of Vergennes v. Cameron 535 V. Warren 747 Bank of Washington v. Triplett 39, 237, 308 Banorgee v. Hovev . 57 Barber v. Gingell' 646, 658, 661, 670 Barclay, Ex x>arte 884 Barker v. Parker 462 V. Prentiss 524 V. Valentine 276 Barlow v. Scott 276 •Barnes v. Ontario Bank 748 Barnet v. Smith 747 Barough v. White 259 Barr v. Greenawalt 616 Barry v. Ransom 600 Barstow v. Hiriart 376 Barbour r. BaA'on 307 Barclay c. Bai"ley 311, 312 V. Weaver 476 Baring v. Lyman 57 Barlow v. Bishop 162, 163 V. Broadhurst 10 Barnes v. Gorman 7 Barnet v. Smith 43 Barney r. Earle 200. 207 Barnsback i'. Reiner 616 Barrett v. Wills 316 Barry County v. McGlolhli.n 478 TABLE OF CASES CITED. xlvU PAGE 427 •183 2ir>, 216, 2G2 2l;3 Bartholomew v. Hill Barton v. Baker Bartruin v. ('aildy Bass V. Clivu Bassett v. Avery .0. Dodgiii Batenian t\ Joseph 4y8 Bates V. Kem[) 27G BaiimganliiiT r. Reeves 458 Bawden r. Howell 1(51 Baxter v. Diireii 669 i\ Stewart 9 Bay r. Cod.iinfrtoii 171, 172, 189 Ba^anl c. Lathy 50 V. Shiink 6:5-1 Baverque v. San Francisco 8 Bayley v. Tabcr 226, 23o Beal V. McKii-niau 614 Braie V. Parrish . 388, 413 Bcals ('. Peck 363 Bean v. Arnold 469 Beardslee f. Ilorton 10 Bear.bley v. Baldwin 12 Beaucha:n[i v. Cash 363 V. Parry 259 Beck V. Robley 350, 351 Beckford v. Jackson 701 Beckwith v. Angell 122, 124, 126, 130 V. Corrall 708 Bceching v. Gower 410 Beekinan v. Wilson 479 licenian c. Du.k 62, 661, 670 Beers v. The Phcenix Glass Co. 747 Helden v. Lamb 399 Belmont Branch Bank v. Hoge 258 Belknap r. National Bank of North America 648, (5G5 Belshaw V. Bush 2U7 Beltzlioover v. Blackstock 708 Bene.lict 0. CafFe 4^2 Benior j;. Paqnin 216 Bennett, £.r y)a;7e 614 B(!noist r. Creditors 442 Bent V. Baker 513, 523 lienthall V. Jndkins 131 Bentley v. Columbia Ins. Co. 614 Benton r. Martin 543 Berkshire Bank d. Jones 468, 542 Bernard r. Barry 715 Berridge v. Fitzgerald 404 Berry c. Robinson 158 Bevan V. Eldridge 492 Bray v. Iladwen 394 IK Manson 563 Breckinridge r. Moore 201 Brenzer r. Wiglitnian 393 Beveridge v. Burgis 458 Bibb V. Reid 605 Bickford v. First Nation Bigehjw r. Colton Bignold, Ex parte Bikerdike v. BoUman Bird V. Le Blanc Birdseye v. Ray I Bishop V. Dexter I Bissidl V. Jellersonville j Blackburne, L'x parte j Pdaikenship v. Rogers I Blackhan c. Doren 1 Blai.-kiiaw v. Doren j Blaekie r. Pidding I Blade v. Noland i BJake v. Wheadon Blanchard v. Stevens I Bleaden r. Charles Bliss r. Nichols Bloodgood V. Hawthorn Bloxhani, Ex parte Boelim r. Sterling Bogy V. Keil Bolton V. Richard Bond V. Farnhara V. Fitzpatrick Boody V. Bartlett Bookman v. Metcalf Boot r. Franklin Borrailale v. Lowe Bosanquety. Corser V. Dudnian V. Forster Boss V. Hewitt Boston Bank v. Hodges Bostwick V. Dodge Boultljee V. Stubbs 4G2 Boulton V. Welsh 366, Bowcn V. XewcU Bowie V. Dnvall Bowling V. Harrison Bowyer v. Bamplon Boyce v. Edwards Boyd V. Emmerson V. McCanu V. Mr Ivor. V. Plumb Brabston v. Gibson Bradley v. Davis Bramah r. Roberts Branian c. Hess Brannin r. Henderson Brett c. Levett Bridgeford v. .Simonds Bridgepoit City Bank /• Bristol V. Warner Bromley v. Holland al V>£ l'\r,n 747 156 462 4;J0, 431. 432, 433, 44(J, 442 472 171 158 744 636, 669 442 432, 441 588 679 673, G94 161 200, 2t)7, 256 335 404 442 177, 179. 193 746 4G2 G54 427, 459, 461 271 210 211, 212 328 426, 476 198, 206 193, 198, 204. 208 198, 206 214 484 200, 207 464, 575, 576 373, 374, 375 718 23, 109, 479 377, 532 512 49, :)2 746 2(52 257 734, 735, 736 109 363 177, 180, 193 279 43 466 543 211 6 6'JO, 691, 692 17; 4<55, ^\\ xlviii TABLE OF CASES CITED. PACK Brooks V. Page 7 B rough V. Parkings 292 Brown, ]Matter of 442, 588, 717, 720 V. Barry 41 V. Bunn 715 V. Butchers' and Drovers'* Bank 110 156 V. Davies 250, 2G0, 275 V. Fferguson 393 V. Ilarraden 308 V. Leavitt 211 V. Lfckie 747 V. London 748 V. Maffey 432, 465 V. JNPDi-rniot 426 «r. JNIott 593 j,\ Ne-vvell 308 V. Pi-nfield 214 V. Taber 250 V. Turner 393 Browne v. Coit 108 Browning v. Kinnear 458 Bruce v. Bruee 647, 657, 665 V. Lytle 330, 451 Bruen w. Marquand 576 Brush -y. Reeves 134 V. Seribner 194 200, 207 252 Bryant v. Damariscotta 677 V. Edson 308 Bryden v. Bryden 410 Buchanan v. Marshall 469 Buck v. Cotton 462 Buckler i\ Buttivant 288 289 Buckley v. Bentley 472 Buckner v. Finley 500 Buller V. Harrison 176 Bullet V. Bank of Penns ylvania 678, 703 705 Burbridge v. Mannei-s 485 Burchell v. Slocock 6 Burchfield.w. Moore 62 Burgess v. Vreeland 376 Burgh V. Legge 368 Burnham v. ^Vebster 469 747 Burns r. Rowland 50, 57 Burr V. Smith 354 Burridge v. Manners 338 341 Burrough v. Moss 274 275 Burrows v. Hannegan 715 Bush V. Peckard 200 207 V. Livingston 279 Bussard v. Levering 488 Butler V. Campbell • 116 V. Damon 525 v. Kimball 490 V. Paine ,7 Cabot Bank v. Morton 669 CaldwelU. Cassady 22, 109 Callow ?'. Lawrence 351, 353 Cameron v. Chappell 223 Camidge v. Allenby 618, 620, 669 Camp V. Bates 417 Campbell v. Butler 115, 118 V. Pettengill lOS, 443 Canal Bank v. Bank of Albany 61, 62, 'C43, 669 Carlisle v. Wishart Carnegie v. Morrison Carpenter v. Oaks Carr v. Moore V. Rowland Carroll v. Upton V. Weld Carstairs, Ex parte V. Rolleston Carter v. P>urley V. Flower Carver v. Warren Castrique v. Bernabo Cathell V. Goodwin Catskill Bank v. Stall Caunt f. Thompson 200, 207 50, 57 131, 143 611 143 399 124 575 354 393 443 127, 129 485, 492 441 411, 734 375, 376, 428 Cayuga Bank v. Warden 363, 375 Cavuga Conntv Bank v. Hunt 312 Chaffee v. Jones ' 128 Chalmers v. Mc^Iurdo 147 Champion v. Griffith 145 Chandler v. Mason 528 Chanoine v. Fowler 383, 390, 426, 428 Chapman v. Keane Chard u.-Fox Charles v. Marsden Charnley v. Grundy Chaudron v. Hunt Cheetham v. Ward Chesmer v. Noyes Chester v. Doit Chick V. PiUsbury Chicopee Bank v. Chapin 384 375 216, 263 297 674 576 292 217 392, 394 200, 203, 256, 271 V. Philadelphia Bank 25, 109, 322 Childs V. Wyman 131 Chouteau v. Webster 401, 410 Church V. Barlow 396, 592 V. Clark 484 Churchill v. Suter 279, 514, 520, 522, 523, 524, 525, 526 Citizens' Bank v. Payne 211 City Bank v. Cutter 309, 357, 484 Clagett V. Salmon 576 Claremont Bank v. Wood 592 Clark National Bank v. Bank of Albion 748 TAIJLK OP CASES CITED, xlix Clapp v. Ilan-son PAOE 527 V. Rice 1:51 Clarid^'C r. Dalton •111, 442, 0H6 ( 'lark's ( 'ase 511 Clark V. Devlin 505 V. Eldridge 363, 375 V. Alinton 462 r. Percival 14 V. Merriaiu 124, 143 V. Cock 48, 49 V. Quince 679 V. Kiisscl 41 Clason r. JJailcy 14 ("laxton V. Swift 564 Clayton's Case 352 Clavton V. Gosling 14 Cloi)i)cr V. Union Bank 441, 592, 596 Clotiston V. Harbiere 139 Cobl) V. Doyle 211 Cockerill v. Kirkpatrlck T^ 6 Cocks V. Mastcnnan 615, 646 Coddington v. Bay 169, 170, 172, 173, 177, 184, 256 V. Davis 462, 471, 472 Coggill V. American Exchange Bank 61, 62 Coggs V. Bernard 326, 744 Cole *;. Wcndel 4 Colelian v. Cooke 12 Coleman v. Ewing 490 V. Riches 738 V. Sayer 307 V. Wise 513 Colkett V. Freeman 486 C'ollinge v. Ileywood 616 Collins V. Butler 458 r. Emmett 61 V. Lincoln 6, 7 V. Martin 167, 176, 333, 334 CoUis ('. Eiiiett 245 CoUott V. Ilaij^h 590 Colpoys L\ Colpoys 5 Commercial Bank v. Benedict 708 V. Cunningham 592 Commercial Bank of Albanv v. Clark 537 V. Iluiiiies 441 Connnercial Bank of Lake Erie o. Norton 747 Commonwealth v. Alleghany Co. 744 V. Pittst)urg 744 V. Stone 63(i Comparree v. Brockway 139 Conalian /•. Smith 715 Cone r. Baldwin 250, 257 Conkling c. Vail 212 Conner v. Routli 1)5 Cony V. Wheelock ' 161 PAGE Cook V. Litchfield 363 V. Martin 441 V. Satterlee 2 V. Southwick 143 Cooke V. French 3(J8 Cookendorfer v. Preston 306 Cooley V. Lawrence 155 Cooliijge c. Brigham 669 V. Payson 42, 49, 54, 55, 57, 75, 192 V. Ruggles 12 Cooper V. Le Blanc 661 V. Meyer 63 V. Smith 613 V. VValdgrave 715 Copeland v. IMercantile Ins. Co. 613 Corbit V. Bank of Smyrna 036 Cordery v. Colvin * 542 Corney v. Da Costa 459, 460, 465, 466 Corp V. M'Comb 488 Corson, //( re 353 Cota i\ Buck 8, 13 Cotes v. Davis 163 Cottrell V. Conklin 111* Couch V. AVaring 546 Coursin v. Ledlie G Cowles V. Harte 376 Cowley V. Dunlop 288, 289 Cowper V. Smith 576 Craig V. Sibbett 225 Cram v. Hendricks 285, 288 Cramlington v. Evans 478 Crawford v. Branch Bank 375, 715 Crawshay v. Collins 160 Craythorne v. Swinburne 600, 601, 602 Creamer t'. Peny 462, 475,' 476 Creery r. Holly 4 Crenshaw i\ McKiernan 490 Cronise v. Kellogg 596 Crook V. Jadis 253 Crosse v. Smith 456 Crowell V. Van Bibber 42, 50, 51 Crygter v. Long 494 Cunlilfe v. Whitehead 502 Cunningham v. Wardwell 43 Curtis V. ]Mohr 212 Cushman v. Ilaynes 14 V. Dement 124 Cuthbert v. ILiley 283 Cutter V. Powell 301 Dabney v. Campbell Dailey o. De Frees Dakin v. Anderson Darbishire v. Parker 309 216 636 40, 391, 410 TABLE OF CASES CITED. PAGE Darby v. Ouseley • 641 Davies v. Dodd 691, 692 Daviess v. Barton 539 Davis V. Beckham 409 V. Briggs 478 V. Williams 09 Dawkes v. De Lorane 8 Dawson r. Chauinev 326 Day V. Riddle " 326 Deacon v. Stodbart 364 Dean v. Ilall 118 V. Hewit 477 V. Speakman . 674 De Berdt v. Atkinson 459, 460 Deberry v. Darnell 2, 3 Decring r. The Earl of Winchel- sea 600 De Forest v. Frary 14 Dehers v. Harriot 297, 307 De la Chanmette v. The Bank of England 193, 197, 202, 203, 205, 715 Delaney v. Stoddart 37 De la Torre v. Barclay 676 •Denison v. Tyson 7 Dennett v. Goodwin 7 Dennie v. Walker 316, 317, 488 Dennistoun v. Stewart 303 Dennv v. Palmer 462, 463 Des Arts v. Leggett 674, 679, 694 Descadillas v. Harris 642 'Desha v. Stewart 160, 478 De Silva v. Fuller 335, 338 De Tastet, Ex parte 353 Devallar, Executors of, v. Herring 174 Dewey v. Washburn 7 DeWolf 17. Murray 375 Deyraud v. Banks 328 Dezell V. Odell 745 Dickens v. Beal 399, 441 Dod V. Edwards 338 Dodge V. Bank of Kentucky 393 Dole V. Gold 375 DoUfus V. Frosch 441% 479 Don V. Lippman 716 Dougal r. Cowles 43 Douglas V. Waddle 149 Dowe V. Schutt 223 Downer v. Remer 409 Downs V. The Planters' Bank 392, 394 Drake v. Henly 627 Draper v. Weld 131 Drinkwater v. Tebbetts 4G9 Du'^an V. United States 343, 479 Duncan v. McCullough 317, 319, 329, 451 Dunn V. OTveefe 259 Dupeau v. Waddington Duvall V. Farmers' Bank PAGE 255 462, 471 Eagle Bank v. Chapin 393 V: Hathaway 381, 396 Easter v. Minard 214 East India Company v. Boddam 690 Eastman v. Plumer 696 East River Bank y. Butterworth 217 Eccles V. Ballard 134 Eckhert v. Cameron 214, 338, 343 Edie V. The East India Co. 158 Edmunds v. Digges 636 Edson V. Fuller 43 Edwards v. Jones 171, 270 Eicheberger «. Finley 443 Elford V. Teed 311 EUicott V. Martin 219, 258 Elliot V. Abbott 747 Elhs V. Brown 111, 139, 145, 148 V. Commercial Bank of Natch- ez 715 V. Mason 13 V. Ohio Life Insurance Co. 665 V. Wild 669 Ellsworth V. Brewer 616 Elting V. Vanderlyn 255 Ely V. Adams 4 Emly V. Lye 669 Emmett v. Tottenham 221 English V. Darley 563, 665 V. Derby 586 V. Wall 443 Esdaile v. Sowerbv 291, 425, 459, 461, 462, 465 Essex Company r.Edmands 156 Etheridge v. Ladd 297 Etting V. Schuylkill Bank 375, 388 Evans v. Underwood • 13 Everard v. Heme 573 V. Watson 375 Exchange Bank of St. Louis v. Rice 50 Fairbanks v. Metcalf 607 Fairchild v. Ogdensburgh, &c., R. Co. 109 Fales V. Russell 675, 676, 678, 683, 695, 696 Farebrother v. Simmons 613 Farmers' Bank v. Gilson 616 V. Van Meter 441 Farmers' Bank of Maryland v. Du- vall 393, 489 Farmers' Bank of Virginia v. Rey- nolds 708 TABLE OF CASES CITED. Farmers' and Mecbanics' Bank v. R;xtlibone 354, 581 FariiiLTs' and Mechanics' Bank of Kent Co. v. Butchers' and Drov- ers' Bank 7-27, 745, 747, 748 Farmers' Ins. Co. v. Miller 7 Fanners' Loan and Trust Co. v. Curtis 744 Farnsworth v. Allen 312 Fariium v. Fowle 452, 483 Farrington v. Brown 476 r. The Park Bank 214 Farwell v. Kennett G V. Tyler ■ - 478 Fav r. Grimsteed 403 Fear v. Dunlap 139 Fegenbush r. Lang 124 Fenn r. Harrison G69 Fentum v. Pocock 591, 594, 596 Ferf^uson v. King 100, 478 Ferrall c. Shaen 278 Field V. Can- .S52 Findlav r. Ilinde 693 Firth V. Thrush 394 Fish V. Hubbard's Adm'rs 5 Fisher v. Beck with 42 V. Bradford 479 V. Fisher 211 V. Marvin 343 V. Mershon 673 Fitch V. Jones 233, 234 Fleckner i;. Bank of United States 747 Fleming v. Potter Fletcher v. Austin V. Chase V. Dana V. Gushee- Flint V. Day V. Flint V. Rogers Florance r. Adams Foard v. Womack Foden v. Sharp Foley V. Cowgill Folger V. Chase Foltz V. Pourie Ford V. Angelrodt V. Beech Foster v. Julion V. Pearson Fowler r. Brantly Fox r. Whitney Foy r. Blackstone Fralick r. Norton Francia v. Joseph Frankfort Bank Franklin v. Twogood V. Verbois 109 604 211 160, 478 258 140, 593, 600, 601 276 485 614 441, 443 21 606, 607 112, 325 161 108 ^07, 561, 5(;2 326, 330, 449, 452 198, 253, 259 235, 239, 250 524, 526 212 10 172 Johnson 745 PAGE Frazer v. Jordan 560 Frazier v. Warfield 715 Freakley v. Fox 479 Fredd v. Eves 164 Freeman v. Boynton 296, (i!»0 I'. Bri'ttin .")28 Freemans' Bank v. Perkins 393 French v. The Bank of Columbia 434, 442 Frontier Bank v. Morse 636 Fry V. Hill 40, 41 Fuller V. Smith 669 FuUerton v. Bank of United States 325, 393, 443 V. Sturges 610 Fulton V. Williams 161 Furze v. Sliarwood 371, 376 Fydell v. Clark 669 Gale V. Walsh Gallery t\ Prindle Galpin V. Hard Gansvoort v. Williams Gardner v. Walsh Garnett v. Woodcock Gaskin v. Wells Gay r. Haseltine Gazzam t'. Armstrong Geary v. Physic Geill V. Jeremy Geljocke v. Dubuque Genesee Bank v. The Bank George v. Surry Geralopulo v. Wieler Gerard v. Le Coste Gibbs V. Fremont V. Gannon Gibson v. Connor Gilford, Ex parte Gilbert v. Dennis Gill V. Cubitt 208, 216, Gillespie v. Cammack V. PLannahan Gilman r. Peck Girard Bank v. Bank Township Gist r. Lybrand Gladwell v. Turner Glendinning, Ex parte 431 8, 108 320 734, 735, 736 599* 311 642 543 87 110, Patchin 110, 200, 575, 296, 253, 254, 258, 317, of Penn 330, 575, 576, 210 468 Gloucester Bank v. The Salem Bank 644, 646, 648, 656, Glynn v. Bank of England 691, (xoblet V. Beechey Goddard v. Lyman 112 394. 744 729 111 88 6 713 426 207 576 375 257, 259 443 451 636 747 449 542 594, 596 657 692 6 160 lii TABLE OF Cases cited. PACK Goddard v. Merchants' Bank GG5 Goddin V. Shipley 308 Gohlsmith r. Bland 454, 456 Goodall i\ DoUey 27, 431 Goodloe V. Taylor 13 Goodman v. Harvey 208, 216, 251, 252, 253, 257, 258, 259 V. Simonds 208, 216, 219, 223, 235, 239, 260, 261, 478 Goodrich v. De Forest 50 Gorliam v. Carroll 528 Goshen & j\I. Turnpike v. Hurtin 13 Goss v. Nelson 12 Gould V. llobson 550,, 564, 565 Goiipy V. Harden 40 Gove v. Vining 476 Gower V. Moore 428,' 429 Grafton Bank v. Cox 329, 451 V. Hunt 635 Graham v. Adams 6 V. Gillespie 665 V. Sangston 375 Grandin v. Leroy 216 Granite Bank y.Ayres 452, 458, 462 "Grant v. Norway 738 V. Vaughan 167, 175, 254, 257, 333 Graves v. American Exchange Bank 339 Gray v. Brown 576 r. Donahoe 6 Greele v. Parker 60, 56 Greeley v. Thurston 485 Green v. London Omnibus Co. 744 Greenway, Ex parte 682, 689, 690 Grenaux v. Wheeler 258 Griffin v. Goff 476 Griswold V. Davis 203, 338 V. Slocum 155 Grugeon r. Smith 368, 373 Grutacap v. WouUouise, 10 Guidon V. Robson 161 Gurney v. Womersley 669 Gwvnn V. Lee 252 Hawden v. Mendizabel 479 Haines v. Dennett 528 Hale V. Andrews 616 V. Burr 330 429 451 Hall V. Fuller 661 662 665 V. Hale 257 V. Newcomb 111, 131, 145, 148, 472, 528 Halsey v. Brown 302 Haly r. Lane 174 ILinimond v. Dufrene 443 Hancock Bank v. Joy 164 Hansard v. Robinson 291, 293, 675, 679, 690, 692, 698 Hansbrough v. Gray 596 Harker v. Anderson 41, 720 Harley v. Thornton 636 Harper v. West 43, 51 Harphain v. Haynes 214 HarreU v. Marston 14 Harris v. Clark 149 V. Robinson 385 Harrison v. Bailey 476 V. Courtauld 591, 595 V. HaiTison. 110 Harrison v. Ruscoe 385, 386 Hartford Bank v. Steadman 390, 393 Hartley v. Case 363, 366, 372, 486, 487 Harvey v. Towers 199, 233 Hasbrook v. Palmer 6 Hasey v. White Pigeon Sugar Co. 43 Haskell v. Boardman 463 Haslett V. Kunhardt 429 Hatch v. Searles 215 Hatcher v. McMorine 715 Hawkes v. Phillips 131, 154 V. Salter 394, 535 Hawkins v. Watkins 6 Haxtun v. Bishop 274, 677 Haynes v. Birks 394 Hazelhurst v. Kean 715 Hazelton v. Colburn 542 Heane v. Rogers 539 Heath v. Sansom 213 Hedger v. Steavenson 367, 373, 374 Hemmenway v. Stone 128 Hemming v. Brook 352 Henderson r. Bondurant 215 Henry v. Jones 482 V. Lee 311 Hepburn v. Toledano 321 Herdnian i\ Bratten 606 Hern v. Nichols 732, 738, 745 Herrick v. Carman 114, 115, 134, 135, 136, 137, 147 V. Woolverton 214 Hetherington v. Kemp 536 Heywood v. Watson Hiatt V. Simpson Hickman v. Ryan Hicks V, Brown Higgins V. Watson Hill V. Lewis V. Norris Hilton V. Smith Hine V. Allely Hinsdale v. Bank of Orange V. Lamed 177, 179, 193, 198, 206 607 393 710 156 134 441, 442, 443 271 458 677, 706 677 TABLE OP CASES CITED. liii Hinsdale v. Miles 297 Iliiitoii V. Bank of Columbus 03 Ilirsdifield V. Smith 713, 714 Ilitc i'. Tlie State 6 Iloailley v. Bliss 476 Hoare v. Cazenove 88 V. Graham 505 Ilobart V. Dodge 14 Ilodi^es V. Shuler 10 Holfman v. Miller . 210 V. Smith [441, 443 Ilofje V. Lansing 215 llnlcman v. Ilobson 271 llollowell r. Curry 443 Ilolnian r. fFoImson 234 Holme V. Karsper 234 Holmes D. D'Camp G72 Home Ins. Co. v. Green 363 HoTues i;. Smyth 183, 184, 200, 207 Hooker v. Gallagher 160 Hopkins v. Liswell 475 Ilopkirk V. Page 426, 430, 444, 543 Hornl)lower v. Proud 255 Hortsman v. Henshaw 57, 88, 338, 339, 648, 661, 662 Hough V. Barton 674 Houghton V. Adams 636 Houlditch V. Cauty 368, 373, 375 House V. Adams 443, 543 Housum V. Rogers 212 Howard v. Ives 392 Howe i\ Bowes 458 V. Merrill 131 Howell V. Crane 262 Hoyt V. Lynch 6, 10 Hubbard v. Chapin 235 V. Jackson 351 Hume r. Peploe 488 Humphries c. Blight 260 V. Chastain 161 Hunt V. Adams 117, 127, 128 V. Bovd 642 V. Wadleigh 462 Hunter v. Ingraham 108 V. Kibbe 219 Hutchins v. Nichols 576 Hyslop V. Jones 409 Illinois, State of, v. Delafield 735 Ilsley V. Jewett 642 Imeson, Ex parte 1,2 Ingalls V. Lord 38 Ireland v. Archer 51 V. Kip 409, 456 Irick V. Black 615 Irish V. Cutter 131 Irvine v. Lowry 6 Irving Bank v. Wetherald Ives V. Farmers' Bank Jackson v. Richards G65, 748 211 393, 459, 462. 488 V. Ritter James t\ Badger Jameson v. Swinton Janson v. Thomas Jarvis v. St. Croix Manuf. Co. JelFcrson County Bank v. Chap- man Jenney r.-Herle Jennings v. Thomas Jennison v. Parker V. Stafford Jenys v. Fawler Jerome v. Whitney Johnson v. Baker V. Catlin V. Collins V. Kennion V. Weed Johnston, Ex parte Jones V. Bank of Iowa V. Broadhurst V. Brooke V. Fales 1, 302, 685, 695, 696 V. Hibbert 271 r. Lewis 399 V. O'Brien o39 V. Quinnipiack Bank 615 V. Ryde 647, 651, 657, 669 V. Simpson 14 V. Thorn 160 V. AVardell 377 Jordaine v. Lashbrooke 509, 510, 511, 513, 522, 523 460 565 384 307 410 677 139, 143 639 255 658 7 604, 605 478 48 350, 351 632 462 50 346 279 Josselyn v. Ames 115, 122, 126 V. Lacier 8 Joyce V. Williams 734 Judah V. Harris 2 Juniata Bank v. Hale 384, 423 Kearney v. King 715 Kearslake r. Morgan 207 642 672 Kearsley v. Cole 575 Keene v. Beard 718, 745 Keith V. Jones 2,3 Kelley r. Brooklyn 7.8 V. Brown 476 V. Hemingway 8 Kelly V. Solari 648 Kellogg I'. Dunn 166 V. LawrencQ 109 Kemble v. Lull 109 liv TABLE OF CASES CITED. PAGE Kondrick v. Lomax 550 Kcniuird v. Knott 563 Kennebeck Bank v. Page 302 Kennedy v. Carpenter 616 V. Geddes 51 Kensington v. Inglis 701 Kent V. Somervell 479 V. Warner 476 Kenworthy v. Hopkins 600, 564 Kerrison v. ("coke 591 Ketcbell r. Bums 111 Kiddell v. Ford . 462 Kilgore v. Bulkley 308 Killby V. Rochussen 542 Kilsby V. Williams 746 Kimball, The 213 V. Huntington 6 King V. Baldwin 559 V. Holmes 327 Kingman v. Pierce 334 King-sbury v. Butler 12 Kingsley v. Robinson 441 Kinsley v. Robinson 443 Klein V. Currier 124 Knapp V. Parker 140 Knight V. Piigh 258 Knox Co. V. Aspinwall 744 Kramer v. Sandford 462, 463 Kupfer V. Bank of Galena 441 LaCoste v. Harper LaJdlaw v. Organ Lake v. Stetson Lambert, Ex jyarte V. Ghiselin V. Oakes V. Sanford Lancaster Nat. Bank v Landry v. Stansbury Lane v. Ridley V. Steward Lange v. Kohne Langton v. Lazarus Lansing v. Gaine Lanusse v. Massicot Laverty v. Burr Lawrence v. Bowne V. Dougherty V. Langley Lawson v. Sherwood V. Weston Laxton v. Peat Lazarus v. Cowie Lazell V. Lazell Leach V. Buchanan Leaf r. Gibbs Le Breton v. Peirce Taylor 442 624 156 87 413 450 596 213 429 353 469 2 62, 662 734 458 734 494 7 462 535 254, 708 590, 591, 594 345, 596 C92 63, 661 604, 609 202 PAGE Lee V. Buford 542 V. Levi 563 Lee Bank v. Spencer 452 Leeds v. Vail 164 Leffingwell v. White 476 Leftley v. Mills 300, 311, 377, 485 Legge V. Thorpe 432 Leggett V. Jones 9 V. Raymond 111, 112 Legro V. Staples 14 Le Guen v. Gouverneur 39 Lehman v. Jones 316, 330, 449, 450 Leiber v. Goodrich 1, 2 Leland v. Farnliam 213 Lenox v. Leverett 88 V. Prout 563 V. Roberts 389, 392 Leonard v. Gary 476 V. Mason 10 V. Sweetzer 143 V. Vredenburgh 138 Levy V. The Bank of the United States 620, 646, 654, 658, 660, 661 Lewis V. Gompertz V. Hanchman V. Harvey V. Kramer V. Reilly Lickbarrow v. Mason 367, 373, 375 592 131 462 161 214, 262 Life and Fire Ins. Co. v. Mechan- ics' Fire Ins. Co. 744 Lightbody v. The Ontario Bank 619, 625 Lindas v. Bradwell Little V. Phoenix Bank Livingston v. Clinton V. Hastie V. Littell V. Livingston V. Rogers Cohen 104 6, 720 477 734 214 693 673, 701 715 604, 609 279 Lizardi v. Lloyd V. Howard V. Keach V. The West Branch Bank 747 Lockwood V. Crawford 375, 393 Loker v. Haynes 523 Lorain Bank of Elyria v. Town- send 399 Loring v. Gurney 14 Lovell V. Martin 334 Low V. Chifney 258 V. Copestake 161 V. Howard 469, 476 Lowe V. Waller 229, 512 Lowery v. Scott 320 Lowndes v. Anderson 177 LoAvrey v. Murrell 636 Luke V. Lyde 191 TABLE OP CASES CITED. Iv Lumley v. Palmer 43 Luiit V. Adams 312 Lyon V. Ewings 212 r. Holt 5G2 Lysaght o. 15rvant 385 IMacartiicy r. Graham GOO IMaidonald r. Hoviiijrton oG4 ]\IacH' V. Wc-lis 5G0 ]MaclK'll r. Kinnear 160 ;Matli.sh ('. Kkins 175 Madison, The, &c., Plank Road Co. V. Stevens 606 Magee v. Badger 258 Magriider v. Union Bank of (ieorgetown 428 Maiden Bank r. Baldwin 328 Mallet V. Thompson 575, 590 Manchester Bank v. Fellows 381, 541 Manning v. !MtClure 211 V. Wheatland 277, 278 IManrow r. Durham 111 Mareal v. Melliet 215 March r. Ward 128 Marine Bank r. Clements 234 Marion, &e., R. Co. v. Ilodge 43 INIarkle i: Hatfield 626, 632, G35, 651 Marr v. Johnson 38.S Marsh v. Barr 409 V. Xewell 479 Marshall v. Mitchell 462, 476 Martcl c. Tureauds 4G2 Martin v. Bacon 42 V. Bank of United States 678, 703 V. Boyd 131 V. Channtry 7 r. TiigersoU 476 Mason v. Franklin 328, 329 v. Hunt 47, 108 Master v. IMiller 702 Mather v. Lord Maidstone 661, 670 Matossv ('. Frosh 502 IMatthews v. Povthress 258, 708 [Matthey v. (ially 469 Mauran ik Lamb 478 May V. Chapman 251, 252 V. Quimby 212 Mayor r. Johnson 702, 703 v. Lord 744 McCalop I'. Fhiker 109 IM'Clarin v. Xesliit 2 ISrCormick v. Trotter 3 ]\Ic('ranier D. Thompson 615 McDonald v. Bailey 469 r. :\ratrruder 593 McDowell v. Keller 6 PAGE McEvers r. Mason 49 McFarland v. Pico 492 Mcdarr y. Lloyd 674 McGee r. Proiity 343 MHi ruder v. Bank of Washington 317, 319, 330 McGuIre v. Bosworth 131 McKenzie v. Durant 490 M'Kinney v. Crawford 424 MeKlcroy v. Southern Bank of Kentucky 648, G62, 664 McLemore v. Powell 546, 559 M'Nairy v. Bell 24 McNeil V. Wyatt 388 Meacher ?). Fort 661 Mead v. Engs 339 V. ^lerchants' Bank of Albany 748 V. Young 338 Meads v. INIerchants' Bank 747 Mechanics' Bank v. Griswold 462, 476 V. Hazard 346 r'. The New York and New Haven Railroad Company 738, 739 Meckles v. Colvin 211 Mellish V. Rawdon 40, 41 Mercer Co. «. Hacket 744 V. Lancaster 410 Merchants' Bank v. Birch 429 V. Spicer 14, 111 Merchants' National Bank v. Na- tional Eagle Bank 648 Merciiants' National Bank v. State National Bank 739 Merriam c. (Jranite Bank 257 V. Wolcott 669 Messenger c. Southey 367, 373 Metcalfe v. Richardson 375, 376 Midland v. Lagarde 452 Michigan Ins. Co. v. Leavenworth 12 State Bank r. Leaven- worth 203, 211, 213, 546, 557 Middlesex, &e. v. Davis 6 ^liddleton Bank r. Morris 40 Miers v. Brown 376, 428 Miles V. O'Hara 424 Miller i\ Delamater 163 r. Hacklev 501, 536 V. Race 16G, 175, 254, 257, 333, 617, 618, 619, 620, 628, G54, 702 Millett V. Parker 612 Mills V. The Bank of the United States 237, 308, 352, 368, 390 V. Barber 199, 234, 258 Miln V. Prest 51 Ivi TABLE OF CASES CITED. Milne V. Graham 71o Minet t'. Gibson 61 Misei" V. Trovinger 441 Mitchell V. Culver 245 V. Deo-rand 392 V. Rice 479 Mitford V. Wallicot 2T5 Mobley v. Clark 443 Moffat V. Edwards 13 Mohawk Bank v. Broderick 41 Moics V. Bird 116, 118, 128 Moline, Ex parte 485, 41)0 Montague v. Perkins 245 Montgomery Bank v. Walker 592, 596 Moore v. Denslow 160 V. Fall 679 V. Hardcastle 409 V. Isley 601 Moran v. Miami Co. 744 Mores v. Conham 744 Morgan t\ Davison 312 V. Peet , 476 Morley v. Culverwell 338 Morris v. Bethell 661, 669 V. Sumnierl 37 Morrison v. Buchanan 648 V. StockwcU 478 Morton v. Burn 255 V. Navlor 8 V. Westcott 409 Moses v. Ela 463 Moss V. Hall 561, 562 V. Riddle 606 Mossop V. Eadon 689, 690, 691, 692 Muilman v. D'Eguino 40 Mulherrin v. Hannum 24, 109 Mullick i\ Radakissen 40 Munn r. Baldwin 376, 532, 533 V. Commission Co. 279 V. Ruggles 285 Murdock v. Mills 50 Murray v. Judah 696 V. Lardner 257 Mussey v. Eagle Bank 729 Mutford V. Walcot 158 Nadin v. Battle 564 Naglee r. Parrott 211 Napier v. Elam 256 National Bank of North America V. Bangs 664 National Park Bank v. Ninth Na- tional Bank 665 National Savings Bank v. Tranah 213 Natwyn v. St. Quintin 553 New York and New Haven Rail- road Co. V. Schuyler 745 N. B. Savings Inst. Bank Neal V. Wood Nelson v. Dubois V. Fairhaven 615 541 114, 115, 116. 118, 134, 135 556 483 8, 25 Newell and Pierce v. Hamer N. E. Bank v. Lewis Newhall v. Clark i New York M. Iron Works v. Smith N. Y^ & Va. State Stock Bank v. Gibson Niagara District Fairman, &c., Co. Nichols V. Holgate V. Norris Nicholls V. Bowes Nicholson v. Gouthit 256 234 Bank v. The Manufacturing 329 528 575, 576, 591 19, 20 425, 459, 460, 461, 462, 465 V. Patton 257 V. Revill 576 Noble V. Kennoway 302 North Bank v. Abbot 328 Northern Bank v. Farmers' Bank 708 North River Bank v. Aymar 735, 736, 748 Northam v. Latouche 233 Norton v. Coons 600 V. Lewis 417 V. Waite 183, 200, 207 Nott V. Beard 292 Nutter V. Stover 211 Ogden V. Cowley V. Slade Ogilby V. Wallace O'Keefe v. Dunn Okie V. Spencer 455 6 477 259 204, 213, 546 Oliver v. Bank of Tennessee 441 Ontario Bank v. Lightbodv 619, 620, . 625, 634, 661 V. Worthington 42, 51, 172, 189 Ord V. Portal 160 Orear v. McDonald 441, 443 Oridge v. Sherborne 307, 308 Oriental Bank v. Blake 429 Orono Bank v. Wood 542 Orr V. Maginnis 292, 443, 688 Ory r. AVinter 715 Osborn v. Moncure 487, 493 Osgood V. Thompson Bank 211 Otsego County Bank v. Warren 463 Oulds V. Harrison 276 Outhwite V. Porter 211 Overman v. Hoboken City Bank 650 TABLE OP CASES CITED. Ivii PAOE 1 I-AGE Overton v. Tyler 9 Percival v. Franipton 177, 182, 194, Owen V. Ifjlanor 108 198, 206 I'. Liivine 108 Perkins v. Barstow 150 Owenson v. !Morse 632 V. C'atlin 124, 143 Oxlurd Bank v. Ilaynes 129 V. Franklin Bant 480 V. Lewis 657 Perry v. Green V. Harrington Peto V. Reynolds 402 8, 108 14 Pacific Bank v. Mitchell 354 Petrie r. Clark 184, 200, 207 Packard v. Richardson 522 Pettee v. Prout 213, 478 Pagan i\ Wjlie 66.-) Philadelphia Bank v. Newkirk 14 Palen i'. ShurtlefF 388 Philadelphia and Baltimore R Co. Palmer v. Hughes 109 V. Quigley 744 V. Pratt 12 Phillips V. Cole 259 V. Richard 198, 2on, 2r,2 r. Frost 43 V. Richards 604 6()9 V. Thum 61, 62, 63, 88 V. Stej)hens 14, 111 Phipps r. Chase 443 r. Whitney 543 Pliipson V. Kneller 465, 466, 476 Park r. Page 482 PhcL-nix Bank v. Hussey 88 Park Bank v. Watson 212 Phoenix Ins. Co. v. Allen 542, 637 Parker v. Gordon 311 V. Gray 542 r. Greele 56 Pickering v. Busk 614 V. Hanson 525 Picquet v. Curtis 219 V. Maconiber 101 Pidcock V. Bishop 004 Parks V. Ingiam 596 Pierce v. Cate 330, 429, 449 451,490 Parr v. Eliason 279, 280 V. Kennedy 112, 139 Partridge v. Davis 111, 112, 156 V. Pendar 377, 382 Pascoe V. Vyvyan M5;! Pierce v. Wiiitney 327 Pasmore v. North 220 Pierson v. Dunlop 46, 47 ', 48, 351 Passunipsic Bank v. Goss 6in, 615 V. Hooker 475 Paterson v. Hardacre 21;?, 3:53 V. Hutchinson 672, 682 Patience r. Towidey 418, 419, 444 Pillans V. Van Mierop 46, 47, 48, 49, Patton f. Bank of South Carolina 703 174, 192 V. State Bank 703 Pine V. Smith 214 Pawling V. The United States 604, 606, Pinkhara v. Macy 375 607, 608, 009 Pinnes v. Ely 112 Payne v. Cutler 172 1.S9 Pintard v. Tackington 671 680, (582 Payson v. Coolidge 50 Pitcher r. Barrows 161,478 Peabody v. Rees 215 Plato V. Reynolds 543 Peach I'. Kay 43 Plets V. Johnson 61 Peacock v. Purcell 208 210 Plumnier v. Lyman 50, 51 V. Rliodes 167 , 176 , 2o4 , 333 Poirier v. Morris 199, 204 206, 256 Pearson v. Bank of Metropolis 320 ,327 Polk V. Spinks 446 r. Crallan 408 Pollard V. Herries 10 r. (iarret 12 Pons V. Kelly 443 r. Stoddard 156 Poole r. Tumbridge 490 Pease, Ex jmrte 204 205 Pope V. Nance 648 V. Hirst 354 Porter v. Kemball 472 Peck V. Bli-h 276 Potter r. Brown 711 r. Hibbard 715 V. Lansing 38 Peckani v. Gilnian 150 Powell I'. Jones 43 Pcisch V. Dickson 4 V. Waters 216, 283 Pendlebury i\ Walker 601 Pownal V. Ferrand 353 Pendleton v. Bank of Kontut ky 748 Pratt V. Coman 211 People, The, r. Bostwic k 611 Prentiss v. Danielson 462 r. Wiley 677 Prentice v. Zane 201, 2<i2 Pepper V. The State 605, 007, 608, Prescott Bank r. Caverl v 528 » 609 611 ,615 Preslar v. Stalworth 616 Iviii TABLE OP CASES CITED. ] 'AGE PAGE Prestwick v. Marshall 163 Richter v. Selin 476 Price V. P](hn()nds 591 Rideout v. Bristow 255 V. Edmunds 563, 591 Ridgway v. Day 476 V. Neale 646, 655, 656, 657, 658 Ricraan v. Fisher 669 V. Price 206 Riggs V. Waldo 112, 139 V. Teal 10 Riley ik Gerrish 528 V. Young 429 Ringgold V. Tyson 528 Pridcaux v. ('riddle 396 Ripka V. Pope 109 Prince v. Brunatte 163 Ripley v. Greenleaf 308, 546, 557 Pring V. Clarkson 546, 549 Robarts v. Tucker 665 Pringle v. Phillips 258 Robb V. Bailey 160, 161, 478 Prossor v. Luqueer 132 Robins v. Maidstone 271 Puckford V. Maxwell 632, 642 Robinson v. Abell 145 Purssord v. Peek 350 351, 352 V. Ames 441 Putnam v. Sullivan 316, 317, 451, 610, 668 V. Bland V. Reynolds ?). Smith 715 214, 262 211 Quin V. Sterne 150 V. Yarrow Robson V. Bennet V. Curlewis 63 746 375 Rabey v. Gilbert 542 Rogers v. Coit 111 Raborg v. Bank of Columbia V. Stevens 292, 431, 476 Radolph V. Cook 490 Rohde, Ex parte 452 Ranger v. Cary 274 Rolfe V. Caslon 288 V. The Great Western R. V. Wyatt 591 Co. 745 Rordasnz v. Leach 160 Ransom v. Mack 363, 375, 377, 382, 410 Rosa V. Brotherson Roscow V. Hardy 172, 189 386 Ranson v. Sherwood 124 Rose V. Park 715 Raphael v. The Bank of England 252, V. Sims 288 253 v: Van Mierop 46-49 174, 192 Ratcliff V. Planters' Ban k 330 Rosher v. Kieran 386 Rayner v. Linthorne 613 Ross V. Bedell 258 Read v. Adams 41 444 RothsL'hild V. Cnrrie 712, 713 V. Brookraan 690 Routh V. Robertson 363 V. Gamble 502 Rowan r. (\lenheimer 363 IK Marsh 50 Rowe v. Tipper 385 Reakert v. Sanford 164 IK Young 17, 18, 21 108, 329 Reddick v. Jones 200 , 207 Rowley v. Ball 673, 676 680, 698 Reedy v. Seixas 363 V. Home 708 Rees V. Warwick 42 Royal British Bank v. Tarquand 744 Reg. V. Bateman 215 Rucker et nJ. v. Hiller 433 V. Wilson 215 Ruggles V. Patten 23, 109 Reid V. Eurnival 353 Rundle v. Moore 37 V. Morrison 317, 329, 330, 449, Rushton V. Aspinwall 305, 491 451 Russel V. Langstaflfe 215 245, 610 Renner v. The Bank of Columbia Russell V. Swan 160 237, 297, 362 , 447 , 505 , 696 V. Turner 38 Reynolds v. Blackburn 351 353 V. Wiggin 50, 51, 57 V. Doyle 616 Rutland & B. R. Co. V. Cole 478 Rex V. Hart 215 Ryan v. Chew 211 V. Johnson 701 Rhett V. Poe 441 ,443 Rice V. Mather 288 Safford V. Wyckoff 729 V. Riatt 211 Salinas v. Wris/ht 14 Richardson v. Lincoln 129 , 221 Salisbury v. AVilliams 701 V. Rikeman 672 Samson v. Thornton 129 Richie v. McCoy 443 1 Sanderson v. Bo\\^s 20, 23 TABLE OP CASES CITED. lix PAfiK Sandford v. Dillaway 452, 402 Sanford v. Lainlieit 592 V. IMicklcs 161 V. Norton 112, 111, 142, 213, 257 Sard V. Rhodes 352 Sargent v. Appleton 354, 443, 576 V. Soutiigate 273, 274, 275, 520 Saul V. Jones 543 Saiindcrson v. Judge 377 Savage v. King 103, 104 Saver r. WagstalT 213 Sehimnielpennifli r. Hayard 49, 54, 04 Schneider v. Schiffman 131, 143 Scholield i\ Bayard 88, 422 Schollenberger v. Nehf 124, 143 Scott V. Greer 472 V. Ocean Bank 210, 212 r. Lifford 377 Scruggs V. (iass 619, 020 Seabury v. Hungerford 132, 138 Seacord v. Miller 403 Schree v. Dorr 502 Seely v. The Peo[)le 003 Seixas v. Woods 624 Seneca ( 'o. Jiank v. Xeass 325, 410 Serle v. Norton 740 Seventh Ward Bank v. Ilanrick 392 Bewail V. Russell 393 Seymour v. Leyman 150 Shaniburiih v. Connnagere 328 Sharp V. United States 008 Shaver v. Elile 082 Shaw V. Coates 383 r. Croft 383, 380 V. Reed 290, 328, 330, 451, 462 Shaylor v. Mix 382, 409 Shearni r. Burnard 502 Shed V. Brett :i77, 409, 458, 484, 496 Sheldon v. Benhani 382, 390 V. ( 'hapnian 543 r. llorloii 470 ' Shelton i\ Urothwaile 308 Shepj)anl ifc Co. v. Stewart 342 Sherwood i\ Barton 161 r. Roys 479 Shirley v. Fellows 441 Shute (;. Robins 40 Shuttleworth, Ex parte 669 Sigerson v. ^Mathews 542 Simpson v. Moulden 6, 7 V. Turney 896 Sinclair r. Lynch 375 Slacum r. Pomerv 715 Smedes v. The lltica Bank 380, 535 Smith ('. Bank of Washington 490 V. Boulton 375 I'AGE Smith V. Iha'me 198, 233, 258 V. ( 'hester 63, 058 r. De Witts 193 V. P^arl of Jersey 4 V. Iliscock 202 V. Kendall 6, 9 V. Knox 203 V. Lusher 161, 478 V. Mechanics' Bank 257 V. Mercer 046 656, 657, 058 V. IVIoberly 612 V. IMullett 382, 395 V. Nightingale 10, 14 V. RockAvell 695, 697 V. Thatcher 442 V. Whiting 363, 364, 370 V. Winter 576 V. A\"right 303 Snow V. Peacock 708 V. Perkins 363 V. Perry 636 Society for Savings v. New I iOn- don 744 Solarte, Ex parte 462 V. Palmer 300, 307, 372, 373, 374, 375 Solly V. Forbes 576 Solomons v. The Bank of England 201 Spangler v. ]Mcl)aniel 443 Spaulding v. Andrews 42 Spear v. Atkinson 441 Spencer v. Harvey 462, 476 Spies V. Gilmore 111, 139, 145, 156, 451 V. Newbury . 375 Spooner v. Rowland 642 Spring I'. Lovett 527 Spiincfield Ins. Co. v. Tincher 543 StalFord v. Rice 522, 528 Stagg v. Elliott 215 Staley V. Mathers 276 Stalker v. IMcDonald 201, 250, 265 Stanton v. Blossom 386, 388 Staples V. Okines 402, 465, 466 Starr i'. Sanford 542 State V. Bodly 610 V. Chrisman 600, 012 Bank i\ Evans Oil V. Ilurd 827, 370 V'. Napier 109, 325, 328 Steadman v. Gooch 206 Stedman v. Gooch 642 Steinhart v. Boker 216 Steman v. Harrison 50 Stephenson r. Dickson 396 V. Primrose 462 Sterling r. ^larietta, &c.. Trading Co. 644, 550 Ix TABLE OP CASES CITED. Stevens v. Blunt 13 V. CainplioU 211 V. Hoyland 211 Stewart v. Eden 315, 575 V. Smith ^214 Stivers v. Prentice 328 Stockman v. Parr 303 Stoddard v. Kimball 211, 256 Stones V. Butt 479 Stoney v. The American Life In- surance CompanJ' 728, 744 Storer v. Logan 50, 57 Storm V. Sterling 14 Stothart V. Parker 462 Stotts V. Byers 212 Stout w. Benoist 661 Straker v. Graham 40 Strang v. Wilson 527 Strange v. Price 368, 373 V. Wigney 708 Strong's Case 540 Strong V. Foster 562 V. Ptiker 141, 143 Stump V. Napier 528 Sumner v. Gay 117, 129 V. Parsons 127 Supervisors v. Schenck 744 Sussex Bank v. Baldwin 3'27, 328 Sutcliffe V. McDowell 442 Sutton V. Shelley 505 Swan V. The North British Austra- lian Company 604, 610, 745 Swansey v. Breck 108 Swetland v. Creigh 7 Swift V. Tyson 168, 169, 177, 183, 199, 2U0, 207, 210, 211, 212, 219, 222, 235, 249, 252, 256, 261, 264, 265 Sylvester v. Crapo 259 V. Downer 112 Talbot V. Bank of Rochester 62 V. Clark 393 Talman v. Gibson 477 Tarleton v. AUhusen 642 V. Benbow 689, 691 Tarver v. Nance 441 Taunton Bank v. Richardson 476 Tayler v. Mather 260, 275 Taylor v. Beck 528 V. Snyder 25, 109, 326, 449, 450, 451 Taylor v. Craig 612 Tebbetts v. Dowd 541 Temple v. Seaver 161 Tenney v. Prince 117, 129 Teresy v. Gorey 691, 692 Thackray v. Blackett 442 Thayer v. Boston 745 V. BufFum 161, 478 V. Grossman 522, 527 V. King 680, 686 Thomas v. Fenton 352 r. Newton 261 V. Todd 636 Thompson v. Ketcham 327 V. Patrick 744 V. Shepherd 264 Thornton v. Wynn 475 476 Tillman v. Wheeler 134 Tillotson V. Rose 616 Timmis v. Gibbins 636 Tindal v. Brown 363, 365-371, 372, 374, 384, 385, 391, 425, 428, 488 Tinker v. McCauley 156 Tobey v. Berly 476 Tobias v. Rogers 600 Todd V. Stafford _ 528 Tomlinson Co. v. Kinsella 214 Toosey v. Williams 535 TooteW, Ex jxnie 14 Tower v. Appleton Bank 674, 694 Townsend v. Bush 523, 527 V. Crowdy 648 V. Lorain Bank 375, 376 Townsends v. Bank of Racine 636 Townsley v. Springer 393 V. Sumrall 27, 49, 51, 192, 500 Treon v. Brown 527 Triggs V. Newnham 311, 312 Trimby v. Vignier 715 Troy City Hank v. Lauman 329 Trustees v. Hill 212 Tunstall v. AValker 401 Tyrner v. Leech 386, 387 Twopenny v. Young 557 Ubsdell V. Cunningham 13 Uhler V. Semple 615* Ulen V. Kittredge 116 Ulster County Bank v. McFarlan 56 Union Bank v. Hyde 357, 469, 472 V. Magruder 476 V. Stoker 409 Union Bank of Weymouth v. Wil- lis 144, 148, 156 United States v. Barker 91 V. Dunn 91 V. Hodge 203 V. Le filer 606, 607 V. Parker 392 United States Bank v. Goddard 386 Upham V. Prince 113 TABLE OF CASES CITED. Ixi Uther V. Rich Utica Ins. Co. V. Toledo I'Adi: G13 200, Valette v. IVIason Valk V. Siniinons Vallance v. Siddel Vallett V. Tarker Vaiiaukt-n v. llornbeck Van Duzer 17. Howe (rj, Van Kaiigh i\ Van Arsdale Van Vc'chten r. Pruyn Van Wart v. WooUey 3U, 31 Veazie Bank r. Wynn Vere v. Lewis Vidal V. Thonipson Vincent v. lloiloik Vinton V. King Violctt V. Patton Vore V. Hurst 207, 441, 173, 233, 215, 39G, ,32, 38, 131, 271 443 174 235 673 G02 711 410 34, 213 490 Gl 308 111 214 245 139 Waekerbatli, Ex jiarte 87 Wade V. Buekner, Stanton, & Co. 55G V. New Orleans Canal 674 V. Wade 680 V. Withington 668 Wain V. Bailey 297 Wainwright v. Webster 636 Wait V. Brewster 642 Wakfield v. Crossman 539 Walker v. Bank of The State of New York 39, 329 V. Geisse 200, 207 V. Laverty 475 V. Rogers 441, 442, 476 r. Stetson 377, 413, 542 Wall V. Bry 472 Wallace v. Agry • 715 V. M"( onnell 109 r. Tellfiiir 37 Walmsley r. Child 689, 691, 692 Walter v. Kirk •192 Walton V. Mascall 255 V. Shelley 505, 509, 511, 513, 517, 520, 622, 523, 527 Walwyn v. St. Quintin 351, 432, 564 Ward r. Allen V. Evans V. Lewis ?■. Berrin Warden r. Howell AVare v. Street Warner v. Lee Warren r. Gihnan V. Lynch 62, 662 6:!2 607 404 268 636 210 219, 376, 381, 541 171, 188 i: Warren v. Merry Warrington r. Furbor Wasiiington Bank v. Krum Wasiiington Co. Mut. Ins. Co Miller Waterbiiry v. Sinclair WatervHet Bank v. AVhite Watkins v. Crouch I'AOE 522, 523, 524 291 212 13 111, 139 479 22. 109, 328, 462, 463 200 262 124, 143 276 478 719 509 485, 486 124 37 616 24, 109 479 Hathaway Watson V. Cabot Bank V. Flanagan • V. Hurt Way V. Lamb V. Richardson Wavman v. Bend Webb r. Danforth V. Fairmaner Webster v. Cobb r. De Tastet r. Kirk Weed V. Van Houten Welch r. Lindo Welland Canal Co. r. Hathaway 745 Wells V. Jackson 139 Wentworth v. Wentworth 635 West V. Brown 328 Westfall V. Braley 636 Wetlierwax v. Paine 131 Whak-y v. Houston 442 Wheaton v. AVihnarth 363 Wheeler v. Field 330, 399, 449, 452 V. Guild 218, 252, 331 V. Johnson 479 V. Slocuui 255 Whistler v. Foster 210,«213, 339 Whitaker v. Brown 261 V. Sumner 744 White V. Hopkins 592 v. Howland 118, 128 V. Kibling 260, 338 V. Richmond 7 V. Springfield Bank 256 Whitefield r. Fausset 692 Whitehead c. Walker 276 Whitfield V. Savage 425 Whitlock ?;. McKechnie 161 Whittaker v. Ednmnds 258 Whittier v. Graiiam 316, 317 Wiiitwell V. Johnson 296, 39^ WilKn V. Roberts 271 Wiggin r. Bush 250 Wiggle V. Thomason 492 Wild V. The Bank of Fassama- quoddy 747 «. Rennards 20 Wildes V. Savage 50, 57 Wilkes r. Jacks 443 Wilkins r. Jadis 311,312 Ixii TABLE OF CASES CITED. Wilkinson v. Adam V. Johnson V. Lutwidge Willcts V. Plifjenix Bank Williams v. Brashear V. Cheney V. Germaine ■V. Little V. Smith 374 63, 645, 605 G58 747 441, 442 235 200, 203, 207 200, 271 United States Bank 378 Wade Walbridge Winans I'. Johnson Williamson Wilson, Ex parte V. Clements V. Holmes ». Lazier V. Senier V. Swabey V. Williams V. Williman Windham v. Wither Wintermute v. Post Winton v. Saidler Wiseman v. Lyman Wolcottu. Van Santvoord Wolfe V. Jewett WoUenweber v. Ketterlinus Wood V. Brown V. Corl Woodcock V. Houldsworth Woodford v. Whiteley Woodman v. Churchill 715 622, 734 42, 51 111 664 50 260 715 463 384 734 489 567 108 622 642 21, 22, 109 451 441, 442 476 308 399 679 213, 215 PAGE Woodruff V. Merchants' Bank 308, 718, 720 Woods V. Dean 476, 542 V. Neeld 409 V. Price 441, 476 r. Pugh 87, 88 V. Tyson 479 Woodworth v. Huntoon 262 Worcester Bank v. Dorchester and U. Bank 257 V. Welh Wormley v. Lowry Worrall v. Gheen V. Munn Wright V. Austin V. Dannah V. Maidstone V. ]\Iorse V. Shawcross V. The Shelby, &c Wyat V. Campbell Wynn v. Alden 715 201 648, 665 607 616 613 679 156 394 606 233 375 Co. Yallop V. Ebers 691 Yeaton v. The Bank of Alexan- dria 303 York County Mut. Fire Ins. Co. V. Brooks Young V. Adams V. Bryan V. Grote Youngs V. Lee Youngue v. Ruflf 604 618, 619, 630, 635, 651 356 62, 648, 665, 668 255, 363 441 LEADING AND SELECT CASES. LEADING AND SELECT CASES UPON BILLS OF EXCHANGE AND PROMISSORY NOTES. FORM AND KEQUISITES. Thompson v. Sloan et al. (23 Wendell, 71. Supreme Court of New York, January, 1840.) Payable in Canada money. — A written promise, executed in New York, to pay in that State a certain sum in Canada money is not a negotiable note ; but if negotiable, parol evidence is admissible to show the meaning of the term " Canada money." The note in this case was dated at Buffalo, New York, signed by James Sloan and John Wilkinson, payable to the order of John- son, Hodge, & Co., in Canada money, at the Commercial Bank in Buffalo, and indorsed by the payees. The makers and indorsers were sued jointly. The questions in controversy were, first, whether the paper were a negotiable note ; and secondly, whether parol evidence could be received to explain the meaning of the term " Canada money," as understood in Buffalo. CowEN, J. A promissory note must, in order to come within the statute, like a bill of exchange, be payable in money only, in current specie ; Bayl. on Bills [1], 10 Am. ed. of 183G ; Ex parte Imeson, 2 Rose, 225 ; or at least in what we can judicially notice as equiva- lent to money. Accordingly, a note payable in bills of country banks, Jones v. Fales, 4 Mass. 245, in Pennsylvania or New York paper currency, current in Pennsylvania or New York, Lei- ber V. Goodrich, 5 Cowen, 186, in notes of the chartered banks of Pennsylvania, though the note was made and payable in the State 1 2 FORM AND REQUISITES. of Pennsylvania, M'Cormick v. Trotter, 10 Serg. & Kawle, 94 ; see Cook V. Satterlec, G Cowen, 108 [ joos^, 8] ; in paper medium, Lange t;-|:ohne, 1 M'Cord, 115 ; see M'Clarin v. Nesbit, 2 Nott & M'Cord, 519, or in cash or Bank of England notes, Ex parte Imeson, before cited, 2 Buck, 1 S. P., has been held without the statute. The farthest we have gone is, to say that a note drawn and pay- able here, in New York bills or specie, Keith v. Jones, 9 Johns. 120, or in bank-notes current in the city of New York, Judah v. Harris, 19 Johns. 144, is negotiable. In both cases the Court went on the ground of a right to take judicial notice that New York bills, and especially bank-notes current in the city of New York, were customarily considered and treated as equivalent to specie. And, in the last case, they said, though the defendant might have a right to pay with foreign bills current in the city, the note was still to be regarded as payable in current money. Admitting that the note in question imports an obligation to pay in gold and silver, current in Canada, I do not see on what prin- ciple we can pronounce it to be payable in money, within the mean- ing of the rule. It is not pretended that coins current in Canada are, therefore, so in this State. As gold and silver they might readily be received : and so might the coin of any foreign country, Germany or Russia, for instance ; but the creditor might, and in many cases doubtless would, refuse to receive them, because igno- rant of their value. In law, they are all collateral commodities, like ingots or diamonds, which, though they might be received, and be in fact equivalent to money, are yet but goods and chattels. A note payable in either would, therefore, be no more negotiable than if it were payable in cattle or other specific articles. The fact of Canada coins being current here is not, at any rate, so notorious that we can judicially notice them as a universally customary medium of payment in this State ; and if not, they are no more a part of our currency than Pennsylvania bank-bills. Leiber v. Goodrich, before cited. Nor do I perceive in the case any proof, or offer to prove, that such coins were universal currency. This view of the case is not incompatible with a bill or note pay- able in money of a foreign denomination, or any other denomination, being negotiable, for it can be paid in our own coin of equiva- lent value, to which it is always reduced by a recovery. Chit, on Bills, 615, 616, Am. ed. of 1839 ; Deberry v. Darnell, 5 Yerg. 451. A note payable in pounds, shillings, and pence, made in any coun- THOMPSON V. SLOAN. 3 try, is but another mode of expressing the amount in dollars and cents, and is so understood judicially. The course, therefore, in an action on such an instrument is to aver and prove the valuo»of the sum expressed, in our own tenderable coin. It is payable in no other, vide Bayl. on Bills, 23, Am. ed. of 18-30, and the cases there cited, whereas on the note in question, Canada money, a specific article, would be a lawful tender ; Canada coppers, for aught I see, and, under our own decisions, bank-bills commonly current in Canada, would also be tenderable. Nor is it necessary to deny, that had this note been made, in dorsed, and payable in Canada, it would have been negotiable. It would then on its face have been payable in the current coin of the country where it is made. The objection is, that the note was made, indorsed, and payable here, in a foreign commodity, which the payee was entitled to demand specifically ; and to reject gold and silver current in the United States. It is of course the same thing under the extrinsic evidence offered by the plaintiff, and re- ceived by the judge. The Canadian statute merely proved what coins were current as Canada money ; which could not be recog- nized as the money of this country. In the light of that proof, the note must be read as necessarily payable in Canada money, current by law in that province. It did not improve the case, without fol- lowing it with some statute making that money, as such, current here ; or, at least, showing that it was, in fact, so notoriously cur- rent among us that we should be entitled to take judicial notice of the fact. The latter is the utmost, that, by our cases, the plaintiff could claim ; though we have gone farther than the cases decided in any other State or country, so far as they were cited on the argument, or have come under my observation, except a case in Ten- nessee, Deberry v. Darnell, 5 Yerg. 451. The instrument was pay- able in North Carolina notes, yet held negotiable. In M'Cormick V. Trotter, I fear we were somewhat justly criticised for the high ground on which we had placed all our State bills in Keith v. Jones. At any rate, Mr. Justice Diuicdti very truly reminded us that New York State bills had depreciated in common with those of Pennsyl- vania. A remark, which he made as to the note in that case, which was payable in Pennsylvania bills, would, I apprehend, be nearly applicable to our own at some stages of our currency ; viz., that " it was payable in more than forty kinds of paper of different value." 4 FORM AND REQUISITES. The evidence offered, that the makers were desirous to draw the note payahle in Canada hills, which the plaintiff refused, tended to pri)ve no more than that the note was intended to be payable in Canadian current coin. It was, therefore, as we have seen, irrele- vant, besides being, as I think, inadmissible, because it was direct independent evidence of intention, as explained by the parties at the very time of drawing the note. Every thing of this kind which the parties declared was merged by the written agreement. The legal effect of a written agreement cannot be controlled by this kind of evidence. Creery v. Holly, 14 Wend. 26. Nor, in general, can a patent ambiguity be obviated by it. See Cowen & Hill's Notes to 1 Phil. Ev. 1384, 1388, et seq. and cases there cited. I speak of the confessions or declarations of the parties, which go to show what they meant by the words used in the writing. I do not deny that in such a case, a resort may be had to collateral circum- stances. Per Bayley, J. in Smith v. Doe, ex dem. Earl of Jersey, 2 Brod. & Bing. 558 ; 1 Phil. Ev. Cowen & Hill's ed. 546, note 957; p. 1399, et seq.; Peisch v. Dickson, 1 Mason, 9, 11. The cases of Cole V. Wendel, 8 Johns. 116, and Ely v. Adams, 19 id. 313, were mentioned to us on the argument. I much doubt whether the latter case can be understood as conflicting at all with the distinc- tion I have mentioned. In the former, it was doubtful which of two subjects mentioned in the writing, the parties intended to refer to, and the judge at the circuit, received evidence of the form in which the plaintiff desired the contract should be written, and to which the defendant assented. It was written in a different form, which made it ambiguous on its face. Yet the verdict was sustained on motion for a new trial, and an opinion expressed that the evi- dence was proper. The ambiguity, though patent, lay between two objects only, and the decision may be sustained by a class of authori- ties which make such cases an exception. Vide Cowen & Hill's Notes to 1 Phil. 1388, 1392. The ambiguity was not, in its own nature, unexplainable ; and the only difficulty is on the kind of proof. There was, however, as the Court remarked, enough ap- pearing on the face of the paper itself to remove the doubt. The case is sustainable on that ground, even if the contemporaneous declarations were improperly received. But in the case at bar, extrinsic evidence of the kind offered by the defendants was, I think, admissible to prove that Canada money meant, in general mercantile understanding at Buffalo and in its THOMPSON V. SLOAN. 6 vicinity, Canadian bank-bills, and not specie, whether we regard tlie words used in the note as jn-ima facie importing current Cana- dian coin, or as ambiguous on their Face ; in otlicr words, leaving it doubtful whether they meant current Canadian coin or bank-notes. Such evidence was not necessary, if what I have said as to the legal ellect of the words be correct, and was therefore irrelevant, and, in that view, inadmissiljle. But suppose I am mistaken in saying that this note was not negotiable as being payaljle in the legal money of the province, then it was competent to prove the customary mean- ing of the words. The cases are quite numerous, that though tiie meaning of the word be perfectly well settled in general language, yet if a secondary meaning has been affixed to it in commercial usage, in a certain region of country, or among certain classes of men, this may be shown ; and when the proof is clear, the use of the word in that region, or among those men, carries into the contract the signification thus established. The general rule is clear, and hardly calls for a quotation of books, vide Cowen & Hill's Notes to 1 Phil. Ev. 1409, 1412, and the cases there cited ; and if a word of known general signification may be thus qualified, it is difficult to perceive how, without a violation of the very principle on which this is allowed, we can refuse the same sort of testimony to clear up a doubtful word. The latter would seem to be a less violent exception to the rule, which requires that language shall have an effect according to its general import. It is supposed that a ])atent ambiguity is more stubborn than a direct and clear expression. This conclusion is sought to be de- rived from the famous rule of Lord Bacon, which declares patent ambiguities unexplainable. I had occasion in a late case, Fish v. Hubbard's Adin'rs, 21 Wend. 651, to show that the rule in its general sense had seldom, if ever, been acted upon, and never should be so applied as to preclude collateral circumstances in ex- planation of doubtful words or phrases, which, when explained, are found to be significant and operative of themselves. This was also sufficiently shown in Colpoys v. Colpoys, Jacob, 451. Usage is one of the most common circumstances receivable for the purpose of such explanation. It is from this that we derive our general knowledge of language, which knowledge cannot be made the only test, without assuming judges and jurors to be familiar with words and phrases applicable to every employment of life in different sections of the country, and indeed in foreign countries. 6 FORM AND REQUISITES. It is obviously as necessary to ascertain the provincial meaning of words, through witnesses who are acquainted with their signifi- cation, as to translate a foreign language through a sworn interpre- ter. Abbreviations of words are often used, generally of known import ; but sometimes entirely ambiguous, not to say absohitely obscure. Such was the word mod in the will of NoUekens, the sculptor. But its meaning was collected through the medium of witnesses skilled in the trade of the testator, and from proof of the surrounding circumstances. In that case, too, direct evidence of intention, viz., the declarations of the testator of what he intended to bequeath, and to whom, made by him to his female attendant in his sickness, was overruled. Goblet v. Beechey, 3 Sim. 24, more fully reported in Wigr. on Bxtr. Ev. 139, et seq. ; and see Hite v. The State, 9 Yerg. 357, 381. The motion to set aside the nonsuit, and for a new trial, is denied. The New York statute as to negotiable notes is as follows : ' ' All jiotes in writing, made and signed by any person whereby he shall promise to pay to any other person, or his order, or to the order of any other person, or unto the bearer, any sum of money therein mentioned, shall be due and payable as therein expressed ; and shall have the same effect, and be negotiable in like man- ner as inland bills of exchange, according to the custom of merchants." 1 Rev. L. of 1813, 151 ; 1 Rev. St. 768, § 1. This is substantially the statute of Anne, \ which has been generally adopted in this country. ' Under this statute it is held that negotiability, as between the original parties, is not necessary to a promissory note, Burchell v. Slocock, 2 Ld. Raym. 1645 ; Smith v. Kendall, 6 Term, 123 ; Kimball v. Huntington, 10 Wend. 675 ; Middlesex, &c. v. Davis, 3 Met. 133. But see Bristol v. Warner, 1-9 Conn. 7, for the rule in Connecticut. And negotiability is not essential to bills of exchange. Coursin v. Ledlie, 31 Penn. State, 506. See also Gerard v. Le Coste, 1 Dallas, 194; 1 American Leading Cases, 302, and note ; Hoyt v. Lynch, 2 Sandf. 328. A check drawn in New York, payable in Mississippi, in current bank-notes, is not negotiable. Little v. Phoenix Bank, 7 Hill, .359, affirming 2 Hill, 425, It has generally been held, that instruments payable in current bank-notes are not negotiable, though possessing all other requisites to negotiability. Simp- son V. Moulden, 3 Cold. 429; McDowell v. Keller, 4 Cold. 258; Gray v. Dona- hoe, 4 Watts, 400 ; Hasbrook v. Palmer, 2 McLean, 10 ; Ogden v. Slade, 1 Texas, 13 ; Irvine v. Lowry, 14 Peters, 293 ; Collins v. Lincoln, 11 Vt. 268 ; Farwell v. Kennett, 7 Mo. 595 ; Graham v. Adams, 5 Ark. (Pike) 261. In the last-named case it was held that a note or bond payable " in good current money of the State," was payable in gold and silver. And Cockerill v. Kirkpatrick, 9 Mo. 688, was to the same effect. In Hawkins v. Watkins, 5 Ark. (Pike) 481, it was held that a draft payable " in Arkansas money of the Fayetteville Branch,' was not a bill of exchange. WORDEN V. DODGE. ♦ But a different doctrine has been held in the followinf? cases : Swetland v. Creigh, 15 Ohio, 118, in which a note payable " in current Ohio bank-notes," was held negotiable. Read, J., dissenting. The same Judge dissented again in White V. Richmond, 16 Ohio, 5, in which a note payable " in current funds of the State of Ohio," was held negotiable ; Butler v. Paine, 8 Minn. 324, where it was held that an order payable in " currency " was payable in money. Tlie mere mention of a particular fund in a bill of exchange will not vitiate it, if it was inserted only as a direction to the drawee how to reimburse himself. Kelley ». Brooklyn, 4 Hill, 263. In Vermont, a contract in the form of a promissory note, payable in specific articles, is treated as a proniissory note for some purposes. Denison v. Tyson, 17 Vt. 549 ; Dewey v. Washburn, 12 Vt. 580; Brooks v. Page, 1 D. Chip. 840. As in regard to pleading and importing consideration, but not as to nego- tiability; as a note payable in "current bills" is not negotiable. Collins v. Lincoln, . 11 Vt. 268. See also Farmers' Ins. Co. v. Miller, 26 Vt. 77, as to premium notes being promissory notes for the full amount expressed therein. See further upon the subject of instruments payable in specific articles, Jerome ». Whitney, 7 Johns. 321 ; Lawrence v. Dougherty, 5 Yerg. 435 ; Simpson v. Moulden, 3 Cold. 429 ; Alexander v. Oakes, 2 Dev. & B. 513 ; Martin v. Chaun- try, 2 Stra. 1271; Dennett u. Goodwin, 32 Maine, 44; Atkinson v. Manks, 1 Cowen, 691 ; Barnes v. Gorman, 9 Rich. Law, 297, and other cases cited in this and the following notes. WoRDEN V. Dodge et al. (4 Denio, 159. Supreme Court of New York, January, 1847.) Payable out of a particular fund. — An instrument by which a party promises to pay a certain sum at a stated time out of the net proceeds of ore to be raised and sold from a certain ore bed, is not a promissory note, it being payable upon a con- tingency. Assumpsit upon a written instrument in the form of a promis- sory note, except that it was payable " out of the net proceeds after paying the costs and expenses of ore to be raised and sold from the bed in the lot this day conveyed by Edward Maiden to Edwin Dodge, which bed is to be opened, and the ore disposed of as soon as conveniently may be." Beardsley, J. The nonsuit was proper. A promissory note must be payable absolutely, and not upon any contingency as to time or event. 3 Kent, 5th ed. p. 74 ; Smith on Merc. Law, 113, 116 ; Story on Prom. Notes, §§ 1, 22-26 ; id. on Bills of Exch. §§ 46, 47 ; Chit, on Bills, 10th Amer. ed. pp. 132-139. 8 FORM AND REQUISITES. This was not such an engagement, for although the promise was to make payments at certain specified times, the payments were to be made " out of the net proceeds " " of ore to be raised and sold " from a certain ore bed. Here was a contingency ; the fund might turn out to be inadequate, in which case there would be no obligation to pay at any time. It was not a promise to pay " abso- lutely and at all events," as a promissory note always is. New trial denied. That an order or promise to pay out of a particular fund is not a bill of exchange or promissory note see Morton v. Naylor, 1 Hill, 583 ; Josselyn V. Lacier, 10 Mod. 294 ; Gallery v. Prindle, 14 Barb. 186 ; Jenney v. Herle, 2 Ld. Raym. 1361; Dawkes v. De Lorane, 3 Wilson, 207; Bayerque v. San Francisco, 1 McAU. 175. If, however, the mention of a particular fund was inserted merely as a direction to the drawee how to reimburse himself, the in- strument will not be vitiated as a bill of exchange. Kelley v. Brooklyn, 4 Hill, 263. Acceptance of an order to pay a certain sum out of the fii'st money of the drawer, received by the drawee from a particular source, will bind the acceptor to pay as the funds come to the hand of the drawee. Perry v. Harrington, 2 Met. 368 ; and note to Newhall v. Clark, post. See, also, Cota v. Buck, 7 Met. 588, cited at length in note to Kelley v. H&m- mgv!&y, post, 11. Cook v. Satterlee and Satterlee. (6 Cowen, 108. Supreme Court of New York, August, 1826.) Additional directions. — An order directed to the defendants to pay to the plaintiff, or bearer, ninety days after date, §400 ; " and take up their note given to William and Henry B. Cook for that amount," is not a bill of exchange, though accepted by the defendants. Assumpsit against the defendants, as acceptors of a bill of ex- change, requesting them to pay the plaintiff 8400 ninety days after date ; " and to take up their note given to William and Henry B. Cook for that amount, dated April 19, 1825." The question in the case was whether the instrument were a bill of exchange. Savage, C. J. The essential qualities of a bill or note, are : 1. That it be payable at all events ; not dependent on any con- tingency, nor payable -out of a particular fund ; and 2. That COOK V. SATTERLEE. 9 it be for the payment of money only, and not for the per- formance of some other act, or in the alternative. (Chit, on Bills, 55). Is not the instrument declared on payable upon a contingency ? From the face of the instrument itself, it appears that the drawers had, on the IDtli of Aj)ril preceding its date, given their note for i460, to William and H. B. Cook ; and the object of drawing the instrument in question was to take up that note. The engage- ment of the acceptors must be construed according to what is required of them by the drawers. The note was supposed to be in possession of the payee or holder of the bill, and the payment of the money and taking up the note of the drawers, must be si- multaneous acts. The acceptors could not take up the note till it was presented ; nor were they bound to pay the money till the plaintiff was ready, and offered to enable them to take up the note. It seems to me, therefore, that substantially this instrument is payable upon a contingency, and is the same as if it had said, " Pay W. C. 8400, on his giving up our note," (fee. Had such been the form, it would clearly not be technically a bill of exchange. The holder, in declaring upon it, should aver his readiness to de- liver up the note. Upon a contrary doctrine, the defendants may be compelled to pay the bill, and the drawers to pay the note, provided it lias been transferred before due. The defendants are entitled to judgment, with leave to amend on the usual terms. Rule accordingly. To the same effect on very similar facts, is Austin v. Burns, 10 Barb. 643. So an instrument in the usual form of a promissory note, to which i.s added an authority to any attorney to enter judgment in favor of the holder for the amount of the note with costs, coupled with a release of errors and a waiver of stay of execution and of the right of an inquisition and an appraisement, is not a prom- issory note, so as to be entitled to days of grace. Overton v. Tyler, 3 Penn. State, 34G. A promissory note, however, does not lose its character as such, by a recital in the instrument that bonds have been deposited as collateral security for the note, and that they may be sold in case of non-pajaneut. Arnold v. Rock River, &c., K. Co., 5 Duer, 207. So a Avritten promise to pay and to do some other act required by law, as a promise to pay the hire of slaves and clothe them, is a negotiable instrument. Baxter v. Stewart, 4 Snecd, 213. An instrument by which the maker promises to pay with cui~rent exchange, haa been held a promissory note. Smith v. Kendall, 9 Mich. 241 ; Leggett v. Jones, 10 FORM AND REQUISITES. 10 Wis. 34. In the former case Campbell, J., dissenting, said : " In tbe case of Pollard V. Herrics, 3 Bos. & Pul. 335, the action being between theimmediate par- ties to the note, no question arose concerning its negotiable character ; and there is no English case that I am aware of, which has given any countenance to innova- tion on tliis subject. So fir as any practice has existed in this State, in relation to notes payable with exchange, I believe it has not been in favor of their nego- tiability. The question has been raised several times in the Federal Court with- in my own experience, and every case I have known has held them not to possess that character." The cases refen-ed to by Judge Campbell do not seem to have been reported. Grutacap v. WouUouise, 2 McLean, 581, the only Michigan case bearing on the subject in the Federal Court, was an action on a note paya- ble with exchange. But the question was not raised whether this vitiated it as a promissory note ; the question was whether exchange could be recovered, and it was held that it could be. See also Price v. Teal, 4 McLean, 201. If the instrument recite that the payee is to receive a certain sum less than the principal sum named, in case the paper is paid on an earlier day than that named, it is not a promissory note. Fralick v. Norton, 2 Mich. 130. A written promise to pay S., or order, $1000, or, upon surrender of "this note," to issue stock for the same, is held a promissory note. Hodges v. Shuler, 24 Barb. 68. It was held in this case, that, as it was optional with the holder to take the stock, there was no condition and no uncertainty in the promise to pay money. Another reason is stated, that, as the instrument purported on its face to be ne- gotiable, being payable " to order," and using the expression "this note," the payee and indorser, who was the defendant, was estopped to deny the negotia- bility of the paper. In Leonard v. Mason, 1 Wend. 522, the plaintiff held a promissory note against one Leonard, underneath which was written an order in these words : ' ' Levi Mason, Esq., please pay the above note, and hold it against me in our settle- ment. N. Leonard." A parol acceptance was proved, and the Court held the order a bill of exchange. So an order drawn underneath an account directing the drawee to pay the amount of the same, is a bill of exchange, though not negotiable. Hoyt v. Lynch, 2 Sandf. 328. Nor will it vitiate the instrument as a promissory note, that the consideration for which it was given is stated in it. Beardslee v. Horton, 3 Mich. 560. But an instrument by which a party promises to pay a certain sum " and also all other suras which may be due," is too indefinite to constitute a promissory note. Smith v. Nightingale, 2 Stark. 375 ; by Lord Ellenborough, in 1818. So an instrument promising to pay to the representatives of S., three months after his death, " first deducting thereout any interest or money which S. might owe the maker on any account," is not a note for the payment of a certain sum at all events. Barlow v. Broadhurst, 4 Moore, 471 (1820). KELLEY V. HEMMINGWAY. 11 David Kelley, Appellant, v. Moses Hemmingway, Appellee. (l;5 Illinois, G04. Supreme Court, June, 18^2.) Ca-tatnti/ as to time of jtai/ineiit. — A writing promising to pay a certain sum when K. shall arrive at age, is not a promissory note, being payable upon a contingency which may never happen ; and it does not alter the case that K. actually lived to attain his majority. The case is stated in the opinion of the Court. Treat, C. J. This was an action brought by Hemmingway against Kelley before a justice of the peace, and taken by appeal to the Circuit Court. On the trial in the latter Court, the plaintiff offered in evidence an instrument in these words : — "Castleton, April 27th, 184-1. " Due Henry D. Kelley, fifty- three dollars when he is twenty-one years old, with interest. David Kelley." On tlie back of which was this indorsement : — " RocKTOX, May the 21st, 18-49. " Signed the within, payable to Moses Hemmingway. Henry Kelley." The plaintiff proved that the payee became of age in August, 1849. The defendant objected to the introduction of the instru- ment, because it was not negotiable, but the Court admitted it in evidence, and rendered judgment for the plaintiff. Our statute makes promissory notes assignable by indorsement in writing, so as absolutely to vest the legal interest in the assignee. "Was the instrument in question a promissory note ? To constitute a promissory note, the money must be certainly payable, not de- pendent on any contingency, eitlier as to event, or the fund out of which payment is to be made, or the parties by or to whom pay- ment is to be made. If the terms of an instrument leave it un- certain whether the money will ever become payable, it cannot bo considered as a promissory note. Chitty on Bills, 134. Thus, a promise in writing to pay a sum of money when a particular per- son shall be married, is not a promissory note, because it is not 12 FORM AND REQUISITES. certain that he will ever be married. Pearson v. Garret, 4 Mod. 242 ; Bcardsley v. Baldwin, 2 Strange, 1151. So of a promise to pay when a particular ship shall return from sea, for it is not cer- tain that she will ever return. Palmer v. Pratt, 2 Bing. 185 ; Coolidge V. Ruggles, 15 Mass. 387. In all such cases, the promise is to pay on a contingency that may never happen. But if the event on which the money is to become payable must inevitably take place, it is a matter of no importance how long the payment may be suspended. A promise to pay a sum of money on the death of a particular individual, is a good promissory note, for the event on which the payment is made to depend will certainly transpire. Colelian v. Cooke, Willes, 393 ; s. c, 2 Strange, 1217. In this case, the payment was to be made when the payee should attain his majority, — an event that might or might not take place. The contingency might never happen, and therefore the money was not certainly and at all events payable. The instrument lacked one of the essential ingredients of a promissory note, and consequently was not negotiable under the statute. 'The fact that the payee lived till he was twenty-one years of age makes no difference. It was not a promissory note when made, and it could not become such by matter ex post facto. The plaintiff has not the legal title to the instrument. If it presents a cause of action against the maker, the suit must be brought in the name of the payee. Tlie case of Goss v. Nelson (1 Burr. 226), is clearly distinguishable from the present. There, the note was made payable to an infant when he should arrive at age, and the day when that was to be was specified. The Court held the instrument to be a good promissory note, but expressly on the ground that the money was at all events payable on the day named, whether the payee should live till that time, or die in the interim ; and it was distinctly intimated that the case would be very different had the day not been stated in the note. It was regarded as an absolute promise to pay on the day specified, and no effect was given to the words that the payee would then become of age. The judgment must be reversed. Judgment reversed. When no time of payment is fixed, the presumption is that the bill or note is payable on demand. Michigan Ins. Co. v. Leavenworth, 30 Vt. 20. In- the case of a note payable " when demanded," the statute of limitations be- gins to run from the date of the note ; and there is no distinction between such a note and one on demand. Kingsbury v. Butler, 4 Vt. 458. KELLEY V. IIEMMINGWAY. 13 " Against the 26th of December, 1819, or when the house John Mayficld has undertaken to build for me is completed, I promise to pay," &c. Held, that by tlic first clause the particB iiad fixed upon a certain time of payment, constituting the iustrinncnt a promissory note. Goodloe v. Taylor, 3 Hawks, 458. Sec also Stevens v. Blunt, 7 Mass. 240. " For value received I promise to pay J. P., or bearer, $570, it being for property I purchased of hiui in value at this date, as being payable as soon as can be realized of the above amount for the said property I have this day pur- chased of said P., which is to be paid in the course of the season now coming." JleM, that tlie note was payal)le at all events, and within a certain time. Cota v. I'uck, 7 Mot. 588. " We tiiink the meaning to be this : that the signer, for value received in the purchase of jjroperty, promised to pay P. or bearer the sum named as soon as the termination of the coming season, and sooner, if the amount could be sooner realized out of the fund. Such reference to the sale of the property, was not to fix the fund from which it was to be paid, but the time of payment. The undertaking was absolute, and did not depend on the fund." Ibid. Per Shaw, C. J. A note payal)le " twenty-four after date " was held, in Conner v. Routh, 7 How. (Miss.) 176, not void for uncertainty, nor a note on demand, but payable at some time after date. The note, with other evidence, was held admissible to show that the time of payi^ent was intended to be twenty-four months from date. In Ubsdell v. Cunningham, 22 Mo. (1 Jones) 124, it was held that the follow- ing were promissory^ notes : " Due U. & P. $100, to be paid over to them as soon as collected at P., now in the hands of P., of that place ; " and " Due U. & P. §34.63, for goods pm-chased of them while at P., to be paid as soon as col- lected from my accounts at P." There are, however, no authorities cited in sup- port of the decision, and it is very doubtful if any can be found, though it has been held in England that it is suHiciently certain that the paper is made paya- ble on the payment of money due for wages on shipboard from the Government. Andiewsr. Franklin, 1 Stra. 24 ; livans i'. Underwood, 1 Wil. 262. The ground taken ceeina to have been that the Government was certain to pay at some time. In Ellis V. Mason, 7 Dowl. P. C. 598, the following was held a promissory note: " John Mason, 14th February, 1836, borrowed of Marv Ann Mason, his sister, the sum of £14, in cash, as per loan, in promise of payment of which I am truly thaiil<^ful for; it shall never be forgoUen by me, John Mason, your af- fectionate brother. £14." No question wa- raised in this case as to the time of payment, and it may- have been tacitly considered a promise to pay on demand. It would be diflicult to sustain the case on any other hypothesis. So a writing promising to pay " in such manner and proportion, and at such time aiul place," as the payee shall require, is a promissory note ; being payable in instalments, in effect on demand, at the election of the payee, (ioshen and M. Turnpike v. Ilurtin, 9 Johns. 217 ; Washington Co. Mut. Ins. Co. r. Miller, 26 Vt. 77. But if the writing is payable " by instalments for rent," without further quali- fication, it has been held not to possess the requisites of a promissory note, in not specifying a certain time ol payment. MoU'at v. Edwards, Car. & M. 16. 14 FORM AND REQUISITES. If, in this case, the time when the instalments were payable had been stipulated, the instrument would probably have been held a promissory note, as the time of payment would thus have been made certain. See, also, respecting time of payment, Loring v. Gurney, 5 Pick. 15 ; Ho- bart V. Dodge, 1 Fairf. 156 ; De Forest v. Frary, 6 Cowen, 151 ; Harrell v. Marston, 7 Rob. La. 34 ; Salinas v. Wright, 11 Texas, 572 ; Clayton v. Goshng, 6 Barn. & C. 360; Ex parte Tootell, 4 Ves. 372. In addition to the requisites to a valid promissory note or bill of exchange, stated in the preceding cases and notes, the following are important : — The amount must" be definite and certain. See Cushman v. Haynes, 20 Pick. 132 ; Philadelphia Bank v. Newkirk, 2 Miles, 442 ; Legro v. Staples, 16 Maine, 252 ; Jones v. Simpson, 2 Barn. & C. 318 ; Clark v. Percival, 2 Barn. & Ad. 660 ; Smith V. Nightingale, 2 Stark. 375 ; Ayrey v. Fearnsides, 4 Mees. & W. 168. There must be certainty as to the parties, as the maker of a note. Ferris v. Bond, 4 Barn. & Aid. 679 ; Clason v. Bailey, 14 Johns. 484. The payee of a note or bill when not payable to bearer. Storm v. Sterling, 3 El. & B. 832. The draw- er and drawee of a bill, Peto v. Reynolds, 9 Exch. 410. But the initials of the maker were held sufficient in Palmer v. Stephens, 1 Denio, 471. So of an indorser : Merchants' Bank v. Spicer, 6 Wend. 443. The result of the cases upon the form and requisites of bills of exchange and promissory notes, may be concisely stated thus : A bill of exchange is a written and signed order or request, and a promissory note a written and signed promise, for the payment to a person named, or to his order, or to bearer, of a di.finite sum in money, that is, legal tender, without condition or contingency, and at a definite time. And each should be dated, though this is not absolutely necessary. Chitty, Bills, 148. WALLACE V. M'CONNELL. 15 MAKER'S LIABILITY. William Wallace, Plaintiff in Error, v. Corry M'Connell, Defendant in Error. (13 Peters, 136. Supremo Court of the United States, January, 1839.) Note payable at particular place. No demand necessary upon maker. — In an action against the maker of a note payable at a designated place, no demand need be averred and proved ; if the maker was ready and offered, at the time and place, to pay, it is a matter of defence to be pleaded and proved by him. The case is stated in the opinion of the Court. Thompson, J. This case comes up on a writ of error from the District Court of the United States for the Southern District of Alabama. The action in the Court below was founded upon a note, which, althoiigh under seal, is considered in Tennessee a promissory note, and is in the words following : — " Three years and two months after date, I promise to pay Corry M'Connell or order, at the office of discount and deposit of the Bank of the United States, at Nashville, four thousand eight hun- dred and eighty dollars, ninety-nine cents, value received." The declaration sets out this note according to its terms, and alleges the promise- to pay at the office of discount and deposit of the Bank of the United States, at Nashville, without averring that the note was presented at the bank or demand of payment made there. The defendant pleaded payment and satisfaction of the note ; and issue being joined thereupon, the cause was continued until the next term thereafter, at which time the defendant interposed a plea puis darrein continuance, alleging that the plaintiff, as to the sum $4204, part and parcel of the sum demanded in the declaration, ought not further to have and maintain his action therefor against him, because that sum had been attached by Blocker and Co., by proceedings commenced by them against the plaiutifiF in this cause, 16 maker's liability. under the attachment law of Alabama, in which he was summoned as garnishee ; and setting out the proceedings against him according to the requirements of that law, and under which he was examined on oath ; and did declare, that he executed the note to the said M'Connell, the plaintiff in this cause, as set out in the declaration ; that he had paid on the note $372.34, and that the remainder of the said note was due by him to said M'Connell. And the plea further sets out, that, under the proceedings on the attachment, the Court had given judgment against him for 84204, and costs ; but with a stay of all further proceedings until the further disposition of tlie case, and which remains yet undeter- mined. To this plea the plaintiff demurred. And the Court sustained the demurrer, and gave judgment for the plaintiff for $675.39, the residue of the plaintiff's debt in his declaration mentioned, by default ; and thereupon gave a final judgment for the plaintiff for the full amount of the note, $4880, the debt aforesaid, and $394, the interest assessed by the clerk together witli his cost. And the plaintiff remits upon the record the sum of $351.28 ; and the questions arising upon this record have been made and argued under the following objections : — 1. That the declaration is bad for want of an averment that the note was presented, and payment demanded at the office of dis- count and deposit of the Bank of the United States, at Nashville. 2. That the matters pleaded of the proceedings under the at- tachment laws of Alabama, were sufficient to bar the action, as to the amount of the sum so attached ; and that the demurrer ought therefore to have been overruled. 3. That the judgment by nil dicit, for the $676.39, was erro- neous. The question raised as to the sufficiency of the declaration in a case where the suit is by the payee against the maker of a promis- sory note, never has received the direct decision of tliis Court. In the case of the Bank of the United States v. Smith, 11 "Wheat. 171, the note upon which the action was founded was made pay- able at the office of discount and deposit of the Bank of the United States, in the city of Washington ; and the suit was against the indorser, and the question turned upon the sufficiency of the averment in the declaration of a demand of payment of the maker. And the Court said, when in the body of a note, the place WALLACE V. M'CONNRLL. 17 of payment is designated, the indorser has a right to presume that the maker has provided funds at such place to pay the note ; and has a right to require the holder to apply at such place for pay- ment. In the opinion delivered in that case, the question now presented in the case hefore us is stated ; and it said, whether where the suit is against the maker of a promissory note, or the acceptor of a bill of exchange, payable at a particular place, it is necessary to aver a demand of payment at such place, and upon the trial to prove such demand; is a question upon which con- flicting opinions have been entertained in the courts in Westmin- ster Hall. But that the question in such case may, perhaps, be considered at rest in England, by the decision of the late case of Rowe V. Young, 2 Brod. &, Bing. IGo, in the House of Lords ; where it was held, that if a bill of exchange be accepted, payable at a particular place, the declaration on such bill, against the acceptor, must aver presentment at that place, and the averment must be proved. But it is there said a contrary opinion has been entertained by courts in this country ; that a demand on the maker of a note, or the acceptor of a bill payable at a specified place, need not be averred in the declaration or proved on the trial ; that it is not a condition precedent to the plaintiff's right of re- covery. As matter of practice, application will generally be made at the place appointed, if it is believed that funds have been there placed to meet the note or bill. But if the maker or acceptor has sustained any loss by the omission of the holder to make such application for payment, at the place appointed, it is matter of defence to set up by plea and proof. But it is added, as this ques- tion does not necessarily anse in this case, we do not mean to be understood as expressing any decided opinion upon it, although we are strongly inclined to think, that as against the maker of a note or the acceptor of a bill, no averment or proof of a demand of payment at the place designated would be necessary. The question now before the Court cannot, certainly, be considered as decided l)y the case of the Bank of the United States v. Smith, 11 Wheat. 171. But it cannot be viewed as the mere obiter opinion of the judge who delivered the judgmenl of the court. The atten- tion of the Court was drawn to the question now before the Court, and the remarks made upon it, and the authorities referred to, show that this Court was fully apprised of the conflicting opinions of the English courts on the question ; and that opinions, contrary 18 maker's liability. to that of the House of Lords, in the case of Rowe v. Young, 2 Brod. ct Bing. 1G5, had been entertained by some of the courts in this country ; and under this view of the question, the Court say they are strongly inclined to adopt the American decisions. As the precise question is now presented by this record, it becomes necessary to dispose of it. It is not deemed necessary to go into a critical examination of the English authorities upon this point ; a reference to the case in the House of Lords, which was decided in the year 1820, shows the great diversity of opinion entertained by the English judges upon this question. It was, however, decided that if a bill of exchange is accepted, payable at a particular place, the declaration in an action on such bill against the acceptor, must aver presentment at that place, and the averment must be proved. The Lord Chan- cellor, in stating the question, said this was a very fit question to be brought before the House of Lords, because the state of the law, as actually administered in the courts, is such, that it would be infinitely better to settle it in any way than to permit so contro- versial a state to exist any longer. That the Court of King's Bench has been of late years in the habit of holding that such an accept- ance as this is a general acceptance ; and that it is not necessary to notice it as such in the declaration, or to prove presentment, but that it must be considered as matter of defence ; and that the defendant must state himself ready to pay at the place, and bring the money into court, and so bar the action by proving the truth of that defence. On the contrary, the Court of Common Pleas was in the habit of holding, that an acceptance like this was a qualified acceptance, and that the contract of the acceptor was to pay at the place ; and that as matter of pleading a presentment at the place stipulated must be averred, and that evidence must be given to sustain that averment ; and that the holder of the bill has no cause of action unless such demand has been made. In that case the opinion of the twelve judges was taken and laid before the House of Lords, and will be found reported in an appendix to the report of the case of Rowe v. Young, 2 Brod. & Bing. 180. In which opinions all the cases are referred to in which the ques- tion had been drawn into discussion ; and the result appears to have been, that eight judges out of the twelve sustained the doc- trine of the King's Bench on this question, notwithstanding which the judgment was reversed. WALLACE V. M'CONNELL. , 19 It is fairly to be inferred from an act of parliament passed immediately thereafter, 1 A: 2 Geo. IV. c. 7H, that this decision was not satisfactory. By that act, it is declared that " after the 1st of Augnst, 1821, if any person shall accept a bill of exchange payable at the house of a banker or other place, without further expression in his acceptance, such acceptance shall be deemed and taken to be, to all intents and purposes, a general acceptance of such bill. But if the acceptor shall, in his acceptance, express that he accepts the bill payable at a banker's bous6 or other place only, and not otherwise or elsewhere ; such acceptance shall be a qual- ified acceptance of such bill ; and tiie acceptor shall not be liable to i)ay the bill except in default of j)ayment, when such payment shall have been first duly demanded at such banker's house or other place." Bayley on Bills, 200, note. In most of the cases which have arisen in the English courts, the suit has ))een against the acceptor of the bill, and in some cases a distinction would seem to be made between such a case and that of a note when the action is against the maker, and the designated place is in the body of the note. But there can be no solid grounds upon which such a distinction can rest. The acceptor of a bill stands in the same relation to the drawee as the maker of a note does to the payee ; and the acceptor is the princi- pal debtor in the case of a bill, precisely like the maker of a note. The liability of the acceptor grows out of, and is to be governed by, the terms of his acceptance, and the liability of the maker of a note grows out of, and is to be governed by, the terms of his note ; and the place of payment can be of no more importance in the one case than in the other. And in some of the cases where the point was made, the action was against the maker of a promissory note, and the place of payment designated in the body of the note. The case of NichoUs v. Bowes, 2 Camp. 498, was one of that de- scription, decided in the year 1810 ; and it was contended on the trial, that the ])laintiff was bound to show that the note was pre- sented at the banking house where it was made payable. But Lord Elh'nhorovijh^ before whom the cause was tried, not only decided that no such proof was necessary, but would not suffer such evidence to be given ; although the counsel for the plaintiff said he had a witness in court to prove the note was presented at the banker's the day it became due ; his lordship alleging that he was afraid to admit such evidence lest doubts should arise as to 20 „ maker's liability. its necessity. Aryi in the case of Wild v. Kennards, 1 Camp. 425, note, Mr. Justice Bayle.y, in the year 1809, ruled that if a promis- sory note is made payable at a particular place, in an action against the maker, there is no necessity for proving that it was presented there for payment. The case of Sanderson v. Bowes, 14 East, 500, decided in the King's Bench in the year 1811, is sometimes referred to as contain- ing a different rule of construction of the same words when used in the body of a promissory note, from that which is given to them when used in the acceptance of a bill of exchange. But it may be well questioned whether this use warrants any such conclusion. That was an action on a promissory note by the bearer against the maker. The note, as set out in the declaration, was a promise to pay on demand at a specified place, and there was no averment that a demand of payment had been made at the place designated. To which declaration the defendant demurred ; and the counsel in support of the demurrer referred to cases where the rule had been applied to acceptances on bills of exchange ; but contended that the rule did not apply to a promissory note, when the place is desig- nated in the body of the note. Lord Ellenhorough ^ in the course of the argument, in answer to some cases referred to by counsel, observed : " Those are cases where money is to be paid, or some- thing to be done at a particular time as well as place, therefore the party (defendant) may readily make an averment, that he was ready at the time and place to pay, and that the other party was not ready to receive it ; but here the time of payment depends en- tirely on the pleasure of the holder of the note." It is true Lord Ellenhoro'ugh did not seem to place his opinion, in the ultimate decision of the cause, upon this ground. But the other judges did not allude to the distinction taken at the bar between that case and the acceptance of a bill in like terms ; but placed their opin- ions upon the terms of the note itself, being a promise to pay on demand at a particular place. And there is certainly a manifest distinction between a promise to pay on demand, at a given place, and a promise to pay at a fixed time at such place. And it is hardly to be presumed that Lord EUenhorong-h intended to rest his judgment upon a distinction between a promissory note and a bill of exchange, as both he and Mr. Justice Bayley had a very short time before, in the cases of Nicholls v. Bowes, 2 Camp. 498, and Wild v. Reunards, 1 Camp. 425, note, above referred to, WALLACE V. m'CONNELL. 21 applied the same rule of construction to jjroraissory notes where the promise was contained in the body of the note. Where the promise is to pay on demand at a particular place, there is no cause of action until the demand is made, and the maker of the note cannot discharge himself by an olTer of payment, tl* note not being due until demanded. Thus we see that until the late decision in the House of Lords in the case of Rowe i\ Young, and the act of parliament passed soon thereafter, this ([ucstion was in a very unsettled state in the English courts ; and without undertaking to decide between those conflicting opinions, it may be well to look at the light in which this question has been viewed in the courts in this country. This question came before the Supreme Court of the State of New York, in the year 1809, in the case of Foden and Slater v. Sharp, 4 Johns. 1S3, and the Court said the holder of a bill of exchange need not show a demand of payment of the acceptor any more than of the maker of a note. It is the business of the acceptor to show that he was ready at the day and place appointed, but that no one came to receive the money, and that he was always ready afterwards to pay. This case shows that the acceptor of a bill and the maker of a note were considered as standing on the same footing with respect to a demand of payment at the place designated. And in the case of Wolcott v. Van Santvoord, 17 Johns. 248, which came before the same court in the year 1819, the same question arose. The action was against the acceptor of a bill, payable five months after date at the Bank of Utica, and the declaration contained no averment of a demand at the Bank of Utica, and upon a demurrer to the declaration the Court gave judgment for the plaintill". Chief Justice Spencer, in delivering the opinion of the Court, observed, that the question had been already decided in the case of Foden v. Sharp ; but considering the great diversity of opinion among tlie judges in the English courts on tiie question, he took occasion critically to review the cases which had come before those courts, and shows very satis- factorily that the weight of authority is in conformity to that decision, and the demurrer was accordingly overruled ; and the law in that State for the last thirty years has been considered as settled upon this point. And although the action was against the acceptor of a bill of exchange, it is very evident that this circum- stance had no influence upon the decision ; for the Court say that 22 maker's liability. in this respect the acceptor stands in the same relation to the payee as the maker of a note does to the indorsee. He is the principal, and not a collateral debtor. And in the case of Caldwell v. Cassady, 8 Cowen, 271, decided in theieame court in the year 1828, the suit was upon a promissory note payable sixty days after date at the Franklin Bank in New York, and the note had not been presented or payment demanded at the bank ; the Court said, this case has been already decided by this court in the case of Wolcott v. Van Santvoort. And after noticing some of the cases in the English courts, and alluding to the confusion that seemed to exist there upon the question, they add : " That whatever be the rule in other courts, the rule in this court must be considered settled, that where a promissory note is made payable at a particular place on a day certain, the holder of the note is not bound to make a demand at the time and place by way of a condition precedent to the bringing of an action against the maker. But if the maker was ready to pay at the time and place, he may plead it as he would plead a tender in bar of dam- ages and costs by bringing the money into court." It is not deemed necessary to notice very much at length the various cases that have arisen in the American courts upon this question ; but barely to refer to such as have fallen under the obser- vation of the Court ; and we briefly state the point and the decision thereupon ; and the result will show a uniform course of adjudi- cation, that in actions on promissory notes against the maker, or on bills of exchange, wiiere the suit is against the maker in the one case, and acceptor in the other, and the note or bill made payable at a specified time and place, it is not necessary to aver in the declaration, or prove on the trial, that a demand of pay- ment was made in order to maintain the action. But that if the maker or acceptor was at the place at the time designated, and was ready and offered to pay the money, it was matter of defence to be pleaded and proved on his part. The case of Watkins v. Crouch & Co., in the Court of Appeals of Virginia, 5 Leigh, 522, was a suit against the maker and in- dorser, jointly, as is the course in that State upon a promissory note like the one in suit. The note was made payable at a speci- fied time, at the Farmers' Bank, at Richmond, and the Court of Appeals, in the year 1834, decided that it was not necessary to aver and prove a presentation at the bank and demand of pay- WALLACE V. M'CONNELL. 23 meiit, in order to entitle the plaiutifTto recover against the maker ; but tiiat it was necessary, in order to entitle him, to recover against the indorser ; and th6 president of the Court went into a very elaborate consideration of the decisions of the English courts upon the question ; and to show that, upon common-law principles, applicable to bonds, notes, and other contracts for the payment of money, no previous demand was necessary in order to sustain the action, but that a tender and readiness to pay must come by way of defence from the defendant ; and that, looking upon the note as commercial paper, the principles of the common law were clearly against the necessity of such demand and proof, where the time and place were specihed, though it would be otlierwise where the place, but not the time, was specified ; a demand in such case ought to be made ; and he examined the case of Sanderson v. Bowes, to show that it turned upon that distinction', the note being payable on demand at a specified place. The same doctrine was held by the Court of Appeals of Maryland, in the case of Bowie v. Duvall, 1 Gill & Johnson, 175 ; and the New York cases, as well as that of the Bank of the United States v. Smith, 11 Wheat. 171, are cited with approbation, and fully adopted : and tiie Court put the case upon the broad ground that, when the suit is against the maker of a promissory note, payable at a specified time and place, no demand is necessary to be averred, upon the principle that the money to be paid is a debt from the defendant, that it is due gen- erally and universally, and will continue due, though there be a neglect on the part of the creditor to attend at the time and place to receive or demand it. That it is matter of defence, on the part of the defendant, to show that he was in attendance to pay, but that the plaintiff was not there to receive it ; which defence generally will be in bar of damages only, and not in bar of the debt. The case of Ruggles v. Patten, 8 Mass. 480, sanctions the same rule of construction. The action was on a promissory note for the payment of money, at a day and place specified ; and the defendant pleaded that he was present at the time and place, and ready and willing to pay, according to the tenor of his promises, in the second count of the declaration mentioned, and avers that tlie plaintifTwas not then ready or present at the bank to receive pay- ment, and did not demand the same of the defendant, as the jilaiii- tiff in his declaration had alleged ; the Court said this was an immaterial issue, and no bar to an action or promise to pay money. 24 maker's liability. So, also, in the State of New Jersey, the same rule is adopted. In the case of Weed v. Van Houten, 4 Halst. (N.J.) 189, the Chief Jus- tice says : " Tlie question is, whether, in an action by the payee of a promissory note, payable at a particular place, and not on demand, but at time, it is necessary to aver a presentment of the note and demand of payment by the holder at that place, at the maturity of the note." And, upon this question, he says : " I have no hesita- tion in expressing my entire concurrence in the American decisions, so far as is necessary for the present occasion ; that a special averment of presentment at the place is not necessary to the validity of the declaration, nor is proof of it necessary upon the trial. This rule, I am satisfied, is most conformable to sound reason, most conducive to public convenience, best supported by the general principles and doctrines of the law, and most assimilated to the deci- sions, which bear analogy more or less directly to the subject." The same rule has been fully established by the Supreme Court of Tennessee, in the cases of M'Nairy v. Bell, and Mulherrin v. Hannum, 1 Yerg. 502, and 2 Yerg. 81, and the rule sustained and enforced upon the same principles and course of reasoning upon which the other cases referred to have been placed. And no case, in an American court, has fallen under our notice, where a contrary doctrine has been asserted and maintained. And it is to be observed, that most of the cases which have arisen in this country, where this question has been drawn into discussion, were upon promissory notes, where the place of payment was, of course, in the body of the note. After such a uniform course of decisions for at least thirty years, it would be inexpedient to change the rule, even if the grounds upon which it was originally establislied, might be questionable ; which, however, we do not mean to intimate. It is of the utmost importance that all rules relating to commercial law should be stable and uniform. They are adopted for practical pur- poses, to regulate the course of business in commercial transactions ; and the rule here established is well calculated for the convenience and safety of all parties. The place of payment in a promissory note, or in an acceptance of a bill of exchange, is always matter of arrangement between the parties for their mutual accommodation, and may be stipulated in any manner that may best suit their convenience. And, when a note or bill is made payable at a bank, as is generally the case, it is well known that, according to the usual course of business, the note WALLACE V. M'CONNELL. 25 or bill is lodged at the bank for collection ; and, if the maker or acceptor calls to take it up when it falls due, it will be delivered to him, and the business is closed, IJut, should he not find his note or l)ill at the bank, he can deposit his money to meet the note when presented ; and should he be afterwards prosecuted, he would be exonerated from all costs and damages, upon proving such ten- der and deposit. Or, should the note or bill l)e made payable at some place other than a bank, and no deposit could be made, or he should choose to retain his money in his own possession, an offer to pay at the time and place, would protect him against interest and costs, on bringing the money into court ; so that no practical inconvenience or hazard can result from the establishment of this rule, to the maker or acceptor. But, on the other hand, if a pre- sentment of the note and demand of payment at the time and place, are indispensable to the right of action, the holder might hazard the entire loss of his whole debt. See note to Xewhall v. Clark, j^ost ; Taylor v. Snyder, and Chicopee Bank v. Philadelphia Bank, and note, post, as to the rule respecting indorsers of paper payable at a place designated. DRAWER'S LIABILITY. The liability of the drawer of a bill of exchange being in general that of an indorser, the subject will not be separately introduced here. Tlie cases and notes will be found under Pre- seulniciit fur Acceptance, and ruocEEUiNGS upon Non-Payment, post. 26 ACCEPTANCE. ACCEPTANCE. S. & M. Allen v. Suydam and Boyd. (20 Wendell, 321. Court of Errors of New York, December, 1838.) Agent's duty to present for acceptance. — An agent who receives a bill of exchange, pay- able after date, for collection, which has not been accepted, is bound to present the same for acceptance without unreasonable delay, or he will be liable to his prin- cipal for the damages which the latter may sustain by the agent's negligence- In case the debt is lost by the agent's negligence, the measure of damages is prima facie the amount of the bill ; but evidence of facts may be produced tending to reduce the recovery to a nominal sum. Action on the case against S. <fe M. Allen for negligence in omit- ting for seventeen days to present for acceptance a bill of ex- change sent them by Suydam and Boyd for collection, and payable two months after date. By the Chancellor. Two questions of importance to the com- mercial community are presented for oar consideration and decision in this cause : 1. Whether an agent, or broker, who receives for collection a draft or bill of exchange payable at a particular day, or a certain number of days after its date, is under any obliga- tion to present the same to the drawee for acceptance immediately, and before the time when the draft is due and payable ? And, 2. If he is, whether the person who has given him such draft or bill for collection, can, in case of his neglect to present the same before tlie day of payment, recover the whole amount due thereon, with interest ; although the owner has not, in fact, sus- tained damage to that extent, by the neglect of his broker or agent to present the bill for acceptance without any unnecessary delay ? A bill payable at sight, or a certain number of days after sight, must be presented for acceptance and payment, or for acceptance only, without unreasonable delay, or the drawer and indorsers will be discharged, for they have an interest in having the bill accepted immediately, in order to shorten the time of payment, and thus to ALLEN V. SUYDAM. 27 put a limit to the period of their liahility ; and also, to enahle them to protect themselves by other means, before it is too late, if the bill is not accejjted and paid within the time originally contem- plated by them. But in relation to a bill payable at a day certain^ as at a fixed time after its date, it is perfectly well settled, not only in this country and in England, but also in Scotland and in France, that the drawer or indorser of the bill is not discharged by the neglect of the holder to present the same for acceptance immediately, or until the time when it becomes due and payaljle. If, however, such a bill is actually presented for acceptance, and is dishonored before it becomes due, notice of such dishonor must Ije given to the drawer or indorser without delay, or he will be dis- charged. 3 Kent, Comra. 2d ed. 82 ; Townsley v. Sumrall, 2 Peters, U. S. 170; Goodall v. Dollcy, 1 Term, 712; Bayley on Bills, 21!2 ; Glen, 109 ; Byles, 102 ; Evans, 80 ; Muir, 22 ; 2 Par- dessus, No. 358, p. 417, 2d Paris ed. All the writers agree, however, that the owner of the bill has an interest in having it presented for acceptance without delay, although such present- ment is not necessary in the case of a bill payable on a day certain, to enable him to retain his claim against the drawer or indorser of such bill ; and that if the ai>-rnt who has been intrusted with the bill for the purpose of getting it accepted and paid, or accepted only, neglects to comply with the direction of the owner, to get the bill accepted without any unnecessary delay, he will be liable to the owner for the damage which the latter has sustained by such negligence. Pardessus says that the right to require an acceptance in such a case, is one which the holder of the bill may use or not, as he thinks proper, but that it is certainly an advan- tage to him to demand such acceptance ; for if the drawer is in credit, the drawee will probably accept, and the holder will thus obtain an additional security for his debt ; whereas, if he delays to present the bill for accoj)tance until it becomes due, and the drawer fails in the mean time, the drawee may then refuse to accept ; and he mii^ht have added, for such is the rule of the French law on the subject, that if the bill was protested for non- acceptance before it became due, the holder would then have been entitled to demand, both of the drawer and of the indorsers, security for the payment of the bill when it should become due, or for reimbursement, with the expenses of protest and re-exchange. Pardessus also says that the bearer of the bill may hold it as a 28 ACCEPTANCE. mere agent, to do what is necessary for the interest of his prin- cipal ; in which case, he ought to act according to the express or implied duties which are derived from his relation to such princi- pal ; and among the duties whicli his situation imposes upon the agent, is that of presenting the bill for acceptance whenever the law or prudence imposes such an obligation on him. 2 Pard. No. 358, pp. 417, 420 ; No. 583, p. GG9. It was upon this ground that the case of The Bank of Scotland v. Hamilton, referred to in a note to Bell's Commentaries, and also in Cliitty on Bills, was decided. And Glen, who also has a brief note of that case, states, as exceptions to the rule, that it is not necessary to present a bill, payable at a time certain, for acceptance, before it becomes due; the case of a direction to the payee or holder of the bill to present it immediately ; and the case of a bill sent to an agent for negotia- tion. Glen on Bills, 109. The counsel for the plaintiffs in error, however, attempted to take the case out of this last exception to the general rule, on the ground that these agents only received the bill for collection, and that they received no instructions to present it for acceptance before it came due. I infer, however, from the note of the case of The Bank of Scotland v. Hamilton, as given by Glen, that the present case cannot be distinguished from that in this respect. For it there appears that the bill then in question was finally pre- sented for acceptance on the evening of the fourth day from its date, after the drawer had failed, and then only in consequence of a letter from Dunlop, who had sent the bill to the agents in Glas- gow three days before. From that statement of the case, I think we may fairly presume there were no special directions to the agents to present the bill for acceptance when it was originally sent to them for collection, especially as it had but four days to run when it was originally discounted by Dunlop. On this subject, Pothier says, in regard to the indorsement of a bill by the owner thereof to another, as a mere agent to receive the amount due thereon for the indorser and as his proxy : " The contract which such an indorsement implies, and which it makes between the indorser and the person to whom he makes his order, is a contract of agency, and creates the ordinary obligations of an agent ; and consequently, he to whom the order is given is liable in the char- acter of an agent, as regards his indorser, the owner of the bill, to obtain acceptance if it has not already been accepted, and to go ALLEN V. SUYDAM. 29 when the bill becomes due to receive payment thereof, and remit him the amount ; and also in default of acceptance or of payment, to make the protests, i^c, which are necessary in such cases, and the indorser on his part is bound to make good the whole of the expenses which have been incurred therefor by the indorsee." Poth. Traite Du Cont. DcChange, c. 4, No. H2. Again : " The bearer of the bill, where he is merely the agent of the owner, ought to present it as soon as possible to the drawee to have it accepted. It is very important to have it accepted, as it is only by accepting it that the drawee becomes bound to pay it. Without such acceptance, the owner of the bill has for his debtor only the drawer of the 1)111, to whom he has paid its value. Therefore, if the drawer should happen to fail, the bearer of the bill who had neglected to present it for acceptance would be liable to damages, if it was his fault, in favor of the owner of the bill for whom he was agent." Id. No. 128. The principles thus laid down by Pothier are recognized by Beawes and Paley as sound and correct, in relation to the duties and liabilities of agents who are employed in negotiating or collecting f5ifls of exchange ; and I can see no good reason why they should not be applied to the case now under consideration. If the receiving a bill by an agent, to collect, implies an obligation on his part to take the necessary steps to charge the drawer and indorsers, by protest and notices, in case it is not accepted and paid by the drawee, I do not see why due dili- gence on the part of the agent, in procuring the acceptance of the draw^ee without delay, when it may be necessary or beneficial to the interests of the principal, should not also be implied, as it is the duty of a faithful agent to do for his principal whatever the principal himself Avould probably have done if he was a discreet and prudent man. Even where the principal is habitually negli- gent in attending to his own interests, it forms no excuse for similar negligence on the part of his agent. The fact, therefore, that the bill in this case was not put into the hands of the agents for collection until some time after it bore date, was no legal excuse for their negligence in not sending it on for acceptance and payment without unnecessary delay. For these reasons, I agree with the Court below, that the Aliens were legally liable to the owners of this bill for the damages, if any, which the latter sustained by the non-presentment of the bill to the drawee for acceptance previous to the time it became due. 30 ACCEPTANCE. In relation to the amount of damages, however, I think the charge of the judge, who tried the cause, was clearly wrong ; and that it has unquestionably produced great injustice in this case. As we have before seen, the relation between the drawer or indorser of the bill and the person to whom it is transferred for the mere purpose of negotiation or collection, is not the relation of indorser and indorsee, so as to throw the loss of the whole amount of the bill upon the latter, if he neglects to present the same for acceptance and payment in time, or to give notice of its dishonor to the indorser, as required by law. Nor will the pay- ment of the damages, by the agent, have the effect to subrogate him to all the rights and remedies of the person from whom he received the bill, as against other parties who may be liable for the payment thereof; but it is a mere contract of agency, which leaves the indorser to all his rights and remedies for the recovery of his debt as against other parties, and only renders the indorsee liable as agent for the actual or probable damages which his principal has sustained in consequence of the negligence of such agent. This principle was distinctly recd^ized by the Court of King's Bench in England, in the case of Van Wart v. Woolley, 5 Dowl. & Ryl. 374, where the plaintiff had not lost his remedy against the drawers of the bill, or the persons from whom he received it, by reason of the neglect of the agents to present it for acceptance in due time ; the drawers of the bill in that case having drawn without authority when they had no funds in the hands of the drawees, and Irving & Co., who had sent the bill to the plaintiffs in payment, not standing in the situation of indorsers of the bill, as their names did not appear upon it. In that case, however, if there had been any evidence to warrant the belief that the bill would have been accepted if an immediate acceptance or rejection of tbe bill by the drawees had been insisted on, according to the decision in the case of The Bank of Scotland v. Hamilton, the loss which had arisen from the neglect of the defendant in not pressing for an acceptance, or in not giving due notice of the dishonor of the bill immediately, if it could then probably have been collected from the drawees, should have fallen upon Woolley & Co. instead of Irving & Co., who had remitted the same to Van Wart ; and tlie plaintiff would then have l^een permitted to recover whatever damages had been sustained by such negligence, for the benefit of Irving & Co. In that respect Irving & Co. stood in the same rela- ALLEN V. SUYDAM. 31 tive situation to Van Wart, as Dunlop did to tlie Bank of Scotland, ill the case before referred to ; and Woolley Sc Co. occupied the situation of Ilainiltoii ct Co., who were hpld lialjle in that case, in exoneration of J)uiil<)|t\s liability. The only difference in principle which I can see Itetween the two cases is, that in the Scotch case it was evident that the bill would probably have been accepted and saved, if it had been presented for acceptance on Saturday, when it was received by the agent in Glasgow, instead of being kept back until Tuesday evening, when news of the drawers' failure had reached that place ; and therefore, to exonerate Dunlop, who remitted the bill, the agents in Glasgow were very properly ciiarged Avith the amount of the bill, the whole of which had been lost through their negligence, except the small amount of dividend wliich the bank would be entitled to out of the drawers' estate under the commission of bankruptcy against him ; whereas, in the case of Van Wart /•. Woolley, there was no reason to believe that the Ijill would have been accepted if the agent had insisted upon an answer immediately, and there was as little j)rol»ability that any thing would have been obtained from the drawers if Van AVart or Irving & Co. had received notice of the di>honor of the bill immediately after it was received by the agent in London. In the latter case, therefore, the damage which either Van Wart or those who had transmitted him the bill in payment had sustained, was merely nominal. Besides, the Supreme Court of this State having decided, that neither the drawers nor Irving & Co. were discharged from their liability to the idaintitf by this neglect of his agent, neither of them, in fact, having been injured by such neglect, the plaintiff upon the second trial was of course only held to be entitled to such damages as he had sustained, and which were noiniiial only. If the rule laid down by the judge who tried the j)reseiit case was correct, that the princij>al was entitled to recover the whole amount of the bill and interest, because there was no other evidence to enable the jury to discover what the damage was, then the plaintitV in the case of Van Wart /'. Woolley should have been permitted to retain his verdict upon the lirst trial ; as it did not then appear whether he could actually succeed in collecting the money, either from the drawers of the bill, or from Irving & Co. ; neither did it then appear whether by the laws of this S'tate, where they resided, they were not actually discharged from liability, so that no judgment could be recovered against them, in conse- 32 ACCEPTANCE. quence of the negligence of the agent. The granting of the new trial in that case, therefore, proceeded upon the principle that the agent was not liable for the whole amount of the bill, unless damages to that extent had been sustained by his neglect, and that to recover damages to that extent it was 'incumbent upon the party claiming, to give sufficient evidence to satisfy the Court and jury that it was at least probable that he had sustained damages to that amount. Neither the Scotch or the English case, therefore, is an authority to sustain the charge of the judge in relation to the amount of damages in the present case ; on the contrary, the case of Van Wart v. Woolley is a direct authority to show that the agent ought not to be charged with the whole amount of the bill, unless tliere is sufficient evidence to render it at least probable that tlie whole amount of the debt would have been saved if the agent had discharged the duty which his situation imposed upon him. Where there is a reasonable probability th.at the bill would have been accepted and paid if the agent had done his duty ; or where, by the negligence of the agent, the liability of a drawer or indorser who was apparently able to pay the bill has been discharged, so that the owner of the bill cannot legally recover against such drawer or indorser, I admit the agent by whose negligence the loss has occurred is prima facie liable for the whole amount thereof, with interest, as damages ; unless he is able to satisfy the Court and jury that tha whole amount of the bill has not been actually lost to the owner in consequence of such negligence. The case under consideration, however, is one of a very diiferent description. Here it is perfectly evident, from the testimony of one of the drawees, that the draft would not have been accepted at any time after it was received by the Aliens for collection, as the drawees had received express directions from the drawer not to accept ; nor would they have accepted it, even without such a prohibition, unless they had previously been advised so to do by the drawer. The fact, also, that tiie drawer's credit was not good at the time this draft was received for collection, lie having suf- fered his note to Boyd and Suydam to lie under protest for some time, and the express directions given by him to the drawees not to accept this draft, rendered it highly improbable that he would liave paid the draft himself to save liis credit, if it had been sent back protested at an earlier day. From the facts of the case, ALLEN V. SDYDAM. 33 tlicrcforc, I think thoro was no ground for supposing tliat the owners had sustained any actual damage from the mistake of the Aliens, in not sending on the bill for acceptance immediately after they received it for collection in New York ; or that their chance of obtaining* payment from the drawer was materially impaired by the delay of the protest for a few days. Under the circumstances of this case, therefore, I think the jury should have been instructed that, upon the evidence, the plaintiffs were only entitled to nominal damages ; or at least they should have been told to (iiiil only such damages as they should, fi-om the evidence, believe it jjrobable the plaintiflfs might have sustained by the delay in presenting the draft for accci)taiice immediately ; for I do not see how it is possible for any one to believe, or even to suppose it probable from this evidence, that the whole amount of this draft was in fact lost to the plaintiffs below, by the delay of the Aliens in presenting it to the drawees, and giving notice of the dishonor thereof immediately to the drawer, who never intended that it should be accepted and paid. For these reasons I am of opinion that the judgment of the Court below should be reversed, and that a venire cle novo should be awarded ; to the end that no more damages may be recovered than such as a jury may believe it probable, from the evidence adduced, that the plaintiffs may have sustained from the negligence of their agcnte. By Senator Verplanck.^ In this case the defendants in the Court below were agents for collecting, for a commission, a draft on another State, payable after date. What are the duties and responsil)ilities of agents in regard to presenting such paper for acceptance ? Legal authority, as well as commercial usage, has long settled as a genei-al rule, that the holder of a bill of exchange, payable at a specific time, is not obliged to present such bill for acceptance in order to iiold the drawer or prior indorser. It is, indeed, usual as well as prudent, to do so, both for the sake of the added security a*nd better credit of the paper, and because in case of refusal, recourse may be had immediately to the drawer. It is, therefore, the duty of an agent for collection, to exert the cus- tomary prudence, and present such paper for acceptance without 1 Tliis opinion is given as exceedingly interesting and able ; though that part of it relating to the damages was not adopted. 3 34 ACCEPTANCE. delay, since, by neglect, his principal may either lose the drawee's security, and the credit it gives, or else be prevented from malting such inquiries and demands, or using such legal or precautionary measures towards the drawer or other parties, as might tend to secure his debt. Tiiis distinction was long ago stated by Pothier, who points out the different obligations of him who holds a bill as ail agent (" mandataire "), " who ought to present it for acceptance as soon as possible ; " and those of him who holds as owner (" lorsque le porteur est en meme temps le proprietaire "), who may present it when he thinks fit. Contract du Ciiange, partie 1, c. 5, art. 128. This distinction was recognized in the English elementary books (see earlier editions of Chitty on Bills, and other writers there cited) as part of the general commercial law of Europe, before any express judicial decision to that point. The modern case of Van Wart v. Woolley, 5 Dowl. & Ryl. 374 ; 3 Barn. & Ores. 439, has sanctioned the principle judicially, by deciding that the delay of an agent to give notice of non-acceptance of bills, subjected him to damages, even when the drawer was not discharged. The case of tiie Bank of Scotland v. Hamilton, cited in 1 Bell's Commentary on the Laws of Scotland, 409, decided by the Scotch Court of Sessions, is remarkable for its similarity to the present case, and is entitled to the same authority with us, as it receives in England (see Chitty on Bills, 300, who refers to that case as an authority to this point), as well on adcount of the general uniformity of the law of negotiable paper in the civilized world, as because it is evident from the books that on this head the Scotch law conforms to the English, and is much governed by its usages and decisions. In that case, a bill payable at Glasgow, three days after date, was sent to an agent at that city for collec- tion. It is stated " that it is not customary for porteurs (bearers) of bills at short dates to present them for acceptance." Before the day of payment the drawer failed, and the Glasgow Bank refused to accept. It was not clear whether the bank would have accepted the draft if it had been immediately presented, for the bank had no funds of the drawer, and the practice had been to make provisions for such drafts at the day of payment. The action was against the agents. " The Court held, that, as ag-ents, they were bound imme- diately to present the bill for acceptance." Thus, it seems to be the general commercial law of the civilized ■world, that when a bill is payable at a day certain, the drawer and indorser are not discharged if the bill is not presented until the ALLEN V. SUYDAM. 85 day of payment. Yet it is still the duty of the a^•entJor collection to present the bill for acceptance without delay, and to give imme- diate notice of refusal to accej)t. The reason of this, I take to be, that the drawer, by fixing a day certain for payment, assumes the responsibility of providing funds at that time, whatever may have been his previous credit with the drawee. Again: an indorser makes, as the phrase is, " a new bill on the same terms ; and besides, he waives liis right of immediate acceptance, by not enforcing it, but putting his bill into circulation without accept- ance." Not so he who places a bill in his agent's hands for collection. He makes no waiver or postponement of any of his rights, l)ut looks directly to the means necessary or expedient for his own security. In the present instance, the draft, which the payees might have retained until the day of payment, had they thought fit, was placed, directly upon receiving it, in the hands of agents, who were to receive " a commission or compensation for collecting the same." It was retained for seventeen days by the agents, who could have forwarded it for acceptance the next day. Nor after it had been refused acceptance did they again present it for payment. In the delay of presentation for acceptance, there was want of due diligence. The principle is familiar, that an agent for pay is bound to use such means, care, skill, and pre- caution, as are adequate to the due execution of his trust. He must use the ordinary diligence of a skilful and prudent man in such affairs. ' Now an early presentment for acceptance is an obvious precaution which a prudent man of business would take, to insure collection of a questionable draft. By this neglect or delay, the payees were prevented from making those demands and taking such immediate measures as to the drawer, on receipt of notice of non-acceptance, as might possibly have secured the payees in some way or other. At the late period at which they did receiye such notice, they preferred looking to the responsibility of their agents. These must be held responsible for the consequences of their negligence to the amount of the damage so caused. Nor is it a sufficient defence of the agents, that the bill would not have been accepted if immediately presented, because the drawer had directed that it should not be, nor that it was uncertain whether the funds in the hands of the drawees were sufficient or not, to meet the draft at the day fixed for payment. At and after the time when the draft sliould have been presented, the drawer was in business at New York, struggling for and obtaining credit, and 36 ACCEPTANCE. having the command of funds which he applied to pay other drafts presented subsequently to the date, when, with due diligence, notice of the non-acceptance of this bill would have been received. Whatever might have been his first intention, it was not for a court and jury to assume the broad presumption that an imme- diate demand, upon return of the draft, with such other legal measures as the state of business between the parties or other circumstances might render advisable, would not have led to the ultimate payment. As a mere conjectural inference from the character and course of business of Eastabrook, as incidentally presented in the evidence, I should think the probability rather the other way, and that immediate and urgent measures might perhaps have prevented loss. His death, and the consequent insolvency of his estate, have left all this mere matter of con- jecture ; but it is quite immaterial as to the question of the agent's duty, and the right of action against him, though were it distinctly in evidence either way, it might affect the measure of damages. Thus far, then, I think the law quite clear as to the rights of holders of bills, and the duties of collecting agents ; but I have had more hesitation as to the rule of damages. Is the plaintiff, in similar cases, to be obliged to make out in evidence the precise actual amount of the damage he sustained, and thus to give to the party in fault all the numerous and great advantages of doubt, uncertainty, and difficulty in the proof? Or are we to apply to these cases the doctrine of laches in commercial paper, as between the holder and other parties, and consider the agent as liaving made the paper his own by his neglect ? Contradictory as these rules are, they have yet each their share of authority, and are just and wise when applied to other questions ; but I am not satisfied with the equity in the commercial policy of either, when applied to a collecting agency, and I have sought in the decisions for some safer and more equitable doctrine on that head. Considering the subject in regard to commercial policy, there is, on one side, the vast amount of paper daily collected through our banks, the great public necessity for giving every facility and inducement to such collections, the serious drawback on those facilities and inducements that would be occasioned, and the opportunity of fraud afforded if worthless paper deposited for collection can, whenever parties are discharged by the blunder ALLEN V. SUYDAM. 37 of a clerk, be saddled irrevocably on responsible a<j:ents and "made their own " absolutely, and without allowing any defence or nuli<i;atiun of danuigos. On the other band, the policy of hold- ing sucii agents to strict accountability is e([ually clear. Our whole system of negotiable paper, and its responsibilities, formed, as it is, by long experience, and admirably adjusted to the varied uses of commerce, rests upon the single princii)le of strict punc- tuality in demands, j)resentments, and notices, as well as in pay- ments. Now^ the policy and necessity of that punctuality, apply with the same force to the agent of such paper that they do to the principal. I can, therefore, find no sounder rule of damages, nor one better protecting and reconciling all these claims of policy and justice, than that pointed out by the decisions in a large class of cases of agency, and by the analogy of the measure of damages in trover. In those cases, the presumption is, in the first instance, to the full nominal amount of the loss, as if appears on the face of the transaction against the agent wanting in diligence, or the party guilty of the tortious conversion. Thus, where an agent or factor neglects to insure for his principal, according to order, he is held responsible for the default, prima facie, to the total amount which he ought to have covered by insurance. But at the same time he is allowed to put himself in the place of the underwriter, and to prove fraud, deviation, or any other defence which would have been good, bad the insurance been made, or which would go to show that nothing at all, or how much, was actually lost by the neglect. Delaney v. Stoddart, 1 T. R. 22 ; Wallace v. Teimiir, 2 id. 18S ; Wel)ster /•. De Tastet, 7 id. 157. In the courts of this State, lUmdle v. Moore, o Johns. Cas. 30. And in the courts of the United States, Morris v. Summerl, 2 Wash. 203. See also 1 Phil, on Ins. r)21, and the cases there cited. So, too, in actions against sheriffs, where those official public agents become chargeable with the debt of another, by their own negligence or misconduct. When the default is established, the amount due the plaintiff in the original suit is the j/rima facie evidence of the measure of damages. This presumjttion may be controlled or rebutted, and the sheriff may give in evidence any fact, showing cither that the party has not been aciually injured, or to a much less amount. He may show, for instance, the insolvency of the original debtor. But the burden of proof is upon him ; if lie leaves the presumption uncontradicted, that establishes the meas- 38 ACCEPTANCE. ure of damages. This has been frequently ruled at our Circuits, nor can I find that it has ever been questioned in our Supreme Court, and is substantially recognized in Potter v. Lansing, 1 Johns. R. 215 ; Russell v. Turner, 7 id. 189. The Massachusetts decisions are particularly full and express on this very point. See 10 Mass. 470; 11 id. 89; ib. 188; 13 id. 187. Similar decisions may be found in tlie reports of other States. So again in trover. In Ingalls v. Lord (1 Cowen, 240), in trover for a note, it was held, that the prima facie measure of damages was the face of the note ; but that evidence might be given to reduce the amount, by proving payment in part, or the insolvency of the maker, or any other fact invalidating the note or lessening its value. It is true, that Lord Tenterden^ in Van "Wart v. Woolley, above cited, held that damages must be shown, and that the face of the bill is not the conclusive measure ; but this I think is not in con- tradiction to the view tliat I have taken. I therefore take the cases before mentioned to point out the sound doctrine here. The face of the bill is tlie prima facie measure of damages. These may be reduced by any positive evidence proving the real damage to be less ; but the burden of that proof must be upon the negli- gent agent, and not on the party who suffers by his negligence. Circumstances like those of the present case, may often render it difficult or impossible for either party to prove or even to form a probable estimate of tlie precise damages incurred by the agent's neglect. In such cases, is it not just that those chances of loss which must fall upon one or the other, should be thrown upon the party in default, and not upon the innocent sufferer ? It was, then, for the defendants here to show that the debt would not have been paid had due diligence been used, or that there were any other circumstances to diminish the actual damages below the nominal amount. I do not see that this was done, and therefore think that Chief Justice Jones was right in his charge : " That the Court and jury having no knowledge what the amount of damages was except from the proof of the amount of the draft, the jury should fiitd for the plaintiffs for tlie amount of the draft, and interest from the day it became due." Perhaps the case was a hard one. So are many others that arise under our law of negotiable paper, in consequence of laches of parties. In all such instances, the hardship of the particular case must yield to the necessity of adhering to some general rule ALLEN V. SUYDAM. 39 founded on broad considerations of public policy. I can find no such rule safer or more conducive to commercial convenience, or sanctioned by stronger authority, than tiie one 1 have stated. If, however, we abandon this rule, the only alternative, in my judgment, so far as authority governs, is to adopt the stricter doc- trine of our Supreme Court, in Le Guen v. Gouverneur and Kem- ble, 1 Johns. Cas. 4<;7, and affirmed in 1800, in this Court: '^ Tliat where the property consists of credits, the agent whose breach of orders causes damages, is bound to answer to the amount of the credits, and the principal may al)andon to him." The only defence distinctly recognized as valid in those doctrines, is that of fraud, ♦ or some similar one going to invalidate the whole contract. Upon this principle, the agents here would be held to have made the paper their own by their default, if the plaintiffs below thought fit to abandon it to them ; and this, perhaps, is the ground on which the Superior Court rested their decision in this case ; the reasons of which I regret that we have not before us. Under tiie circumstances of the case, either this rule or that which I have stated before, would affirm the judgments of the courts below ; but I place my own vote for affirmance upon the ground first stated, as being the most equitable, the most condu- cive to public policy, and as supported by the analogy and autiiority of many modem decisions. Judgment reversed. In the rule for judgment of reversal, the following entry was made: "It is further ordered and adjudged, that an ag'ent who receives a bill of exchange for roUvrtion which has not been accepted, is bound to present the same for acceptance without unreasonable delay, as well as to present the same for payment when it becomes due, or he will be liable to his prineijjdl for the damages which the latter sustains by such negligence." The doctrine of this case is again held in the Court of Appeals in Walker v. Bank of The State of New York, 9 N. Y. (5 Seld.) 582, decided in 185-1 ; and upon the rulin<j respectinfj dama<xes seems just and reasoiiahle. But it is held in Bank of Washington v. Triplett, I Peters, 25, (1828) in the case of a bank to which a bill had been sent for collection, that a settled usage of the bank, not to note the bill as dishonored, after calling on the drawer for accept- ai^e, is a good defence against the charge of negligence. And it must be ad- mitted that the language ol" Chief Justice Marshall is against the rule letjuiring the agent to present such bills as the one in question for acceptance ; but no authorities were before him, and the case was actually decided upon the ques- tion of usage. 40 ACCEPTANCE. . With respect tp the time when bills payable at or after sight should be presented for acceptance, the only rule, whether the bill be foreign or inland, and whether payable at sight or so many days after sight, or in any other man- ner, is, that they must be presented within a reasonable time ; and as the' drawer may sustain a loss by the holder's keeping it any great length of time, it is ad- visable in all cases to present it as soon as possible ; but he is not obliged to send it by the first opportunity. (Shitty, Bills, 274 ; Story, Bills of Exchange, § 231 ; Muilman v. D'Eguino, 2 H. Bl. 565. In the case of a foreign bill, payable after sight, it is no laches to put it into circulation before acceptance, and to keep it in circulation without acceptance, as long as the convenience of the successive holders may require ; and it has been even laid down that, if such a bill drawn at three days' sight were kept out in that way for a year, this would not be laches. Chitty, Bills, 275 ; Story, Bills of Exchange, § 231. So .in the case of a bill payable in India sixty days» after sight, it would not necessarily be negligence to omit presenting it for accept- ance for twenty-six days after its arrival ; but if, instead of putting it into cir- culation, the holder were to lock it up for any length of time, this would be laches. Muilman v. D'Eguino, 2 H. Bl. 5(35. In this case, Eijre, C. J., said : " It is not necessary to lay down any new rule as to bills of exchange payable at sight, or within a given time afterwards. ... It would be a very serious and difficult thing to say that a person buying a for- eign bill in the way these were bought, should be obliged to transmit it by the first opportunity to the place of its destination. There would also be a great difficulty in saying at what place such a bill should be presented. The courts have been very cautious in fixing any time for presenting for acceptance an in- land bill, payable at a certain period after sight, and it seems to me more neces- sary to be cautious with respect to a foreign bill payable in that manner. I think, indeed, the holder is bound to present the bill ii> a reasonable time." Per Buller, J. " Due diligence is the only thing to be looked at, whether the bill be foreign or inland. . . . But I think a rule may be thus laid down as to laches, with regard to bills payable at sight, or a certain time after sight, viz., tJtat they ouglit to he put into circulation ; and if a bill drawn at three days' sight were kept out in that way for a year, I cannot say that there would be laches ; but if, instead of putting it into circulation, the holder were to lock it up for any length of time, I should say that he would be guilty of laches ; but further than this no rule can be laid down." A similar question as to laches arose in Goupy v. Harden, 7 Taunt. 159, in an action upon a foreign bill payable thirty days after sight. Gibbs, C. J., said : " The distinction is between bills payable at a certain number of days after date, and bills payable at a certain number of days after sight. In the former the holder is bound to use all due diligence, and to present such bill at its maturity ; but in the latter case he has a right to put the bill into circulation before he pre- sents it, and then, of course, it is uncertain when it will be presented to the drawee. It is to the prejudice of the holder if he delays to do it, and he loses his money and his interest." See also Straker v. (Jraham, 4 Mees. & W. 7il ; Middleton Bank v. Morris, 28 Barb. 616 ; Mullick v. Radakisscn, 28 Eng. Law & E4. 86; Mellish v. Rawdon, 9 Bing. 416; Fry v. Hill, 7 Taunt. 3'J7 ; Shute V. Robins, Mood & M. 133; s. c, 3 Car. «& P. 80; Darbishire v. Parker, 6 East, 12; Chitty, Bills, 274-279. If there is a clear and determinate usage of trade SPEAR V. PRATT. 41 wlil'h ascertains and fixes a definite time within wliieh the presentment must be mad"', the usage will .nrovern. Stury, Bills of Exehan^^e, § 231 ; Mellish v. Rawdon, i» Hiiig 410. The kuld'T uf an inland bill payable after j-ight, is not bound instantly to transmit the bill for aceeptance ; he may put it into cireulation, and if he ilo not circulate it, he may take a reasonable time to present it for acceptance ; and the keepin<( it an entire day after he received it, and a delay to present tintil the <burlh day a bill on Loudon, yiven within twenty miles of that city, is not unrea- sonable. C^liitly, Hills, 27;»; Fry v. Hill, 7 Taunt. 'Ml; Ilarker i;. Anderson, 21 Wend. ;)72, and casts cited by the Court. I Respecting the question, What is reasonable time, see Ilarker v. Ander.son, 21 Wend. 372, and Mohawk Bank v. Broderick, 13 Wend. 133. Though there has been some conflict in England as to whether this is a ques- tion of law or fact (see cases above cited), the rule has become pretty well set- tled in this country, that the determination of the (juestion must depend on t'ue particular circumstance of the case; that if the facts are found, it becomes ex- clusively a question for the Court; if not, it is a mixed question of law and f.ut, to be determined l)y the jury, under proper instructions from the Court. The result of the cases upon this subject may be stated thus : — 1. Presentment fur acceptance, though always proper and advisable, is abso- lutely necessary only in the case of bills payable on demand or (d or after si<jht ;. and it should be made within a rcastjnable time. It is always the wisest course, when practicable, to present the bill for acceptance before it is put into circula- tion, though the law does not require this. 2. If a bill payable at a certain time aj'ler date is presented for acceptance. — the advisable but not a necessary proceeding, — and the drawee refuses to ac- cept, iuimcdiate notice should be given to the prior parties to charge them. But in Pennsylvania, protest and notice of non-acce[)tauce in the case of foreign bills is not necessary. Read v. Adams, 6 Serg. & R. 356 ; Brown v. Barry, 3 Da!l. 365 ; Clarke v. llussel, 3 Dall. 415. See Story, Bills of Exchange, § 273, note. Spear and Patien v. Pratt. (2 Hill, f>S2. Supreme Court of New York, May, 1842.) What const it iilos arcf planer. — If the drawee of a bill of exchange write his name across the face of tlie hill, tliis binds him as an acceptor ; and this too, tii()U_u:h tlie statute requires accciUauce to lie in writintr, and signed by tlie aecci)tor or his agent. The defendant, drawee of a bill of exchange, wrote his name across the face of the bill. He was a resident of New York. The question was wlictlicr he was bound as an accej)tor. CowEN, J. Any words written by the drawee on a bill, not put- ting a direct negative upon its request, as " accepted," " presented," 42 ACCEPTANCE. " seen," the day of the months or a direction to a third person to pay it, is prima facie a complete acceptance, by the law merchant. Bayley on Bills, 163, Am. ed. of 1880, and the cases there cited. Writing his name across the bill, as in this case, is a still clearer indication of intent, and a very common mode of acceptance. This is treated by the law merchant as a written acceptance, — a signing by the drawee. " It may be," says Chitty, " merely l)y writing his name at the bottom or across tlie bill ; " and he mentions this as among the more usual modes of acceptance. Chitty on Bills, 320, Am. ed. of 1839. It is supposed that the rule has been altered by 1 Rev. St. 757, 2d ed. § 6. This requires the acceptance to be in ivriting, and sig-ncd by the acceptor or his agent. The acceptance in question was, as we have seen, declared by the law merchant to be both a 'writing- and signing. The statute contains no declaration that it should be considered less. An indorsement must be in writing and signed ; yet the name alone is constantly holden to satisfy the requisition. No particular form of expression is necessary in any contract. The customary import of a word, l)y reason of its appear- ing in a particular place, and standing in a certain relation, is con- sidered a written expression of intent quite as full and effectual as if pains had been taken to throw it into the most labored periphrase. It is said the revisers, in their note, refer to the French law as the basis of the legislation which they recommended ; and that the French law requires more than the drawee's name, — the word accepted, at least. That may be so ; but it is enough for us to see that both the terms and the spirit of the act may be satisfied short of that word, and more in accordance with the settled forms of commercial instruments in analogous cases. The whole purpose was probably to obviate the inconveniences of the old law, which gave effect to a parol acceptance. New trial denied. Verbal acceptance is valid in the absence of statute, if communicated to bim who takes the bill, and he takes it on the credit of such acceptance. Fisher v. Beckwith, 19 Vt. 31 ; Bank of Rutland v. Woodruff, 34 Vt. 89 ; Martin v. Ba- con, 4 Const. 132 ; Spaulding v. Andrews, 48 Penn. State, 411 ; Ward v. Allen, 2 Met. 53; Williams v. Winans, 2 Green (N. J.), 339; Ontario Bank v. Worth- ington, 12 Wend. 593; Rees v. Warwick, 2 Barn. & Aid. 11;]; C'rowell v. Van Bibber, 18 La. An. 637 ; In re Agra, &c., Bank, Law Rep. 2 Ch. 391 ; Coolidge V. Payson, infra, and note. Where a corporation draws upon itself, or a partner draws on his firm for COOLIDGE V. PAYSON. 43 partnership purposes, or an individual on liimsclf, formal acceptance is unnec- essary ; tlie act of drawing is deemed acceptance. Ilasey v. White Pigeon Su- gar Co., 1 Doug. (Mich.) 19.3; Dougal v. Cowles, 5 Day, oil ; Cunningham v. Wardwell, 3 Fairf. 4GG ; Marion, &c., II. Co. ». Hedge, 9 Ind. 163. If the drawee's agent write an order on the bill to another to pay it, this is an acce|)|(ince. Harper >;. West, 1 ('ranch, ('. ('. l'J2. See further upon tin's .sid)jcct, Phillips v. Frost, 2'J Maine, 77 ; Brannin v. Hen- derson, 12 B. Mon. 61, in wiiich the drawee had written upon the back of the bill, " I will see the within paid eventually ; " Edson v. Fuller, 2 Foster, 183, in which a parol promise " to settle," was proved ; Barnet v. Smith, 10 Foster, 256, in which a check was pronounced ''good " by the cashier of the bank upon which it was drawn. In all these cases the words in (juotation marks were held to con- stitute acceptance. Scd qucere. See Powell i'. Jones, 1 Esp. 17. It has even been held that tlie words " I will not accept this bill," written on the draft, constitute a valid acceptance. Lumley v. Palmer, Cas. Temp. Hardw., London ed. 74. But so paradoxical a ruling may well be questioned. See Bailey on Bills, 1G4, note (2 Am. ed.), where it is said: "But by Lord, Mansfield, in Peach v. Kay, . . . ' it was held by all the judges that an express refusal to accept, written on the bill where the drawee apprised the party who took it away what he had written, was no acceptance ; but if the drawee had in- tended it as a surprise ujjon the party, and to make him consider it as an accept- ance, they seemed to think it iiiight have been otherwise.'" See 1 Parsons, Notes and Bills, 283. CooLiDGE et al. V. Payson et al. (2 Wheaton, GG. Supreme Court of the United States, February, 1817.) Promise to accept. — A letter written within a reasonable time, before or after the date of a bill of exchange, describing it in terms not to be mistaken, and i)romising to accept it, is, if sliown to the person wlio afterwards takes the bill on the credit of the letter, a virtual acceptance, binding the person who makes the promise ; and this too though it was drawn in favor of a person who took it for a preexisting debt. The case is stifTiciently stated in the opinion of tlio Court. Maiish.\ll, C. J. This suit was instituted by Payson Sc Co., as indorsers of a bill of exchange, drawn by Cornthwaite and Cary, payable to the order of John Randall, against Coolidge <fc Co. as the acceptors. At the trial the holders of the bill on which the name of John 44 ACCEPTANCE. Randall was ladorscd, olTered, for tlie purpose of proving the in- dorsement, an affidavit made by one of the defendants in the cause, in order to obtain a continuance, in which he referred to the bill in terms which, tliey supposed, implied a knowledge on his part that the plaintiffs were the rightful owners. The defendants jDbjected to the bill's going to the jury without further proof of the indorse- ment ; but the Court determined that it should go with the affida- vit to the jury, who might be at liberty to infer from tlience that the indorsement was made by Randall. To this opinion the coun- sel for the defendants in the Circuit Court excepted, and this Court is divided on the question wlicther the exception ought to be sustained. On the trial it appeared that Coolidge & Co. held the proceeds of part of the cargo of the " fliram," claimed by Cornthwaite and Gary, which had been captured and held as lawful prize. The cargo had been acquitted in the District and Circuit Courts, but, from the sentence of acquittal, tlie captors had appealed to this Court. Pending the appeal Cornthv/aite & Co. transmitted to Coolidge & Co. a bond of indemnity, executed at Baltimore with scrolls in the place of seals, and drew on them for two thousand seven hundred dollars. This i)ill w^as also payable to the order of Randall, and indorsed by him to Payson & Co. It was presented to Coolidge & Co. and protested for non-acceptance. After its pro- test, Coolidge & Co. wrote to Cornthwaite and Cary a letter, in which, after acknowledging the receipt of a letter from them, with the bond of indemnity, they say, '• this bond, conformably to our laws, is not executed as it ought to be ; but it may be otherwise in your State. It will therefore be necessary to satisfy us tliat the scroll is usual and legal with you instead of a seal. We notice no seal to any of the signatures," " We shall write our friend Wil- liams by this mail, and will state to him our ideas respecting the bond, which he will probably determine. If Mr. W. feels satisfied on this point, he will inform you, and in that case your draft for two thousand dollars will be honored." On the same day Coolidge & Co. addressed a letter to Mr. Wil- liams, in which, after referring to him the question respecting the legal oliligation of the scroll, they say, " you know the object of the bond, and, of course, see the propriety of our having one, not only legal, but signed by sureties of unquestionable responsibility, respecting which we shall wholly rely on your judgment. You roOLIDGE y. PAYRON. 45 mention the last surely as l)eing rcspbnsihle ; wliat think you of the others ? " In his answer to this K'lter, Williams says, "I am assured, that tlic l)ond transmitted in my last is sufficient for the purpose for which it was ^iven, provided the parties possess the means ; and of the last signer, I have no hc^sitation in expressinu; my firm heliSf of his being able to meet the whole amount hims(df. Of Ihc j)rinci- pals I cannot s[)eak with so much confidence, not being well ac- quainted with their resources. Under all circumstances, I should not feel inclined to withhold from them any portion of the funds for which the bond was given." On the day on which tiiis letter was written, Cornthwaite and Gary called on Williams, to inquire wiielher he had satisfied Coolidge & Co. respecting the bond. Williams stated the substance of the letter he had written, and read to him a part of it. One of the firm of Payson & Co. also called on him to make the same in- quiry, to whom he gave the same information, and also read fiom his letter book the letter he had written. Two days after this, the bill in the declaration mentioned, was drawn by Cornthwaite and Gary, and ])aid to Payson & Go. in part of the protested bill of two thousand seven hundred dollars, by whom it was presented to Coolidge & Co., who refused to accept it, on which it was protested, and this action brought by the holders. On this testimony, the counsel for the defendants insisted that the plaintiffs were not entitled to a verdict ; but the Court instructed the jury, that if they were satisfied that Williams, on the applica- tion of the plaintiffs, made after seeing the letter from Coolidge k Go. to Cornthwaite and Gary, did declare that he was satisfied with the \nnn\ referred to in that letter, as well with respect to its e.xecu- tion, as to the sufficiency of tlie obligors to pay the same ; and that the plaintiffs, u[)on the faith and credit of the said declaration, and also of the letter to Cornthwaite and Gary, and without having seen or known the contents of the letter from Coolidge k Co. to AVilliamSjdid receive and take the bill in the declaration mentioned, they were entitled to recover in the present action ; and that it was no legal objection to such recovery that the promise to accept the present bill was made to the drawers thereof, previous to the exist- ence of such bill, or that the bill had been taken in part-payment of a pre-existing debt, or that the said Williams, in making the 46 ACCEPTANCE. declarations aforesaid, did ^ceed the private instructions given to him by Coolidge & Co. in their letter to him. To this cliarge the defendants excepted ; a verdict was given for the plaintifTs,- and judgment rendered thereon, which judgment is now before this Court on a writ of error. Tfie letter from Coolidge & Co. to Cornthwaite and Cary contains no reference to their letter to Williams which might suggest the necessity of seeing that letter, or of obtaining information respect- ing its contents. Tliey refer Cornthwaite and Cary to Williams, not for the instructions they had given him, but for his judgment and decision on the bond of indemnity. Under such circumstances, neither the drawers nor the holders of the bill could be required to know, or could be affected by, the private instructions given to Williams. It was enough for them, after seeing the letter from Coolidge & Co. to Cornthwaite and Cary, to know that Williams was satisfied with the execution of the bond and the sufficiency of the obligors, and had informed Coolidge & Co. that he was so satisfied. This difficulty being removed, the question of law which arises from the charge given by tlie Court to the jury is this : does a promise to accept a bill amount to an acceptance to a person who has taken it on the credit of that promise, although the promise was made before the existence of the bill, and although it is drawn in favor of a person who takes it for a pre-existing debt ? In the case of Pillans and Rose v. Van Mierop and Hopkins, 3 Burr. 1663, the credit on which the bill was drawn was given be- fore the promise to accept was made, and the promise was made previous to the existence of the bill. Yet in that case after two arguments, and much consideration, the Court of King's Bench (all the judges being present and concurring in opinion) considered the promise to accept as an acceptance. Between this case and that under consideration of the Court, no essential distinction is perceived. But it is contended, that the authority of the case of Pillans and Rose v. Van Mierop and Hop- kins is impaired by subsequent decisions. In tiie case of Pierson v. Dunlop ct al., [2] Cowp. 571, the bill was- drawn and presented before the conditional promise was made on which the suit was instituted. Although, in that case, the holder of the bill recovered as on an acceptance, it is supposed that the principles laid down by Lord 3IansJield, in delivering his opinion, COOLIDGE V. PAYSON. 47 contradict those laid down in Pillan and Rose v. Van Mierop and PIoj)kins. IIisl()rd.sliij)ol)Scrvcs, '• it lias Ijoen truly said, as a gen- eral rule, that the mere answer of a merchant to the drawer of a hill, saying, ' he will duly honor it,' is no acceptance, •unless accom- panied with circumstanees which may induce a third person to take the bill by indorsement; hut if there arc any such circumstances, it may amount to an acceptance, though the answer be contained in a letter to the drawer." If the case of Pillans and Rose v. Van Mierop and Hopkins, had been understood to lay down the broad })rinciple that a naked prom- ise to accept, amounts to an acceptance, the case of Piersou v. Dunlop certainly narrows that principle so far as to require addi- tional circumstances proving that the person on whom the bill was drawn, was bound by his promise, either because he had funds of the drawer in his hands, or because his letter had given credit to the bill, and induced a third person to take it. It has been argued, that those circumstances to which Lord 3IansJir/d alludes, must be apparent on the face of the letter. But the Court can perceive no reason for this opinion. It is neither warranted by the words of Lord Mansfield, nor by the circum- stances of the case in which he used them. " The mere answer of a merchant to the drawer of a bill, saying "he will duly honor it, is no acceptance unless accompanied with circumstances," &c. The answer must be " accompanied with circumstances ; " but it is not said that the answer must contain those circumstances. In the case of Picrson v. Dunlop, the answer did not contain those cir- cumstances. They were not found in the letter, but were entirely extrinsic. Nor can the Court perceive any reason for distinguish- ing l)etween circumstances which ajjjjcar in the letter containing the promise, and those which are derived from otlier sources. The great motive for construing a j)romise to accept, as an acce{)tance, is, that it gives credit to the bill, and may induce a third person to take it. If the letter be not shown, its contents, whatever they may be, can give no credit to the bill ; and if it be shown, an abso- lute promise to accept will give all the credit to the bill which a full confidence that it will be accepted can give it. A conditional promise becomes absolute when the condition is performed. In the case of Mason v. Hunt, Dong. '2\){j, Lord Matis/ic/d said, " there is no doubt but an agreement to accept may amount to an acceptance ; and it may be couched, in such words as to put a third 48 ACCEPTANCE. person in a better condition than the drawee. If one man, to give credit to another, makes ffn absolute promise to accept his bill, the drawee, or any other person, may show such promise upon the ex- change to get credit ; and a third person, who should advance his money upon it, would have nothing to do with the equitable circum- stances wliich migiit subsist between the drawer and acceptor." What is it that " the drawer, or any other person, may show upon tlic exchange?" It is the promise to accept, — the naked promise. Tlie motive of this promise need not, and cannot be ex- amined. The promise itself, when shown, gives the credit ; and the merchant who makes it is bound by it. The cases cited from Cowper and Douglas are, it is admitted, cases in which the bill is not taken for a pre-existing debt, but is purchased on the credit of the promise to accept. But in the case of Pillans v. Van Mierop, the credit was given before the promise was received or the bill drawn ; and in all cases the person who receives such a bill in payment of a debt, will be prevented thereby from taking other means to obtain the money due to him. Any in- gredient of fraud would, unquestionably, affect the whole transac- tion ; but the mere circumstance, tliat the bill was taken for a pre-existing debt has not been thought sufficient to do away the effect of a promise to accept. In the case of Johnson and another v. Collins, 1 East, 98, Lord Kenyan shows much dissatisfaction with the previous decisions ou this subject ; but it is not believed that the judgment given in that case would, even in England, change the law previously es- tablished. In the case of Johnson v. Collins, the promise to accept was in a letter to the drawer, and is not stated to have been shown to the indorser. Consequently, the bill does not appear to have been taken on the credit of that promise. It was a mere naked promise, unaccompanied with circumstances which might give credit to the bill. The counsel contended, that this naked promise amounted to an acceptance ; but the Court determined otherwise. In giving his opinion, Le Blanc, J., lays down the rule in the words used by Lord 31ansficld, in the case of Pierson v. Dunlop ; and Lord Kenyon said, that " this was carrying the doctrine of implied acceptances to the utmost verge of the law ; and he doubted whether it did not even go beyond it." In Clarke and others v. Cock, 4 East, 67, the judges again express their dissatisfaction with the law as established, and their regret that any other act than a writ- COOLIDGE V. PAYSON. 49 ten acceptance on the bill had ever been deemed an acceptance. Yet they do not undertake to overrul(v the decisions which they disapprove. On the contrary, in that case, they unanimously de- clared a letter to the drawer promising to accept a bill, which was siiown to the person wiio held it, and took it on the credit of that letter, to be a virtual acceptance. It is true, in the case of Clark V. Cock, the bill was made before the promise was given, and the judges, in their opinions, use some expressions which indicate a distinction between bills drawn before and after the date of the promise ; but no case has been decided on this distinction ; and in Pillans and Rose v. Van Mierop and Hopkins, the letter was writ- ten before the bill was drawn. The Court can perceive no substantial reason for this distinction. The prevailing inducement for considering a promise to accept, as an acceptance, is that credit is tliereby given to the bill. Now, this credit is given as entirely by a letter written before the date of the bill as by one written afterwards. It is of much importance to merchants that this question should be at rest. Upon a review of the cases which are reported, this Court is of opinion, that a letter written within a reasonable time before or after the date of a bill of exchange, describing it in terms not to be mistaken, and promising to accept it, is, if shown to the person who afterwards takes the bill on the credit of the letter, a virtual acceptance binding the person who makes the promise. This is such a case. There is, therefore, no error in the judgment of the Circuit Court, and it is affirmed with costs. Judgment affirmed. Tlie doctrine of tlic above case is re-affirmed in Schimmelpennich v. Bayard, post, 64; Townsley r. Suiiiiall, 2 Peters, 170; Boyce v. Edwards, post, 52, and Adams r. Jones, 12 Peters, 207, on the point respecting a promise to accept. In Town^ley v. Sumrall, supra, the Court, Story, J., held that if the drawee Lave no funds in his hands, and the fact is known to the party taking the bill, and yet tlie inducement to take the bill is the promise of the drawee to accept it, it constiiutes a valid contract between the parties, if there is a purchase of the bill on the credit of such promise. In McEvers i\ Ma^*on, 10 .Johns. 207, decided in 1813, three years prior to the decijion in Coolidge v. Payson, the Court, Kent, C. J., drew the same dis- tinction between the rights of one who has taken a bill on the faith of a promise tp accept, and one who has not so taken it; and it was held that, as the indorsee had taken the bill in entire ignorance of any such promise, he could not recover from the defendants as implied acceptors. • 4 50 ACCEPTANCE. Although doubts were expressed in this case whether an agreement to accept a bill thereafter to be drawn would amount to an acceptance, or could be en- forced by the indorsee, yet the law is now considered well settled in America, that an agreement to accept is binding if the bill is drawn within a reasonable time, and such agreement was made known to the indorsee, and the bill was in- dorsed or negotiated on the credit of the acceptor. Per Bean/.sley, Senator, in Greele v. Parker, 5 Wend. 414, citing Goodrich v. De Forest, 15 Johns. 6. In Greele v. Parker, decided in 1830, Walworth, Chancellor, says: " It is a well settled rule of the commercial law of this country, and of most of the nations of Europe, except England, where it has recently been abolished by statute, that an unconditional promise in writing to accept a bill of exchange, if made within a reasonable time before or after the date of the bill, and describing the same in terms not to be mistaken, is a virtual acceptance thereof, in favor of any person to whom such promise has been shown, and who has received the bill for a valua- ble consideration, on the faith of such promise." That a promise to accept a non-existing bill constitutes an acceptance, see Steman v. Harrison, 42 Penn. State, 49 ; Burns v. Rowland, 40 Barb. 368 ; Crowell v. Van Bibber, 18 La. An. 6:57 ; Bayard v. Lathy, 2 McLean, 462 ; Wilson v. Clements, 3 Mass. 1 ; Storer V. Logan, 9 Mass. o5 ; Carnegie v. Morrison, 2 Met. 381; Murdock v. Mills, 11 ]\Iet. 5; Russell «. Wiggin, 2 Story, 213; Plummer r. Lyman, 49 Maine, 229, and other authorities cited in this note. But it must be observed that in such a case the promise must have been communicated to the indorsee, and that he took the bill on the credit thereof. Chitty, Bills, 285. It has been held that a promise to accept an existing bill may be sued upon as an acceptance, whether the holder took it on the credit of the promise or not. Jones v. Bank of Iowa, 34 111. 313 ; Read v. Marsh, 5 B. Monr. 8. But this may be doubted ; and Ex- change Bank of St. Louis v. Rice, 98 Mass. 288, is an ably considered case to the contrary. In Read v. Marsh, the Court say that " it seems to be now well settled that a letter promising to accept or protect a bill, whether written before or after it is drawn, may operate as an accej^tance, . . . although the holder has not been induced by such letter or promise to take the bill,'' citing Chitty, 177. But the text does not support this position ; and this is certainly not the law respecting non-existing bills. In this case, the letter promising to accept, was written after the bill had been drawn. Frequent expressions of regret occur that the doctrine of virtual acceptances of non-existing bills was ever advanced ; and in Wildes v. Savage, 2 Story, 22, ^tory, J., it is held that the doctrine must be strictly confined to the case of bills to be drawn payable on demand or after date, and never extends to those paya- ble at or after sight. It is a little remarkable that he should say (p. 29), that he has been unable to find a single case of that kind, when he himself de- livered the opinion in Payson v. Coolidge, 2 Gall. 233, — the principal case in the Court below; from the report of which, as given in 2 Gallison, it appears th.it the bill in suit, and of which the defendants were there held as acceptors, was payable at sight. No notice of the distinction drawn in Wildes v. Savage, was taken either in the Court below, or on the appeal. The question whether a parol promise to accept a non-existing bill is valid in favor of an indorsee for value, who took the bill on the faith of such promise. COOLIDGE V. PAYSON. . 51 has several times come luffjro the courts of Englaiul and of this country. In Miln V. Prost, 1 Holt, IHl (181G), it is held that a parol promise in such a casse is as valid as if it were in writing; but tlie contrary doctrine is held in Bank of Ireland v. Archer, 11 Mees. & Wels. 383 (1843). And rarke, li., in this case, says that the report of ^liln v. Prest, in Holt, is inaccurate, and refers to 4 Camp. 393, for a correct version of it. The language of Parke, B., seems to cover the case of a uviUcn, as well as of a parol promise to accept a non-existing bill. This is sustained hy the opinion of eminent I-2nglish counsel in Russell v. Wiggin, 2 Story, 21:5; and see C'hitty, Bills, 284-286. Mr. Chitty here re- views the English cases, and considers it "at least questionable whether a third person, who has taken a bill on the faith of such [written] promise, can treat the promise as equivalent to an acceptance." But see /rare Agra, &c., Bank, Law Rep. 2 Ch. Ap. ot)l (18G7), in which it is held that such third person may in equity compel the party to a< cept who had promised to do so. In Bank of ^Michigan v. Ely, 17 Wend. oOS, the Court, Xehou, C. J., say that, previously to the statuie refjuiring acceptances to be in writing, it was set- tled in that State that a parol promise to accept a future bill was not binding, unless the bill was taken by the holcfer upon the faith and credit of such promise ; citing Ontario Bank v. Worthington, 12 Wend. 503. The converse would seem to follow from this, that if the holder did so take the bill, tlie parol promise would be binding. To this elFect are Crowell v. Van Bibber, 18 La. An. G37 ; Williams v. Winans, 2 Green (N. J.), 339. Contra, Kennedy v. Geddes, 8 Port. (Ala.) 2(J3 ; Plummer v. Lyman, 49 Maine, 232. But the promise in the last case came within the statute of frauds. The doctrine being settled in this country, differently perhaps from that of the courts of England, that a promise to accept a non-existing bill under the re- strictions above mentioned, may be sued upon as an acceptance, there seems to be no solid ground for the distinction between a written and a parol promise, when not within the statute of frauds, except where the statute requires accept- ance to be in writing, as in England and New York. The credit given to the indorsee is that which gives the promise its binding force ; and the inducement to take the bill may be as strong when the promise is in parol, as when it is writ- ten. That the ordinary promise to accept is not within the statute of frauds, is well settled. See Townsley v. Sumrall, 2 Peters, 170, and other eases, si(j>ra. There were special circumstances in Plummer v. Lyman, supra, which brought the promise within the statute. If the drawee of a bill, drawn and indorsed for his acconmiodation, procure the same to be discounted and promise to pay the bill at maturity, this consti- tutes him an acceptor. Bank of Rutland v. Woodruff, 34 Vt. 89. So if the drawee's agent write an order on the bill to another to pay it, this is an acceptance of the original bill. Harper v. West, 1 Crauch, C C. 192. 52 * « ACCEPTANCE. BoYCE and Henry, Plaintiffs in Error, v. Timothy Edwards, Defendant in Error. (4 Peters, 111. Supreme Court of the United States, January, 1830.)' Promise to cwcept. Bill must be pointed out. — In order to bind as acceptor one who has promised to accept a non-existing bill, the particular bill must be pointed out and described in terms not to be mistaken. Distinction between an action upon a bill as an accepted bill, and one founded on a breach of promise to accept. The case is stated in the opinion of the Court. Thompson, J. This was an action of assumpsit, brought in the Circuit Court of the United States for the District of South Caro- lina, upon two bills of exchange drawn by Adam Hutchinson, in favor of Timothy Edwards, the plaintiff in the Court below, upon Boyce and Henry, the defendants, both bearing date on the 8th of February, 1827, the one for $2100 and the other for $2331, payable sixty days after sight. The cause was tried before the district judge ; and in the course of the trial, several exceptions were taken on the part of the de- fendants below to the admission of evidence, and the ruling of the Court upon questions of law, all which are embraced in the charge to the jury, to which a general bill of exceptions was taken ; and the cause comes here upon a writ of error. The bills of exchange were duly presented for acceptance, and on refusal were protested for non-acceptance and non-payment ; but the plaintiff sought to charge the defendants as acceptors, by virtue of an alleged promise to accept before the bills were drawn. And whether such liability was established by the evidence, is the main question in the cause. The evidence principally relied upon for this purpose consisted of two letters, the first as follows : " Charles- ton, March 9, 1825. Mr. Edwards : Dear Sir, — Mr. Adam Hutch- inson, of Augusta, is authorized to draw on us for the amount of any lots of cotton which he may buy and ship to us, as soon after as opportunity will offer ; such drafts shall be didy honored by yours, respectfully, Boyce, Johnson, and Henry." Johnson soon after died ; and on the 28th of the same month of March, the defendants published a notice in the Charleston news- papers, announcing a dissolution of the partnership by the death of BOYCE V. EDWARDS. 53 Johnson, and that the business would be conducted in future under the firm of IJoyce and Henry. The other letter is from the defend- ants, of the date of the 4th of January, 1827, addressed to Adam Hutchinson, in which they say, " you are at liberty to draw on us when you send the bill of lading. We do not put you on the foot- ing of otiier customers, for we do not allow them to draw for more than three-fourtiis in any instance. You may draw for the amount," &c. The defendants' counsel had objected to the admission of the first letter from Boyce, Johnson, and Henry, and contended that this did not bind Boyce and Henry to accept bills drawn on them after the dissolution of the partnership was known, and desired the Court so to instruct the jury. But the Court stated to the jury, that the said letter in connection with the other evidence in the cause was sufficient to charge the defendants as acce{)tors. The other evidence referred to by the Court, as would appear from other parts of the charge, was the letter of the 4th of January, 1827, the notice of the dissolution of the partnership, the accounts rendered by the defendants, and the numerous bills, drawn and accepted by them, all wliich had been given in evidence in tlie course of the trial. According to the view which we take of the instruction given by the Court below at the trial, tliat the defendants, upon the evidence, were liable as acceptors, it becomes very unimportant to decide whether the letter of Boyce, Johnson, and Henry should have been admitted or not. For we think, in point of law, there was a mis- direction in this respect, even if the letter was properly admitted. We should incline, however, to the opinion that this letter, at the time when it was olTered and objected to, and standing alone, would not be admissible evidence against the defendants. It was dated nearly two years before the bills in question were drawn, and was from a different firm. It was evidence between other and different parties. A. contract alleged to have been made by Boyce and Henry, could not be supported by evidence that the contract was made by Boyce, Johnson, and Henry. It might be adniissil)le, connected with otlier evidence showing that the authority had been renewed and continued l)y the new firm, and in support of an action on a promise to acc3pt bills drawn on the new firm. But that was not the purpose for which it was received in evidence, or the effect given to it by the Court in the part of the charge now under con- 54 ACCEPTANCE. sideration. It was declared to be sufficient, in connection with the other evidence, to charge the defendants as acceptors. And in this we think the Court erred. Had the letter been written by the de- fendants themselves, it would not have been sufficient to charge them as acceptors. The rule on this subject is laid down with great precision by this Court, in the case of Coolidge v. Payson, 2 W. 66 [ante, p. 43], after much consideration and a careful review of the authorities : " That a letter written within a reasonable time, before or after the date of a bill of exchange, describing it in terms not to be mis- taken, and promising to accept it, is, if shown to the person who afterwards takes the billon the credit of the letter, a virtual accept- ance, binding the person who makes the promise." This case was decided in the year 1S17. Tlie same question again came under consideration in the year 1828, in the case of Schimmel- pennich et al. v. Bayard el al., 1 Peters, 264 [pos^, p. 64], and re- ceived the particular attention of the Court, and the same rule laid down and sanctioned ; and this rule we believe to be in per- fect accordance with the doctrine that prevails both in the English and American courts on this subject. At all events, we consider it no longer an open question in this Court, and whenever the holder of a bill seeks to charge the drawee as acceptor upon some collateral or implied undertaking, he must bring himself within the spirit of the rule laid down in Coolidge v. Payson, and we think the present case is not brought within that rule. With respect to the letter of the 9th of March, 1825, in addition to the objection already mentioned, that it is not an authority to draw emanating from the drawees of these bills, it bears date nearly two years before the bills were drawn, and, what is conclusive against its being considered an acceptance, is, that it has no reference what- ever to these particular bills, but is a general authority to draw at any time, and to any amount, upon lots of cotton shipped to them. This does not describe any particular bills in terms not to be mis- taken. The rule laid down in Coolidge v. Payson, requires the authority to be pointed at the specific bill or bills to which it is intended to be applied, in order that the party who takes the bill upon the credit of such authority may not be mistaken in its application. And this leading objection lies also against the letter of the 4th of January, 1827. It is a general authority to Hutchinson to BOYCE V. EDWARDS. 55 draw, upon sending to the defendants tlie l)ills of lading for the cotton. This is a limitation iipon the authority contained in the former letter, even supposing it to have been adopted by the new firm, and must be considered, pro tanto, a revocation of it. Hutch- inson is only authorized to draw upon sending the bills of lading to tlie defendants. And although it may fairly Ijc collected from the evidence, that that was done in the present case, it does not remove the great objection that it is a general authority, and does not j)oint to any particular bills and descrilje tliem in terms not to l)0 mis- taken, as required by the rule in Coolidge v. Payson. The other circumstances relied on by the Court to charge the defendants as acceptors, are still more vague and indefinite, and can have no such effect. The Court, therefore, erred in directing the jury that the evi- dence was sufficient to charge the defendants as acceptors, and the judgment must be reversed. The distinction between an action on a bill, as an accepted bill, and one founded on a breach of promise to accept, seems not to have been adverted to. But the evidence necessary to sui)port the one or the other is materially different. To maintain the former, as has been already shown, the promise must he applied to the particular bill alleged in the declaration to have been accepted. In the latter, the evidence maybe of a more general character, and the authority to draw may be collected from circumstances and ex- tended to all bills coming fairly within the scope of the promise. Courts have latterly leaned very much against extending the doctrine of implied acceptances, so as to sustain an action upon the bill. For all practical purposes in commercial transactions in bills of exchange, such collateral acceptances are extremely incon- venient and injurious to the credit of the bills ; and tiiis has led judges frequently to express their dissatisfaction that the rule had been carried as far as it has, and their regret that any other act than a written acceptance on the bill, had ever been deemed an acceptance. As it respects the rights and the remedy of the innnediate parties to the promise to accept, and all others who may take bills upon the credit of such promise, they are equally secure, and eqiuilly at- tainable by an action for the breach of the promise to accept, as they could be by an action on the bill itself. In the case now before the Court, the evidence is very strong, if 56 ACCEPTANCE. not conclusive, to sustain an action upon a count properly framed upon the breach of the promise to accept. The bills in question appear to have been drawn for the exact amount of the cost of the cotton shipped at the very time they were drawn. And i£, the bills of lading accompanied the advice of the drafts, the transaction came within the authority of the letter of the 4th of January, 1827 ; and if satisfactorily shown that the bills were taken upon the credit of such promise, and corroborated by the other circumstances given -in evidence, it will be difficult for the defendants to resist a recov- ery for the amount of tlie bills. With respect to the question of interest, we think that, if the plaintiff shall recover at all, he will only be entitled to South Caro- lina intx^rest. The contract of the defendants, if any was made, upon which they are responsible, was made in South Carolina. Tiie bills were to be paid there ; and although they were drawn in Georgia, they were drawn, so far as respects the defendants, with a view to the State of South Carolina, for the execution of the contract. The judgment of the Circuit Court must be reversed, and the cause sent back with directions to issue a venire de novo. ' The following letter, in Ulster County Bank v. McFarlan, 5 Hill, 432, was held to be a sufficient promise to accept : "I hereby authorize you to draw on me at ninety days, from time to time, for such amounts as you may require, pro- vided that the whole amount running and unpaid shall not exceed S3000." And the Court, Bronson, J., after citing Bank of Michigan v. Ely, 17 Wend. 508, and Parker w., Greele, 2 Wend. 545; s. c, 5 Wend. 414, say: "These cases show also that the written promise to accept need not contain a particular de- scription or identification of the bill to be drawn." The case was decided in favor of the defendant, on the ground that the authority was not strictly pursued. It was afterwards affirmed in the '• 'ourt of Appeals on that defence. 3 Denio, 553. But Hand, Senator, takes occasion to deny the soundness of the doctrine advanced in the Supreme Court above men- tioned, and thinks that a wrong view was taken of the cases of Greele v. Parker, and Bank of Michigan v. Ely. He says: "The first case was on a promise to accept for $250 at three and four months, and was clearly intended to be but one transaction. The names of the j^arties and amount were given, and the time the bill was to run, which was a far more definite description than that given in this case. The last case turned on another point." Again on p. 558 : " But the ground upon which I put this part of the case is, - that by the law of this country, irrespective of the statute, the promise must point to the particular bills, and describe them in tenns not to be mistaken, and that the statute has in no way enlarged that rule." The statute referred to is worthy of note. It reads as follows : " An uncondi- nORTSMAN V. HP:N.SnAW, 57 tional promise in writing to accept a bill before it is drawn, shall be deemed an actual acceptance in favor of every person who, upon the faith thereof, ^hall have received the bill for a valuable considera'tion," 1 R. S. 768, § 8, published in 1829. It will be seen that it says nothing concerning the necessity of the promise dejpignating and describing the bill ; and it is not difficult to see that there might be diirorent views on this subject in construing the statute. But in the absence of statute, the rule in the principal case will be found a safe and just precedent. The following cases further illustrate the subject : lianorgee v. Ilovey, 5 Mass. 11; Storer v. Logan, 9 id. 55 f Carnegie v. Morrison, 2 Met. 381; Wildes v. Savage, 1 Story, 22; Baring v. Lyman, ib. 39G ; Russell v. Wiggin, 2 id.. 213 ; Adams v. Jones, 21 Peters, 207 ; and cases cited in note to Coolidge V. Payson, supra. See also Burns v. Rowland, 40 Barb. 3G8, in which the defendants authorized IL to draw on them for the amount he might owe tiie plaintilfs. The Court held that it was no objection that the drafi was drawn for a specific sum not mentioned in the letter, and that the defendants were liable as acceptors. John Hortsman, Plaintiff in Error, v. John Henshaw et al.. Defendants in Error. (11 Howard, 177. Supreme Court of the United States, December, 1850.) What acceptance admits. — The drawee of a bill of exchange cannot recover tlie amount thereof paid to a honnjide liolder, if tlie drawer put tlie bill into circulation bearing a fort^ed indorsement of the payee's name. Acceptance admits tlie drawer's sig- nature to be genuine, and tlie drawer, in sucii case, warrants the signature of tlie payee. The case is stated in the opinion of the Court. Taney, C. J. The material facts in this case may he stated in a few words. Fiske and Bradford, a mercantile firm in Boston, drew their bill of exchange upon Hortsman of London, payable at sixty days' sight to the order of Fiske and Bridge, for six hundred and forty-two pounds sterling. The drawers, or one of them, placed the bill in the hands of a broker, with the names of the payees indorsed upon it, to be negotiated ; and it was sold to the defendants in error bona fide and for full value. They transmitted it to their Corre- spondent in London, and, upon presentation, it was accepted by the 58 ACCEPTANCE. drawee, and duly paid at maturity. The payees and indorsees all resided in Boston, where the bill was drawn and negotiated. It turned out that tjie indorsement of the payees was forged, — by whom does not appear ; and a few months after the bill was paid, the drawers failed and became insolvent. The drawee, hav- ing discovered the forgery, brought this action against the defend- ants in error to recover back the money he had paid them. The precise question which this case presents does not appear to have arisen in the English courts ; nor in any of the courts of this country with the exception of a single case, to which we shall here- after more particularly refer. But the established principles of commercial law in relation to bills of exchange leave no difficulty in deciding the question. The general rule undoubtedly is, that the drawee by accepting the bill admits the handwriting of the drawer; but not of the in- dorsers. And the holder is bound to know that the previous in- dorsements, including that of the payee, are in the handwriting of the parties whose names appear upon the bill, or were duly author- ized by them. And if it should appear that one of them is forged, he cannot recover against the acceptor, although the forged name was on the bill at the time of the acceptance. And if he has received the money from the acceptor, and the forgery is after- wards discovered, he will be compelled to repay it. The reason of the rule is obvious. A forged indorsement can- not transfer any interest in the bill, and tlie holder therefore has no right to demand the money. If the bill is dishonored by the drawee, the drawer is not responsible. 'And if the drawee pays it to a person not authorized to receive the money, he cannot claim credit for it in his account with the drawer. But in this case the bill was put in circulation by the drawers, with the names of the payees indorsed upon it. And by doing so they must be understood .as affirming that the indorsement is in the handwriting of the payees, or written by their authority. And if the drawee had dishonored the bill, the indorser would undoubt- edly have been entitled to recover from the drawer. The drawers must be equally liable to the acceptor who paid the bill. For hav- ing admitted the handwriting of the payees, and precluded them- selves from disputing it, the bill was paid by the acceptor to the persons authorized to receive the money, according to the drawer's own order. HORTSMAN V. IIENSIIAW. 59 J^ow the acceptor of a bill is presinhed to accept upon funds of the drawer in his hands, and he is prcclnded by his acceptance from averring the contrary in a suit brought against him Ijy the holder. The rights of the parties are therefore to be determined as if this bill was paid by Hortsman out of the money of Fiske and Brad-ford in his hands. And as Fiske and Bradford were lia- ble to the defendants in error, they are entitled to retain the money they have thus received. We take the rule to be this. Whenever the drawer is liable to the holder, the acceptor is entitled to a credit if he pays the money ; and he is bound to pay upon his acceptance, when the payment will entitle him to a credit in his account with the drawer. xVnd if he accepts without funds, upon the credit of the drawer, he must look to him for indemnity, and cannot upon that ground defend himself against a bona fide indorsee. The insolvency of the drawer can make no difference in the rights and legal liabilities of the parties. The English cases most analogous to this are those in which the names of the drawers or payees were fictitious, and the indorse- ment written by the maker of the bill. xVnd in such cases it has been held that the acceptor is liable, although, as the payees were fictitious persons, their handwriting of course could not be proved by the holder. 10 Barn. & Ores. 478. The American case to which we referred is that of Meacher v. Fort, 3 Hill (S. C), 227. The same question now before the Court arose in that case, and was decided in conformity with this opinion. Another question was raised in the argument upon the sufficiency of the notice ; and it was insisted by the counsel for the defend- ants, that, if they could have been made liable to this action by the plaintiff, they have been discharged by his laches in ascertaining the forgery and giving them notice of it. But it is not necessary to examine this question, as the point already decided decides the case. Tlic judgment of the Circuit Court is affirmed, with costs. The case of IVIeacher v. Fort, cited by Taney , J., is so clearly stated, and so important, that the opinion is f;iven in full. Before Evans, J., at Charleston, January term, 1837. His Honor, the presiding jud^^o, reported the case as follojvs : — This was an action on a promissory note. Tiie note was payable to Jph Fort and Joseph Maybank, and indorsed to the plaintill", Meacher The defend- ant was the maker. There was no doubt as to the signature of the defendant, • 60 ACCEPTANCE. as maker, or of.Maybank, one oMlie indorsers. The defence relied on was, that the signature of John Fort, one of the indorsers, was a forgery ; and as the note was niadu payable to John Fort and Maybank, the plaintiff could not recover unless both indorsed it. There is no doubt of the correctness of this position, as a general rale. It was clearly proved that the signature was not John Fort's. But the plaintiff contended that the defendant himself had either forged the signature of John Fort, or had procured it to be done, and had put the note in circulation, and was thereby precluded from objecting to the forgery of the signature of the indorser. Fort, who was the defendant's father. The plain- tiff, Meacher, was a bona fide holder, — having received the note from one Bruerton, on account of a debt due to him by Bruerton. When the note became due, Meacher sent an agent (Stillraan), to demand payment of the drawer, at his residence on Black River, fifteen miles above Georgetown. Stillinan told him if it was not paid it would be protested, and the indorsers called upon for payment. The defendant replied it was impos- sible for him to pay it before January (the note was due 1st December), and spoke of selling some property to pay the debt. The demand of payment was made for Meacher. A bond, signed by John E. Fort and John Fort, was offered in evidence, to enable the jury to decide whose writing the signature of John Fort was. On the part of the defendant, John Fort was examined. He denied that the signature was his, or that he had ever authorized any person to sign his name on the note. In fact he had never heard of the existence of any such paper, until it was presented to him by Meacher, 1st February, 1833 (which was some months alter its date: it was due 1st December, 1883). As soon as he knew of the note, he advertised it as a forgery. Defendant is his son, and lived, at the date of the note, at the thirty-two-mile house. A Mrs. Durant had rented the house of Bruerton, and kept a tavern. Defendant married her daughter, and heard him say he would buy the place if he could. He tried to do so, but could not make the payment. Bruerton had very little property, and the defendant never had any propc.-rty from him of the value of this note (nine hundred dollars). In my charge to the jury, I told them that from the evidence I thought Meach- er should be regarded as the bona fide holder of this note, — he having received it from Bruerton in the course of a regular business transaction ; but to enable him to recover against the maker, it was necessary to prove that the payees of the note had parted from their interest by indorsement. This was the general rule, but there were exceptions. Among the exceptions which were applicable in this case, were these : — 1. If the maker of a note make it payable to a fictitious person, which ficti- tious name he writes on the note, and then puts it in circulation. 2. Or if he make it payable to a real person, and forge his indorsement, or if he procure it to be done, and then put it in circulation. In these cases the drawer could not insist on proof of the indorsements, be- cause he was estopped to say that was not genuine which he had represented to be so, by putting it jn circulation. It was submitted to the jury .to decide, whether the eviden .'c in this ca^e brought it within these exceptions to the general rule. They found for the plaintiff. The •notice of appeal is annexed. HORTSMAN V. HENSHAW. 61 On the trial the plaintifT contended he could recover on the promise made by defendant to pay at Janiiiny, when .Stiiinian demanded panncnt. I did not think so; but I find it alle;.'((i in the iioliee, as a ground that I did not instruct the jury that the plaintlll' could not recover on this proniite, unless it Lad been declared on. I certainly so decided in the hearing of" the jury ; and I charged them to find for defendant, unless they believed the case came within the excep- tions hereinbefore stated. The defendant moves for a nonsuit, or a new trial, on the grounds following: 1. Because the phiintill's case was without evidence, in this that tlie declara- tion was upon a note, and no proof of the indorsement alleged in the declaration, which was necessary to convey a right to the plaintiff. 2. Because the Court did not instruct the jury that the plaintiff must recover on the note only, and could not recover upon the promise made to the jjlain- tiff, as the same was not declared on; and, if it had been, was founded on no « consideration. 3. Be( ause the verdict was against the positive evidence, as to the indorse- ment, and the judge erred in charging the jury that, although the indorsement ■was not genuine, they were at liberty to presume it was made by the assent of the real payee of the note, and that if so made, the interest in the note was thereby passed to the plaintiff. 4. Because tiie judge eireil in charging the jury that, if the name of the pavee of the note was written by the maker, the plaint ilt" was entitled to recover undeir a declaration setting forth a real indorsement by the payee himself; whereas, it is submitted, that if such was the state of facts, the action should have been founded on the deceit. CuiUA, Evans, J. This Court is of opinion there was no error in the charge of tlie presiding judge. The facts of the case were for the decision of the jury, and there docs not appear to be any sufficient ground to disturb the verdict. The motion is dismissed. Oanlt, Richardson, 0''Xeall, and Butler, JJ., concurred. A similar question arose in 1847, in Coggill v. American E.xchange Bank, 1 Comstock, 113. In that case one of the drawers of the bill forged the payee's name, and then procured it to be discounted ; and at maturity the plaintiff, the drawee, paid it. On discovering the forgery he sued the delendant, a hona Jide holder to whom he had paid the b!ll, to recover the sum paid. The Court held that the action could not be maintained; but based their decision on the fact stated, that the payee had no interest in the bill, comparing it to a bill drawn to a fictitious person, such a bill being in effect payable to bearer. Vere v. Lewis, 3 T. R. 182; Rlinct v. Gibson, ib. 481; s. c, 1 H. Bl. 5G9; Collins V. Emmett, 1 II. Bl. 313: rhilllps v. Thurn, Law Rep. 1 C. P. 4C3 ; Plets v. Johnson, 3 Hill, 112. The j)oint made in the j)rincipal case was not noticed, that, in such ease, the drawer is estopped to deny the genuineness of the in- dorsement ; that he is thus liable to the bona Jide holder, and that, therefore, the drawee is entitled, on payment, to a credit against the drawer. Whence it would follow that it is immaterial that the payee had no interest in the bill, when the drawer himself puts it into circulation, bearing the payee's indorsement. But, ac- cording to Coggill V. American Exchange Bank, explaining, on this point. Canal Bank v. Bank of Albany, 1 Hill. 287, if the payee owned the forged bill, the ac* 62 ACCEPTANCE. ceptor would be entitled to recover the sum paid to the holder. It must be con- fessed there is ailhculty in harmonizing the two cases, unless the language of the principal decision is used with reference to the case of a payee without interest ; and yet, if that be true, how can it be said that in -such case the drawee has paid to one not entitled to receive the money ? The case seems to cover the whole ground of a payee who owned the bill, as well as of one who had no interest in it. And a further explanation than the very satisfactory one given by Judge Taney, may perhaps be given to the case ; that it rests upon the familiar principle that of two innocent parties, he should suffer who occasioned the difficulty. The drawee, by accepting, induced the holder to part with his money. See opinion of Keating, J., in Phillips v. Thum, Law Rep. 1 C. P. 472. The case of Canal Bank v. Bank of Albany, supra, may at first seem to present a different view ; but it nuist be observed that it is nowhere stated in that case that the forged bill was put into circulation by the drawer, — the distinguishing fact in all the other above cases. See also Burchfield v. Moore, 3 E. & B. 683 ; Talbot v. Bank of Roch- ester, 1 Hill, 295 ; Young v. Grote, 4 Bing. 253. These eases show that the drawer is not estopped to deny the genuineness of the indorsement, if the forg- ery occurred after the bill passed out of the drawer's hands ; and this is the line of distinction drawn in the principal case. This may have escaped the notice of the learned judge (Bronson), in Coggill v. American Exchange Bank. And we repeat that it must be understood that the principal case and the above discus- sion are predicated of forgery committed before the drawer put the bill into circulation. Though it is true in general that the acceptor does not warrant the genuine- ness of the signature of any indorser, still, if he accept and negotiate the bill with knowledge that there is a forged indorsement upon it, he is estopped to deny the genuineness of such indorsement. Beeman v. Duck, 11 Mees. & W. 251. It has been held that, though acceptance admits the genuineness of the draAv- er's signature, the rule does not apply where the forgery is in the body of the bill, as in the sum to be paid ; that the reason and justice of the rule extend no farther than to the signature. With the drawer's handwriting, as indicated in his signature, the drawee is bound to be familiar, but with nothing else. Bank of Commerce v. Union Bank, 3 Comst. 230 (1850). In this case the amount of the bill was altered from .$105 to $1005; and the acceptor having paid the latter sum, was held entitled to recover it from him to whom he had paid it. But the law upon this point do6s not seem to be so settled. See Byles, Bills, 323 ; Ward V. Allen, 2 Met. 53, decided in 1840, and Langton v. Lazarus, 5 Mees. & W. 629, decided in 1839, in which cases it is held that the fraudulent altera- tion of the day of payment, made before acceptance, is no defence to the accept- or in an action by a bona fide holder. And in Van Duzer v. Howe, 21 N. Y. 531 (1860), post, it is held that where the defendant wrote his blank acceptance on an agreement with the drawer that he should not draw for more than $1000, and he inserted in the bill a larger sum, and passed it for value to the plaintiff', the defendant was nevertheless liable. So in Young v. Grote, 4 Bing. 253 (1827), it is held that, if the drawer facili- tated or gave occasion to the forgery, he must bear the loss himself. In that case •the bill had been so drawn by leaving a space after the mark " £," that the amount * HORTSMAN V. HENSHAW. 63 was rhanged from £iy2.'2, to £352.2, and the drawer was required to bear the lo.'^s, after payment by the drawee. See IJylcs, liills, 3215. The acceptance of a bill drawn by procuration admits the hand\vriting of the drawer, and also the procuration ; but it does not admit the agent's power to in- dorse, though the handwriting is the same as that of the drawer, and though the indorsement preceded the acceptance. Robinson v. Yarrow, 7 Taunt, -loo (1817) ; Smith V. Chester, 1 T. K. (t.')4. If, however, the drawer is a fictitious person, and the bill is drawn payable to the drawer's order, the arceptor's undertaking is that he will pay to the signature of the same person that signed for the drawer ; and in such case the indorsee may show, as against the acceptor, that the signatures of the fictitious drawer and of the first indorser, are in the same handwriting. Cooper v. Meyer, 10 Barn. & C. 468. A party who admits that an acceptance is in his own handwriting, and thereby induces another to take the bill, is precluded thereafter from denying the gen- uineness of the acceptance. Leach v. Buchanan, 4 Esp. 22G. So if the acceptor puts the bill into -circulation, he cannot be allowed to allege that he paid it before maturity. Ilinton r. Bank of Columbus, 9 Port. Ala. 4C3. Acceptance for the honor of an indorser does not admit the genuineness of the indorser's signature. Wilkinson v. Johnson, 3 Barn. & C. 428. And the rea- soning of Abbutt, C. J., in this case is perhaps broad enough to warrant the rule as laid down in 1 Parsons, Notes and Bills, 323, that acceptance for honor does not admit the genuineness of the signature of any party for whose honor the acceptance is given, not even of the drawer's signature. The acceptor for honor then occupies a more favorable situation than an acceptor in at least two respects : first, that he is entitled to notice, like an in- dorser, on presentment to and non-payment by the drawee ; secondly, that he can recover money paid to a holder who claims under a forgery of the drawer's name, according to the rule in Parsons and the reasoning in Wilkinson t'. John- son, supra. But one who accepts for the honor of tlie drawer is, like the drawer himself, estopped from denying that the bill is a valid bill ; and consequently it is not competent to him to set up as a defence to an action against him by an indorsee, that the payee is a fictitious person, and that he was ignorant of that fact at the time he accepted the bill. Phillips v. Thurn, 18 Com. B. (x. s.) G94 (1865) ; s. c, again in Law Rep. 1 C. P. 463. See next case and note. In this case, the bill was payable to a fictitious payee, and therefore held equivalent to a bill payable to bearer, Erie, C. J, said: " I take it to be cleai" that if the defendant had not intervened, and the action had been brought by the holder of the bill against the drawer, the drawer would have been by law compelled to admit that the bill was a valid bill, payable to bearer. ... It seems to me there is good reason lor saying that that which the drawer would be estopped from denying, the acceptor for honor should also be estopped from denying. I think that he is ecpially bound to admit that the bill is a valid bill." 18 Com. B. 701. 64 ACCEPTANCE. Gerrit Schimmelpennich and Jan Adrian Toe Lear, Aliens, v. William Bayard, William Bayard, Jr., Rob- ert Bayard, and Jacob Le Roy. (1 Peters, 264. Supreme Court of the United States, January, 1828.) Acceptance supra protest. — If tlie drawees of a bill of exchange, refusing to honor the bill, were bound to accept the same, they will not be permitted to change the rela- tion in which they stand to the parties on the bill by a wrongful act. They can acquire no rights as the holders of bills paid supra protest, if they were bound to honor them in their character of drawees. When bound to accept. — A drawee, who has been in the habit of receiving consign- ments from the drawer with whom he has an open account therefor, is not bound to accept bills drawn on him against a particular shipment, which bills the drawer in his letter of advice says may be charged in account, if the account actually show that the drawer had no funds in the hands of the drawee. The case is stated in the opinion of the Court. Marshall, C. J. This action was brought on nine hills of exchange, drawn by John C. Delprat, on the plaintiffs, and indorsed by the defendants, a list of which follows : — Baltimore, May 23, 1822, £500 favor of J. P. Kraft. 200 favor of defendants. 300 )) 500 » 1000 5) 300 )j 1000 » r. 10,000 » 5000 5> ,, June 12 „ 5) 55 -'-" 55 . „ July 31 „ 55 55 55 55 55 55 55 55 These bills were regularly protested for non-acceptance and non- payment ; but were accepted and paid svpra protest., by the draw- ees, for the honor of the defendants the indorsers. The jury found a verdict for the plaintiffs, subject to the opinion of the Court, on a case stated. The judges were divided in opinion on the following points, which have been certified to this Court. 1. Whether the authority to John C. Delprat to draw on the plaintiffs, did or did not amount to an acceptance of the bills. 2. Whether the bills paid by the plaintiffs, supra protest, for the SCIIIMMKLI'ENNICII V. BAYARD. 65 lioiior of tlie dcfendiiiits, were drawn and negotiated in confornnty to the authority and instructions of the phiintiffs to J. C. Delprat. 3. Whether the plaintiffs were bound to accept and pay the hills in question, and whether the same having l)ecn jjaid hy the plain- tiffs, supra protest, for the honor of the defendants, the plaintiffs are entitled to recover the amount of the defendants. 4. Whether J! C. Delprat was a competent witness. 5. Whether the letter oifered by the plaintiffs in evidence, and rejected, ought to have been admitted. 6. Whether the plaintiffs are entitled to a judgment on the ver- dict of the jury. These questions require an examination of the relations which existed between the drawer of these bills and the drawees. On the lltli of January, 1H18, the plaintiffs entered into a con- tract with John C. Delprat, of wliich the following is a copy. The undersigned, N. and J. and R. Van Staphorst, merchants in this city, and John C. Delprat, of Philadelphia, present the last choosing for the present act his domicilium citandi et exequendi, at the office of the youngest notary here, have entered with one another into the following arrangement and stipulations : — Art. I. The second undersigned (namely, J. C. Delprat) shall to the benefit of the first undersigned (N. and J. and R. V. S.) manage in the United States of America, the mercantile interest of said first undersigned, consisting chiefly in the forming of new solid connections, and procuring of consignments ; and shall further perform every thing the first undersigned will appoint him to do as their agent. Art. II. The second undersigned binds himself to procurfi to no person or i)ersons in this kingdom any consignments or commis- sions from himself or any other, except to the first undersigned ; but, on the contrary, to use his utmost exertions towards the ben- efit of the mercantile house of the first undersigned, they being willing on their side to facilitate all such commercial operations as might, benefit tiic second undersigned without their prejudice. Art. III. The first undersigned allows to the second undersigned the faculty to value on them direct, or payable in London, at no shorter date than sixty days' sight, for such moneys as the second undersigned shall emjjloy to make advances, on whole or jiart of cargoes of current articles, namely, to the aniount of two-thirds of 5 66 ACCEPTANCE. the invoice price of articles laden in chartered vessels, and of three- fourths in vessels owning to the shii)pers, and likewise consigned to the first undersigned ; it beiug left to the knowledge and prudence of the second undersigned to judge of the invoice price of the afore- mentioned goods ; and it being understood that the second under- signed, at the same time that he gives advice of his drafts furnished in the above maimer, shall enclose and forward, or cause to be enclosed and forwarded, to the first undersigned, the bill of lading and invoice of the goods on which the above-mentioned advances might have been made ; and shall cause the above goods to be duly insured in America to that effect, that the policy of said insurance be delivered up, duly indorsed, to the second undersigned, and rests with him until the end of the expedition. It being further a fixed rule that tlie first undersigned must never come in the predicament of having made any advances on cargoes or part of cargoes which are not duly insured in America. The first undersigned further oblige themselves to open a credit of $40,000, say forty thousand dollars, with Messrs. Le Roy, Bayard, & Co., New York, to be made, use of by the second undersigned, in case any advances are required on consignments to be made to the said first undersigned, that credit to be renewed every time by the said first undersigned, after the arrivement of the consigned goods shall have been duly advised by them. If, however, against all probability, it happened that the multi- plicity of consignments rendered it desirable to the first undersigned to stop for a wliile further consignments, then the said first under- signed retain the faculty to prescribe to the second undersigned such limits and orders as they shall find proper, according to cir- cumstances, which orders and limits the second undersigned shall be obliged to follow. Art. IV. As sometimes an opportunity might offer to procure a good consignment to the first undersigned, on condition of their taking an interest in that expedition, they authorize the second undersigned to make use likewise of the above-mentioned credit of $40,000 to interest the first undersigned ; in such expeditions for a proportion not larger than one-fourth, with this restriction, that said proportion must never exceed the amount of $10,000, say ten thousand dollars. The choice of the articles to be shipped to the first undersigned on their own account, being left to the commercial knowledge of the second undersigned. This authorization will be considered as renewed after the termination of each expedition ; SCHIMMELPENNICH V. BAYARD. 67 namely, after that termination sliall have l)een duly advised to the second undersigned hy the first undersigned. Art. V. That the first undersigned, in consideration of the ser- vices to he rendered hy the second undersigned, shall grant to the second undersigned one-third of the amount of the two per cent commission, to he earned by the first undersigned on the consign- ments to he procured, and further, one per cent from the purchase of such goods which might Ijc shipped for the account of the first undersigned, as is m')re amply specified in article 4 ; it is to be understood that then no benefit arises from the third of the two per cent commission of those good ; and finally, that the second under- signed is promised an allowance for travelling and other expenses the sura of 82000, say two thousand dollars, per annum, to com- mence with the first of February, 1818. Art. Yl. These arrangements shall last for the term of two con- secutive years, and thus end with the last day of January, 1820. It being understood that (in case of no denunciation to the contrary, made by any of the parties aforesaid) this contract will be continued from year to year, but that, in case one of the parties should desire the annullation of the present contract, said party shall be obliged to signify his intention to the other party four months before the expiration thereof. Art. Vn. Ultimately, it has been stipulated that in the Unhoped- for and wholly unexpected case of any differences taking place between the undersigned, respecting tlie fulfilment of any of the articles al)ove mentioned, those disputes or differences shall be entirely adjusted and decided by the decision of two arbiters, to be chosen in the city of Amsterdam, one by each party ; who, in case of difference of opinion between them, shall have the faculty of appointing a third or super arbiter, which arbiters then must decide and finally terminate all such differences ; both parties renunciating to all law measure and impediments, and especially to the faculty of laying any arrests or hindrance on moneys, goods, or possessions, belonging to any one of the parties undersigned ; all such aforesaid measures to be considered now and then as null, void, and of no effect whatsoever ; the consequences thereof to be suffered by the party which might have made use of the aforesaid measures. Of the present act have been made two copies, itc. (Signed) N. and J. and R. Van Staphorst. John C. Delprat. AMSTEiauM, 11th January, 1818. 68 ACCEPTANCE. A copy of tins contract was transmitted by the plaintiffs to the defendants, in a letter dated the 21st of the same month, a copy of which follows. Amsterdam, 21st January, 1818. M,essrs. Le Roy, Bayakd, & Co., New York (confidential). Gentlemen, — Thinking it useful for the extension of our commer- cial relations in the line of consignments (one of the branches of our establishment), to appoint an agent to that purpose in the United States of America, we have been decided by the confidence we place in the character and commercial notions of Mr. John C. Delprat, to appoint that gentleman to the aforementioned trusts ; in which choice we have chiefly been directed by the reliance we have on the principles of loyalty and prudence, which must actuate a person employed during such along period by your worthy house. We judged it necessary, for the obtaining of said purpose, to leave at the disposal of Mr. Delprat sufficient means to facilitate his exertions ; namely, by opening with you, in his favor, a credit to be made use of by him in the manner pointed out in the enclosed abstract of our contract with said gentleman. We therefore request and authorize you to furnish Mr. Delprat to the extent of $40,000, say forty thousand dollars (to be made advances with by him on such cargoes, or part thereof, as he might procure the consignment of to our house, and to be made use of to interest our house in part of cargoes to the forementioned purpose). The credit to run for the space of two years, unless countermanded by us in such a manner that, when Mr. Delprat has availed himself of the whole or part of said credit of $40,000, that credit, or part of the same, must be considered renewed when you receive our approbation of the said disposition of Mr. Delprat. You will observe, the sole object of the mission of Mr. Delprat is to obtain solid consignments from good houses, throughout the United States, and the disposal of the credit opened in his behalf with your house is exclusively intended to facilitate said business. In this important matter, it will be a point of great security, and, as such, eminently satisfactory to us, that our said agent may be able to have recourse, in every circumstance, to wise and friendly counsel ; and we therefore request you to assist Mr. Delprat, as far as opportunity may offer, with the lessons of your long experience, particularly with respect to those transactions for which, by virtue SCHI.MMELPENNICU V. BAYARD. 69 of tlic credit aforementioned, we may have recourse to your cash, it heiuf^, as you will observe, a material point that we are secured ; that the moneys he may dispose of will have no other than the des- tination just mentioned. To this ellect, we authorize you, gentle- men, in case of moral certainty that the moneys Mr. Delprat should demand from you by virtue of the above-mentioned credit, would not be employed in the aforementioned manner, and earnestly request you not to pay, and to refuse him, any moneys whatsoever, on account of the above credit. In general, as a trust of this nature, which is to have* its effect at such a distance, is always a delicate matter, we must claim and dare expect from your known sentiments towards us, that you will give the strictest attention to tlie line of conduct followed by Mr. Delprat; and if, unexpectedly, that conduct could appear in the least exceptionable, we mean either imprudent or equivocal, then, gentlemen, do give us, with all the frankness of long-experienced friendship, your ideas respecting that suljjcct, and be j)erfectly secure that every information, of what nature soever, will not only be thankfully acknowledged by us, but received with the most religious secrecy. We have now, gentlemen, only to request your kind oliices in favor of Mr. Delprat, and to solicit your friendly co-operation towards tlie attaining the object of his mission, which, we are fully persuaded, can be much facilitated by your kind recommendation to the numerous friends you have in different parts of your country. Be assured, gentlemen, of the high sense we have of the obligation we will liave to you for your friendly services through the whole of the business we just now took tlic liberty to explain to you, and of the earnest desire we have to be often in the opportunity of render- ing you the like, or any services in our power. Referring for com- mercial information to our general letter of this date, we are, with sincere regard, Gentlemen, your most obedient servants, N. and J. and R. Van Staphorst. (Indorsed), Confidential, Amsterdam, 21st of January, 1818. N. and J. and R. Van Staphorst. Received March 29th. Answered 24th do. This letter was answered l)y Le Roy, Bayard, & Co. in the fol- lowing terms : — 70 ACCEPTANCE. PRIVATE. New York, 24th March, 1818. Messrs. N. and J. and R. Van Staphorst, Amsterdam. Gentlemen, — We have the honor of replying to your esteemed favor of 21st of January, acquainting us with the arrangement you have made with our mutual friend, Mr. Delprat, who has undertaken the agency of procuring you consignments from this country. In the furtherance of the object, we shall be very happy to render our services useful, and beg to offer our best wishes for the success of Mr. Delprat's operations in your behalf. Due note is taken of the credit you are pleased to open to that gentleman with us, to the amount of 140,000, subject to renewal, as fully expressed in your letter. We doubt not, from the knowledge we possess of Mr. Del- prat's character, that he will fully justify the confidence you repose in him ; and though he may, under existing circumstances, find it difficult to enlarge to the extent that could be mutually wished, we are persuaded that no exertion will be wanted on Mr. Delprat's part, to reap the utmost benefit from the mission intrusted to him. Believe us, with honor and esteem, gentlemen, Your obedient servants, Le Roy, Bayard, & Co. It is proper to observe that several merchants of Holland, whose agents the plaintiffs were, had become large holders of government stock, and of shares ih the Bank of the United States. Le Roy, Bayard, & Co. had been employed to draw the interest and divi- dends, and to remit them to Europe. The credit of $40,000, there- fore, which was raised for Delprat, with Le Roy, Bayard, & Co., was merely the application of so much of their funds, in the United States, to the business of his agency, in aid of the bills he was authorized to draw on them. The continuance or discontinuance of this credit might depend on the eligibility of continuing this mode of remittance, as well as on the withdrawal of their- confidence in their agent. Several letters passed between the plaintiffs and defendants, respecting their transactions in consequence of this credit, which manifest, unequivocally, the desire of the plaintiffs that its amount should not be exceeded, but which betray no want of confidence in Delprat. In a letter of the 24th of June, 1819, they renew the credit of $40,000, and add, " at the same time, we con- SCHIMMELPENNICH V. BAYAIID. 71 firm our former orders not to exceed said amount for our account. In case you have funds in hand, for any of our institutions, and you think proper to' remit us for the sarae3Ir. Delprat's bills oir us, the nature of which you are well ac(iuainted with : you allow him. then, the same credit which you do to all persons from whom you take bills, in the persuasion of their solidity and of the reality of the transaction on which the bills are issued." In answer to this letter, the defendants say, on the 24th of Sep- tember, 181*J : '' You also accord us the permission to remit this gentleman's (Delprat's) drafts for any moneys we may have on hand bclonginj^ to your various institutions. The confidence which we mutually have in this gentleman's cliaracter, must, .with us, act in lieu of vouchers, to exhibit the reality of transactions which may give origin to such drafts, the whole of this gentle- man's operations having Ijcon hitherto beyond our immediate knowledge." This correspondence continued until the 12th of May, 1820, when X. and J. and R. Van Staphorst addressed a letter to Messrs. Le Roy, Bayard, & Co., of which the following is an extract: — '" There being frequent opportunities of drawing here now, on New York, we will probably have, for some timo to come, occasion to dispose of tlie dividends which ' you will receive for our ac- count, in October next,' and so on ; and we have therefore directed Mr. Delprat not to make use of his credit of 840,000, lately opened in his favor. We thus also request you, by the present, to con- sider the same as annulled until we may again renew the same." The agency of Delprat continued after this revocation of his credit with Le Roy, Bayard, <fe Co. He continued to solicit con- signments for their house in Amsterdam, and to draw bills on them for advances, without any other alteration in his powers than is contained in a letter of the (Uh of February, 1821, which contains the following clause : " The advances, therefore, to be made by you on our behalf, on shipments to our consignments, either from funds belonging to jus in your hands, or by drawing and indorsing tlie shipper's draft, must not exceed, henceforth, one-half of tiie ' true invoice.' " As a compensation for this reduction of the advance to be made in the United States, J. and X. apd R. Van Staphorst engaged, on the arrival of the shipments, to remit to the consign- ors the estimated value of the cargoes in bills on their house in the United States. 72 ACCEPTANCE. Delprat acknowledged the receipt of this letter on the 17th of April, 1821, and promised to conform to its directions. Tlie correspondence between the plaintiffs and defendants, re- specting Mr. Delprat's agency, appears to have ceased on the 12th of May, 1820, when his credit with the house of the latter was annulled. At least, no subsequent letter appears in the record until the 9th of July, 1822, when the plaintiflfs announced to the defendants the sudden termination of their connection with Mr. Delprat ; whose conduct, they said, had been so imprudent as to oblige them, at the same time, to protest several of his drafts. Tlieir knowledge, they say, of the former intercourse between Le Roy, Bayard, & Co. and Mr. Delprat, and of the great regard felt for hiin by those gentlemen, induce them to state the chief reasons which compelled them to this measure. These are, his irregularities in keeping his accounts, and omission to furnish an account since the 31st of December, 1820, although the balance then due from him was fully 17837.54, being " for the proceeds of gin consigned l)y us to him ; for proceeds of drafts, issued by him on us, for our account, in order to employ the proceeds to make prudent advances with," &c. They then proceed to state that Mr. Delprat owed, at tliat date, upwards of 82,000 florins, against which he might be entitled to a credit of $6000. The account, they say, has accrued to this height, in a great measure, " inconsequence of shipments made to him for his account, in full confidence of his making us, for the amount, remittances ; which we till now have not received, though the goods were witli him for many months." The letter complains of the large advances made by Mr. Delprat, on consignments, notwith- standing their repeated remonstrances ; and dwells on the high opinion they had entertained of him ; " his integrity," they say, tiiey "even now will not question." Thus, the letter proceeds, " were matters situated, when last Friday, contrary to any thing we could expect or anticipate, we found ourselves drawn upon by Mr. Delprat, for £200, <£300, and <£500, issued, as he informs us, for the amount of purchases which he is making of articles not yet shipped;" and, on the other hand, 2d, .£500, florins 1250 and 1750, issued on us,- as advances made to Mr. Krafft, already so much our debtor, on shipments which he made some long time ago, and which Mr. Delprat could clearly perceive that, taken at an average, did nothing diminish the balance due by him." SCIIIMMELPENXICH V. BAYARD. 73 The letter proceeds to state, in substance, that they could choose only between the alternatives of allowing the debt due from Mr. Dclprat to be swelled to a still larger amount, and protesting his bills. They had chosen the latter, however it might pain their feelings. They express tlieir regret to find that, among the drafts to be protested for non-acceptance, and perhaps afterwards for non- payment, are several indorsed l)y the defendants^ for whose honor, however, they had intervened. This letter was received by the defendants on the first day of Sep- tember, 1822. They immediately obtained from Mr. Delprat an order on tiie plaintiffs to hold at their disposal all the proceeds of the goods shipped in his name, by the " Virgin" and other vessels, and all balances due to him. This order was enclosed to the plain- tififs, in a letter of the 7th of September, 1822, in which they say : " We can of course only consider this order as applying to the bal- ance that may possilily accrue to him upon the settlement of your account ; and if any should accrue, we will thank you to take such legal steps which you may deem necessary, as will place it with us, without fear of contention. His drafts, which you may have paid for our account, will probably furnish sufficient authority to enable you to do so." At the trial, John C. Delprat was examined as a witness. He deposes that the several bills of exchange on which this suit jvas instituted, were drawn in his capacity as agent, on account of and for the purpose of making advances on shipments consigned to the plaintiffs ; and, except that in favor of J. P. Krafft, for ,£500, were accompanied by letters of advice. That during the whole period of his agency, he was in the habit of making shipments on his own account, and of drawing for advances on the said shij)ments pre- cisely in the same manner as when they were made by others ; that this was done with the full knowledge and approbation of the said N. and J. and R. Van Staphorst, who never found fault with him for doing so ; but to encourage him to make such shipments, gave him credit for one-half the commission upon the sales of the shijiments so made upon his own account. On his cross-examination, the witness stated that the bill for £500 in favor of Krafft was drawn for shipments, by the " Edward," "Jason," and " May Flower." He cannot say when the " Edward " sailed. The " Jason " had arrived, and the " May Flower " had sailed before the bill was drawn. Kraffl was at that time indebted to the plaintiffs. The bill was issued to 74 ACCEPTANCE. Krafft, but was returned to witness, who sent it to the defendants. The bills of lading and the invoices were not sent with it. The three bills of the 27th of May, for XIOOO, were drawn on account of shipments, in his own name, by the " Virgin." She sailed about the oOth of July. They were not accompanied by invoices or bills of lading. The two bills of the 12th and 18th of June, for £1000 and for <£300, were drawn on tobacco shipped by the " Henry," belong- ing to the witness and to Mr. Krafft. The bill of lading and invoice did not accompany them. The three bills of the 31st of July were drawn on the shipments by the " Virgin " generally. They were not accompanied by bills of lading or invoices. The defendants re- ceived a commission for indorsing his bills on the plaintiffs. In making the advances on shipments on his own account, he drew on the plaintiffs, sent his bills to the defendants, to whom they were charged, and then drew on the defendants, as the mo'ney was required, either on his own shipments or the shipments of others ; ■which bills were credited to the defendants. He understands that all his transactions with the defendants were carried by them into their general account with him. These transactions were not con- fined to his agency for the plaintiffs. He remains considerably indebted to them. He was concerned in shipments with Mr. Krafft, and did a great deal of business with him ; but did not consider himself as a gen- eral partner. The connection between the plaintiffs and J. C. Delprat, was formed by the agreement of the 11th of January, 1818. He was con- stituted their agent for purposes therein described, and received such powers as were deemed suflficieint to enable him to perform the duties which devolved on him. That duty was to manage their mercantile interest in the United States, " consisting chiefly in the forming of new solid connections, and procuring of consignments." To enable him to perform this duty, he was allowed the faculty to value on them direct or payable in London, at no shorter date than sixty days' sight, for such moneys as he should " employ to make advances on the whole or part of cargoes of current articles ; " namely, to the amount of two-thirds of the invoice price, &c. It being understood that his letters of advice should be accompanied by the bills of ladings and invoices of the goods on which the ad- vances piay have been made. John C. Delprat, then, had no general authority to personate the SCIIIMMELPENNICH V. BAYARD. 75 plaintiffs in all respects whatever ; but was an agent appointed for particular purposes, with limited powers, calculated to subserve those purposes. To procure consignments, it was indispensable that he should advance money to the consignors, and this money was to be raised by bills on the plaintiffs. But he was authorized to draw only for a sjiecial j)urpose, and to a limited extent. Out of the limits assigned to him, he had no power. The plaintiffs not being, as a matter of course, the acceptors of every bill he might draw, must have performed some act in relation to the particular bills, which imposes on them in law the character of acceptors. This point was considered by this Court, in the case of Coolidge and otliers v. Payson and others, 2 W. 66 \^ante, p. 43]. Coolidge & Co. held the proceeds of a cargo, claimed by Cornthwaite and Gary, whose claim depended on the decision of this Court, of a case depending therein. Cornthwaite and Cary were desirous of drawing these funds out of the hands of Coolidge <fe Co., and offered a bond, with sureties, as an indemnity, in the event of an unfavorable decision. Coolidge & Co., in a letter to Cornthwaite and Cary, state some formal objections to the bond, and add, " we shall write to our friend Williams, by this mail, and will state to him our ideas respecting the bond, which he will probably determine. If Mr. Williams feels satisfied on this point, he will inform you ; and in that case your draft for 82000 will be honored." In answer to the letter addressed by Coolidge & Co. to Wil- liams, on this subject, he declared his satisfaction with the bond, as to form ; declared his confidence that the last signer was able to meet the whole amount himself ; but that he could not speak certainly of tiie })rincipals, not being well acquainted with their resources. He added, " under all circumstances, I should not feel inclined to withhold from them any portion of the funds for which the bond was given." On the same day, Cornthwaite and Cary called on Williams, who stated the substance of the letter he had written, and read a part of it. One of the firm of Payson <fe Co. also called on him, and received the same information. Two days afterwards Corn- thwaite and Cary drew on Coolidge & Co. for 82000, and paid the bill to Payson & Co., who presented it to Coolidge & Co., by whom it was protested. Payson & Co. sued them as acceptors. The Court instructed the jury that if they were satisfied that 76 ACCEPTANCE. Williams, on the application of the plaintiffs, made after seeing the ^ letter from Coolidt^e & Co. to Cornthwaite and Gary, did declare that he was satisfied with the bond referred to in that letter ; and that the plaintiffs on the faith and credit of tlie said declaration, and also, of the letter to Corntiiwaite and Gary, did receive and take the bill in the declaration, they were entitled to recover in the action. The jury found a verdict for the plaintiffs ; the judgment on which was alTirmed in tliis Court. In this case, the drawee had written a letter to the drawer, promising to honor his bill for $2000, if Mr. Williams should be satisfied with a bond of indemnity, which had been placed in their possession. Mr. Williams declared his satisfaction with it, both to the drawer and holder of the bill, within two days after this declaration. In this case the promise to accept was express, and applied to a particular bill, the precise amount of which was speci- fied in the promise. The Court in its opinion reviews several decisions in England on this point ; in all of which the promise to accept was express ; and in some of which the Court declared the opinion that the promise ought to be accompanied by circumstances which may induce a tliird person to take the bill. After reviewing these cases, this Court laid down the rule, " that a letter written within a reason- able time before or after the date of the bill of exchange, describ- ing it in terms not to be mistaken, and promising to accept it, is, if shown to the person who afterwards takes the bill on the credit of the letter, a virtual acceptance, binding the person who makes the promise." It cannot be alleged that these bills are brought within this rule. The plaintiffs, therefore, cannot be considered as acceptors of them. But, although the plaintiffs cannot be viewed as the acceptors of these bills, it does not follow, necessarily, that they can maintain the present action. To entitle them to maintain it, the Court must be satisfied that the payment is, in fact, what it professes to be, — a payment really for the honor of the indorsees. If the' drawees, thus refusing to honor the bill, and thus denying the authority of the drawer to draw ui)on them, were bound in good faith, to accept or pay as drawees, they will not be permitted to change the rela- tion in which they stand to the parties on the bills by a wrongful SCHIMMELPENNICH V. B A YARD. 77 ^act. They can acquire no rights, as the holders of bills paid supra protesl, if they were hound to honor them in their ciiaracter of drawees. The sinj^le and unmixed inquiry, therefore, on the second and third (luestions is, whether the drawees were l)ouMd to accept or to pay tiicse hills. And, first, were they so bound be- cause the bills were drawn in pursuance of the authority they had given to the drawer ? Tliis demands a more critical examination of the evidence than was required when considering the first question. It is apparent, from the contract of the 11th of January, 1818, that Mr. Delprat came to the United States as the agent of N. and J. and R. Van Staphorst, to manage their mercantile interest ; " consisting chiefly in forming new solid connections and procur- ing of consignments ; " and also with commercial views of his own. The jirincipal object of the contract is to define his author- ity, and to regulate his conduct as agent. He is allowed to draw on the jdaintiffs for such moneys as he should employ, in making advances on current articles consigned to his principnls, to the amount of two-thirds of the invoice price of articles laden in chartered vessels. He was still further restricted in his advances, by orders received long before the bills in question were drawn, to one-half of the true invoice. Mr. Delprat's authority, then, to make advances was limited, at the date of this transaction, to one- half the invoice price. One, and perhaps the most usual mode of conducting business of this description is, to draw in favor of the consignor, or to indorse his l)ill. The agent might, however, if not otherwise instructed, draw immediately on his principal, and advance tiie money to tlie consignor which was raised by the bill. In either case, however, drafts beyond one-half the invoice price of the consignments actually made would exceed the authority given. Circumstances may exist, which w^ould impose on the principal the obligation to pay such drafts ; but the question we are Jiow considering relates only to the authority under which the bills were drawn. That authority restricted the agent in the amount of his drafts to one-half the invoice price of the articles actually consigned ; and also required him to accompany his let- ters of advice with bills of lading and invoices. Were the bills in question drawn in conformity with powers and instructions thus limited ? The first bill on the list is for =£500, drawn in favor of J. P. 78 ACCEPTANCE. Krafft, on the 23d of May, 1822, and indorsed by liim to the de-^ fendants. Tlic letter of advice states this bill to be drawn on ac- count of shipments by the "-Ecrward," "Jason," and "May Flower," as by letter of 21st, which is to be charged to account of P. Krafft. Tiio letter of the 21st is not in the record. The shipment by the " Jason " had arrived, and the " May Flower " had sailed before the bill was drawn. Mr. Krafft was at the time iiulcl>ted to N. and J. and R. Van Stapliorst. The bill was returned by Krafft to Delprat, and then indorsed by the de- fendants. It does not appear certainly who remitted this bill ; although the probability is that, as it was indorsed by the defendants, not as purchasers, but for a commission, it was remitted by Delprat, to whom it was returned by Krafft, as is stated in Delprat's testi- mony, or by some person to whom Delprat sold it. It is true that he further states that, after the bill was so returned, he sent it to the defendants ; but this was, no doubt, done for the purpose of having it indorsed by the defendants, in order to give it credit. Neither does it appear, from the evidence in the cause, that Krafft accompanied the sliipments on account of which this bill was drawn, by any letter of advice, or otherwise directing the proceeds thereof to be applied to the discharge of this bill ; but, on the contrary, the letter of advice addressed to the plaintiffs by Delprat directed the bill to be charged to the account of Krafft, generally. Under these circumstances, taken in connection with the addi- tional one that Delprat was concerned, generally, with Krafft, in the shipments made to the plaintiffs, the Court is of opinion that there is no material difference between this bill and those drawn on account of shipments made by and in the name of Delprat, which are now to be considered. It has already been stated that Mr. Delprat was a merchant, trading on his own account, at the same time that he was the agent of N. and J. and R. Van Staphorst. His transactions, in his two characters, were as distinct from each other as if they had been the transactions of distinct persons. As an agent, he was bound to act " in conformity to the authority and instructions " of his principals ; as a merchant, he was himself the principal, and acted in conformity with his own judgment. It would seem, then, that the cpntract must contain some very peculiar and unusual provisions, to. place Mr. Delprat under the authority of the house SCHIMMKLPENNICH V. BAYARD. 79 in Amsterdam, wliilst carryinp; on trade iii tlic riiited States on his own account. Uj)on reference to the contract, we find a stip- ulation between the parties in the following words : " The second undersigned (Delprat) binds himsell to procure to no person or persons in this kingdom any consignments or commissions, from himself or any other, except to the first undersigned ; but, on the contrary, to use liis utmost exertions toward the benefit of the mer- cantile house of the first undersigned ; they being willing, on their side, to facilitate all such commercial operations as might benefit the second undersigned, without their prejudice." This article contains the only limitation on the entire independ- ence of Mr. Delprat as a merchant. It is, perhaps, a necessary limitation, which was, in part, the price of his agency, and for which he finds a comj)ensation in the profits of the business con- fided to him. This restriction does not change the character of his transactions as a merchant. His waiving the right to consign to any other liouse, does not impress on his consignments to the Van Staphorsts, or on his bills drawn on those consignments, a character dilferent from that which would have belonged to them had his shipments been made from choice. He does not bind him- self to make consignments to them ; but not to make consignments to any other house in the Netherlands. If any doubt could arise from this article, it would be produced by the peculiar manner in which it is expressed. Mr. Delprat binds himself to {)rocure to no person in the kingdom of the Netherlands any consignments or commissions, from himself or any other, except to the Van Staphorsts. The singular applica- tion of the word " procure," to consignments made by Mr. Delprat himself, may be connected with the succeeding article, which au- thorizeshim to draw bills, and may have some influence on its construction. In that article, the Van Staphorsts allow Mr. Del- prat " the faculty to value on them direct, or payable in London," for such moneys as he shall employ to make advances on the whole or part of cargoes of current articles consigned to them, to the amount of two-thirds of the invoice price. It may be said that, as in the preceding article, consignments made by Delprat on his own account were considered as procured by him, and were placed on the same footing with consignments made by others ; so in this the express authority to draw bills might embrace transactions of both descriptions. But we do not 80 ACCEPTANCE. think that the inaccurate use of words in one article will justify a departure from the correct construction of a succeeding article ; unless the same words are used, or the bearing of the one on the other is such as to require tliat departure. The same motives existed for restraining the agent from making as from procuring consignments to any other house in the Nether- lands. His utmost exertions were required for the benefit of his principals. The restriction, therefore, might be expressed in the same sentence ; and a sliglit inaccuracy of language was the less to be regarded, because it could produce no possible misunder- standing with respect to the extent of the prohibition. The third article might not be intended to prescribe the same rules for the conduct of Mr. Delprat, as a merchant and as the agent of the Van Staphorsts. As a merchant, he had a right to draw on effects placed in their hands, independent of contract. Tiie usage of trade allows such drafts to be made on a shipment ; and the consignee must pay the bills, if the shipment places funds in his hands to pay them. But, as agent, his line of conduct was to be prescribed by contract. We must therefore, consult the language of the agreemeat, in order to determine whether it pro- vides for the future connection between the parties, further than as regards their characters as principal and agent. The faculty given to Mr. Delprat by the third article, to value on the Van Staphorsts, is " for such moneys as he should employ to make advances " on articles consigned to them. Money laid out in the purchase of articles on his own account cannot, with any propriety of language, be denominated money employed in making advances on articles consigned to him. The distinction between money advanced on articles consigned and money em- ployed in purchases, although the articles may be purchased for the purpose of being consigned is obvious. Money advanced is always to another, never to the individual making the advance. This language shows, we think, incontestably, that the article was drawn with a sole view to bills drawn by Mr. Delprat as agent, not on his own account as a merchant. A subsequent part of the article gives additional support to this construction. Mr. Delprat is to draw for two-thirds of the in- voice price of the article, and is himself the judge of the price which may be inserted in the invoice. This power might be safely confided to him in making advances to others, but might not be SCniMMELPENNICH V. BAYARD. 81 trusted to him in his own case. The case shows the Van Stap- horsts to have been men of extreme caution. Their letter to Le Roy, Bayard, & Co., enclosing their contract witii Delprat, shows an unwillingness to commit themselves to him further than was necessary. It is not i»rol)able that they would have given him an elipress authority to draw on his own account on invoices to be priced by himself. But the language of the article applies, wc think, entirely to his bills drawn as agent, not to those drawn as a merchant transact- ing business for himself. When examined as a witness, Mr. Delprat says that, during the whole period of his agency, he was in the habit of making ship- ments on his own account, to the said house in Amsterdam, and of drawing for advances on account of the said shipments so made, precisely in the same manner as when the shipments were made by ' others ; and this was done with the full knowledge of X. and J. and R. Van Staphorst, who never found fault with him for doing so ; but, in order to encourage him to make such shipments, gave him credit for one-half the commission upon the sales of the ship- ments, so made on his own account. The Van Staphorsts were commission merchants, desirous of extending their business. No doubt can be entertained of their willingness to receive consignments from Mr. Delprat, as well as from others. But this does not prove that the power given him as their agent, to make advances to others, was intended to regulate the intercourse between them as merchants. That intercourse was regulated by the general principles of mercantile law ; and the contract between the parties does not show that cither was dissat- isfied with those principles, or wished to vary them. This question refers, we presume, to the authority given by the contract of the 11th January, 1818. The first article describes the objects which were committed to Mr. Delprat, by the Van Staphorsts. These were : the management "■ of their mercantile interest in the United States, consisting chiefly in the forming new solid connections, and procuring of consignments." The second article restrains the right Mr. Delprat might other- wise have exercised, of consigning to other houses in the Nether- lands. The third authorizes him to draw bills on his principals, for the 6 82 ACCEPTANCE. purposes of his agency, under such limitations as they deemed it prudent to prescribe. Tills contract, we think, does not contemplate bills drawn by Mr. Delprat on his own account, as a merchant. The bills mentioned in the declaration, which were drawn in favor of the defendants, and indorsed by them, do not come within the authority given b^ the contract. No instructions from the plaintiffs, extending this authority, appear in the record. Tlie third question comprehends the whole matter in contro- versy, and has been partly answered in answering the preceding questions. It asks whether the plaintiffs were bound to accept and pay the bills in question ; and whether the same having been paid by the plaintiffs, svpra protest, for the honor of the defend- ants, the plaintiffs are entitled to recover the amount of the de- •fendants ? Tlie opinion has been already expressed that the bill, drawn on the 23d May, 1822, for X500 sterling, in favor of J. P. Krafft, is not distinguislial)le from those which were drawn by Mr. Del- prat, to enable him to purchase articles on his own account, which were shipped to the plaintiffs. In making these shipments, and in drawing these bills, Mr. Delprat acted for himself, as an inde- pendent merchant. The relation between him and the plaintiffs was that of consignor and consignee. The obligation of the plain- tiffs to accept and pay his bills, depended essentially on the state of their accounts. So far as the information furnished by the case goes, Delprat appears to have been indebted to the plaintiffs. In tlieir letters of 19th July and 10th September, 1822, which were given in evidence by the defendants, they state him to be then their debtor ; and it is not shown that this debt has been dis- charged. The plaintiffs, therefore, were not bound to accept and pay these drafts, unless they have acted in such a manner as to give the holders of the bills a right to count on their being paid. It is believed to be a general rule, that an agent with limited powers cannot bind his principal when he transcends his power. It would seem to follow that a person transacting business with him on the credit of his principal, is bound to know the extent of his authority. Yet, if the principal has, by his declaration or con- duct, authorized the opinion that he had given more extensive powers to his agent than were in fact given, he could not be per- mitted to avail himself of the imposition, and to protest bills, the SCHIMMELPENNICII V. BAYARD. 83 drawing of which his conduct had sanctioned. But the defend- ants, in this cause, cannot allege that they have been deceived. They were the intimate correspondents of the plaintiffs, from whom they received a co})y of the contract. The letter which transmitted i^ requests their friendly supervision of the conduct of Mr. Del- prat, and desires them not to pay the money for which the plain- tiffs had given him a credit with them, in case of "a moral certainty " that it would not be employed for the purposes of hi& agency. In the course of the correspondence between the plain- ^ tiffs and defendants, we find several letters, written during the continuance of Mr. Delprat's credit with the latter, which show the determination of the former not to approve of advances be- yond that credit. In their letter of the 24th June, 1819, the plaintiffs expressly caution the defendants, should they think ^ proper to remit in Mr. Delprat's bills, the nature of which they are well acquainted with, that they (the defendants) allow hira the same credit that they do other persons, from whom they take bills, in the persuasion of their solidity, and of the reality of the transaction on which the bills are issued. They add : " Tiiis is not the effect of any want of confidence in our agent, but merely profluing from our invariable rule to limit and circumscribe the credits we allow." The letters from the defendants show a perfect understanding on their part, of the terms on which Mr. Delprat's bills were to be taken. On the 11th May, 1819, announcing that he had filled his credit, they say : " In addition to it, he has ex- pressed an anxiety that we should negotiate his drafts on you, payable in London, for about £3000 sterling, or that we should take his drafts on Amsterdam, for a similar value. The personal regard which we bear for Mr. Delprat, would have induced us promptly to accede to his request, had not the restriction laid upon us, of not permitting him to exceed, but for a few hundred dollars, the credit you give him, and the total absence of any indication from you of a wish for us to interfere in his pecuniary arranti-e- ments, in any other than the mode marked by the credit, led us to believe that our negotiations or purchase of his drafts, was neither wished nor contemplated by you." And, in their letter of the 7th September, 1822, enclosing the order of Mr. Delprat on the plaintiffs, for any balances belonging to him in their hands, so far from complaining of the protest of the bills, they say : " We can, of course, only consider this order as applying to the balance 84 ACCEPTANCE. that may possibly accrue to him, upon the settlement of your account." Messrs. Le Roy, Bayard, & Co., then, were not deceived by the plaintiffs. Unfortunately for themselves, they placed too much confidence in Mr. Delprat. They took his bills, as they were cau- tioned to do, in the letter of the 24th June, 1819, " in the persua- sion of their solidity, and of the reality of the transaction on which they were issued." If in this they were mistaken, the re- ** sponsibility and the loss arc their own. The fourth and fifth ques- tions have been waived by the parties, and do not properly arise in the case. They are on exceptions taken in the trial of the cause, which could not be brought before the Court after verdict, but on a motion for a new trial, which was not made. ^ The sixth question, whether a judgment can be rendered on the verdict of the jury, has been answered, so far as this Court can answer it. We do not understand it as referring to the amount of the verdict, for, on that the Circuit Court alone can decide. If it is intended to repeat, in another form, the question whether the plaintiffs can maintain their action, as the holders of bills, accepted and paid, supra 2Jrotest, for the honor of the drawers, it is already answered. The decision of a majority of this Court, on the points on which the judges of the Circuit Court were divided, will be certified in conformity with the foregoing opinion. This cause came on to be heard, on a certificate of division of opinion of tiie judges of the Circuit Court of the United States, for the Southern District of New York, and on the points on which the said judges were divided in opinion, and was argued by coun- sel, on consideration wiiereof, this Court is of opinion, — 1. That the authority to John C. Delprat to draw on the plain- tiffs did not amount to an acceptance of the bills. 2 and 3. Tliat the bills mentioned in the declaration, were drawn by the said Delprat, not under the authority of the plaintiffs, but on his own account ; and the plaintiffs were not bound to accept and pay them, unless funds of the drawer came to their hands. 4 and 5. These questions are understood to be waived, and do not appear to arise in the case. 6. The sixth question is decided by the answer to the second and KONIG V. BAYARD. 86 third, 80 far as respects the right of the plaintiffs to maintain their action. On the (juantum of damages, this Court can give no opinion. All which is ordered to be certified to the Court of the United States for the Second Circuit and District of New York. See next case. William Konig, an Alien, Plaintiff below, v. William Bay- ard, William Bayard, Jr., Robert Bayard, and Jacob Le Roy. « (1 Peters, 250. Supreme Court of the United States, January, 1828.) Acceptance supra protest hi/ stranger. — It is no objection tliat a stranger lias intervened as acceptor for the honor of an indorser ; or that his acceptance has been made at the request and under tlie jjuaranty of the drawee. But in such case the indorser may avail himself of all defences which he could have made had the drawee accepted for his honor and then sued upon such acceptance. The case is stated in the opinion of the Court. Marshall, C. J. This suit was brought in the Court of the United States for the Second Circuit and District of New York, on a l)ill of exchange, drawn by John C. Delprat, of Baltimore, on Messrs. N. and J. and R. Van Staphorst, of Amsterdam, in favor of Le Roy, Bayard, <fe Co., of New York, and indorsed by them. The bill was regularly presented, and protested, after which it was accepted and paid by the plaintiff, for the honor of the defendants. The jury found a verdict for the plaintitT, sub- ject to the opinion of the Court, on a case stated by the parties. The judges of the Circuit Court were divided in opinion on the following points : — 1. Whether the letters offered in evidence by the defendants, and objected to, ouglit to have been admitted. •J. Whether the plaintiff had a right, under the circumstances, to accept and pay the bill in question, under protest, for the honor of the defendants, and is entitled to recover the amount with charges and interest. The first question is understood to be waived. It is a questiou 86 ACCEPTANCE. which was decided by the Court at the trial, and could not arise after verdict, unless a motion had been made for a new trial. The second requires an examination of the case stated by coun- sel. The bill was transmitted by Le Roy, Bayard, & Co., to Messrs. Rougemont and Behrends, of London, to have it presented for acceptance, who enclosed it to the plaintiff in a letter, from which the following is an extract : " We beg you to have the en- closed accepted: 1st of fl. 21,500, 60 days, on N. and J. and R. Van Staphorst, and hold the same to the disposal of 2d, 3d, and 4th. You will oblige me by mentioning the day of acceptance, and in case of refusal, you will have the bill protested." * The plaintiff gave immediate notice of the dishonor of the bill, and of their intervention for the honor of the defendants. Messrs. N. and J. and R. Van Staphorst addressed a letter to the defendants, dated the 26th November, 1822, giving notice that the bill was dishonored, the drawer having no right to draw, and that they were advised by counsel not to interpose in their own names for the honor of the defendants. Tlie letter adds : " In this predicament, we applied to our friends, William Konig & Co., who had the said bill in hand, informed them of the whole case, and requested these gentlemen, under our guarantee, to in- tervene on behalf of your signature, with acceptance and payment of the above bill ; which favor these gentlemen have not refused to us ; so that, without our prejudice, and completely without yours, we have duly protected your interest." The defendants also gave in evidence a letter from the plaintiff, stating that he had intervened, at the request of N. and J. and R. Van Staphorst, and under their gua^-antee ; but that they required him to proceed against the defendants, as preliminary to the per- formance of that guarantee. It was admitted that the bill was drawn by J. C. Delprat, on his own account, and not on any shipment for a debt due from him to the defendants, for advances previously made to him ; and that he had given to the defendants an order on N. and J. and R. Van Stap- horst, for all balances due from them to him. It is not alleged that the drawees had any funds of the drawer in their hands. The plaintiff in this case must be considered as the agent of N. and J. and R. Van Stapliorst, and as having paid the bill at their instance. All parties concur in stating this fact. The Van Stap- KONIG V. BAYARD. 87 horsts adopted this circuitous course, instead of interposing directly in their own names, under the advice of counsel. They, however, immediately stated the transaction in its genuine colors, to the defendants. It is impossible to doubt that a person may thus intervene, throui^h an agent, if it be his will to do so. The suspicion which might be excited by proceeding, unnecessarily, in this circuitous manner, cannot affect a transaction, which was immediately communicated, with all its circumstances, to the per- sons in wKose behalf the intervention had been made ; unless those persons were exposed to some inconvenience, to which they would not have been exposed had the interposition been direct. This is not the case in the present instance, since it cannot be doubted that the defendants might have availed themselves of every defence in this action -of which they could have availed, themselves had N. and J. and R. Van Staphorst been plaintiffs. The case shows plainly that the bill was not drawn on funds, and that the drawees were not bound to accept or pay it. No reason, therefore, can be assigned why the person who has made himself the holder of the bill, by accepting and paying it under protest, should not recover its amount from the drawer and indorsers. This cause came on to be heard on a certificate of division of opinion of the judges of the Circuit Court of the United States for the Southern District of New York, and on the points on whicli the said judges were divided in opinion, and was argued by coun- sel ; on consideration w^hereof this Court is of opinion that the plaintiff had a right, under the circumstances, to accept and pay the bill in question, under protest, for the honor of the defendants, and is entitled to recover the amount with charges and interest ; which is ordered to be certified to the said Circuit Court. In regard to the defences wliieh a drawer or indorser may raise against a stranger who accepts for his honor, it seems to be immaterial whether such acceptor acted at the instance of the drawer or as the agent of the drawee, as in the above case ; at least no distinction is drawn in the cases upon this point. See Gazzam v. Armstrong, 3 Dana, 554 ; Wood v. Piigh, 7 Ohio, 15G (Curwen's ed. 501). An accepted bill whicli has been dishonored may be accepted again for honor upon the insolvency of the drawee. See Ex parte Wackerbath, 5 Ves. 574; Ex parte Lambert, 13 Ves. 179. In the latter ca'se Lord Erskine disapproves the position taken in the former, that in such case the acceptance is given to an accepted bill, and holds that the acceptor for honor stands precisely in the place 88 ACCEPTANCE. of the drawer in an action against the drawee, and can acquire no stronger title against the latter than the drawer had. The acceptor supra protest is considered in the light of an indorscr ; and there- fore at maturity the bill must be again presented to the drawee, and if still dis- honored bv him, it should be protested, and notice given to the acceptor for honor, or he will i)e discharged, lloare v. Cazenove, 16 East, 3D1 ; Williams v. Germaine, 7 B. & C. 468; Schoficld v. Bayard, 3 Wend. 488; Lenox v. Lever- ett, 10 Mass. 1. A stranger to the bill may, by paying it for the honor of the jmrties, acquire a right of action against all of them, and will be considered as standing in the place of a bona fide holder. But to entitle him to this attitude, he must pay the bill, not for the honor o{ any one, but of all the parties, and not before but after protest ; and the payment should be accompanied by a declaration, evidenced by a notarial act, showing why, and for whom, the payment was made ; and of all this the parties to be charged should have notice. Per Marshall, J., in Gaz- zam V. Armstrong, 3 Dana, 554. See Geralopulo v. Wieler, 10 C. B. 690, 709 ; Phoenix Bank v. Hussey, 12 P'ick. 483. And if the party who has paid a bill supra prote4 do not give reasonable notice to the party for whose credit he has made the payment, the latter will not be required to refund. Wood v. Pugh, 7 Ohio, 156 (Curwen's ed. 501). In a suit by a holder who discounted a bill on the faith of an acceptance for honor, the bill being forged, the acceptor supra protest cannot deny its genuine- ness. Phillips V. Thurn, Law R. 1 C. P. 463. See note to Hortsman v. Hen- shaw, ante, 63, suhfin. The United States, PlaintifFs in Error, v. The Bank of THE Metropolis, Defendant in Error. (15 Peters, 377. Supreme Court of the United States, January, 1841.) Acceptance hy the United States. — Tlie liability of the United States, on an acceptance by an authorized officer given to a bona Jide holder is the same as that of a private individual. Conditional acceptance. — A bill drawn by a government contractor was "accepted on condition that tlie drawer's contracts be complied with," and discounted by the defendants in due course of trade. Held, that forfeitures previously incurred, and advarfces previously made, were not covered by the condition. The case is stated in the opinion of the Court. Wayne, J. This is an action of assumpsit brought by the United States to recover the sura of ^27,881.57. The defendants pleaded the general issue. On the trial of the cause, the defendants claimed credits, amounting to $23,000, exclusive of interests and costs. UNITED STATES V. BANK OF THE METROPOLIS. 89 The items liad been ])i'escnted to the proper accounting ofTicer, and were not allowed. They were acceptances of the post-office depart- ment, of the drafts of mail contractors, and an item of 8tjll.o2, called in the record " E. F. Brown's overdraft." Tlie jury foinid for tlie defendants, and certified there was due to them by the United States -'353371.94, with interest from the (jth March, 1838. The errors assigned arc, that the Court refused to give to the jury the following instructions, which were asked after the evidence had been closed on both sides. 1. That upon tlie evidence aforesaid, the defendants are not entitled in this action to set off" against the plaintiffs' demand, the amount of die acceptances given in evidence by the defendants, nor the amount of the overdraft of E. F. Brown. 2. If the jury believe, from the evidence, that when the accept- ance of the draft of E. Porter was given by the then treasurer of the department, there was nothing due to Porter standing on the books of the ])Ost-office department, and that on the books of the depart- ment, when the acceptance fell due, there was nothing due to him ; then the defendants cannot set off" the amount of said acceptance against the plaintiffs' claim in this action. 3. That if the accounts of E. Porter and Reeside, as contractors with the post-office department, were not finally settled on the books of the post-office department when the present postmaster-general came into office, it was his duty to have said accounts settled ; and if in such settlement there were credits claimed by them as allowed by order of Mr. Barry, when postmaster-general, and entered on the journal, but not carried into these accounts in the ledger, and finally entered as credits in these accounts, which credits were for extra allowances which the said postmaster-general was not legally authorized to allow them, then it was in the power, and was the duty of the present postmaster-general, to disallow such items of credit. We will consider the instructions asked in connection, and upon the merits of the case ; but, before we conclude, will express an opinion upon the form of the first. It appears that the five drafts claimed as credits were drawn on the post-office department by contractors for carrying the mails. That they were accepted, and were discounted at the Metropolis Bank in the way of business. 90 ACCEPTANCE. Porter's draft was at ninety days after date for |10,000, payable at the Metropolis Bank to his own order, to be charged to account, and was unconditionally accepted by R. C. ^ason, signing himself treasurer of the post-office department. It is admitted that he was so. Reeside drew four drafts. One on the 17th October, 1835, for $4500 ; another on the 20th October, 1835, for $1000 ; a third on the 23d October, 1835, for $4500 ; and the fourth on the 28th October, 1835, for $3000. They were payable to his own order ninety days after date, for value received ; to be charged to his account for transporting the mail, and addressed to the postmaster- general. Tlie following was the form of all of them, and of the acceptances of the postmaster-general. $4500. Washington City, October 17, 1835. Sir, — Ninety days after date, please pay to my own order, four thousand five hundred dollars, for value received, and charge to my account, for transporting the mail. Respectfully yours, James Reeside. Hon. Amos Kendall, Postmaster-General. " Accepted, on condition that his contracts be complied with." Amos Kendall. Porter's draft was unconditionally accepted. It was discounted by the defendants, upon his indorsement. Tlie bank became the holder of it, for valuable consideration, and its right to charge the United States with the amount cannot be defeated by any equities between tlie drawer and the post-office department, of which the bank had not notice. When the United States, by its authorized officer, become a party to negotiable paper, they have all the rights, and incur all tUe responsibility, of individuals who are parties to such instruments. We know of no difference, except that the United States cannot be sued. But if the United States sue, and a defendant holds its negotiable paper, the amount of it may be claimed as a credit, if, after being presented, it has been disallowed by the accounting officers of the treasury ; and if the liability of the United States upon it be not discharged by some of those causes which discharge a party to commercial paper, it should be allowed by a jury as a credit against the debt claimed by the United States. This is the UNITED STATES V. BANK OP THE METROPOLIS. 91 privilege of a defendant, for all equitable credits given by tbe Act of March 3, 1797 ; ^ 1 Story, 4t!4. This, and the liability of the United States, in the yianncr it has l)een stated, has been repeat- edly declared, in effect, by this Court. It said, in llie case of the United States r. Dunn, Pet. 51, "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 princij)lcs originated in the convenience of com- mercial transactions, and cannot now be departed from." From the daily and unavoidable use of commercial paper by the United States, they are as much interested as the community at large can be, in rriaintaining these principles. It was held in the case of the United States v. Barker, 4 Wash. C. C. 464, that the omission of the secretary of the treasury, for one day, to give notice of the dishonor of bills, which were pur- chased by the United States, discharged the drawer. And this Court said, when that case was brought before it, there was no right to recover, on account of the neglect in giving notice after the return of the bills. 12 AVheat. 501. That, and other cases like it, show how rigidly those principles have been applied in suits on bills and promissory notes, in which the United States was a party. The acceptance of Porter's draft was unconditional, and there is nothing in the evidence to discharge the acceptor. There is neither waiver, express or implied, of his liability. There was no understanding nor communication concerning it between the bank and any officer of the post-office department, before it was discounted. The bank advanced the money, which it was the object of the bill to obtain. It cannot be doubted, the accept- ance was given for that purpose. The want of consideration, then, between the drawer and the acceptor, can be no defence against the riglit of the indorsee, who gave a valuable consideration for the bill. It does not matter how the drawer's account stood. Whether he was a debtor or a creditor of the department ; whether the bank knew one or the other. An unconditional acceptance was tendered to it for discount. It was not its duty to inquire how the account stood, or for what purpose the acceptance was made. All it had to look to was the genuineness of the acceptance, and the authority of the officer to give it. The rule is, that a want of 1 1 Stats, at Large, 512. 92 ACCEPTANCE. consideration between the drawer and acceptor is no defence against the right of a third party, wlio has given a consideration for the bill, and this even though the acceptor has been defrauded by the drawer ; if that be not known by such third party, before he gives value for it. The evidence then, concerning Porter's account, was immaterial and irrelevant to the issue. It cannot affect the rights of the bank, and did not lessen the obligation of the department to pay the acceptance when it became due. But the evidence does not show that any thing was due by Porter when the draft was accepted, or wlien it came to maturity. Mason, the witness, says, " that in the interim a sufficient sum had been raised and carried to the credit of Porter, to pay the draft ; but that he had also, within the dates, been charged with the amount of a draft, drawn upon him by the postmaster at Mo- bile, accepted by him, which draft was payable in 1833, and that he was charged with failures and forfeitures incurred as con- tractor, in 1833 ; which charges were made by order of Mr. Barry, then postmaster-general. It was certainly right to debit Porter with these charges, if they were due by him ; but that did not change the relative rights and obligations of the bank and the dei)artment upon his bill. If either are to lose by Porter, shall it be that party, who was bound to know the state of the account, before it gave an unconditional acceptance, for the purpose of accommodating its own agent ; or the other, who placed faith in the acceptance, advanced the money upon it, which it was intended to raise ; and who could not have learned what was the state of Porter's account, as it is proved that the charges which it is now said should have priority of payment over the bill, were not made against Porter until after his bill had been accepted ? Certainly, the loss should fall upon the first. It cannot be otherwise, unless it be affirmed that an acceptor may claim to be discharged on account of his own negligence, and that, having induced a third party to advance money upon his acceptance, he shall be permitted to intervene between himself and the indorsee of the paper, a debt due to him by the drawer. The evidence offered to invalidate this credit was done from ignorance of the legal consequences in- curred by such an acceptance. In such a case, the bank right- fully looked to the United States for payment of this bill ; and if Porter owes any thing for forfeitures incurred as contractor, or on account of tHe Mobile draft, the United States must look to him. UNITED STATES V. BANK OP THE METROPOLIS. 93 There is no proof on the record, however, of any things being due by I'ortcr on those accounts ; and we do not intend to express any opinion upon his lial»ilty, or the rights of the United States, in respect to them one way or the other. What are the merits of the case upon Reeside's drafts? They were drawn on the postmaster-general, at ninety days, pay- able to the order of the drawer, and were to l)e charged to his account for transporting the mail. They were " accepted on con- dition that liis contracts l)e complied with." Tiiis is of course as binding as an absolute acceptance, if the condition, has been per- formed. What is the proof of performance, and how shall this condi- tional acceptance be construed? Mason, the witness, says: " Reeside, in fact, performed the services for which he was con- tractor, in the year ISof) ; and the money which he earned upon his contracts was a|>^jlied, to an extent exceeding the amount due upon his drafts, to the extinguishment of balances created against him i)y recharging him with sums of money which had been allowed to him by Mr. Barry, the former postmaster-general, as contractor for carrying the mail, by giving him credit therefor in a general account current on the journal, but not entered in the ledger, where his account remained unsettled when the present post- master-general came into office." It is said, this does not cover the condition of the acceptance, because Reeside stipulated, by his bond, to pay forfeitures, and repay advances ; and that he owed the department on both accounts, wiien these acceptances were given ; and that in this sense his conti'acts were not complied with. If this be so, in one sense the contracts would not be com- plied with ; but is that the construction which should be i)ut upon such a condition, when the snlyect-matter to which it relates is considered ? If one purpose making a conditional acceptance only, and com- mit that acceptance to writing, he should be careful to express the condition therein. He .cannot use general terms, and then exempt himself from liability, by relying upon particular facts whicii have already happened, though they are connected with the condition expressed. Why? Because the particular fact is of itself sus- ceptible of being made a distinct condition. This case furnishes as good an illustration of the rule as any other can do. Instead of the words being used, " accepted on condition that his con- 94 ACCEPTANCE. tracts be complied with," could it not have been as easily said, accepted on condition that forfeitures already incurred shall be _ paid, and that advances made shall be refunded ? Tliis would have conveyed a very different meaning; and v?^ould haveput the bank, when the drafts were offered to it for discount, on inquiry. If they had been discounted without inquiry, it would have been done at the risk that the earnings upon the contracts, and such as might be earned between the date of the acceptances and the times of payment, would be enough to pay forfeitures, repay advances, and to take up the bills. It matters not what the acceptor meant by a cautious and precise phraseology, if it be not expressed as a condition. And when we are told, as we are in this case, by the person making these acceptances, that the form of words was devised expressly for that purpose, meaning for the purposes of having forfeitures paid and advances refunded, and to avoid prom- ising to pay any thing to the order of contractors so long as any thing should be due from them to the department, we think it will be admitted that the purpose explained is larger than the con- dition expressed. And from the passage in the evidence just cited, how just does the rule appear which has been laid down by the Court, that, in the case of acceptances of commercial paper, that which can be made a distinct condition must be so expressed ; nor can any thing out of the condition be inferred, unless it be in a case where the words used are so ambiguous as to make it necessary that parol evidence should be resorted to to explain them. Then the onus of proof would be on the acceptor, and the proof would be of no avail if the holder or any person under whom he claims, took the bill without notice of such conditions and gave a valuable consideration for it. The error in this case arose from the acceptor supposing that the defendants did know, and if they did not, they were bound upon such an acceptance to inquire into the stipulations and conditions of Reeside's cojitracts before they discounted the bills ; and it is said they did not use " due diligence to acquire information." The objection then im- plies that inlbrmation of these forfeitures and advances could have been given, and that it was not given when these acceptances were made. This makes it, then, a question of due diligence between the acceptor and the defendants, as to his obligation to communi- cate what he knew ; and their want of caution in not making the inquiry. UNITED STATES V. BANK OF THE METROPOLIS. 95 Wc tliink it will be conceded to be a general principle, that one having knowledge of particular facts upon which he intends to rely to exempt him from a pecuniary obligation, about to be con- tracted with another, of which facts that other is ignorant, and can only learn them from ihc first or from documents in his keeping, that the fact of knowledge raises the obligation upon him to tell it. This would be the law in such a case, and it is in this case. Inquiry by the defendants would, at most, have resulted in obtain- ing what was already known to the acceptor. He held the con- tracts ; he knew, or should have known, officially, the state of the accounts ))ctween the contractor and the department; and wheu he conditionally accepted his drafts, which were to be charged to his account for transporting the mail, as his liability to pay them would occur in ninety days, it was but reasonable that he should have said, in plain terms, when giving his acceptances : " If the earnings of the contractor from this time to the maturity of tlie draft, shall be sufficient to pay what he owes, and the debt he may incur until then, then these drafts will be paid." This would have been a condition about which there would have been no mis- take. But, further, if two persons deal in relation to the executory contracts of a third, as these contracts were, and one of them being the obligee induces the other to advance money to the obligor, upon " condition that his contracts be complied with ; " and he knows that forfeitures have been already incurred by the obligor, for breaches of his contract, and does not say so ; shall he be per- mitted afterwards to get rid of his liability, by saying to the per- son making the advance: " I cannot pay you, for when I accepted there was already due to me from the drawer of the bill more than I accej)ted for. I had knowledge of it then, and so might you have had if you had made the inquiry, but you did not choose to inquire ; so I will pay myself first, because my acceptance was on condition that his contracts be complied with." Such is the case before us as it was presented by the argument ; and we cannot doubt it will be thought decisive that it was the duty of the acceptor, in this instance, to communicate what he knew of Reeside's account, if he had any conversation with the defendants before the drafts were discounted, and that it was not the duty of the defendants to inquire. It cannot be answered by saying the words of the acceptance were intended to provide for 96 ACCEPTANCE. what might .exist, but what was not then known, or for breaches of the contracts which had already occurred, but which had not been charged with a penalty ; for either would be an admission that inquiry by the defendants when the acceptances were made, could not have resulted in getting tlie information at the depart- ment. But, again, will the terms of the acceptance admit in any way of retroactive construction ? The words must be taken according to the ordinary import of them. They are " accepted on condition that liis contracts be complied with." Can there be compliance with an executory contract, l)ut in future, if breaches have already happened ? Supposing no breaches to have occurred, necessarily implies such as may occur in future, and subsequent compliance. If both past and future breaches, then, are, as contended for, to be comprehended witliin the condition of this acceptance, why may not the condition be extended to such as may happen after the ma- turity of the drafts, as well as to such as had occurred before they were accepted ? A literal interpretation must lead to both, and that will not be contended for. But the argument is, that the de- fendants should have inquired into the " stipulations of the con- tracts and tlie extent of the condition ; " and it is said : " The bank would have been informed that the department expected Mr. Reeside to renew his drafts until the accumulation of his current pay would be sufficient to meet them ; and had his pledge to take them up himself, if earlier payment should be required." Be it so. Can there be a plainer admission than there is in the preced- ing sentence, written by the acceptor, that it is necessary to go out of the condition of the acceptance to ascertain his meaning, and that his construction rests upon facts, known by himself and Mr. Reeside, which the defendants could not have known but from one or the other of them ? — facts out of the condition, and which could alone become a condition by being so expressed. Again, it is taken for granted in the argument, if the defendants had in- quired into the stipulations of the contract and the bond, that they would have been informed of the forfeitures which had been in- curred. But that would not follow. Before such knowledge could have been obtained, it would have been necessary to take one step fiirtlier beyond the condition, an inquiry into the accounts. Where shall such construction stop, if it be allowed at all ? The law does not permit a conditional acceptance to be construed by any UNITED STATES V. BANK OP THE METROPOLIS. 97 thing extraneous to it, unless where tlie terms used are so ambigu- ous that it cannot be otherwise ascertained. We will suppose, however, that the stipulations of Reeside's contract, and his bond, had bee'n known to the defendants. Might they not very justifuibly have concluded tliat his drafts were ac- cepted to aid liim with an advance to fulfil his engagements ? The bond in evidence shows that a necessity for advances was contem- plated. It had been the habit of the department to make them to contractors. Its exigencies, it is said, required advances to be made. Tiie witness. Mason, says : " From the year 1830 the pecun- iary aflfliirs of the department were much deranged, and it was frequently unable to pay debts due by it to contractors. Under such circumstances, the department was in the practice of giving to contractors acceptances for sums less than was actually stand- ing to their credit, unconditionally ; and such acceptances were always taken up at maturity, ])rior to May, 1835. That occasion- ally, and with the special approbation of the postmaster-general, acceptances were given upon the faith of existing contracts, con- ditional upon the performance of the contracts, which were under- stood to become absolute, if the contractor performed the services stated in the contract." The defendants, in the year 1835, lield acceptances of the same character for more than f 70,000, all of which were under protest for non-payment, but subsequently paid prior to the institution of this suit*, except those in dispute in this case. The witness further says, the Bank of the Metropolis and other banks in the city of Washington and elsewhere, have been, for many years, in the practice of discounting such acceptances. That it was often done for the accommodation of the department, often for the accommodation of the drawer, and frequently of both. This testimony brings the department and the bank in connection upon accc{)tanccs of the former for contractofs ; shows the course of business upon them ; and aids to give a proper construction to the acceptances under consideration. When it is remembered, also, that these acceptances were given to renew others of tlie de- partment which were overdue, we think it cannot be doubted that the terms " accepted on condition that his contracts be complied with," cannot retroact to embrace forfeitures which had been in- curred, and to refund advances said to have been made before the date of these acceptances. The argument upon this point was made upon the false assumption that there had been a communica- 7' 98 ACCEPTANCE. tion between the postmaster-general and the defendants concerning these acceptances, before they were discounted ; or that there was an obligation upon the part of the defendants to make an inquiry into the state of Reeside's contracts, and his fulfilment of them, because the acceptances were conditional. It did not exist here, nor does it in any case of a conditional acceptance. The acceptor is bound by his contract as it is expressed, and so it may be nego- tiated without any further inquiry. Having fully canvassed the argument upon the point of the obli- gation of the defendants to inquire into the condition of the accept- ance, we turn, for a moment, to the case as it is shown to be by the evidence. Reeside's earnings between the date of the acceptances and the time for the payment of them, were not applied to pay forfeitures, or refund advances. They were exhausted by recharging him with sums of money which Mr. Barry had allowed to him as contractor for carrying the mail, which were credited in the journal, but not entered into the ledger. That they were not posted, cannot affect Reeside's right to such allowances ; and something more must appear than the testimony in this case discloses, before it can be admitted that credits, given by Mr. Barry, were legally withdrawn by his successor. There is no evidence in this cause to impeach the fairness and legality of the allowances credited by Mr. Barry ; no proof that Reeside had incurred forfeitures, or that advances had been made to liim. Proofs should have been given, if it was intended to justify the recharges for the causes stated. No at- tempt was made to do so. The allowances, then, are credits in Reeside's account, which the defendants may use to prove his per- formance of the conditions of the acceptance ; and they do show performance, as the amount earned would have paid his drafts if it had not been divei^ted. The third instruction asked the Court to say, among other things, if the credits given by Mr. Barry were for extra allowances, which the said postmaster-general was not legally authorized to allow, then it was the duty of the present postmaster-general to disallow such items of credit. The successor of Mr. Barry had the same power, and no more, than his predecessor, and tlic power of the former did not extend to the recall of credits or allowances made by Mr. Barry, if he acted within the scope of official authority given by law to the head of the department. Tliis right in an in- UNITED STATES V. BANK OF THE METROPOLIS. 99 cumbent of reviewing a predecessor's decisions, extends to mis- takes in matters of fact arising from errors in calculation, and to cases of rejected claims, in which material testimony is afterwards discovered and produced. But if a credit has been given, or an allowance made, as these were, by the head of a department, and it is alleged to be an illegal allowance, the judicial tribunals of the country must be resorted to, to construe the law under wliich the allowance was made, and to settle tiie rights between the United States and the party to whom the credit was given. It is no longer a case between the correctness of one officer's judgment and that of his successor. A third party is interested, and he cannot be deprived of a payment on a credit so given, but by the intervention of a court to pass upon his right. No statute is necessary to au- thorize the United States to sue in such a case. The right to sue is independent of statute, and it may be done by the direction of the incumbent of the department. Tiie Act of July 2, 183G,^ en- titled " An Act to change organization of the post-office depart- ment," is only affirmative of the antecedent right of the government to sue, and directory to the postmaster-general to cause suits to be brought in the cases mentioned in the 17th section of that Act. It also excludes him from determining finally any case which he may suppose to arise under that section. His duty is to cause a suit to be brought. Additional allowances the postmaster-general could make under the 43d section of the Act of March 3, 1825,^ 3 Story, 1985 ; and we presume it was because allowances were supposed to have been made contrary to that law, that the 17th section of the Act of July 2, 1836, was passed. In this last, the extent of the postmaster-general's power in respect to allow- ances, is too plain to be mistaken. We cannot say that either of the sections of the Acts of 1825 and 1836, just alluded to, covers the allowances made by Mr. Barry to Reeside. But if the postmaster-general thought tiiey did, and that such a defence could have availed against the rights of the bank to claim these acceptances as credits in this suit, the same proof which would have justified a recovery in an action by the United States, would have justified the rejection of them as cred- its, when they are claimed as a set-off. We pass to the credit claimed, and called E. F. Brown's over- i 5 St. at Large, 80. 2 4 id. 114. 100 ACCEPTANCE. draft. But why it is so called avc do not know ; for certainly no overdraft occurred when he checked alone upon the contingent fund of the department deposited to his credit in the bank. $7070.24, on the 30th April, 1835, were deposited to his credit. By 7th June, he had drawn of that sum 13076.97. Then the postmaster- general directed the bank not to pay Brown's checks, unless they were approved by Robert Johnson, the accountant of the depart- ment. It is in proof that no check of Brown's was afterwards paid without Johnson's approval. On the 2d December following, the original deposit to Brown's credit was drawn out in his checks, approved by Johnson, and it was found there had been an over- draft of something over $600. We do not say that an overdraft out of the bank, by authorized officers of the United States, is in any case chargeable to the United States, unless it can be shown that the money overdrawn has been applied to the use of the Uni- ted States ; but, in the present instance, we think no proof of such application was necessary, and we cannot resist the conclusion that the defendants are in equity entitled to this credit ; for the proof is, that on the day that the overdraft was known, the postmaster- general wrote a letter to the cashier of the bank, stating that " the contingent fund of the department was exhausted, but the public service requires that a number of bills chargeable to that appro- priation, shall be paid sooner than the usual sums can be obtained from Congress ; I therefore request the favor of your bank to pay such bills against the department of that character as may be pre- sented, with the certificate that the amount is allowed, signed by Robert Johnson, accountant of this department." The request was complied with, and the bank advanced, until the 14th May, 1836, more than 86000 to pay claims on the contingent fund. In this case, as in those of more humble dealings, the course of busi- ness between parties must be used when it can apply to explain their understanding of past transactions. Nor can the inference be resisted that, when the postmaster-general discovered the con- tingent fund had been overdrawn, and requested that other over- drafts might be made on the same account, that it was an admission of the correctness of the first. We think, then, that the United States was a debtor to the defendants for Porter's draft, and Ree- side's drafts, and for the overdraft on the contingent fund, princi- pal, interest, and costs. But it is said, though the credits claimed by the defendants UNITED STATES V. BANK OF THE METROPOLIS. 101 shall be found to be due by the United States, they cannot be set off in this suit. This was the first instruction asked, and refused by tlie Court. It is urged that, to allow them as credits in this suit is, in effect, to permit money to be taken from the treasury, otherwise than it is directed to be disbursed by law. That the money previously held by the defendants, had been passed to the account of the treasurer of the United States by direction of the postmaster- general, in conformity with the Act of July 2, 1836. 4 Story, 2464. That when the defendants complied with the letter of instruction, written to them by the postmaster-general, on the 16tli July, 1836, and transferred the money then on deposit to the credit of the department, to the treasurer of the United States, for the service of the post-office department, and when they con- sented to receive future deposits according to a form sent, and to transact the business according to the regulations contained in the letter of the 16th July, 1836, that the defendants cannot legally charge their claims against that account, by way of set-off in this suit. To the foregoing objections, a brief but conclusive answer may be given. That is certainly the treasury of the United States, where its money is directed by law to be kept ; but if those whose duty it is to disburse appropriations made by law, employ, or are permitted by law to employ, either for safe-keeping or more con- venient disbursement, other agencies, and it shall become neces- sary for the United States to sue for the recovery of the fund, that the defendant in the action may claim, against the demand for which the action has been brought, any credits to which he shall prove himself entitled to, if they have been previously presented to the proper accounting officers of the treasury, and been rejected. Such is the law as it now stands. This right was early given, by an Act of Congress, to all defendants in suits brought by the United States. 1 Story. It has been repeatedly before this Court. The decisions upon it need not be cited. They apply to this case. The transfer of the deposit to the treasurer of the United States ; the letter of tiie postmaster-general, directing it to be done ; his regulations for keeping the account, and for disbursing it, were directory to the defendants ; and their compliance with such direc- tions was an acknowledgment that the postmaster-general had the right to give them, as the conditions upon which they were to cou- 102 ACCEPTANCE. tinue the depository of the fund. But it cannot be inferred, either from the Act of July 2, 1836, requiring that when the revenues of the post-office department have been collected, that they shall be paid, under the direction of the postmaster-general, into the treasury of the United States ; or because appropriations for the ser- vice of the department shall be disbursed by the checks of the treasurer, indorsed upon warrants of the postmaster-general, and countersigned by the auditor for the post-office department, under the words " registered and charged ; " or from the declaration in the postmaster-general's letter to the defendants, that no other credit, set-off, or deduction will be admitted in this account. It cannot be inferred that the defendants accepted the postmaster- general's letter as a contract to surrender the right secured to them by the statute, to claim credits in a suit brought against them by the United States ; or that it imposed upon them any legal obligation not to do so. From the previous and contemporaneous correspondence be- tween the bank and the postmaster-general, concerning these drafts, it is clear such was not the apprehension of the defendant when the account was open with the treasurer of the United States, in compliance with the postmaster-general's letter. That was done in compliance with the law, changing entirely the fiscal arrangements of the department ; and for that purpose the post- master-general was the proper organ to direct it to be done ; but any condition in that letter not required by the Act of Congress, under which he was acting, though officially made, is rather an evidence of what he wished to do, than a conclusion that he had the power to impose it, or that the defendants had consented to look to Congress for the reimbursement of the debt due tliem, and not to the courts of justice. When the account was changed to the treasurer of the United States, there was a large balance on deposit to the credit of the post-office department. The fund, however, was not the less that of the United States, in the one case or the other. The change, then, made no difference as to the ownership of the fund, in their right to retain, if the defendants had any right at all to retain it for th6ir debt. They had been dealing with the executive branch of the government in a matter of money, and could not be turned to the legislature without their consent to ask it to do as a favor, what the judiciary could settle as a right. If the defendants had supposed such was to be the UNITED STATES V. BANK OF THE METROPOLIS. 103 consequence of carrying the fund to the treasurer's account, it is manifest, from the evidence in tiie case, that it would not have been done. That they did not do so, it is to be inferred also, from the evidence, arose from an indisposition to enforce a right until every effort had been made to obtain it by amicable adjustment; and from an indisposition to embarrass a department which had been severely pressed, and was then just beginning to be relieved. The postmaster-general says, in his letter of March 19, 1838, that, " excepting the refusal, in common with other banks, to ])ay the warrants of this department in gold and silver, or an equivalent, commencing in May last, and the seizure of both a general and special deposit of moneys in the treasury to meet alleged claims, under the circumstances exliibited in the annexed papers, the Bank of Metropolis has faithfully discharged its duties as a deposit bank for this department." The circumstances alluded to are those which have been the subject of comment in this case; and it is our opinion that they confirm the right of the defendants to tlie credits claimed. There was no error, then, in the Court not giving the instructions asked for, and the judgment is affirmed. It is proper for us to say, however, if the law and the merits of the case were not with the defendants, that the Court might well have refused to give the first instruction, from the manner in which it is asked. After the evidence had been closed on both sides, the Court was asked to say, " that, upon the evidence afore- said, the defendants are not entitled, in this action, to set off against the plaintiffs' demand, the amount of acceptances afore- said, so given in evidence by the defendants, nor the amount of the overdraft of E. F. Brown." It raises all the issues, both of law and fact, in the case, and requires the Court to adjudge the case for the ])laintiffs. Tbis the Court could not do, as there were contested facts in the case, which it was the province of the jury to decide. The Court could only have, said, alternatively, what was the law of the case, accordingly as the jury did or did not believe the fiicts ; and this, it will be admitted, would have been equivalent to a refusal of the instruction. Wlien instructions are asked, they should be precise and certain, to a particular intent ; that the point intended to be raised may be distinctly seen by the Court, and that error, if one be made, may be distinctly assigned. 104 ACCEPTANCE. MoRETON Newhall et al. v. Joseph W. Clark. (3 Gushing, 376. Supreme Court of Massachusetts, March, 1849.) Conditional acceptance. — An acceptance of tlie following order is conditional : " Please pay, &c., out of the amount to be advanced to me, when the houses I am now erecting on your land . . . are so far completed as to have the plastering done, according to our contract," &c. And if the work was never done by the con- tractor (the drawer), under the contract referred to, the event never occurred upon which the defendant by his acceptance bound himself to pay. And it is imma- terial that this contract was subsequently cancelled by the drawer and acceptor, if there was no fraudulent interference by the acceptor to prevent the completion of the work contracted for. The plaintiffs, as the payees, brought this action against the defendant, as the acceptor of two orders drawn on him by Henry M. Reed, for different sums, and of different dates, but in other respects of the same tenor. The declaration also contained the general counts for work and labor, money paid, &c., in common form. The following is a copy of one of these orders : — " Boston, June -22, 1844. J. W. Clark : — Please pay to Newhall & Maguire, or their order, one hundred and eighty-four dollars and sixty-six cents, out of the amount to be advanced to me when the houses I am now erecting on your land in Erie Street are so far completed as to have the plastering done, accord- ing to our contract, dated April 12, 1844, now on record, and charge it to my account. Yours, &c., respectfully, Henry M. Reed." "Indorsed: Jos. W. Clark." The plaintiff contended, in the Court below, that the orders and acceptance were absolute ; and the defendant, that they were con- ditional. The presiding judge ruled this point in favor of the plaintiffs ; but considering the question doubtful, allowed tliem to proceed and introduce evidence to show, and the fact was admitted, that, on the 14th February, 1845, Reed, the contractor and drawer of the order, made an assignment to Rice and Jenkins of all his right in the contract, and that on the same day the contract was cancelled by Rice and Jenkins and the defendant. The plaintiffs contended, upon this evidence, that if the orders were conditional, the defendant and the drawer having cancelled the contract, the defendant had thereby rendered himself liable absolutely, from the time of the cancellation ; and the presiding NEWHALL V. CLARK. 105 I judge so ruled. The defendant thereupon offered to show the following facts, by way of explaining and avoiding the effect of the cancellation : — That the contract had expired by its own limitation, at the time of the cancellation ; that Reed had wholly failed to comply with the terms of the contract, and had released the premises to Clark ; that the work done by Reed was not done pursuant to the con- tract ; that he was utterly unable to complete the work, and that in February, 1845, the work was wholly suspended; that this was well known to the plaintiffs ; and that the assignment was made in consequence of the utter inability of Reed to go on with and complete the contract. This evidence, being objected to by the plaintiffs, was considered inadmissible by the Court, and rejected. It was agreed that the plaintiffs worked upon the houses men- tioned in the contract to the full value of the sums for which the orders were drawn, and on the faith of these orders. Upon the facts in evidence, the presiding judge ruled that the plaintiffs could recover, and a verdict being returned accordingly in their favor, the defendant alleged exceptions. Shaw, C. J. The Court are of opinion, that this verdict, under the instructions given, and the evidence offered, as appears by the bill of exceptions, cannot be sustained. The plaintiffs declare in a general count for work and labor, money paid, etc., in common form, and also upon two orders, copies of which accompany the bill of exceptions. These orders are alike, and the same remarks will apply to both : " Please pay, (fee, out of the amount to be advanced to me, when the houses I am now erecting on your land, in Erie Street, are so far completed as to have the plastering done, according to our contract, dated," &c. The orders refer to the contract subsisting between the par- ties, and necessarily call for evidence, beyond that of the orders themselves, to ascertain their meaning and legal effect, and to determine when and from what fund the sums mentioned in them are to be paid. They look to the future, to a certain quantity of work to he done, and materials supplied, by the drawer, for the use and benefit of the acceptor, according to contract. All future events are contingent ; all unaccomplished enterprises, intended labors and performances, fall within this category. The acceptance was 106 ACCEPTANCE. an agreement to the request expressed in the order, and as that was contingent, the acceptance was an undertaking dependent on the same contingency. That contingency was, luheji, or if, the work I have undertaken to do, shall have been completed to a certain stage, agreeably to our contract. If, then, the work was never done by the contractor, the drawer of the order, under and in pur- suance of this contract, the event never occurred, upon which the defendant by his acceptance bound himself to pay. It follows, as a necessary consequence, that by force of the defendant's express promise, he was not bound to pay any thing. Payment was only to be made, at a time which never arrived ; and out of a fund of the drawer, to accrue by the performance of the contract, on the part of the drawer, which never being performed, the fund of course never existed. The Court are therefore of opinion, that the direction of the Court was incorrect, in ruling that this acceptance was an absolute and unconditional promise for the payment of money. But, for the purpose of presenting another question, the plaintiffs offered evidence to prove, that, on the 14th February, 1845, Reed, the drawer of the order, and the contractor with the defendant, made an assignment to Rice and Jenkins of all his right in the contract ; and that on the same day the contract was cancelled by Rice and Jenkins and Clark ; and of these facts there is no dispute. Upon these facts, the Court ruled, at the instance of the plaintiffs, that if the order was conditional, the defendant, and the drawer, that is, as the evidence was, the assignee of the drawer, having cancelled the contract, the defendant had tliereby rendered him- self absolutely liable from the time of such cancellation. This direction was, in our judgment, incorrect. By such cancel- lation, the condition on which the money was to be paid did not occur ; the work on the houses was not done by Reed, conformably to his contract, so as to bring the defendant's engagement within the terms of the order and acceptance ; and the defendant, there- fore, did not become liable by the force of his acceptance. We do not mean to say, that when a party has obtained such an order and acceptance, nothing short of an absolute performance of the contract, on the part of the contractor and drawer, will give the payee any remedy against the acceptor. The holder of such an order is a holder for value, and has an interest in the contract, and in its execution, as a means of raising the fund to which he has a NEWHALL V. CLARK. 107 right to look for his pay. If, therefore, after the acceptance of such an order, the acceptor, without justifiahle cause, should prohibit tlic drawer and contractor from proceeding to such a completion of the contract, as will make the acce[)tance payable, or if he should collude with the drawer of the order, to put an end to the contract, when, but for such fraudulent interference, the drawer would be able and ready to go on and complete it, we are not prepared to say that the holder of the order would not have a remedy by a special action, setting out such wrongful act of the acceptor, and the loss sustained by the holder by means thereof. Tlie sum thus to be recovered would not be the debt due by force of the contract, that is, the acceptance, but damages for the wrongful act of the acceptor, in preventing the completion of the contract, by means of which the holder has sustained the loss of the debt. In such action, the burden of proof would be on the plaintiffs to show, that the preven- tion of the completion of the cojitract had been caused by the defendant, to avoid the order ; and any evidence, on the part of the acceptor, to show that the drawer had failed or been unable to per- form his contract, by reason of death, sickness, insolvency, or other inability, would be competent to rebut the charge, upon which such action must be grounded. But, even if the plaintiffs, under a count in indebitatus assumpsit, ■could be permitted to prove facts tending to show that the perform- ance of Reed's contract, and the earning of the money from which the acceptance was payable, had been prevented by the defendant, of which we have great doubt, it must be done not merely by show- ing a cancellation of the contract, before its completion ; but also that it was done without excuse or justification, on the part of the defendant, and tliat the drawer was competent and willing, and, but for such interference of the defendant, would have been able, to complete his contract ; and thus to place in the defendant's hands the fund from which the acceptance was payable. In the present case, this must have been done by proof of facts aliunde ; and the evidence of facts, offered by the defendant, to explain and avoid the effect of these acts of the defendant in annulling the contract, to wit, that Reed had wholly failed to comply with the terms of his contract, &c., as stated in the bill of exceptions, would have been competent and material, and the rejection of such evidence by the Court was therefore incorrect. Exceptions sustained, verdict set aside, and new trial granted. 108 ACCEPTANCE. ^ A conditional acceptor is not liable if compliance is prevented by the operation of law. Browne v. Coit, 1 McCord, 408. In this case the defendant accepted a bill upon condition that he should sell certain goods of the drawer in his hands, which goods were attached before the maturity of the bill and before they had been sold. The Court held that the defendant was not liable. So if a merchant undertake to accept a bill on condition that a cargo of equal value be consigned to him, and the cargo consigned be not of equal value, he is not bound. Mason v. Hunt, 1 Doug. 297. In Wintermute v. Post, 4 Zabr. 420, the force of an acceptance " when in funds," came under consideration. " The terra ' when in funds ' literally means when the acceptor is in the possession of cash which the drawer has a present right to demand and receive or to appropriate by his bill, whether such funds be the product of labor or of commodities furnished, of goods sold or money de- posited or collected, or any other source. And such, in my judgment, is its fair commercial and judicial construction." Per Haines, J. In this case S., a day laborer, drew on his employer, P. (to whom S. was indebted), in favor of the plaintiff. P. wrote upon the bill " accepted when in funds." S. continued to draw his wages as he earned them ; and the Court held that it was not to be supposed that the parties meant that the pittance of each day's work should be withheld from the necessities of the laborer's family till they should accumulate to the amount of the bill. But If after such appropriation for the necessaries of life a balance should be left In the hands of the acceptor, then his acceptance would become absolute, and he would be bound to pay, and not till then. lb. 424. See Campbell v. Pettengill, 7 Greenl. 126, where it was determined, in con- struing the same expression, that available securities were not funds until actually converted into money. See also Hunter w. Ingraham, 1 Strob. 271; Gallery u. Prindle, 14 Barb. 186 ; Owen v. Iglanor, 4 Cold. 15. And the burden of proof in such case is on the plaintiff, in an action against the drawer, to show funds In the hands of the acceptor. Andrews v. Baggs, Minor, 173. See Owen v. Lavine, 14 Ark. 389. If the funds are not received in the lifetime of the acceptor, but are collected by his administrator, the latter Is liable in his representative character upon the acceptance of the deceased. Swansey v. Breck, 10 Ala. 533. In Perry v. Harrington, 2 Met. 368, It was held that an acceptance to pay a certain sum out of the first money received by the drawee, bound the acceptor to pay, from time to time, on reasonable request, such funds as he received of the drawer ; and that a judgment for a sum which he had refused to pay was no bar to an action for a further sum received since the first action. But the payee is not bound to receive a conditional acceptance. He may refuse, and protest the bill for non-acceptance. But if the plaintiff relies upon such acceptance, he must show that the condition has been performed. Ford v. Angelrodt, 37 Mo. 50 ; Wintermute v. Post, 4 Zabr. 420, and other cases, supra. Whether an acceptance at a particular place Is a conditional acceptance, has been a subject of considerable conflict. In England, after several decisions to the contrary. It was finally decided in the House of Lords, in Rowe v. Young, 2 Brod. & B. 165; s. c, 2 Bligh, 391 (1820), that such an acceptance was con- NEWHALL V. CLARK. 109 ditional, requiring the holder, in an action against the acceptor to aver and prove presentinent at the place designated. This decision gave rise to tiie Stat, of 1 ifc 2 (Jeo. IV. c. 78, declaring that acceptance at a particular place shall not be considered conditional, unless the bill is payable at a designated place " only, and not otherwise or elsewhere." In America, the doctrine generally prevails that in case of a note payable at a particular place, if the suit is against the maker, demand need not be averred ; but if the maker was at the place designated at the proper time, and was ready and olFered to pay the note, it is matter of defence to be pleaded and proved on his part. And the acceptor of a bill being regarded in the same light as the maker of a note, it follows that an acceptance at a particular place is not con^ ditional, and presentment at that place need not be averred. Wallace v. M'Con nell, l;i Pet. 136, ante, 15 ; Watkins v. Crouch, 5 Leigh, 522 ; Bowie v. Duvall 1 Gill & J. 175; Ruggles i'. Fatten, 8 Mass. 480; Weed v. Houten, 4 Halst 189 ; Mulherrin v. Hannum, 2 Yerg. 81 ; Wolcott v. Van Santvoord, 17 Johns 248; Caldwell i\ C'assidy, 8 Cow. 271; Fairchild r. Ogdensburgh, &c. R. Co. 15 N. Y. 3;57; Fleming v. Potter, 7 Watts, 380; Brabston r. Gibson, 9 How 263; l\i[)ka v. Pope, o La. An. 61 ; McCalop v. Fluker, 12 La. An. 551. But the rule is otherwise in Indiana. See Alden v. Barbour, 3 Ind. 414 ; Palmer v. Hughes, 1 Blackf. 328. The law is dilTerent as to an indorser ; he can require presentment at the place designated. See cases above cited. See also State Bank v. Napier, 6 Humph. 270; Taylor v. Snyder, and Chicopee Bank v. Philadelphia Bank, post, and note. The following cases contain further examples of conditional acceptance: Kel- logg V. Lawrence, Hill & D. 332 ; Kemble v. Lull, 3 McLean, 272 ; Atkinson V. Manks, 1 Cow. 691. 110 INDORSEMENT. INDORSEMENT. Brown v. The Butchers' and Drovers' Bank. (6 Hill, 443. Supreme Court of New York, May, 1844.) Form of indorsement. — The following figures in pencil, on a bill of exchange, viz., " 1, 2, 8," in connection witli evidence tending to show that the person who placed them there meant thereby to bind himself as an indorser, constitute a valid indorsement ; though it also appeared that he could write. Brown, the defendant below, was sued as indorser of a bill of exchange, upon which he had placed the figures " 1, 2, 8," in pen- cil. It was in evidence that he intended thereby to bind himself as an indorser ; though it was also proved that he could write. Nelson, C. J. It has been expressly decided that an indorse- ment written in pencil is sufficient. Geary v. Physic, 5 Barn. & Cress. 234 ; and also that it may be made by a mark. George v. Surrey, 1 Mood. & Malk. 516. In a recent case in the K. B., it was held that a mark was a good signing within the statute of frauds ; and the Court refused to allow an inquiry into the fact whether the party could write, saying that would make no differ- ence. Baker v. Dening, 8 Adol. & Ellis, 94. And see Harrison v. Harrison, 8 Ves. 185 ; Addy v. Grix, ib. 504. These cases fully sustain the ruling of the Court below. They show, I think, that a person may become bound by any mark or designation he thinks proper to adopt, provided it be used as a substitute for his name, and he intend it to bind himself. Judgment affirmed. In 2 Parsons, Notes and Bills, 16, note, the doctrine of this case is ques- tioned ; but on the ground of the evidence, that the defendant intended to bind himself as indorser by the use of the figures, the decision seems to be satisfac- tory. If he thereby induced another party to take the bill, it is clear, both on principle and authority, that he would be precluded from setting up the defence BROWN V. THE BUTCHERS* AND DROVERS* BANK. Ill that his indorsement was not formal and valid. It is possible that, in an ac- tion against (he maker of a note or acceptor of a bill thus indorsed by the payee, the unusual form of the indorsement might be considered as a circumstance of suspicion so strong as to rcj)el the holder's claim ; but even this is doubtful. See George r. Surray, 1 Moody & M. olC. However this may be, the case is very different where the action, as here, is against the party who made such in- dorsement, — the proof being that he intended to render himself liable as an indorser. It is, perhaps, to be inferred that the defendant had adopted this method of indorsement for some special and private reason ; and if it was in proof that he was in the habit of thus indorsing paper, the case would be stronger still against him. The case has never been (juestioned in the courts, and is cited as authority in Palmer v. Stephens, 1 Denio, 471, where it was held that, if one sign a note with his initials, intcndinri thereby to bind himself, he is as effectually bound as if he had written his name in full. See Merchants' Bank r. Spicer, 6 Wend. 443, to the same effect. Also Williamson v. Johnson, 1 Barn. & C. 146 ; Bank v. Flanders, 4 N. Hamp. 239, 247, 248 ; Ildgers v. Coit, 6 Hill, 322. Vincent r. Horlock, 1 ("amp. 442, is not in conflict with this view. In that case B wrote above the blank indorsement of A, the following : " Pay the contents to C." It was held that B was not an indorser, on the ground that he did not intend to render himself liable as such. The words quoted were not a substitute for his name as in the principal case. In Partridge r. Davis, 20 Vt. 499, the payee of a promissory note wrote the following words upon the back of it : "I guaranty the payment of the within note. Isaac D. Davis." The Court held that the transaction amcunted to an indorsement, rendering Davis liable upon demand and notice, to any subsequent holder, even though not the immediate assignee of the payee. To the same effect is Leggett v. Raymond, 6 Hill, 639; but Bronson, J., in delivering the opinion of the Court, says tliat his own opinion, which is overruled, is that the contract is a guaranty, void under the statute of frauds for want of a considera- tion, and not negotiable so as to pass a title to any one except to the person to whom the promise was made. He distinguishes the case from Ketchell v. Burns, 24 Wend. 456, in that the defendants' contract (guaranty) in that case was to bearer, and therefore negotiable. In this case (24 Wend. 456), the defendant was held liable as the maker of a new note. The case was also distinguished from Manrow v. Durham, 3 Hill, 584, as the guaranty in this case was made to the plaintiff; whereas 'in Leggett r. Raymond, as in 'Partridge v. Davis, the plainlilf was a subsequent assignee, and not the party to whom the promise was made. The contract in Manrow v. Durham was: "We guarantee the payment of the within note." Signed by the defendants. It was held in legal effect a promissory note, importing a consideration. Bronson, J., dissented, consider- ing the promise as a guaranty, as he did that in Leggett r. Raymond afterwards. This case of Manrow v. Durham, will be found interesting as containing an able review of the early cases, both by Nelson, C. J., in delivering the opinion of the Court, and in the dissenting opinion of Bronson, J. The later New York cases, however, substantiate the view taken by the latter. See Waterbury v. Sin- clair, 26 Barb. 455 ; Ellis v. Brown, 6 Barb. 282 ; Cottrell r. Conkiin, 4 Duer,' 453 ; Spies v. Gilmore, 1 Comst. 321 ; Hall v. Newcomb, 7 Hill, 410 ; and such 112 INDORSEMENT. a contract as that in Leggett v. Ra)'mond, would, now be considered a guaranty and nothing more. This shakes the authority of Partridge v. Davis ; and it may be considered very doubtful whether a contract, such as the one in that case, can be held an indorsement. The early case of Upham v. Prince, 14 Mass. 14, held the same doctrine as Partridge v. Davis. See also Riggs v. Waldo, 2 Cal. 485 ; Pierce v. Kennedy, 5 Cal. 138. See Indorsement by one not a party, infra. ■ A written agreement to pay a note "as if by me indorsed," is an indorse- ment. Pinnes r. Ely, 4 McLean, 173. It is most usual and proper to place an indorsement upon the back of the bill or note, in acc*brda.nce with the literal import of the term ; but this has been held not essential. It may be upon its face, upon a paper attached, and with pencil as well as ink. Folger v. Chase, 18 Pick. 63 ; Geary r. Physick, 7 Dowl. & R. 653 ; Partridge v. Davis, 20 Vt. 499. If there is an intention so to indorse as to effect negotiation, the form of the writing is immaterial. lb. 503 ; Sanford v. Norton, 14 Vt. 228 ; Sylvester v. Downer, post. The result is, as stated by Davis, J., in Partridge v. Davis, "that no pre- scribed formula need be observed to constitute an indorsement. It is governed, like the instrument on which it is made, by those liberal principles of construc- tion which pervade all mercantile contracts, paying little attention to mere tech- nical rules, but endeavoring to ascertain and carry into effect the real intentions of the parties to them." John B. Camden et al.^ Plaintiffs in Error, v. Kenneth McKoY et al., Defendants in Error. (3 Scammon, 437. Supreme Court of Illinois, December, 1842.) * Indorsement by one not a party. — If one not a party to a promissory note place his name on the back thereof, the payee not having indorsed it, he is to be regarded as a guarantor, and not as maker or surety ; and the holder has no authority to write over tlie name any thing which would render such person liable as an original promisor, in the absence of proof of intention. The case is stated in the opinion of the Court. Douglas,! J. This was an action of assumpsit, by the plain- tiffs against the defendants, McKoy, Johnson, and Gray, as maker of a promissory note. McKoy and Johnson pleaded the general issue, which was joined, and Gray pleaded a former recovery, to which the plaintiffs demurred. Before any decision was had on the demurrer, the plaintiffs entered a nolle prosequi as to Gray, ^ Stephen A. CAMDEN V. M'KOY. ' 113 and proceeded to trial against McKoy and Johnson. By agree- ment of the parties, a jury was dispensed with, and the matters of fact as well as law were submitted to the Court. The plaintiffs offered in evidence the following promissory note and indorse- ment: "Three months after date, I promise to pay J. B. and M. Camden & Co., or order, four hundred and eighty dollars, value received, without defalcation. John C. Gray. "January 26, 1838." Jitdorsc7nent. " For value received, we jointly and severally acknowledge our- selves as securities of John C. Gray, for the payment of the within note at maturity. Kenneth McKoy, Jacob Johnson." The signatures of Gray, McKoy, and Johnson were all proven to be genuine, and the plaintiffs' counsel admitted that the names of McKoy and Johnson were written in blank on the back of the note, and that they wrote said indorsement over said signatures on the trial. Various witnesses were then examined for the purpose of as- certiaining at what time, and under what circumstances, McKoy and Johnson indorsed said note ; but the whole evidence left it extremely doubtful whether they placed their names on the back of the note at the time of its execution, or long subsequently ; and there was no evidence showing that they were privy to, or participated in tlie consideration. The plaintiffs then offered to read said note in evi- dence, under a declaration charging said McKoy, Johnson, and Gray as joint and several makers of said promissory note, to wiiich the defendants objected, and the Court sustained tlie objection ; and the plaintiffs offering no other evidence, a judgment of nonsuit, and for costs, was entered against the plaintiffs. Tiie assignment of errors questions the decision of the Court, excluding the note from evidence, and entering the judgment of nonsuit. Supposing the names of McKoy and Johnson to have been indorsed upon the note at the time of its execution by Gray, it becomes necessary to inquire into the nature and extent of their liability, and especially whether they, in connection with Gray, are liable, as joint and several makers of the note. The general rule is, that an indorsement in blank operates as 8 114 INDORSEMENT. authority to the bona fide holder of the note to fill up the indorse- ment, by writing any thing over the signature which shall be con- sistent with the nature of the instrument, and the intention of the parties. Great difficulty and confusion have arisen in applying the rule to the peculiar state of facts existing in each case. Upon an examination of the various cases cited in the argument, and others to which I have directed my attention, I find many apparently con- tradictory decisions, which will render it necessary to review the leading cases, in order to arrive at a satisfactory conclusion. Ilerrick v. Carman ^ was a case where one Ryan had executed his note to Carman & Co., and procured Herrick to indorse it in blank. Carman & Co. assigned the note to J. V. Carman, who sued Herrick, seeking to charge him on his indorsement. The Court held that as it did not appear that Herrick gave Ryan credit with Carman & Co., by indorsing the note, or that he was in any wise informed of the use to which Ryan meant to apply the note, it would intend that Herrick meant only to become second indorser, with all the rights incident to that situation ; that the fact of his indorsing first, in point of time, could have no influence, for he must have known, and we are to presume he acted on that knowl- edge, that though the first to indorse, his indorsement would be nugatory, unless preceded by that of the payees of the note. -The Court also says, had it appeared that Herrick indorsed the note for the purpose of giving Ryan credit with Carman & Co., he would have been liable to them, or any subsequent indorsers, and his indorsement might have been converted into a guarantee to pay the note, if Ryan did not, according to the decision of the Supreme Judicial Court in Massachusetts.^ From this decision, it appears that the indorser was not liable, either as maker or guarantor, for the reason that it was not proven that the payees gave the credit to him at the time they received the note ; and if that fact had been proven, he would have been responsible as guarantor, and not as maker of the note. The case of Herrick v. Carman,'^ was an action on the same note, and the Court decided that it could not be maintained, either in the names of the payees, or the assignees of the note. In Nelson v. Dubois,* the Court maintains the same doctrine, upon a case similar in all respects, except that the person who indorsed the note in blank, did so for the purpose of inducing the 1 12 Johns. 159. 2 3 Mass. 274. 3 10 Johns. 224. * 13 Johns. 175. CAMDEN V. M'kOY. 115 payees to accept it, and part witli their property in lieu of it. In delivering the opinion, Chief Justice Sjyencer says, the facts in that case (Ilerrick v. Carman) are tiie same as in this, with the diiference only, that it did not appear that Ilerrick indorsed the note for the purpose of giving Ryan credit with Carman & Co. It was then, and still is, my oj)inion, that, had he done so, he would have been liable to them, or any sulisecpient indorsee, and that Ilerrick's indorse- ment might have been converted into a guarantee to pay the note, if Ryan did not. In the present case, it does appear clearly and affirmatively, that the plaintiff" refused to sell the horse for which the note was given, on Brundige's (the maker's) responsibility, and that the defendant put his name upon the note as guaranty for Brundige's payment of it, when it fell due ; and that but for the defendant's undertaking, as guaranty, the })laintiff" would not have parted with his property. The case of Campbell v. Butler,^ was founded upon a state of facts precisely similar in all respects to the preceding one. One Law executed his note to Butler, and Campbell and Harvey indorsed their names on the back of the note, for the purpose of enabling Law to oljtain from Butler a horse and wagon, in exchange for the note. Butler sued Campbell upon his indorsement, and on the trial filled up the blank indorsement as follows : — " For value received, I undertake and promise to guaranty the payment of the money within mentioned, to the within named James Butler. William Campbell." " Per Curiam : The question is, whether the plaintiff" below was authorized to write such a contract over the names of the indorsers of the note, respectively, and can sustain an action upon that con- tract. According to the decision in Nelson v. Dubois, and as the law is recognized in Herrick v. Carman, we think the plaintiff" had a perfect right to recover, as on an original undertaking to pay, by each of the indorsers, as guarantors of the note. The defendant in error is, therefore, entitled to judgment." ^ The case of Josselyn v. Ames,- which was cited in Herrick v. Carman, was an action by the assignee against the assignor of a note. The facts disclosed in the pleadings and proofs are these : Josselyn held a note against John Ames, and demanded security upon it. John proposed his brother Oliver as surety, who was 1 14 Johns. 349, 35L 'i 3 Mass. 274. 116 INDORSEMENT. # accepted ; and accordingly, John executed a note to Oliver, who indorsed it in blank, and delivered it to Josselyn in lieu of the first note. Josselyn sued Oliver on his note, averring in his declaration, that '"the said Oliver then and there promised the said Josselyn, to guaranty to him the payment of the contents of said note, on demand, and then and there, in consideration of the premises, promised the said plaintiff to pay him the contents of said note, agreeable to the tenor of the same," &c. The Court held that the blank indorsement did not authorize such an aver- ment ; but did authorize the following indorsement over the sig- nature : — " For value received, I undertake to pay the money within men- tioned, to E. J." I confess that I am unable to discover what principle this case does establish, for the reason that I can perceive no material differ- ence between the averment in the declaration, which the Court held to be unauthorized by the blank indorsement, and the one dictated by the Court ; and it seems the parties took the same view of it, for they immediately agreed to have judgment entered upon the declaration as it stood. The case of Ulen v. Kittredge,^ was upon a state of facts sub- stantially the same as Nelson v. Dubois, and Butler v. Campbell. Ulen declared against Kittredge, who had indorsed the note in blank, as guarantor, and proved a parol agreement that he was to guaranty the payment in the event that the maker did not pay it by a certain time ; and he recovered according to his averments and proof. The question there was, whether the indorsement was valid, as against the statute of frauds, and the Court says, we are of opinion that the defendant's signature on the back of the note, with the authority given by him to the witness to write over the signature a sufficient guarantee, and such guarantee being accordingly written by the witness, pursuant to such author- ity, may be considered as a memorandum signed by the party, within the intent of the statute, as fally as if it had been written in the defendant's presence, immediaiely after the signature. In Moies v. Bird,- the action was brought by the payee against an indorser in blank, who was not in any other manner a party to the note ; but there w'as proof, showing that the indorser had affixed his signature there in pursuance of an agreement between 1 7 Mass. 233. 2 11 Mass. 435. CAMDEN V. M'KOY. 117 the maker and the payee, at the time of the sale of the land, and the execution of the note. The defendant insisted, that if liable at all, he was only rcsimnsible as indorscr ; but the Court held that in consequence of the parol agreement, \\t was liable as orig- inal obligor. Tenney v. Prince,^ was a case where a person indorsed a note in blank, nine months after date, and three montlis before maturity, and the payee brought suit against the indorser, charging him as original promisor. The Court held that he could not be rendered liable in that capacity, nor in any other, unless the indorsement was based upon some new consideration, and then only as guar- antor. In Sumner v. Gay ,2 the plaintiff declared against the defendant, who had indorsed a note in blank, as maker of the note in the first count, and as guarantor in the second ; and the suit was main- tained ; but it docs not appear whether as maker or guarantor, nor was it material in that case, for the liability would have been the same. Baker v. Briggs,^ was an action brought to recover the amount of a note made by Ryan to Baker, and indorsed in blank by Briggs. It appears, from the report, that one count charged Briggs as maker of the note ; but we have no means of knowing in what character he was declared against in the other counts. The proof in the case shows that it was the understanding of the parties that he should be held responsible as surety, and the Chief Justice treats him as an original promisor. It is wortliy of note, that, in each of the preceding cases, the indorsement was in blank ; the indorser was sued alone, uncon- nected with the maker ; and in every one, where a recovery was had, there was proof showing, affirmatively, the understanding of the parties, and the nature of the transactions between them. There are two other cases in the Massachusetts Reports, which belong to a dilTorent class, and deserve attention. The case of Hunt (Adra'r) v. Adams,'* was on a promissory note made by one Chaplin, to the plaintiff, with the following indorsement at the bottom : — "I acknowledge myself holden as surety for the payment of the demand of the above note. Witness my hand. " Barnabas Adams." 1 4 Pick. 385. 2 4 Pick. 311. ' 8 Pick. 122. * 6 Mass. 358. 118 INDORSEMENT. Adams was sued as surety in said note ; and the Court decided that the suit was well brought, saying that the defendant is an original party to the contract, as well as Chaplin. The contract, in its legal construction, is a promise made, as well by the defend- ant as by Chaplin, for value received, to pay fifteen hundred dollars to plaintiff's intestate. To this promise Chaplin has signed as principal, and defendant as surety. This mode of signing is an accommodation between the promisors, by which the defendant is entitled, if he pay the note, to an indemnity from Chaplin ; but as to the intestate, they must be considered as joint and sev- eral promisors. Again the Chief Justice says, the legal effect of a note in this form is not different from a note in the form of " I, A B, as principal, and I, C D, as surety, promise to pay, &c." This last form is not uncommon, and the promise has always been holden to be made by each as original promisor. The other is the case of White v. Howland,^ and is similar to this in the facts of the case, the form of the action, and the reason- ing of the Court. These are distinguishable from all the other Massachusetts cases in this, that the indorsement was written out in full, and mutually agreed upon, by the parties, before signing. The terms of the contract, and the character and extent of the indorser's liability, were matter of agreement between the parties, and it only remained for the Court to execute that agreement according to its spirit and legal effect. If the indorser was liable as a joint maker of the note, in the capacity of surety, he became 80 in pursuance of the provisions of an agreement written and signed by himself, and not by virtue of a contract made for him, by the Court, or the construction of law, over a blank indorsement upon the back of a promissory note. In Dean v. Hall,^ the doctrine upon this subject is discussed with great learning and ability. The New York and Massachu- setts cases are all reviewed ly Justice Coiven, and the conclusion seems to be, that the indorser cannot be charged as maker unless there are some peculiar circumstances arising out of a promise to become originally and directly responsible, or a participation in the consideration for which the note was given. In fact, such a state of case was shown, by proof, to exist in Nelson v. Dubois, and Campbell v. Butler, and, indeed, in all the New York cases where the indorser in blank was held responsible as guarantor ; 1 9 Mass. 314. 2 17 Wend. 214. CAMDEN V. m'kOY. 119 and for the want of such evidence, it was held, in IleiTick v. Carman, that the indorser was not lialjlc, citlicr as maker or guarantor. Besides the absence of any evidence connecting McKoy and Johnson with the original consideration of the note, the case under consideration diflers from those referred to, or any I have Ijeen able to find in the books, in one essential particular. Here the makers and indorsers are sued jointly, as makers of a joint and sevei'al promissory note. In each of tlie others, the suit was against the indorser alone ; and I have been able to find no case in which the maker and indorser were joined in one action. This difference becomes important, for the reason that in most, if not all the cases, except Moies v. Bird, where the indorser has been held to be an original j)roraisor, the declaration contained counts charging the defendant as guarantor, as well as maker ; and the language of the Court usually is, that he is responsil)le as original promisor or undertaker, without distinguishing between maker and guarantor. In those cases it was not material in which character the defend- ant was responsible, as the effect would have been the same, as it regards tiie form of the action, and the extent of the lial)ility. If, then, this question is to be determined upon the weight of author- ity, we do not feel authorized, in the absence of any testimony showing the understanding of the parties, to treat McKoy and Johnson as joint and several makers of the note witii Gray. Aside from authority, and relying upon general principles, tiie question is, in our opinion, free of difficulty. Whilst the law requires no particular form of words to constitute a j)romissory note, and designates no particular place at which the owner shall affix his name, in order to establish his liability in that capacity, yet, by the universal consent and acquiescence of commercial and business men, custom has established and sanctioned a form and mode of signing, which furnish a legal presumption of the inten- tion of the parties, and the precise character of the liability attaching to the signature, which presumption may, in many cases, be rebutted by parol evidence. For instance, a signature at the bottom of a note, on the right-hand side of the paper, is prima facie evidence that it was affixed there in the character of maker, whilst the same signature, at tlie left-hand side of the paper, would furnish equally satisfactory evidence that it was placed there only 120 INDORSEMENT. as a witness to the instrument. So the signature of a third per- son, upon the back of a note, after the payee has indorsed it, is evidence of a contract to become responsible as second indorser. If custom has ripened into the form of legal presumption, in these respects, it would seem to follow, that a departure from this cus- tom would negative such presumption, and furnish prima facie evidence of a different kind of liability. The authorities are not definite and conclusive as to the technical character of this lia- bility ; yet their general tendency, as well as the nature of the transaction, lead us to the conclusion that it amounts to a guar- anty. Upon the ground of variance, the note was clearly inadmissible in evidence. The note declared on purported to be made and signed by McKoy, Johnson, and Gray, and the note offered in evidence was signed by John C. Gray alone, and indorsed by McKoy and Johnson, with implied authority to write a guaranty over the signatures. Upon the well-settled principle, tliat the pleadings and proofs must correspond, the note was properly re- jected. In this case, it is unnecessary to inquire whether the plaintiffs, after entering a nolle prosequi as to Gray, could proceed to trial and judgment against the other defendants. The judgment is affirmed. Caton, J., dissenting. I regret that I feel compelled to dis- agree with a majority of the Court in this case. After a careful examination of the authorities and general principles applicable to the main questions involved, I am constrained to the conclu- sion, that where a name is found on the back of a promissory note in the hands of the original payee, the presumption of law is, in the al)sence of proof on the subject, that it was put there at the time of the making of the note, and as part of the original transaction. In the case under consideration, the proof is so entirely uncertain and unsatisfactory, that it leaves the mind without a bias or inclination one way or the other, and the law is left to raise its own presumption on the subject. The name on the back of a note, while in the hands of the original payee, does not make the writer, in a technical sense, an indorser. He cannot be the first indorser, because he is not the payee of the note, nor can he be a second or any subsequent indorser, because his CAMDEN V. M KOY. 121 indorsement is not preceded by the name of the payee. The very term indorscr presupposes that the note, either is, or lias been negotiated. The defendants, then, cannot I^c treated as indorsers of this note. Then for what purpose were the names put on the back of it? Not being indorsers, it was not for the jjurpose of giving the note ncgotial)iUty, but must have been for the purpose of increasing the payee's security ; and if this was the object, there is nothing unreasonable in presuming that the security was required and obtained, at the time the note was given. This security was required because the payee was not satisfied with the responsibility of the maker of the note. If this responsibility of the defendants was undertaken at the time the note was given, then no new con- sideration was necessary to make their undertaking obligatory on them, because the presumption of law is, that it was a part of the original contract between the plaintiff and Gray, that this security should be given. l>y presuming that this indorsement (and I use the terra not in its technical sense) was made at the time the note was given, and was a part of the original contract, we give effect and efficacy to the acts of the defendants. If we do not presume that the undertaking was made at that time, we let go every thing like certainty, and determine without any fixed principle or certain rule. If we determine that it was made after the execution and delivery of the note, and on a new arrangement, it would be an undertaking on the part of the defendants to pay the pre-existing debt of Gray, whicii, by the statute of frauds, must be in writing, on a good con- sideration. By adopting the construction which I give, a manifest embarrassment is avoided, and the evident intent of the parties is carried into execution ; and unless we do adopt that construction, we shall, in most instances, discharge the liabilities of such sureties altogether. Unless the presumption of law is that such an indorse- ment was made at the same time with the note, we must presume it was made afterwards ; and if we do this, we determine that the act was prima facie void, because we make it a new and independ- ent transaction, unconnected with the consideration of the note, and requiring a new consideration to be proved to support it. But I do not understand the opinion of Mr. Justice Doujlas, to deter- mine that the presumption of law is, that the names of the defend- ants were written on the note after its execution. But in the absence of all proof on the subject, the law must determine at what time this undertaking was entered into^by the defeildants, whenever 122 INDORSEMENT. that question of time becomes material, as it most unquestionably does in a case like this. It will not be denied, I presume, that if it were proved by testimony on the trial, that the defendants wrote their names on the back of this note, at the time the note was made, it would all be considered one transaction, and supported by the same consideration, and their liability would be fixed ; while, on the other hand, if it were proved that their names were not put there till afterwards, it would be a new and independent undertak- ing, to support which the plaintiff must prove a new consideration. I think, then, that tlie Courts of New York and Massachusetts, in determining, in the absence of all proof on the subject, in cases like the present, that the indorsement was made at the time the note was made, and for the same consideration, have adopted a sound and salutary rule, perfectly consistent with the general principles of law, and, in fact, the only one that can secure to the parties, in many, if not in most instances, the rights and liabilities intended by them ; and against this I have been unable to find a solitary decision or dictum. If I have not failed, then, in what I have been attempting to show was the time and consideration of this indorsement, then it was competent for the payee to write any agreement over the names of the defendants, consistent with tlie nature of the instru- ment, and the agreement of the parties ; ^ and when this is done, the parties are liable on that agreement, in the same way that they would have been, had they filled up the indorsement themselves, at the time. The inquiry now is, what was the nature of the liability they intended to assume ? This, too, in the absence of all proof on the subject, the law must determine, from the nature of the case, and the circumstances of the transaction ; while, if there is any satis- factory proof, that must control and determine the nature and extent of the liability. I have already said that the defendants here cannot be considered indorsers, because the paper was never put in- circu- lation,^ but has always remained in the hands of the original payee, to whom alone the defendants are liable, if they are liable at all, and . to wliom an indorser can never be liable, where, as in this State, a note can only be put in circulation by indorsement. Tlie payee of a note here must be the first indorser ; and he, as first indors- ^ Chitty, Bills, 257, note 1 ; Josselyn v. Ames, 3 Mass. 274, and cases there cited ; Beckwith v. AngellfB Conn. 315. 2 Chitty, Bills, 44. CAMDEN V. m'KOT. 123 er, must stand between all subsequent indorsers and danjrer ; so tbat here, if we treat the defendants as indorsers at all, they are second and third indorsers, so that, instead of their being liable to the payee, he in fact might become liable to them. The liability of an indorser is only conditional ; while I presume it will hardly be. doubted, the liability these defendants intended to assume was absolute. If I am not mistaken in the presumptions which the law- raises, then the nature of the defendants' liability is precisely the same as if it had been proved, on the trial, that the defendants and Gray put their names to this paper at the same time, and for the purpose of increasing the plaintiffs' security, and that in considera- tion of their becoming such security, the plaintiffs gave the credit, which, without their names, might not have l)ccn given. Upon such a state of facts 1 hold, and upon the authority of the cases referred to in tlie o[iinion of the majority of the Court ; that these defendants became original joint and several promisors with Gray, for the payment of the sum of money in this note mentioned, and that their agreement with the plaintiffs was absolute, that the money should be paid as in the note expressed ; and, in pursuance of such understanding, the plaintiffs were authorized to write an agreement over the defendants' names, so as to charge them either as guaran- tors or as sureties ; this being perfectly consistent with the nature of the instrument, and the agreement of the parties, which was that their responsibility should be absolute, for the payment of the money, and not conditional, as it would have been, had they been technical indorsers. In this case, then, I hold tliat the plaintiffs had a right to fill up this contract as they have done ; to wit, " For value received, we jointly and severally acknowledge ourselves as securities of John Gray, for the payment of the within note at maturity." The plaintiffs having chosen, as they had a right to do, to treat the defendants as sureties to this note, the authorities clearly establish that they are liable as joint and several makers of the note, precisely the same as if the note had read, '• We jointly and severally promise to pay, the first as principal, and the other as sureties," &c., and their names had all been put to the bottom of the note. It is said, however, that this case is distinguishalilo IVom any of the cases to which reference has been made, in this, that, in the case before us, the principal and sureties were all charged in the same suit, whereas, in all the other cases, where tile person, whose 124 INDORSEMENT. name is found on the back of the note, has been treated as original maker of the note, he has been sued separately. But this, I sub- mit, can make no difference in principle, and is attributable rather to accident tlian necessity. If all can be treated as joint and several makers of the note, there is certainly no reason why all may not be sued jointly, and the sureties surely ought not to object that their principal is joined with them. But at the time this note was offered in evidence, and rejected by the Court, Gray was not a party to tlic suit. The Court had permitted the plaintiffs to dis- miss their suit as to him, and proceed as to the present defendants, so that, if the Court was correct in permitting this to be done, the suit then stood precisely as if Gray had never been made a party to it. A majority of the Court differing with me in opinion on this question, I have deemed it unnecessary to examine the question, whether the Covirt below was correct in allowing the plaintiffs to discontinue as to Gray, and proceed as to the other defendants ; while this would have been an important inquiry, had a majority of the Court been with the plaintiffs on the other points. Judgment affirmed. This case has been followed in Illinois by Cushman v. Dement, 3 Scam. 497 ; Carroll v. Weld, 13 111. 682 ; Klein v. Currier, 14 111. 237 ; Webster v. Cobb, 17 111. 459. See also Watson v. Hurt, 6 Gratt. 633 ; Clark v. Merriara, 25 Conn. 576 ; Perkins v. Catlin, 11 Conn. 213; Beckwith v. Angell, 6 Conn. 315; Ranson v. Slierwood, 26 Conn. 437 ; Schollenberger v. Nehf, 28 Penn. State, 189 ; Fegenbush v. Lang, 28 Penn. State, 193, and the cases infra. President, Directors, &c., of The Union Bank of Wey- mouth AND BrAINTREE V. TiLLEY WiLLIS. (8 Metcalf, 504. Supreme Court of Massachusetts, October, 1844.) Indorsement by one not a party. — If a person not a party to a note place his name upon the back of it at the time it was made, he is liable as maker ; and when the note is in the hands of a bona fide holder, the presumption in the absence of proof is that the name was placed upon it at the time it was executed. Assumpsit by the indorsees against the indorser of a promis- sory note of the following tenor : " August 8th, 1843. For value UNION BANK OF WEYMOUTH AND BRAINTREE V. WILLIS. 125 received, I promise Tilley Willis, to pay hira, or order, $350, in four mojitlis from date. T. D. Thomijsoii." On the back was the name of B. L. Mirick & Co., and under that name was the name of the defendant, both indorsements being in blank. At the trial before the Chief Justice, the plaintiffs' cashier tes- tified that they discounted the note for Thompson, and that, when it was discounted, the names stood on the note as they now do. There was no evidence that the note was presented to Mirick & Co. for payment ; but there was evidence tending to show that notice of dishonor was given to them, as indorsers, as well as to the defendant. The defendant contended that Mirick & Co. were to be considered as joint, or joint and several, promisors, and that the defendant was not responsible as indorser, without proof of presentment to them for payment. But it was ruled that they were not to be so considered as promisors, as that presentment of the note to them, and demand of payment of them, were necessary to charge the defendant. A verdict was returned for the plaintiffs, which is to be set aside, and a new trial granted, if the ruling was incorrect. Hubbard, J. It is admitted that the note was not presented for payment to Mirick <fe Co. ; and the question is, whether the omis- sion to do it discharges the indorser. If the subject now brought before us were a new one, we should hesitate in giving countenance to such an irregularity, as to hold that any person whose name is written on the back of a note should be chargeable as a ])romisor. We should say, that a name written on the paper, which name was not that of the payee, nor following his name on his having indorsed it, was either of no validity to bind such individual, because the contract intended to be entered into, if any, was incomplete or within the statute of frauds ; or that he should be treated, by third parties, simply as a second indorser ; leaving the payee and himself to settle their respective liabilities, according to their own agreement. But the validity of such contracts has been so long established, and the coflrse of decisions, on the whole, so uniform, that we have now only to apply the law, as it has been previously settled, in order to decide the present suit. The first case' of this description, of which any mention is made 126 INDORSEMENT. in the reports, is that of Humner v. Parsons, tried before this Court in Lincohi county, July term, 1801. The facts were these : " Parsons wrote his name on a paper and gave it to John Brown, but there was no evidence of the intent, or of any connection in business between them. Brown made a note on the other side, payable to Jesse Sumner or order, on demand, with interest, and signed it, and thirty days after made a partial payment on it. Sumner then got a writing in these words over the name of Par- sons : ' In consideration of the subsisting connection between me and my son-in-law, John Brown, I promise and engage to guaranty the payment of the contents of the within note, on demand.' And he sued Parsons, declaring on the promise, specially stating it, and the note, but did not aver any demand on John Brown, or notice to Parsons. In two trials in the Supreme Judicial Court, it was held that Parsons was liable, and that Sumner had a right to fill the indorsement so as to make Parsons a common indorser of the note, with the rights and obligations of such, or a guar- antor, warrantor, or surety, liable in the first instance, and in all events, as a joint and several promisor would be." Am. Prec. Declarations, 113. Mr. Dane, who cites it in his Abridgment, Vol. I. 416, 417, remarks, that " this case was carried as far as any case had gone, and on the review the Court was not unan- imous ; and it has since been questioned ; " and we have no doubt with good reason ; for the holder of the paper, having himself set out the contract by the words written over the name of the de- fendant, should have been held by its terms, and the legal effect should have been given to the material word " guaranty." And in that view of the contract, the promise of Parsons was only to pay after a demand upon Brown for payment, and a refusal by him, and of which Parsons should have had notice. But the Court must have construed the writing as constituting him an original promisor, and so bound, absolutely, without notice. And in our apprehension, the writing of the guaranty over the name of Par- sons ought not to have been held as an act obligatory on him ; but he should have been treated, if held at all, as an indorser of the note, and, as such, subject to the liabilities, and entitled to the notice of an indorser. See Beckwith v. Angell, 6 'Conn. 325, opinion of Hosmer, C. J. The next case which came before the Court was that of Josselyn V. Ames, 3 Mass. 274. By the report, it appears that John Ames UNION BANK OF WEYMOUTH AND BRAINTREE V. WILLIS. 127 was indebted on note to the plaintiff, who demanded security, and Jolin ofTcred his brother Oliver as surety, who was accepted. John then made a note to Oliver, not negotiable, and Oliver put his name on the back in blank. The plaintiff received it and gave up his formeir note, and afterwards wrote over the defendant's name the same words as in Sumner v. Parsons, with this addi- tional clause : " and in consideration of receiving from Elisha Jossclyn a note of the said John of the same amount." The Court held that the plaintiff could not recover in that action, but might cancel the words written, and sul)stitute, " for value re- ceived, I undertake to pay the money within mentioned to Elisha Josselyn," and, upon such an indorsement, might maintain an action upon the facts reported. In what light the Court held the defendant, does not distinctly appear ; but we presume as an original promisor, from the manner in which the case of Sumner v. Parsons is spoken of. " The guar- antor in that case," they say, " was not the promisee, but a stranger, who warranted the payment to him. He cannot himself warrant to a third person payment of a note made payable to him- self and not negotiable." Tiie next reported case is that of Hunt v. Adams, 5 Mass. 358, which was assumpsit on a note given by Cliaplin to Bennet, under which the defendant wrote, " I acknowledge myself holden as surety for the payment of the demand of the above note. Wit- ness my hand. Barnabas Adams." This cause was much con- sidered, and the Court ruled that the defendant, Adams, was to be charged as a promisor, and that his holding himself as surety did not abridge or affect the plaintiff's rights, but only was evidence, as between the promisor and himself, that he had signed for his accommodation. Other cases between the same parties, on similar notes, afterwards arose, and were decided in the same manner. 6 Mass. 519. Immediately after, occurred the case of Carver v. Warren, 5 Mass. 545. That was on a note made by one Cobb to the plain- tiff, and on the back of which the defendant wrote his name ; and the plaintiff filled the indorsement, and declared upon it as his promise. The defendant demurred to the declaration, on the ground that this was but a promise to pay the debt of another, and was void for want of consideration. But the Court held that, by* the pleadings, each promised to pay the same sum, and that the 128 • INDORSEMENT. defendant's promise did not import any guaranty or collateral stipulation ; and that if the defendant had indorsed as guarantor, and the present indorsement was filled up without his consent, or any authority from him, he should have pleaded the general issue, and on the trial he might have availed himself of this defence. And so the plaintiff had judgment on the demurrer. The case of Hemmenvvay v. Stone, 7 Mass. 58, followed. There the note ran, " I promise to pay F. M. Stone or order," and was signed B, Chadwick ; and below was signed by the defendant. The Court held that it was a joint and several note, like the case of March v. Ward, Peake's Cas. 130. See also Bayley, Bills (2d Am. ed.), 44. The next case was White v. Howland, 9 Mass. 314, which was on a note payable by one Taber to the plaintiff, and on the back of it was written, " for value received, we jointly and severally undertake to pay the money, within mentioned, to the said Wil- liam White. I. Coggeshall, Jr. Jno. H. Howland." The Court held that this undertaking was within the principle settled in Hunt V. Adams, and was the same as if the party had signed his name on the face of it ; and that he was well charged as a several original promisor. The case of Moies v. Bird, 11 Mass. 436, which succeeded, is substantially like the present. A note was made to the plaintiff, and signed by Benjamin Bird, and the defendant signed his name in blank on the back of the note. The Court say, the defendant " leaves it to the holder of the note to write any thing over his name which might be considered not to be inconsistent with the nature of the transaction. The holder chooses to consider him as a surety, binding himself originally with the principal ; and we think he has a right so to do. If he was a surety, then he may be sued as an original promisor." In the case of Baker v. Briggs, 8 Pick. 130, which was an action to recover the amount of a promissory note made by one Eyan to the plaintiff, the name of the defendant, Briggs, was written on the back of it, and the Court say that, according to several decisions, it was right to declare against him as promisor, though he stood in the relation of surety to Ryan, who signed the note on the face of it. The case of Chaffee v. Jones, 19 Pick. 260, was assumpsit on a note signed by Israel A. Jones, as principal, and Eber Jones and UNION BANK OF WEYMOUTH AND BRAINTREE V. WILLIS. 129 E. Owen and Sons, as sureties, l)y which tliey jointly and severally promised to pay the president, &c., of the Housatonic Bank, or their order ; and the plaintiff put his name on the back of the note, in blank. The jduintiff was called upon, after the neglect of the makers, and he paid it to the bank. The Court held that where one, not a jjromisor, nor indorser, puts his name on a note, meaning to make himself liable with the promisor, he is to be regarded as a joint promisor and surety. He is not lial)le as indorser, for the note is not negotiated, nor a title made to it, through his indorsement; nor as guarantor, there being no dis- tinct consideration ; but he means to give security and validity to the note by his credit and promise, and it is immaterial, for this purpose, on what part of the note he places his name. So in Austin V. Boyd, 24 Pick. 64, where the defendant's name was, in like manner, on the note, it was held that the party, by thus put- ting his name on the back, makes himself an original promisor. He intends by it to give credit to the note. The case of Samson v. Thornton, 3 Met. 275, was assumpsit on a note made by Benjamin Russell to the plaintiff, and was indorsed by the defendant Thornton ; and the declaration charged him as an original ])romisor. The Court there ruled that the defendant, not being the payee of the note, must be held to stand in the character of an original joint promisor and surety. The case of Richardson v. Lincoln, 5 Met. 201, is of the same type. There the Court held that the defendant, not being payee, but having put his name, in blank, on the note, must be consid- ered as an original promisor and surety, if he put it on simulta- neously with the promisor, as an original contractor. See also Sumner v. Gay, 4 Pick. 311. The -same questions have arisen in New York, in various cases, and have been decided in a similar manner. Tiiey will be found cited in Story on Notes, §§ 59, 472-480, where the subject is fully discussed, and the authorities examined. To hold the party, however, as promisor, where the name alone is written, it must appear that he made the promise at the time when the note itself was made ; otherwise, he may cither not be chargeable at all, or be chargeable as surety or guarantor, accord- ing to the facts proved. Carver v. Warren, 5 Mass. 545 ; Tenney V. Prince, 4 Pick. 3cS5 ; Baker f. Briggs, 8 Pick. 122, 130 ; Oxford Bank v. Haynes, 8 Pick. 423; Story ou Notes, §§ 473, 474; 9 130 INDORSEMENT. Beckwith v. Angell, 6 Conn. 315. But that the promise was made at the same time with the note, is a fact which is to be presumed when the note is in the hands of a bona fide holder, and nothing is shown to the contrary. And in the present case, the note was offered to the plaintiffs for discount, by the maker him- self, with the names of Mirick & Co. and Willis on the back of it; showing it, therefore, to have been an original undertaking on their part. It was contended, in the argument, that Mirick & Co. were merely sureties, and tliat the plaintiffs had a right to treat them as such, and therefore were not bound to demand payment of them as makers, as a necessary step to enable them to charge the indorser ; the relation of promisor, surety, and guarantor being distinct. There is, unquestionably, a distinction between these several undertakings ; and always so in regard to a mere guarantor. But as to the subsisting relations between a principal and surety, they rarely affect the contract between the creditor and surety. A man may be equally a surety and an original promisor ; as where the promise is, I, A B, as principal, and I, C D, as surety, promise to pay ; or where the party signs, and adds to his name the word surety. This does not make him less a promisor. It only defines the relation between him and his co-promisor ; and as promisor, the necessity of a presentment to him is not dispensed with, if the intention of the holder of the note is to charge the indorser. It is not for the holder to choose in what character he will consider the party who has put his name on the note ; but he must treat him as sustaining that legal relation which the facts establish. If he put his name on the note at the time it was made, like the case at bar, he is a promisor ; if after the making of the paper, he is a surety or a guarantor, according to the agree- ment upon which he gives his signature. The fixing of the rela- tion of the party, when he enters into the contract, is necessary for the protection of holders, and for guarding the rights of in- dorsers, whose liability is conditional. If it were held otherwise, 1 do not well see how such contracts could be supported against the objection of being void as within the statute of frauds. And, as it is, I consider these engagements rather as exceptions to the statute, than in any other light, and as growing out of, or rather ingrafted upon, the law merchant applicable to regularly drawn bills of exchange and promissory notes. HALL V. NEWCOMB. 131 Upon this view of the law, as drawn from the various cases, we consider Mirick <t Co. to have been joint and several j)romi8ors with Thompson, and liable in like manner with him. This case is f'ullowiMl ih Massachusetts by Ilawkcs v. Pliillips, 7 Gray, 284, and by Draper v. Weld, l.j (jiray, 580; the latter holding evidence to show that the third party put his name on the note witli authority to fill the blank with a guaranty, inadmissible against one who took the paper without notice. But if the payee afterwards indorse above the signature of the third . party, the latter then becomes an ordinary itidorser, and his liability cannot be changed by parol. Clapp V. Rice, 13 Gray, 403. See Howe v. Merrill, 5 Gush. 80; Vore v. Ilurst, \'.\ Ind. 551. If the signature of such person is written subsequently to the execution of the paper, and as an independent transaction, the signer is a guarantor. Benthall c. Judkins, 13 Met. 265 ; Irish v. Cutter, 31 Maine, 536. See preceding and following cases. See also, to the same effect, Wetherwax v. Paine, 2 Mich. 555 ; Lewis v. Har- vey, 18 Mo. 74; Schneider v. Schiffman, 20 Mo. 571; Childs v. Wyman, 44 Maine, 433; ^lartin t\ Boyd, UN. Hamp. 385 ; Carpenter i\ Oaks, 10 Rich, Law, 17. In McCiuire v. Bosworth, 1 La. An. 248, it is held that such third person binds himself as surety. Hall v. Newcomb. (7 Hill, 41G. Court of Errors of New York, December, 1844.) Indorsemcul by one not a juirty. — If one who is not a party to a promissory note place his name upon the back thereof, the payee not having indorsed it, he is to be re- garded as an indorser, and not as maker or guarantor. The case is stated in the opinion of the Court. The Chancellor. In April, 1840, Peter Farmer made a prom- issory note for two hundred and fifty dollars, payable to Samuel Hall, the plaintiff, or his order, on demand, with interest ; on the back of which note Newcomb, the defendant, indorsed his name in blank, at the request of Farmer, to enable him to get the money on the note. In November, 1841, Hall, without having demanded payment of the note from the maker, or given notice of non-pay- ment to the indorser, brought a suit against the indorser alone, to recover the amount of the note and interest. And the question for our consideration is, whether a person who ])uts his name in blank u})on the back of a negotiable note, which is drawn in such 132 INDORSEMENT. a form that lie may be charged as indorser in the usual mode, if a demand is made and notice of non-payment given, can be charged as a general surety, without such demand and notice, by parol evidence merely. In the case of Prosser v. Luqueer, which was decided by this Court in December last, I expressed the opinion that he could not. See 4 Hill, 420. Tlie reporter misunderstood my opinion in that case, however, if he supposed I intended to intimate that I thought the holder of the note, which was recovered on there, could have maintained a joint action against the makers and the indorser of the note in a count charging them all as joint and several makers of the note. The joint action was sustained against them, in that case, upon the common money counts, under the statute, as makers and indorsers, and the service of a copy of the note with the declaration. But as the indorser had waived notice of non-payment, and had absolutely guaranteed the payment of the money, for value received, I thought, upon the authority of the decisions there referred to, his guaranty w^as itself a several promissory note payable to the bearer of the note written by Edson and Arnold on the other side of the paper ; not tliat he could be considered as having made a joint promise with them. The courts have gone far enough in repealing the statute to prevent frauds and perjuries, by introducing parol evidence to charge a mere surety for the principal debtor, by showing that his written agreement means something else than what upon its face it purports to mean. And I fully concur in the opinion expressed by Mr. Justice Branson, in Seabury v. Hungerford, 2 Hill, 80, that where a man writes his name in blank upon the back of a nego- tiable promissory note, he only agrees that he will pay the note to the holder, on receiving due notice that the maker, upon demand made at the proper time, has neglected to pay it. Mere proof that he indorsed the paper to enable the maker to raise money on it, does not change the nature of his legal liability as indorser, where the note is in the hands of a bona fide holder for a good considera- tion. Such was the whole effect of the parol proof in this case. And for the courts to allow proof by parol to charge a mere surety, beyond the legal effect of his written blank indorsement on such paper, would bring them in direct conflict with the provisions of the statute of frauds. 2 Rev. Sts. 135, § 2, sub. 2. Here there was no difficulty in charging Newcomb as indorser of the note, in favor of Hall, from whom it appears the' maker HALL V. NEWCOMB. 133 intended to get the $250 to enable him to take up a former note. It docs not appear in this case whether the former note had been protested, so as to charge Newcomb as indorser, or not ; or who was the holder of that note. All that appears is, that Newcomb knew that Hall would lend Farmer the $250 to enable him to take it up ; and that Newcomb indorsed this note for Farmer, "fls a mere accommodation indorser, when the name of Hall, to whose order the note was made payable, was not indorsed thereon. Where a note is made payable to an individual or his order, and is indorsed by iiim in blank, and in that situation is presented to anotlier per- son for his accommodation indorsement, who indorses it accord- ingly, the legal effect of his indorsement is to make him liable in the character of second indorser merely ; and he can in no event be made legally liable to the first indorser. And if the maker, or the first indorser, or any other person into whose hands the note might subsequently come, should, without the consent of the second indorser, fill up the first indorsement specially, without recourse to such first indorser, so as to deprive the second in- dorser of his remedy over in case he should be compelled to pay the note, it would be a gross fraud upon him, if not a forgery. But when such a note is presented to the accommodation indorser, and is indorsed by him without having been previously indorsed by the person to whose order tiie same is made payable, the latter may, at tiie time he puts his indorsement upon it, indorse it specially without recourse to himself; so as to leave the second in- dorser lial)le to any person into whose hands it may subsequently come for a good consideration, and without any remedy over against the first indorser. Or, if tbe ol)ject of the second indorser was to enable tiie drawer, as in tliis case, to obtain money from the payee of the note, upon the credit of such accommodation indorser, he may indorse it in the same way without recourse ; and by such indorsement may cither make it payable to tlie second indorser, or to tlic Ijcarer. And such original payee may then, as the legal holder and owner of the note, recover thereon against such second indorser, upon a declaration stating such s|)ecial in- dorsement by him, and subsequent indorsement of the note to him by tiie second indorser. Or ho may recover on the common money counts, under tiie statute, by serving a copy of the note and of the indorsements so made thereon, with his declaration. But as the second indorser, if he has not waived notice of the 134 INDORSEMENT. demand of and non-payment by the maker, cannot be made liable upon his indorsement without proof of such demand and notice, the plaintiff at the trial must prove the same, or he cannot re- cover. In the case of Herrick v. Carman, 12 Johns. 159, the payees of the note,Vho had received it on the credit of Herrick, had them- selves made a general indorsement of the note, instead of a restricted one ; so that if Carman recovered against Herrick who had been duly charged as indorser, the original payees would be liable to him as first indorsers. And a recovery by Carman would therefore, have rendered them liable, contrary to their agreement with him. And in Tillman v. Wheeler, 17 Johns. 326, the payee of the note attempted to charge the indorser as upon a general guaranty, without having made him liable as indorser by a demand of the makers of the note, and notice of its non-payment. Both cases, therefore, were rightly decided. The remarks of the judges as to the right of the Court to turn an indorsement into an abso- lute guaranty, upon a different state of facts, were uncalled for, and are therefore not entitled to the weight of judicial decisions in' opposition to the provisions of the statute of frauds. The decision of the majority of the Supreme Court in the case of Nel- son V. Dubois, 13 Johns. 175, was clearly wrong. The note in that case being payable to Nelson or bearer, the defendant might have been charged as the indorser of the note without any indorse- ment by Nelson. For where a note payable to bearer is indorsed by another person generally, the person who thus puts his name upon it is liable as an indorser, and may be charged as such upon due notice to him of demand and non-payment of the note by the maker. Hill v. Lewis, Skin. 410 ; Bank of England v. Newman, 1 Ld. Raym. 442 ; Eccles v. Ballard, 2 McCord, 388 ; Brush v. The Administrators of Reeves, 3 Johns. 439, 440. It was improper therefore to allow parol evidence to enable the holder of the in- dorsement to turn a conditional liability, as indorser, which, the plaintiff had lost the benefit of by his neglect to give notice of demand and non-payment, into an absolute contract to pay the note, in disregard of the provisions of the statute of frauds. In declaring specially upon such an indorsement, the proper course is to set out the making of the note, the special indorsement thereof by the plaintiff to tlie defendant, where it is payable to order, or the delivery to him where it is payable to bearer or to ' HALL V. NEWCOMB. 13/) the plaintiff or bearer ; and then to state the subsequent indorse- ment of the note by the defendant, by which he ordered and appointed the contents thereof to be paid to the plaintiff, and the demand of the maker of the note and notice of non-payment duly given to the defendant as such indorser. The erroneous decision of the majority of the Judges of the Supreme Court in Nelson v. Dubois not having received the sanction of this Court and being in conflict with the statute of frauds, it is. not too late to declare the law in conformity to the statute, as a majority of the judges of the present Supreme Court have done in tliis case. I conclude, therefore, that the decision of the common pleas in this case was right, and that the judgment of the Sujjremc Court sustaining that decision was not erroneous, and -should be affirmed. Senators Barloiv and Wright delivered opinions in favor of affirming the judgment of the Supreme Court, concurring in the view taken of the case by the Chancellor. Bockee, Senator. It appears very satisfactorily from the testi- mony in this cause, and the nature of the transaction, that the parties intended to give a note or security on which Newcorab, as well as Farmer, should be liable to the plaintiff for the money to be advanced by him. They failed in effecting that object in the usual form of an indorsed promissory note, probably from mistake or ignorance of the proper form of negotiable instruments. In the form in which the note is presented to us, Xewcomb cannot be treated as an indorser. An indorser is one who, by his signature, transfers the legal interest in the note. From sucli indorsement, whether tiie signature is on the back or the face of the note, result the liabilities and privileges of a commercial indorser. Newcomb had no such legal interest in the note, and could not make such an indorsement, because the note is payable to Hall, and is not indorsed by him. Newcomb can never be made liable to Hall as indorser. The payee of a note cannot maintain an action against the in- dorser. So it was ruled in the case of Herrick r. Carman, 10 Johns. 224, where the indorsee failed in maintaining an action against the second indorser, because it was proved that he was the mere agent of the payee and first indorser. Taking this note in the precise form in which it is, payable to Hall, with the signature of Newcomb on the back of it, and laying aside all the other tes- • 136 INDORSEMENT. timony in the cause, it would be the case of Herrick v. Carman above cited, and Newcomb could not be made liable in any form. Had Newcomb put his name on a note designed for discount at a bank or otherwise, intending to be the second indorser, and knowing that his indorsement would be inoperative until the note was indorsed by the payee, he would then be strictly within the rule applicable to a commercial indorsement, and entitled to its privileges. The evidence in this case, however, excludes such a snpposition. It is very clear that Newcomb put his name on the note, knowing that the money was to be obtained from Hall, the payee. The inference is very strong, at least a jury might think so, that Newcomb intended to be surety for the money so advanced by Hall to Farmer, and did not intend to make himself the in- dorser of a negotiable promissory note. The signature of New- comb is a nullity, unless he is liable as guarantor, or on an original undertaking as surety, to pay the note. It is immaterial in which character he is made liable. Here we may safely rest upon the principle laid down by the Supreme Court in the decision of this cause, that such a construction should be given to the contract as will prevent its failure altogether. The maxim ut magis res valeat quam pereat, quoted by the learned judge, comes in aid of the plaintiff, and is decisive in his favor. It is suggested by the learned judge who delivered the opinion of the Supreme Court, and the decision appears to be mainly founded upon this sugges- tion, that the plaintiff, by indorsing the note, might have put it in a form in which it would be available to the holder against New- comb as second indorser. True, he might have indorsed the note and sent it into the market, so that an innocent bona fide holder might have recovered against Newcomb as second indorser, but in such case Hall, as first indorser, would have been liable to Newcomb. The order of liability would be reversed. Hall would become surety to Newcomb, instead of holding Newcomb as surety for Farmer. It is said that Hall might have indorsed the note without re- course, and then, althougli he was the payee and first indorser, might himself have recovered as the indorsee of Newcomb. This would be placing Hall in a position never intended by the contract. I think we must take this instrument and decide the rights of the parties under it in the precise shape and form in which it appears to us, without indorsement by the payee. Viewing this instru- ** HALL V. NEWCOMB. 137 ment as commercial paper, indorsed by Newcomb for tlie accom- modation of the maker, I doubt the ri^ht of the jiayee to nego- tiate it by a restricted indorsement, in which case it might operate as a fraud upon the person who puts his name upon the note with the view of being the second indorser. If the payee makes such indorsement, I think it would not avail. An indorsement is strictly and literally an order to pay money. Hall orders the money to be paid to Newcomb, wliose name already stands upon the note, we may presume, as second indorser. He writes over Newcoinlt's signature an order to i)ay back the money to himself. By this little contrivance it is supposed that a right of action would accrue to Hall against Newcomb as indorser, when he had not before any such right of action. This sort of finesse and shutliing game is below the dignity of the law. We must take this con- tract as the parties left it, complete and perfected when the note was delivered to Hall, and we have no right to ask iiim to resort to practices bordering on trick and deception, for the purpose of clianging the character and liability of the parties. If Mr. Hall could legally and properly pursue the course advised by some of our learned friends, I can see no reason why a restricted indorse- ment may not be written over the name of any prior indorser of accommodation paper, and so the person who has lent his signa- ture on the faith of the responsibility of those who have preceded him, may be utterly ruined, and that without remedy. I think that Judge Spencer, in the case of Herrick v. Carman, 12 Johns. 101, states the law of this case correctly, and draws the proper distinction. Where a person indorses a note for the purpose of giving the maker credit with the payee, and with knowledge of the use to be made of tiie note, he is liable as on an original un- dertaking, and his indorsement may be turned into a guarantee. Otherwise, if he indorses tlie note without any such knowledge. It must tiien be presumed that he intended only to become a second indorser, with all the rights which i)ertain to that character. In the latter case he is not liable to the payee, nor to any person de- riving title from him with knowledge of the circumstances attend- ing the indorsement. This j)rinciplo has, I think, been recognized and sanctioned by every analogous case to be found in the books from 12 Johns, down to "> Hill, and ought at this day to be con- sidered as settled and established law, if in the conflict of deci- sions and diversity of opinion among judges any principles can 138 INDORSEMENT. be considered as settled and established. The case of Seabury V. Hungerford, 2 Hill, 80, on the authority of which the decision of the Supreme Court mainly rests, is not an exception. The principle of that case is not adverse to the present plaintiff's right to recover. The maker drew a note payable to Seabury or bearer, with a view of borrowing money from him, which note, before delivery, was indorsed by Hungerford ; and it was held that Hungerford could not be charged as maker or guarantor, but only as indorser. Now two remarks may be made explana- tory of the difference between that case and the present. It does not appear that Hungerford knew that the money was to be ad- vanced by the payee, and it is not disputed that, on a mere naked indorsement of negotiable paper, unconnected with knowledge of the use to be made of it, the party could be charged only as in- dorser. It may be further remarked, that the note in that case was payable to Seabury or bearer, and the observation of Judge Cowen would be apt and pertinent, that the payee might, by trans- ferring the note, render it available to any holder against Hunger- ford as indorser. Not so in the present case, where, though words of negotiability are used, they are entirely inoperative, and might as well have been left out of the instrument. The plaintiff" could not have transferred the note without involving himself in re- sponsibilities never intended, and entirely inconsistent with the contract between the parties. Tiien let the rule of Seabury v. Hungerford be applied to this case, and as there is no possibility of charging Newcomb as indorser, consistently with the contract and intention of the parties ; and as he knowingly undertook to be surety for Farmer to Hall in some form, lie must be held liable either as guarantor or as an original promisor. He may be sued in either character. Another point made on the argument of this cause is, " that the statute of frauds would bar a recovery against the defendant on any other ground than that of an indorser." The case of Leon- ard V. Vredenburgh, 8 Johns. 29, is exactly analogous to the present, and appears to settle the principle very conclusively in favor of the plaintiff". Here, as well as there, the undertaking was a part of the original transaction, and tlie defendant's under- taking was the inducement to the creation of the debt. Parol testimony was admitted without objection on the trial, and was properly admitted to show the attending circumstances, and the SYLVESTER V. DOWNER. 139 purpose and design for which the signature of the defendant was affixed to the instrument. The nonsuit was improperly granted, and the judgment of the Court of Common Pleas, and of the Supreme Court are erro- neous, and should be reversed. Judgment affirmed} This case is followed in New York by Spies v. Gilmore, 1 Comst. 321 ; Ellis V. Brown, 6 Barb. 28J ; Watcrbury v. Sinclair, 26 Barb. 4.')5. See also, to the same effect, Clouston v. Barl)ierc, 4 Sneed, 33G, approving Comparree v. Brock- way, 11 Hum. 3.^0 ; Fear r. Dunlap, 1 Greene (Iowa), 331 ; Jennings i'. Thomas, 13 Sniedes & M. 617 ; lliggs r. Waldo, 2 Cal. 485 ; Pierce v. Kennedy, 5 id. 138 ; Wells r. Jackson, 6 Blackf. 40; Vore r. Ilurst, 13 Ind. 551. See preceding and following cases. Barzillai Sylvester, Executor, &c., v. Solomon Downer. (20 Vermont, 355. Supreme Court, March, 1848.) Indorsement hi/ one not a party. — One who is not a party to a promissory note, by plac- ing his name upon the same, the payee not having indorsed it, renders himself prima facie Uable as maker ; but evidence may be received to show the real inten- tion of the signer. Assumpsit against the defendant as maker of a promissory note payable to Austin and Fay, or order, and by them indorsed to the plaintiffs intestate. The declaration also contained a count for money had and received. Plea, the general issue, and trial by jury, Alarch term, 184G, — Redjicld, J., presiding. On trial the plaintiff offered in evidence a promissory note, for $75.00, signed by one David E. Strong, dated March 27, 1837, and made payable to Austin and Fay, or order, in the month of February then next, with the following indorsements : " For value received, pay the contents to Lemuel Sylvester, (signed) Austin and Fay ; " " For value received, I promise to pay this note according to its tenor to Lemuel Sylvester, (signed) Solomon Downer." To this evidence the defendant objected, for variance ; but the objection was overruled by the Court. It appeared that the indorsements 1 The vote of the Court stood : For aflirmance, 17 ; for reversal, 8. 140 INDORSEMENT. were made in blank, and were filled up by the plaintiff before trial. Redfield, J. This is an action, in common form, against the defendant as a sole maker of a promissory- note. The note, on being produced, showed his name indorsed upon it, and also that of the payees of the note. This, according to the decisions of this Court, repeatedly made, imposed upon the defendant the obligation of the maker of the note, with this difference only, that, his under- taking being in blank, as between the parties to it, it was suscep- tible of being controlled by oral evidence of the real obligation intended to be assumed at the time of signing. This has been so - often declared by this Court, that it seems needless to refer to the decisions. But I will advert to some of them, with a view to extract from them the principle of the decisions. The first case, which distinctly assumed this ground, is that of Knapp V. Parker, 6 Vt. 642. In that case the note had been due, before it was indorsed by the defendant, and he was sued as maker, and the suit sustained. It is true, the Court, in their opinion, advert to a prior contract, resting in parol merely ; but this was clearly merged in the writing. It was of no importance, in deter- mining the prima facie legal obligation resulting from the signature. The law determines that ; and the oral evidence was important only as tending to show, that the defendant intended to assume just such an obligation, as he did by the blank signature. But to show that the circumstance of the previous contract is not of importance, we need only advert to the subsequent cases. In Flint V. Day, 9 Vt. 345, the former case is cited by the late Chief Justice, as a decision of the Court to the effect, that one, who signs a note after it becomes due, and by merely indorsing his name upon the back, is nevertheless holden as a maker, and to the same extent as those who sign upon the face of the note. And in this latter case the defendant, who wrote his name upon the back of the note, because the bank would not take it upon the names already upon it, was holden liable to contribute with a surety, who signed the note upon its face, and who was compelled to pay the whole note. The Court declare, that the defendant (who declared at the time he signed the note, that he knew the plaintiff to be good, and was not afraid to " back the note ") became a joint principal to the bank (the payee), and must stand as a co-surety with the other sureties. SYLVESTER V. DOWNER. 141 The case of iSanford v. Norton, 14 Vt. 228, was where the de- fendant wrote his name npon the back of the note, after it was negotiated, and l)efure it came into the hands of the plaintiff. And the Court had no difficulty in holding the defendant jonwia/acz'g liable, as a maker of the note, and lialjle to all the incidents result- ing from becoming a maker. But the judgment of Chief Justice Williams^ in tlic County Court, was reversed in the Supreme Court, upon the ground that he should have received evidence, which was oifered by the defendant, to show that, at the time he wrote his name upon the back of the note, he was understood to assume only the obligation of a common indorser, and was there- fore entitled to require a demand upon the maker and notice back. At the next trial in the County Court I was myself present, and admitted the evidence, according to the decision of the Supreme Court, and the plaintiff again ol)tained a verdict by showing demand and notice. And that jndgmcnt was affirmed in this Court. It is true that the Chief Justice, in declaring the judgment of this Court, or rather, in writing out his opinion for the press, took occasion to pass some strictures upon the decision of the Court in the former case. And however just they may be, or however unjust, it is not important now to inquire. They were certainly not pertinent to the decision then made, which was, in fact, a full and unqualified affirmance of the former decision, and not, as the Chief Justice undertook to show, a departure from it. This case, then, establishes the doctrine, that one who indorses his name on the back of a negotiable promissory note, while it is in circulation, prima facie assumes the obligation of maker, if he were not before a party to the instrument ; and that his obligation is negotialjle, in the same sense as the original contract, and may be sued in the name of any person into whose hands the note comes in the course of its circulation. • The same was in effect decided in Strong v. Riker, 16 Yt. 554. The point was expressly made in that case, that the defendant indorsed his name upon the note long after it was made ; but the Court held that fact to be unimportant. In that case the note had passed out of the hands of the payee, long before the defendant indorsed it, but had not been indorsed by the payee. In passing it to still another person, not a party to the note, the defendant wrote his name upon the back of tiie note ; and the Court held that he « was holdcn as maker, and that he might be sued in the name of the 142 INDORSEMENT. payee^ who had no interest whatever in the note, at the time the defendant became a party to it, — thus making the defendant liable as maker of the note to the fullest extent, the same as if he had signed the note originally, and in the same form. In all this it is not understood that the Court have ever decided that a more guaranty is negotiable, whether it be collateral and conditional, or absolute. The contrary is no doubt true, as was declared in Sanford v. Norton, 14 Yt. 228. But what this Court has repeatedly held upon this subject, is, that he who writes his name upon the back of a note, if he were not before a party to it, assumes the same obligation as if he wrote his name upon the face of the instrument ; and that, although he do this long after the making of the note, it shall make no difference ; if he consent to be thus bound, and induce others to take the note under that expectation, he shall be estopped to deny that fact, and is treated to all intents the same, precisely, as if he had signed the note in its inception. But, the signature being blank, he may undoubtedly show that he was not understood to assume any such obligation. But the proof in the present case tended to show, and the jury have so found, that the defendant did intend to assume an uncondi- tional obligation to pay the note, according to its tenor. This puts at rest all pretence, that the defendant was not understood to assume the common obligation, which his signature imported. This was, that of the maker of the note to Austin and Fay, as that was the form of the note at the time he indorsed it ; and had they refused to indorse it, the defendant might have been sued, as maker, in their na7nes, according to the case of Strong v. Riker, 16 Vt. 554. But they did indorse it. He was then liable, as maker, to any person who might become a holder of the note ; and especially to the plaintiff's testator, for he assumed the obligation with the under- standing that the note was going immediately into his hands, and that the defendant was liable to him. This point is fully decided by Sanford v. Norton, 14 Vt. 228. The declaration in this case, then, was precisely according to the proof, — that the defendant made a note to Austin and Fay, which was indorsed to the plaintiff's testator. The fact, that the defendant's indorsement was filled up differ- ently from the declaration, and differently from the import of his undertaking, is of no importance, as that is mere form, and may be , GREENOUGH V. 8MEAD. 143 made at any time, and, if made wrong, may be corrected at any time. It is just as well if it be not made at all. Judgment affirmed. Cook V. Southwick, 9 Texas, G15, and Carr v. Rowland, ll Texas, 275, hold a similar doctrine to that of the above case. It is true those cases say, that where the name of the third party is on the bill or note at its inception, which is the presumption in the absence of proof, he is regarded as a guarantor or surety ; but they use the word guarantor as ecjuivalent to maker in both cases, citing, in Cook v. Southwick, the case of Leonard v. Sweetzer, 10 Ohio, 1, which holds that a guaranty of the fulfilment of a contract, written below the contract, and executed at the same time, renders the party liable as an original contractor. See also Watson i'. Hurt, 6 Gratt. 633 ; Clark v. Merriam, 25 Conn. 576 ; Per- kins V. Catlin, 11 Conn. 213; SchoUenberger v. Nehf, 28 Penn. State, 189; Jennings v. Thomas, 13 Smedes & M. 617 ; Schneider v. Schiffman, 20 Mo. 571. In the last-named case it is held that, although it may be shown, as between parties entitled to look into the real transaction, that the third person signed as indorser, and not as maker, this cannot be shown against a subsequent bona Jide holder. But see Carpenter v. Oakes, 10 Rich. Law, 19. See pre- ceding and following cases. B. F. Greenough et al. v. W. Smead et al. (3 Ohio State, 415. December, 1854.) Indorsement by one not a party. — If one not a party to a note put his name on the bafck thereof, the note being subsequently indorsed by the payee below liis signature, but not being intended for the payee, such party is to be regarded as an indorser ; but if tlie note were intended for the payee, the liability of such third person is that of maker or guarantor. The case is stated in the opinion of the Court. Ranney, J. An action was brought and recovery had by the defendants in error in the Commercial Court of Cincinnati, upon the promissory note following : — $4000. Cincinnati, 30th May, 1850. Sixty days after date I promise to pay to the order of Samuel R. Bates, four thousand dollars, value received. Written on the back in the following order : — George H. Bates. B. F. Greenough. Samuel R. Bates. Butler & Brotuer. 144 INDORSEMENT. From the bill of exceptions, taken at the trial, it. appears that the note was discounted by the defendant in error, after all the names were upon it, for the exclusive benefit of t\]£ maker, George H. Bates. On the morning of the day the note matured, George H. Bates died. It was duly presented at his last place of busi- ness, and also at his dwelling-house, and payment requested, and notice of non-payment immediately given to all the persons appear- ing upon the back of the note as indorsers. The plaintiff's coun- sel insist that Greenough was in fact, and should have been, treated by the holders as an original promisor and joint maker of the note with Bates ; and, inasmuch as no demand of payment was made upon him, tliat the indorsers, Samuel R. Bates and Butler and Brotlier, are discharged from all liability upon it. This is sup- posed to result from the fact that his name was placed upon the paper before it was indorsed by the payee, and from the position it is there found to occupy. Notwithstanding the great importance of a definite and uniform rule, fixing the liability incurred by a party to negotiable paper thus situated, a most perplexing contrariety of opinion is found to exist in the reported cases. In Massachusetts, and several of the New England States, he is presumed, in the absence of proof of a different intention, to be an original promisor. The cases will be found collected and ably examined, by J. Hubbard, in the Union Bank of Weymouth v. Willis, 8 Met. 504.^ In that case A made a note payable to B, and C put his name in blank on the back of the note. B, the payee, then placed his name in blank on tlie back of the note under that of C. In this condition, it was discounted by the plaintitf for A, the maker. It was held that C was an original promisor, and in an action against B, the payee and indorser, the holders were defeated, be- cause no demand of payment had been made of C. The Court regarded itself bound, by the previous course of decisions in that ^'?tate, remarking that if the subject were brought before it for the first time, they " should say, that a name written on the paper, which name was not that of the payee, nor following his name on his having indorsed it, was either of no validity to bind such indi- vidual, because the contract intended to be entered into, if any, was incomplete, or within the statute of frauds ; or, that he should 1 Ante, 124. GREENOUGII V. PMEAD. 145 be treated bv third parties, simply as a second indorser, leaving the payee antl himself to settle their rcspcetive lialnlities according to their own agreement." Whatever may have been the principle upon which the earlier decisions in New York j^roceeded, the snbjoct has more recently been fully examined Ijy the Supreme Court of that State in tiie case of Ellis v. Brown, G Barb. S. C. 282, and l)y the Court of Appeals in Spies v. (Jilmore, 1 Comst. 321, and Hall v. Newcomb, 7 Hill, 41G.1 These cases seem to affirm that he can only be made liable as a second indorser; that he is within the protection of the statute of frauds, and therefore parol evidence is not admissible to show that he intended to bind liimself as an original promisor or guarantor. That the indorsement is entirely nugatory until the note has been indorsed by the i)ayee, and that he is then to be charged l)y a sub- sequent holder only upon due demand of the maker and notice thereof. In Ohio, the case of Champion and Lathrop v. Griflfith, 13 Ohio, 228, followed by Robinson v. Abell, 17 Ohio, 30, 42, has settled that the mere indorsement upon the note, of a stranger's name in blank, is prima facie evidence of guaranty. That to charge such person as maker there must be proof that his indorsement was made at the time of execution by the other party, or, if afterward, that it was in pursuance of an agreement or intention that he should become responsible from the date of the execution ; that such agreement or intention' may be proved by parol evidence ; and that the rule is the same whether the instrument is negotiable or not. The dilTerence amounts to this: in Massachusetts such a party is presumed t<j be an original promisor ; in Ohio, he is presumed to be a guarantor: but, in either State, parol evidence is received to rebut tlic j)resunii)lion, and show what liability it was intended he should assume, and what relation he should sustain to the paper. In New York, he is presumed to have intended to assume the liabilities of an indorser, and parol evidence is not admissible to show a ditterent intention. We are not disposed to doubt the correctness of tlio rule laid down in the decisions already made in this State, when confined to the facts of the several cases in which it has been applied. This rule admits parol evidence to ascertain the intention of the » Ante,Vdl. 10 " 146 INDORSEMENT, parties, and requires iis to consider what evidence w^s before the Commercial Court. From the bill of exceptions it appears that the note was indorsed by all tlie i)arties for the accommodation of George H. Bates. That Greenough indorsed it before it was filled np ; that George H. Bates on the samp day filled up the note for $4000, payable to the order of Samuel R. Bates, whose indorsement he then pro- cured, and subsequently that of Butler and Brother. In this con- dition he took it to the defendants in error, and procured it to be discounted. It further appeared from the testimony of Greenough, who was called and examined as a witness for Butler and Brother, that he had been in the habit of exchanging accommodation indorsements with George H. Bates ; that Samuel R. Bates had usually been a party to this paper ; and that whenever it was in- tended that he should be the first indorser, his name was used as the payee. That without having any distinct recollection of this particular note, he was able to say from the course of business between them, that he intended to authorize George H. Bates to make him appear in any character upon the paper that would best serve the purpose of raising the money. This constituted a gen- eral letter of attorney to Bates to bind Greenough in any form he saw fit ; but while it obligated Greenough to submit to any obliga- tion that Bates saw fit to impose upon him, it also entitled him to the full benefit of any arrangement that Bates intended for his benefit. Looking at tlie transaction fairly, we cannot doubt that Bates, the maker, and his brother, the payee, intended to bind him as one of the indorsers of the paper, and to impose upon him all the obligations, and secure him all the privileges of that position ; and that such was the understanding of Butler and Brother is per- fectly manifest from the declarations of one of them, made after the note had been protested, in which he treated George H. Bates as the sole party primarily liable. But if this testimony is loft entirely out of view, and we have nothing but the fact that the note was discounted for the sole ben- efit of the maker, and became first legally operative when received by the defendants in error, we are still brought to the same con- clusion. In the common understanding of business men, it is very sel- dom supposed that one placing his name upon the back of a note becomes primarily liable for the payment of the debt. Tiiis under- standing ought to be no further interfered with than is absolutely GREENOUGH V. SMEAD. 147 necessary ta give full effect to the lawful contracts of parties, and alTortl a remedy to the creditor conirnonsurate with what he may 1)0 presumed to have expected when the promise was made. To do tliis it is only necessary to give effect to the undertaking of each of the parties upon the paper, precisely as they appear at the moment the instrument itself takes effect and becomes legally operative. If he then appears to be a stranger to tiie title, he must assume the position and responsiliilities of a stranger, and as lie cannot in such case be charged as an indorser, and as it can- not l)e supposed that he did not intend to bind himself in some way, he must be charged as a maker or guarantor. This will happen in all cases where the i)aper is designed for the payee, and the name of the stranger is i)ut on the back for security. .Such were all tiic cases yet decided in this State. There was no middle course ; either the undertaking which the party intended to as- sume, and upon the faith of whicii the creditor had parted with his money or property, must take effect in that manner, or it was nugatory and without any effect whatever. Nor would his position or responsibilities be changed, although the payee should afterward transfer the obligation. Once im- pressed with the character of maker or guarantor, they remain the same into whose hands soever it may come. But the case is widely different when the paper is not designed for the payee, and the arrangement contemplates his indorsement as an accommodation party also, before it is used. In such case, there is no oldigation incurred, no contract made, until the note is accepted by the person advancing the consideration upon it. Where it is so accepted, it then, for the first time, has its effect. It then has the indorsement of the payee, to transfer it to the party whose name is already upon it, evidencing his willingness to receive and transmit the title, and in his turn to assume the re- sponsibility of an indorser when the note shall have accomplished its purpose, by being accepted by the party becoming benelicially entitled thereto. The order of this indorsement, in point of time or locality, is of no importance, but it is controlled wholly by the order contemjilated by the contract of indorsement. Chalmers v. McMurdo, o Muul'ord, 2.")2. The fact that the party indorsed before the payee, as was well said by Spencer, J., in llcrrick v. Carman, 12 Johns. IGl, " can iiave no inllucnce, for he must have known, and we are bound to presume that he acted on that knowl- 148 INDORSEMENT. edge,- that though the first to indorse, his indorsement would be nugatory, unless preceded by that of the i)ayee." Two governing principles should be kept constantly in view : first, that such a construction should be placed upon the contract as will prevent its failure, and will give effect to tlic obligation of each of the parties appearing upon it at the moment the contract itself takes effect, — ut res magis valeat quam pereat ; second, when- ever the obligation of a party appearing upon the back of nego- tiable paper, can, at that time, take effect as an indorsement, it should always be held to do so, as conforming more nearly to the general intention of parties assuming that position upon it. The first of these principles is disregarded by the present hold- ing of the courts in New York, in treating as nugatory the obliga- tion assumed by a stranger to the paper, when it is designed for and received by the payee, and when the name is indorsed to give credit to the paper with him. The last is disregarded in the case cited from Metcalf, in pushing the principle of original liability beyond the necessity of its application, and when at the moment the contract is consummated, the obligation of the party thus situ- ated, can, and should have effect as an indorsement. In New York, the present holding is directly opposed to a long series of earlier decisions, as is abundantly proved by the dissent- ing opinions in Hall v. Newcomb, and Ellis v. Brown, in which the very distinction we have made, is recognized and enforced, while in Massachusetts, not one of the numerous cases cited by the Court in the Union Bank v. Willis, had carried the principle beyond the liability assumed for the benefit of the payee. Two states of the case may be supposed, in neither of which would Smead & Co. be obliged to treat Greenougli as an original promisor. If the paper upon its face placed him in that position, yet, if in point of fact the arrangement between the parties was such as to entitle him to the privileges of an indorser, no demand need be made upon him, for the other indorsers having no re- course against him as maker, could lose nothing for the want of it. On the other hand, if he appeared to be an indorser, but in fact, as between him and the other indorsers, he had agreed to assume the responsibilities of maker, yet Smead & Co., having no notion of such an arrangement, would not be bound to regard it. In our opinion, not only the paper upon its face presented him as an indorser, but the evidence given, also comes to the same GREENOUGH V. SMEAD. 149 result, and sliows him a joint accommodation indorser witli the other parties appearing; upon the back of the note; and, as such, under the ruling in Douglas v. Waddle, 1 Ohio, 413, liable only for his proper proportion of the debt, as a co-security. This view of the sul)ject makes it unnecessary to pass upon the question made, as to the sufficiency of the demand. It may not be improper, however, to say that if Greenough could be treated as a joint maker, we should be of the opinion that the demand made, or rather the excuse for not making a demand, would be insufficient to charge the indorsers. The question is not covered by the case of Harris v. Clark, 10 Ohio, 5, and we feel no hesitation in saying that the rule tliere adopted, should be confined to the precise state of facts upon which the decision was made. A demand upon one of several partners in business, is clearly sufficient, and the Court, in that case, considered the several " makers of a joint and several prom- issory note, in the light of jjartners in that particular transaction.''^ But surely the principle could have no application after the death of one of the parties had terminated the implied agency of the survivor ; and it could not be deemed due diligence in the holder to present the note at the residence of the deceased partner, when the survivor was within his reach. It is also assigned for error, that the Court refused to require the plaintiffs to fill up the blank indorsements, upon the trial. In this, we think there was no error. When the plaintiffs gave tliQ note in evidence, with the names of all the defendants upon it, they, at tiie same time, established the lialiility of all, and title in themselves. They were as well entitled to the legal presumptions and inferences to be drawn from the face of the paper, as they were to what was fully expressed in it. All this belonged to its construction and legal effect, and as they claimed nothing more, there was no occasion for writing out what the law presumed with- out it. The name of the payee appeared, transferring the title ; and while it is true that the precise order in which it had passed to and from tlie other indorsers, might not be ap))arent, a sufficient answer is, that tliis was wholly immaterial. In no ])ossible case, could it defeat the title, or be a defence for any one of them. If the plaintiffs had endeavored to establish a liability, not re- sulting from a fair construction of the paper itself, there would have been great propriety in compelling them to specify tiie precise nature of the lyidertaking, and of confining the evidence to its 150 INDORSEMENT. support ; but when nothing but the legal consequences of the in- strument arc invoked, we can see no possible benefit to accrue to the defendants from complying with such a demand, unless it should be the very illegitimate advantage arising from the plain- tiffs having mistaken their legal rights. The judgment of the District Court is affirmed. This very ably considered case is cited as declaring the settled law of Ohio, in Seymour v. Leyman, 10 Ohio State, 283. The same rule prevails in Minne- sota, that the third party becomes liable as maker, if he signs before delivery to the payee, and lor further security to him. Nor will parol evidence be received in such case to show that he was to be bound as an indorser. Peckam V. Oilman, 7 Minn. 446. The law in Georgia is similar. Quin v. Sterne, 26 Ga. 223. And in Rhode Island, Perkins v. Barstow, 6 R. I. 505. See following case. Alexander Rey, William R. Marshall, and. Joseph M. Marshall, partners under the firm name of Marshall & Co., Plaintiffs in Error, v. James W. Simpson. (22 Howard, 341. Supreme Court of the United States, December, 1859.) Indorsement by one not a party. — The defendants, W. M. and J. M., not parties to the note in suit, placed their firm name on the back of the note, at its inception, and before it liad been passed or offered to the plaintiff, at the request of the other de- fendant, tlie maker, knowing that the note had not been indorsed by the payee, and with a view to give credit to the same, for the benefit of the maker, held, that W. M. and J. M. were original promisors with the maker ; evidence being ad- missible to show their intention. The case is stated in the opinion of the Court. Clifford, J. This is a writ of error to the Supreme Court of the Territory of Minnesota. According to the transcript, the suit was commenced by James W. Simpson, the present defendant, on the twenty-first day of « December, 1855, in the District Court of the Territory, for the second judicial district, against the plaintiffs in error, who were the original defendants. It was an action of assumpsit, and was brought upon a certain promissory note for the sum of three thousand five hundred and seventeen dollars and seven and a half cents, bearing date at St. Paul, in that Territory, on the four- teenth day of June, 1855, and was made payable to the order of the plaintiff six months after date, for value received. At the REY V. SIMPSON. 151 period of the date of the note, as well as at the time the suit wus instituted, two of tiifs dcfiindauts, William R. Marshall and Jost?|»h M. Marsnall, were partners, doing husiness under the style and firm of Marshall and (Company. As appears by the declaration, the note was made and signed hy the defendant first naiyed in the original suit, at the time and place it bears date. And the plaintiif further alleges in the declaration, tha|^after making and signing the note, the same defendant then and there delivered the note to the other two defendants ; and that they then and there, by their partnership name, indorsed the same, by writ- ing the name of their firm on the back of the note, and then and there re-delivered the same to the first-named defendant, who after- wands, and i)efore the maturity of the note, delivered it so indorsed to the plaintitf. He also alleges that the defendants, William R. Marshall and Joseph M. Marshall, so indorsed the note for the purpose of guaranteeing the i)ayment of the same, and of becom- ing sureties and security to him, as the payee thereof, for the amount therein specified, and that he, relying upon their indorse- ment, took the note, and paid the full consideration thereof to the first-named defendant. Other matters, such as due presentment, non-payment, and j)ro- test, are also alleged in the declaration, which it is unnecessary to notice at the present time, as the questions to be determined arise out of the allegations previously mentioned and described. Personal service was made on each of the defendants, 1)ut the one fust named did not apjiear ; and after certain interlocutory proceedings, conforming to the laws of the Territory and the i>rac- tice of the Court, he was defaulted. On the thirty-first day of December, 185"), the counsel of the other two defendants served notice of a motion to strike out all that part of the declaration which sets forth the purpose for which it is alleged they indorsed the note, and so much of the declara- tion, also, as alleges that the plaintiff took the note as payee, rely- ing upon the indorsement, and paid to the first-named defendant the full consideration thereof, as before stated. That motion was subsequently heard before the Court ; and on the ninth day of February, 185G, was denied and wholly overruled. After the mo tion was overruled, the defendants, whose firm name is on the back of the note, demurred specially to the declaration. None of the causes of demurrer need be stated, as they will be 152 INDORSEMENT. t sufficiently brought to view in considering the several propositions assumed by the counsel "on the one side and the otiier, iu the ar- gument at the bar. Suffice it to say, that the demurrer was over- ruled ; and on the tenth day of July, 1856, judgment was entered for the plaintiff against all of the defendants for the amount of ■ the note, with interests and costs. b On the eighteentli day of September, 1856, the defendants sued out fn writ of error, and removed the cause into the Supreme Court of the Territory, where the judgment of the District Court was in all things affirmed ; and on the fourth day of February, 1857, a final judgment was entered for the plaintiff, that he recover the amount of the judgment rendered in the District Court, with interest, costs, and ten per cent damages, amounting in the wliole to the sum of four thousand three hundred seventy- one dollars and ninety-seven cents. Whereupon the defendants sued out a writ of error to this Court, which was properly dock- eted at the December term, 1857. All civil suits in the courts of Minnesota are commenced by complaint ; and suitors are enjoined by law, in framing their declarations, to give a statement of the facts constituting the cause of action ; which statement is required to be expressed in ordinary and concise language, without repetition, and in such a manner as to enable a person of common understanding to know wliat is intended. Pursuant to that requirement, and the practice of the courts of the Territory at the time the suit was commenced, the plaintiff in this case set forth the facts already recited as contained in the complaint or declaration. Facts thus stated in the declaration, pursuant to the directions of the law of the Territory, and which were material to the under- standing of the rights of the parties to the controversy, could not properly be suppressed by the Court. Irrespective, therefore, of the question whether or not the motion of the defendants to strike out that part of the declaration was waived, because not pressed in the Supreme Court of the Territory, no doubt is entertained by this Court that the motion was properly overruled by the District Court upon the merits. Proof of the attending circumstances under wliich the defend- ants, William R. Marshall and Joseph M. Marshall, had placed tlieir firm name upon the back of the note, would clearly have been admissible in a trial upon the general issue ; and if so, no REY V. SIMPSON. 153 f reason is perceived why it was not proper for the plaintiff, under tlie peculiar system of pleading which prevailed in the courts of the Territory at the time the suit was commenced, to state those circumstances in the declaration. Beyond question, they were a part of the facts constituting the cause of action ; and, if so. they were exjtrcssly i-C(iuirud 4o l)e stated by the law of the Territory prescribing the rules of pleading in civil cases. And having been alleged in ])ursuance to such a requirement, and being material to a proper understanding of the rights of the parties to the suit, it must be considered, by analogy to the rules of pleading at common law, that they are admitted by the demurrer. l>y the admitted facts, then, it appears the defendants, William R. Marshall and Joseph M. Marshall, placed their firm name on the back of the note at its inception, and before it had been passed or offered to the plaintiff. They placed their firm name there at the request of the other defendant, knowing that the note had not been indorsed by the payee, and with a view to give credit to the note, for the benefit of the immediate maker, at whose re- (jnest they became a party to the same. Whatever diversities of interpretation may be found in the au- thorities, where either a blank indorsement or a full indorsement is made by a third party on the back of a note, payable to the payee or order, or to the payee or bearer, as to whether he is to be deemed an absolute promisor or maker, or guarantor or indorser, there is one principle upon the subject almost universally admitted by them all, and that is, that the interpretation of the contract ought in every case to be such as will carry into effect the inten- tion of the parties; and in most instances it is conceded that the intention of the parties may be made out by parol proof of the facts and circumstances which took place at the time of the trans- action. Story, Prom. Notes, §§ 08, 50, 479. When a promissory note, made payal)le to a particular person or order, as in this case, is first indorsed by a third person, such third i)erson is held to be an original promisor, guarantor, or in- dorser, according to the nature of the transaction and the under- standing of the parties at the time the transaction took place. If he put his name on the back of the note at the time it was made, as surety for the maker, and for his accommodation, to give him credit with the payee, or if he particij)ated in the consideration for which the note was given, he must l)e considered as a joint maker of the note. On the other hand, if his indorsement was 154 INDORSEMENT. subsequent to the making of the note, and he put his name there at the request of the maker, pursuant to a contract with the payee for further indulgence or forbearance, lie can only be held as a guarantor. l>ut if the note was intended for discount, and he put his name on the back of it with the understanding of all the par- ties that his indorsement would be inojierative until it was in- doi-sed by the payee, he would then be liable only as a second inddtser in the commercial sense, and as such would clearly be entitled to the privileges which belong to such indorsers. Decided cases are referred to by the counsel of the defendants, which seemingly deny that such parol proof of the attending cir- cumstances of the transaction is admissible in evidence ; but the weight of authority is greatly the other way, as is abundantly shown by the cases cited on the other side. Whenever a written contract is presented for construction, and its terms are ambigu- ous or indefinite, it is always allowable to weigh its language in connection with the surrounding circumstances and the subject- matter, and we see no reason, as question of principle, why any different rule should be adopted in a case like the present. Such evidence has always been received in the courts of Massachusetts, as appears from numerous decisions, and the same rule prevails in most of the other States at the present time. 1 Am. Lead. Cas. 4th ed. 322. Repeated decisions to the same effect have been made in the courts of New York, and until within a recent pe- riod it appears to have been the settled doctrine in the courts of that State. Recent decisions, it must be admitted, wear a different aspect ; but they have not had the effect to produce a corresponding change in other States, and, in our view, deny the admissibility of parol evidence in cases where it clearly ought to be received. Hawkes V. Phillips ct al, 7 Gray, 284. Applying these principles to the present case, it is obvious that the contract of the two defendants whose firm name is upon the back of the note was an original undertaking, running clear of all questions arising out of the statute of frauds. They placed their names there at the ince})tion of the note, not as a collateral undertaking, but as joint promisors with the maker, and are as much affected by the consideration paid by the plaintiff, and as clearly liable in the character of original prom- isors, as they would have been if they had signed their names under the name of the other defendant upon the inside of the in- " REY V. SIMPSON. 155 strunicnt. Numerous decisions in the State courts might Ije cited ill support of tlie )»ro|)Ositioii as stated, but we think it unnecessary, as they will be found collated in the elementary works to which reference has already been made, and in many others which treat of this sul)ject. Another objection to t}\e right of recovery in this case deserves a brief notice. It is insisted by the counsel of the defendji^its, that the complaint or declaration is not sufficient to maintaii»this suit against tiiese defendants as original j>romisors. That ol»jec- tion must be considered in connection with the system of plead- ing which [prevailed in the courts of the Territory at the time the suit was commenced. By that system, suitors were only required to state the facts which constituted the cause of action. In this case the plaintilT followed that mode of pleading, and we think he has set forth enough to constitute a substantial compliance with the law of the Territory, and the practice of the Court where the suit was instituted. He alleges, among other things, that the defendants whose firm name is on the back of the note placed it there for the purpose of becoming sureties and security to him as payee for the amount therein specified. That allegation, to use the language of the statute of Minnesota, is expressed in ordi- nary and concise language, and in such a manner as to be easily understood, and that is all which is required by the law of the Territory prcscrilMiig the rules of pleading in civil cases. Under tlic system of pleading which prevailed in the courts of the Ter- ritory, the objection cannot be sustained. Tlic judgment of the Supreme Court of the Territory is there- fore alhrmed with costs. It may be stated, as the result ol' the foregoing cases and citations, that in the folh)wing States, one who, not a party to negotiable paper, places his name, without more, on the back of the same, before an indorsement by the payee, renders himself, in the absence of proof, liable as maker or surety : ^Massachusetts, Vermont, Maine. Xew Hampshire, Michigan, Louisiana, Missouri, South Carolina, Texas 5 also in Rhode Island, Georgia, Ohio, and Minnesota, if the party signed before deliver}' to and to secure the payee. In the following, as indorser: New York, Mississippi, Pennsylvania, Tennes- see, Iowa, Wisconsin, California, Indiana. In New York this liability cannot be changed by ])arol proof. In the following, as guarantor: Illinois, Connecticut, Ohio: also in Virginia, if the paper is not negotiable. In New York and Louisiana, if the paper is uniiegotiable, such person becomes maker or guarantor. Griswold r. Slocum, 10 Barb. 402; Cooley v. Lawrence, 4 Martin, 639. 156 INDORSEMENT. In Kentucky, as indorser or guarantor, as to which proof of intention will be received ; but evidence is inadmissible to bind such signer as maker. Kellogg V. Dunn, 2 Met. Ky. 215. But proof of intention is admissible in the courts of the United States, and probably in all the above-named States excepting New York and Massachusetts ; and in the latter State it may be shown that the third person signed subsequently, to the execution of the paper, thus repelling the presumption that he is an orig- inal^promisor. But if the flict is established, either by* direct proof or by the legal presumption in the absence of proof, that the signature was contem- poraneous with the making, no proof of intention will be received. See Essex Company v. Edmands, 12 Gray, 273 ; Bigelow v. Colton, 13 Gray, 309 ; Lake V. Stetson, ib. 310 ; Pearson v. Stoddard, 9 Gray, 199 ; Wright v. Morse, 9 Gray, 337; also note to Union Bank of Weymouth w. Willis, ante, p. 124. The above supposes the mere signature of the name without more. If the party write a guaranty over his own name, the better opinion seems to be that his liability is that of guarantor. See Spies v. Gilmore, 1 Comst. 321 ; Tinker V. McCauley, 3 Mich. 188, overruling Higgins v. Watson, 1 Man. 428. But such a contract was held an indorsement in Partridge v. Davis, 20 Vt. 499, and in some other early cases. See note to Brown v. Butchers' and Drovers' Bank, ante, p. 110. Leavitt, President of the American Exchange Bank, v. Putnam et al. (3 Comstock, 494. Court of Appeals of New York, July, 1850.) Indorsement after maturity. — Negotiable paper does not lose its negotiable character by being dishonored ; not even though indorsed to a particular person without other words. The case is stated in the opinion of the Court. BuRLBUT, J. On the twenty-ninth day of August, 1844, Messrs. J. W. and R. Leavitt made their note for $1570.52, payable to the order of T. Putnam & Co. (the defendants), eight months after date. A few days after the maturity of the note, the defendants indorsed it as follows : " Pay the within to A, Thacher, value received, May 21, 1845. T. Putnam & Co." Thacher indorsed without recourse, and delivered the note for a valuable consideration to the American Exchange Bank, in whose behalf this action is brought. On the trial, the defendants urged, among other grounds of objection to the plaintiff's recovery, that the defendants' indorse- LEAVITT V. PUTNAM. 157 inent was in effect a new draft payable to Thacher only, and not negotiable, so that no action conld be maintained upon it in the name of the i)laintill'. In this they were sustained by the Court, and the plaintiff was nonsuited. The other oljjcctions taken by the defendants on their motion for a nonsuit were not considered by the Court below, and under the circumstances of the case cannot be noticed on this appSal ; so that the only thing for us to consider is, whether the indorse- ment of a note made after due, differs from one made before maturity in respect to its negotial)ility. It was conceded on the argument that no express authority could be found sustaining the distinction upon which the decision of the Superior Court was based, l)ut it was urged that the defence could be sustained upon the ])rinciple that a dishonored note loses its mercantile character, and its indorsement l)ecomes an original contract wiiich must be made expressly negotiable in terms, or it could not be held to possess the character of negotiability. There is unques- tional)ly a difference between the indorsement of a note after due and one while it is running to maturity, but this relates only to a single point arising from the necessity of the case ; to wit, the time of payment, which, in the latter indorsement, is fixed at a future day by the express agreement of the parties, while in the former, it is declared by law to be within a reasonable time, upon demand. But in all other respects the contract is the same as an indorsement in tlie usual course of trade ; and it is difficult to perceive how the single difference referred to can at all affect the negotiability of the indorsement. A bill or note does not lose its negotiable character by being dishonored. If originally negotiable it may still pass from hand to hand ad infinitum until paid by the drawer. Moremer the indorser after maturity writes in the same form, and is l)ound only uj)on the same condition of demand upon the drawer and notice of non-payment as any other indorser. Thus the paper preserves its mercantile existence and retains the main attributes of a proper ])ill or note, and circulates as such in the commercial community. Exceptions to a general rule affect- ing so important and numerous a class of transactions as the one under consideration must be productive of great inconvenience, and will not be indulged except for urgent reasons; and nothing has been made to appear in tlie argument or seems to exist in the case, which warrants the Court in treating the ordinary indorse- ment of a dishonored bill or note as without the law merchant If 158 INDORSEMENT. and not negotiable. While it was questioned whetlier such a note was negotiable, and whether the indorser was chargeable except upon the usual condition of demand and notice, there was perhaps reason enough to sustain the decision of the Court below. But since both the note and its indorsement, by a long course of decisions, have been treated as within the law merchant in respect to their main attributes, the indorsement ought to be regarded as negoti- able to tiie same extent as an indorsement before maturity. The latter follows the nature of the original bill, and is equally nego- tiable. Edie V. The East India Co., 2 Burr. 1216 ; Mutford v. Walcot, 1 Ld. Raym. 571; Allwood v. Hazelton, 2 Baylies, S. C. 457; Bishop v. Dexter, 2 Conn. 419; Berry v. Robinson, 9 Johns. 121. The note in the present case was upon its face transferable, and its character in respect to negotiability could only have been changed by an indorsement containing express words of restric- tion. The defendants' indorsement was a full one, containing the name of the person in whose favor it was made, but omitting the words " or order,^^ the legal effect of which was, nevertheless, to make the note payable to him or his order, and his indorsement therefore was effectual to transfer the note to the plaintiff. Chitty, Bills, 136 ; Story, Prom. Notes, § 139. I am of opinion that the judgment of the Superior Court should be reversed, and a new trial awarded. Judgment revei'sed. The doctrine of this case is well settled. See Chitty, Bills, 215 ; Story, Promissory Notes, § 178; Id. Bills of Exchange, §§ 220-223, and cases cited. Upon the subject of defences in the case of paper overdue, see Holder Foii Value, i^ost. Ebenezer R. Estabrook v. Willis Smith. (6 Gray, 570. Supreme Court of Massachusetts, September, 1856.) Indorsement of firm note bi/ partner in his own name. — An indorsement by one partner, in his individual name, to liis copartner, the paper being payable to the firm or order, will not enable the indorsee to sue thereon in his own name. The case is sufficiently stated in the opinion of the Court. Dewey, J. We take the rule to be uncontroverted, that a promissory note payable " to A B or order " cannot be trans- EsTABIlOOK V. SMITH. 159 ferrcd, so as to give a right of action in the name of a liolder, not the original party, without an indorsement hy the payee. The a[)plication of tliis principle seems to be decisive against the right of the [)UiintilT alone to maintain this action. The action is brought by Estabrook upon a note made to a copartner- ship, Estabrook and Richmond, promising them, by the name of their copartnership, to pay them or order a certain sura of money. That this action cannot 1)C maintained Ijy the plaintiff, as payee of the note, is obvious ; as that would at once present a case^vhere there was an omission to join all the payees as plaintiffs, which would be fatal to the action. The only question therefore, is, whether this note is legally indorsed, so as to enable the plaintiff to maintain the action as indorsee. The payees of the note are Estabrook and Riciimond, who cora- j)ose a partnership. An indorsement of the note by the payees would therefore be an indorsement by Estabrook and Richmond, and this would correspond with the form of the note, and trans- fer the same to their indorsee. One partner might properly transfer the note by indorsement, but he must do it by indorsing the partnership name. Any thing less than this seems to be an irregularity, and a departure from the legitimate mode of transfer of a negotial)le note or bill, payable to the order of a copartnership. It is not contended that the indorsement by Richmond alone would have l^ccn sufficient to authorize an action in the name of a third })erson as indorsee ; but it is urged that such indorsement is sufficient to authorize an action by the other partner, Esta- brook, as indorsee. The position taken is, that Richmond, by his indorsement, has parted with all his interest, and so vested the entire note in Estal)rook. This may be all true as between Rich- mond and Estabrook, and might be quite sufficient to settle, as between them, to whose use this money was to be held when col- lected. But the question still recurs, as to the effect of such an indorsement as against the maker of the note, and whether it creates the legal relation of indorsee. As already remarked, the present action, if maintainable at all, is maintainable by Esta- brook as indorsee of the note. To constitute a legal indorsement, the payees, Estabrook and Richmond must be the indorsers. But no such indorsement has ever been made. No one has ])rofessed to indorse the note in the partnership name. The only indorse- ment is that of Richmond individually ; and although it might be 160 INDORSEMENT. quite competent for the payees, Estabrook and Richmond, in their partnership name, to have indorsed it to Estabrook, yet they have not done so. We have found no authority for maintaining an action by an indorsee under such circumstances. Tlie case of Goddard v. Ly- man, 14 Pick. 268, which seems to be the most favorable case cited to sustain the position taken by the plaintiff, was widely different from the present case. In that case, although the orig- inal i^^dorscmcnt was by two only of three payees, and made to the other payee and a third person, yet it was subsequently in- dorsed by the third payee, and came to the hands of the plaintiff, who instituted the suit with the indorsement of all the payees. That case, upon its facts, does not therefore furnish any precedent for this case ; although some of the remarks, as found in the opinion of the Court, might seem to indicate a broader doctrine than the case required. Robb V. Bailey, 13 La. An. 457, was a case similai- to the principal case ; and the same rule was adopted. See also Fergusons. King, 5 La. An. 642 ; Fletcher V. Dana, 4 Blackf. 377 ; Desha v. Stewart, 6 Ala. 852 ; Moore v. Denslow, 14 Conn. 235; Absolon v. Marks, 11 Q. B. 19; Russell v. Swan, 16 Mass. 314; Hooker v. Gallagher, 6 Fla. 351 ; 2 Greenl. Ev. § 163. Upon the death of a member of a firm, the survivor may indorse in the firm name paper payable to the firm. Jones v. Thorn, 14 Martin, 463. Though it was not necessary in this case for the Court to go farther than to say that, in indorsing the firm name, the survivor thus passes all of his own interest, still the doctrine of survivorship in partnerships seems broad enough for the rule that such indorsement passes full and complete title to the paper, as much so as if recfularly indorsed by the firm in the lifetime of the deceased copartner. Mr. Justice Story, in his Treatise on Promissory Notes, § 125, states that in such case, " The note, or chose in action, vests exclusively in the partner by survi- vorship, although he must account therefor, as part of the assets of the partner- ship ; " citing Crawshay v. Collins, 15 Ves. 218, 226. "Where the paper is indorsed in blank to a firm, and one of the firm dies there- after and before suit, the other members need not, as in contracts generally, de- clare as surviving partners, as they were not bound to prove the partnership, or that the paper was indorsed or delivered to them jointly with their deceased partner. Attwood v. Rattenbury, 6 J. B. Moore, 579. But it is otherwise if the paper is indorsed specially. Ibid., per Pui^k, B., who said, in relation to spe- cial indorsements : '* It has often been ruled that, in an action by the payees or indorsees, strict evidence must be given that the firm to whom it is indorsed con- sists of the persons who sue as plaintiffs on the record, whilst an indorsement in blank conveys a joint right of action to as many as agree to sue on the bill." This, in substance, is the language of Lord Ellcnborough in Ord v. Portal, 3 Camp. 239 ; and again in Rordasnz v. Leach, 1 Stark. 446. See also Machell v. STEVENS V. REALS. 161 Kinnear, 1 Stark. 499, in wliicli it appeared that, though the indorsement was in blank, a rif^lit of aetion was vested in a firm as tru.ste<!s of an insolvent. It was hild that two oi' this firm could not, jointly with a third trustee, not a ineinber of the firm, maintain an action on the hill, without some evidence of the trans- fer of the bill to them by the firm, by delivery or otherwise. See also Guidon v. Robson, 2 C'anip. 302; Low r. Copestake, .'5 Car. & P. 300; Bawden v. Howell, 3 Man. & G. 638 ; Whitlo<k v. McKechnie, 1 Bosw. 427 ; Robb v. Bailey, 13 La. An. 4.07 ; 2 Cireenl. Ev. § 1()3 ; and cases cited at the beginning of this note. The following cases deny the |)ower of one of a firm to indorse paper pay- able to the firm, when the partnership has been dissolved in the lifetime of its members : Sanford v. Mickles, 4 Johns. 224 ; even though the partner may have authority to settle the partnership effeets, Abel v. Sutton, 3 Esp. 108, per Lord Kenyan; Humphries t). Chastain, 5 Ga. 166; Foltz v. Pourie, 2 De- saussure, Eq. 40. See Parker v. Macomber, 18 Pick. 505, But the contrary is held, if the dissolution was unknown to the indorsee, Conyr. Wheelock, 33 Maine, 366. See Lewis v. Reilly, 1 Q. B. 349. So if the firm note was made payable to the partner who, after dissolution, indorsed it. Temple i\ Seaver, 11 Cush. 314. " It is well settled that a note made by a partnership to one of its own mem- bers, or his order, when indorsed will enable the indorsee to maintain an action upon it. It is the promise of all to the order or appointee of one ; and when the appointment is made by an indorsement, it is a valid contract with tlie in- dorsee." Per Shaw, C. J., in Thayer v. BulTum, 11 Met. 398, citing Pitcher v. Barrows, 17 Pick. 361 ; Smith v. Lusher, 5 Cow. 688 ; Blake v. Wheadon, 2 Hay. 109. See also Sherwood v. Barton, 36 Barb, 284 ; Fulton v. Williams, 11 Cush. 108; Temple v. Seaver, supra. Daniel B. Stevens v. William Beals. (10 Cushing, 291. Supreme Court of Massachusetts, October, 1852.) Indorsement hy wife with consent of her husband. — A wife, with the consent of iier hus- band, may indorse in her own name a promissory note made payable to her during coverture, and pass a good title to the indorsee. Assumpsit by the indorsee against the maker of the following promissory note : " Lowell, June <S, 1848. For value received, I promise to pay Lydia H. McFarland, or order, $150 on demand with interest. Williaiu locals.'' At the trial in the Court of Common Pleas, it appeared tliat at the dale of the note the payee was a married woman, living in this Commonwealth with her husband ; that her husband wrote the 11 162 INDORSEMENT. note, and always permitted his wife afterwards to retain possession of it. There was evidence tending to show that the defendant had promised, in presence of the payee's husband, to pay this note to the wife, whenever she wanted the money ; and that the money loaned to the defendant at the time of giving the note, was given to tlic wife by the husband, at the time of tlicir marriage, and liad been used and loaned by her ever since. Tiie note was indorsed by tlie wife in her own name, and she testified that her husband had given her tlie fullest assent to do as she pleased with the note, and that she was to have the note as her own ; that the defendant had promised her repeatedly to pay the note. Tlie defendant objected that, by the indorsement of the wife no legal title passed to the indorsee, and that this action could not be maintained. But the presiding judge, Mellen, J., ruled that the wife, with the assent of the husband, could indorse the note so as to pass the property in it to the indorsee. BiGELOW, J. Two objections only have been insisted on by the defendant in support of the exceptions in this case. The first relates to the authority of the wife, upon the facts reported, to indorse the note in suit in her own name, and thereby vest a good title thereto in the plaintiff. There can be no doubt, that the note, having been given after marriage and during coverture, although payable to the wife, was tlie absolute property of the husband, and he could pass the title thereto by his own sole indorsement. The authorities in this country are concurrent to this point. Bingham on Inf. & Cov. 213, note. We think it is equally clear, that a note made payable to the wife during coverture, when in- dorsed by tlie wife in her own name, with the assent and author- ity of the husband, passes by a good title to an indorsee ; but that without such assent and authority no title passes by her indorse- ment. The cases all turn upon this distinction. In the leading case of Barlow v. Bishop, 1 East, 433, which decides that a mar- ried woman cannot indorse a note made payable to her in her own name, so as to pass a valid title thereto, proof of the authority or assent of the husband was wanting. Subsequent decisions have fully recognized this distinction ; and it is now the well-settled rule of law that the assent or authority of the husband gives validity to the wife's indorsement, and enables her to pass a good title to choses in action made payable to her during coverture. STEVENS V. DEALS. 1C3 The principle upon wliicli this distinction rests is this : The C(nor- ture of the wife creates an incapacity and disability in her to make a valid contract. The assent of the husband removes this disability or supplies the want of capacity. She then becomes to a certain extent tlie agent of the husband, who is bound by jier acts when done in pursuance of the authority conferred by him. Chitty, Bills, 21, 200, 201 ; 2 Bright, Husband and Wife, 42 ; Cotes V. Davis, 1 Camp. 485 ; Prestwick v. Marshall, 7 Bing. SO-O, and 4 Car. & P. 5U4 ; Prince v. Brunatte, 1 Bing. ^. C. 435 ; Miller v. Delamater, 12 Wend. 433. The case of Savage v. King, 5 Rhep. 301, which was cited and relied on by the defendant, is in conllict with the other authorities upon this point. The Court put their decision in that case mainly upon the authority bf Barlow v. Bishop, without adverting to the distinction created by proof of the assent of the husband to the indorsement, which seems to have escaped the attention both of the counsel and the Court. We cannot, therefore, yield our assent to the authority of that case. It was urged by the counsel for the defendant as a strong argu- ment against the recognition of the rule of law giving effect to the wife's indorsement, when assented to and authorized by the husband, that it might in some cases operate very greatly to the prejudice of the rights of a promisor. The argument was this : The note being given to the wife during coverture, the property in it vests absolutely in the husband, and he can sue in his own name upon it ; the indorsement of the note by the wife in her name ex proprio vlgore, would pass no title to it ; and therefore the recovery by the indorsee of the wife would be no bar to another recovery by the husband, unless the promisor could show the assent of the husband to her indorsement, which he might not be able to do, because the wife in an action by the husband on the note, could not be called by the promisor as a witness to prove it. But it seems to us, that tliis argument entirely overlooks the effect of a recovery on the note by the indorsee of the wife. The rule of law being that such indorsement is inoi)crative without the hus- band's assent, and passes no title to the indorsee, a recovery by such indorsee necessarily implies the husband's assent and author- ity, without which no recovery on it could have been had. The indorsement, therefore, of the wife, under sucli circumstances, is equivalent to that of the husband. Her act becomes in law his 164 INDORSEMENT. act. The person recovering a judgment as indorsee on such a note, must claim through her husband by a title derived from him and in privity with him. He thereby becomes bound by the judgment recovered against the promisor, who can well plead it in bar, in a suit brought on the same note against him by the hus- band. In the case at bar, the authority and assent of the husband of the payee to the wife's indorsement were abundantly proved, and the instructions of the Court upon this part of the case, were en- tirely correct and in conformity with the authorities above cited. Upon the other point in this case — that the allegation in the writ that the note was indorsed to the plaintiff before the commencement of suit, is not legal evidence of its truth — the exceptions of the defendant were sustained, and a new trial granted. The question decided in the principal case respecting indorsements by married women arose again in Maine, in 1856, in the case of Hancock Bank v. Joy, 41 Maine, 568. That was an action upon a bill of exchange payable to the order of the defendant's wife, and by her indorsed by authority of her husband. He was held liable by a unanimous court. The principal case is cited as authority for the decision. In Savage v. King, 17 Maine, 801, disapproved by Chief Justice Bigelow, supra^ it was not proved that the wife acted for her husband at the time of her indorse- ment. It is cited to this effect in Hancock Bank v. Joy, supra. The rule in the principal case is also the law in Pennsylvania. See Reakert v. Sanford, .j Watts & S. 161; Leeds v. Vail, 15 Penn. State (3 Harris), 185. Also probably in Delaware. See Fredd v. Eves, 4 Harr. 385. The same is held again in England in Lindus v. Bradwell, 5 Com. B. 583, and may be cou- sidered as established beyond question. DAY V. COUDINGTON. 1G5 IIOLDEK FOR VALUE. Bay v. Coddington et al. (5 Johnson's Ch. 54. ('curt of ( "liancery of New York, 1821.) Note delivered as security for contingent liability. — A, the agent of B, received negotiable notes to be delivered to B, but delivered them to C, as security for responsibilities incurred by C in indorsing accommodation paper for himself, A. C liad not then become chargeable on his said indorsements. Held, that C was not a bona fide holder for value, though he did not know tiiat the delivery of the notes to himself by A, was fraudulent, but believed A to be tlie real owner of them. The plaintiff being owner of a vessel, employed Randolph and Savage, defendants, who were carpenters, to sell her on a credit, and take good notes in payment, and transmit the same to him, with an account of their charges, which he would pay. R. and S. sold the vessel for $3870, and on the third of June, 1819, received the notes of the purchasers, payable in two, three, and four months ; some of them being made payable to, and indorsed by, P. Ay mar & Co., and tlie others by J. R. Stewari. On the twelfth of June, 1810, R. and S. delivered the notes so indorsed, to tlie de- fendants, J. and C. Coddington, who, were, at that time, as they stated in their answer, under heavy responsibilities for R. and S., as indorsers of notes for their accommodation, payable at different times, but all subsequent to the twelfth of June, 1819, and wiiich they were afterwards obliged to take up, as they fell due, amount- ing to above $17,000. The answers admitted that R. and S. had stopped payment, when the notes so held by them were to be delivered to J. and C. Coddington. The defendants, J. and C. Coddington, denied all knowledge of the manner in which the notes had come to the hands of R. and S., and alleged that they believed that they were the bona fide and exclusive property of R. and S. ; that they received these notes 166 HOLDER FOR VALUE. with others, as a guaranty and indemnity, as far as they would avail, for their responsibilities ; and three days after, disposed of some of the notes for cash, and did not know, until several days afterwards, that the notes belonged to the plaintiffs, as stated in the bill. They admitted that when they so received the notes, R. and S. were not,' in a strict legal sense, indebted to them ; but that they were under large gratuitous responsibilities for them. No proofs were taken, and the cause came on to be heard on the pleadings only. Kent, Chancellor. It is admitted that Randolph and Savage held the notes belonging to the plaintiff, and which they trans- ferred to the defendants, J. and C. Coddington, on tlie twelfth of June, 1819, as agents or trustees for the plaintiff, and that they had no authority to pass them away. It was a gross and fraudu- lent abuse of trust, on the part of R. and S. The only question now is whether J. and C. C. are entitled, under the circumstances disclosed, to hold the notes, and retain the amount of them as against the plaintiff. Negotiable paper can be assigned or transferred by an agent or factor, or by any other person, fraudulently, so as to bind the true owner as against the holder, provided it be taken in the usual course of trade, and for a fair and valuable consideration, without notice of the fraud. But the defendants, J. and C. C, have not entitled themselves to the protection of holders of that description. Tlie notes were not negotiated to them in the usual course of business or trade, npr in payment of any antecedent and existing debt, nor for cash, or property advanced, debt created or respon- sibility incurred, on the strength and credit of the notes. They were received from R. and S., and after they had stopped payment and had become insolvent within the knowledge of J. and C. C, and were seized iipon by the Coddingtons, as tabula in navfragio^ to secure themselves, against contingent engagements previously made for R. and S., and on whicli they had not then become charge- able. There is no case that entitles such a holder to the paper, in opposition to the title of the true owner. They were not holders for a valuable consideration within the meaning or within the policy of the law. Ii> Miller v. Race, 1 Burr. 452, a bank-note was stolen, and came to the hands of the plaintifif, and he was held entitled to it. But BAY V. CODDINGTON. 167 the Court of King's Bench considered ))ank-notes as cash, which passed as money iu the way of business; and the holder, in tiiat case, came by the note, for a full and valualilc consideration, by giving money in exchange for it, in the usual course of his busi- ness, and without notice of the robbery, and on those considerar tions he was entitled to the amount of the note. So, in Grant v. Vaughan, 3 Burr. lolO ; 1 W. Black. 785, a bill of exchange payable to bearer, was lost, and the finder paid it to a grocer for teas, and took the change. There the Court laid stress on the facts that the holder came by the l)ill bona fide, and in the course of trade, and for a full and fair consideration, and that though he, and the real owner were equally innocent, yet he was to be preferred, for the sake of commerce and confidence in negotiable paper. Again, in Peacock v. Rhodes, 1 Doug. 633, a bill of exchange, with a blank indorsement, was stolen and negotiated to a person who took it in the way of his trade, for cloth sold and cash for the bal- ance, and he was held entitled to hold it. Lord Mansfield placed reliance on the circumstance that it was received in the course of trade. It was " by reason of the course of trade, which creates a property in the assignee or bearer," that Holt, C. J., 1 Salk. 126, Anon., held, that the owner of a bank-l)ill which was lost and transferred by the finder to C, for a valuable consideration, could not maintain an action against C. It will not be necessary to go further in support of the principle which uniformly pervades the cases upon this point, and I shall conclude with the case of Collins V. Martin, 1 Bos. <fe Pul. 648, in which it was decided, that if bills of exchange, indorsed in blank, be deposited with a banker, to be received when due, and the banker laises money on them, by pledging them to C, and then becomes bankrupt, C could not be sued by the real owner, as he took them innocently, without knowledge of the previous circumstances. But it is to be observed that C there advanced money to the banker, on the credit of the bills, and, as C. J. Eyre, observed in that case, "If it can be proved that the holder gave no value for the bill, then, indeed, he is in privity with the first holder, and affected by all that will alfect him." In shor/, I have not been able to discover a case in wiiioh the holder of negotiable paper, fraudulently transferred to him, was deemed to have as good a title, in law or equity, as the true owner, unless he received it not only without notice, but in the course of 168 HOLDER FOR VALUE. business, and for a fair and valuable consideration given or allowed on his part, on the strength of that identical paper. It is the credit given to the paper, and the consideration bona fide paid on receiving it, that entitles the holder, on grounds of commercial policy, to such extraordinary protection, even in cases of the most pali)able fraud. It is an exception to the general rule of law, and ought not to be carried beyond the necessity that created it. I shall accordingly declare, that the defendants, J. and C. Cod- dington, are not entitled to the notes or the proceeds thereof, as against the plaintiff, who was the lawful owner of them when they were transferred to those defendants, inasmuch as they did not receive the notes in the course of business, nor in payment, in whole or in part, of any then existing debt, nor for cash or prop- erty advanced, or debt created, or responsibility incurred on the credit of the notes. And I shall direct that it be referred to a master to compute the amount of the said notes, with interest thereon from the times they were respectively payable, to the time of making the report ; and that all the defendants in the amended bill, or some or one of them, pay to the plaintiff the sum that shall be reported as the amount of the said notes, with interest, as aforesaid, within thirty days after tlie master shall have made and filed his report, and notice thereof, and of this decree, or that the plaintiff may have execution therefor, against all or either of the said defendants, according to the course and practice of the Court. And it is further ordered, that the defendants, R. and S., pay to the plaintiff his entire costs of this suit, to be taxed, including the costs of the original bill, and that the plaintiff give credit upon the costs so to be taxed, the charges and commissions due from him to the said defendants, R. and S., upon the sale of the vessel in the pleadings mentioned, and amounting to #96.87 ; and that he have execution for the balance of costs, after such deduction, against them, the said R. and S. according to the course and prac- tice of the Court. And it is further ordered that no costs be taxed or allowed to the plaintiff, or to the defendants, J. and C. C, as against each other. Decree accardingly. This case was affirmed in the Court of Errors, in 1822, 20 Johns. 637. See post, note to Swift v. Tyson, 195. STALKRlt V. m'DONALD. 169 Stalker v. M'Donald et al. (G Hill, 93. Court of Krrors of New York, December, 18i:3.) Paper taken as security fur anteadnit debt. — One who takes a note merely as collateral security for an antcceilent debt, without advancing any tiling upon it, or relinquish- ing any security, is not a holder in the due course of trade. Trover for the alleged conversion of two promissory notes by Stalker. He came by the notes in this way : The firm of Gil- lespie and Edwards, who were in debt to Stalker on a certain note which they found they could not pay, prevailed upon Stalker to withdraw it by delivering to him the notes in question as security, for a promise which they then made to pay their note in a short time. This firm stopped payment and failed, without paying their indebtedness to Stalker. The two notes in controversy were paid to Stalker. Walworth, Chancellor. The object of this writ of error ap- pears to be to induce this Court to overrule its decision in th3 case of Coddington v. Bay, 20 Johns. 637, and to make our decision conform to the opinion of Mr. Justice Stori/ in the recent case of Swift V. Tyson, 16 Peters, 1,^ decided by the Supreme Court of the United States. Upon questions arising under the Constitu- tion and laws of the United States, and upon the construction of treaties, the decisions of that high tribunal are binding upon the State courts ; and we are bound to conform our decisions to them. But in questions of local law, and in the construction of the Con- stitution and statutes of the State, the decisions of the highest Court of judicature of the State are the evidence of what the law of the State is ; and are to be followed in preference to those of any other State or country, or even of the United States. On a question of commercial law, however, it is (Ksiral)le that there should be, as far as practicable, uniformity of decision, not only between the courts of the several States and of the United States, but also between our courts and those of England, from whence our commercial law is principally derived, and with whicii country our commercial intercourse is so extensive. 1 have, therefore, 1 Post, 186 170 HOLDER FOR VALUE. thought it my duty to re-examhie the principles upon which the decision of this Court in Coddington v. Bay was founded, not- witlistanding it was deliberately made, with the concurrence of at least one of the ablest judges who has ever adorned the bench of this State, and has been acquiesced in and followed by all the courts of the State for more than twenty years. And I have done it not only out of respect to the decision actually made by the Supreme Court of the United States in the case alluded to, but also because the opinion of the distinguished judge who pro- nounced its decision, is of itself entitled to very great weight upon a question of commercial law ; although what he said in that case respecting the transfer of a negotiable note as a mere security for the payment of an antecedent debt was not material to .the de- cision of any question then before the Coiirt, and is therefore not to be taken as a part of its judgment in that case. In Coddington v. Bay, this Court did not, so far as I have been able to discover, run counter to any decision which had ever been made in this State or in England, previous to that time. For the decision admits that the bona fide holder of negotiable paper, who has received it for a valuable consideration, without notice or rea- sonable ground to suspect a defect in the title of the person from whom it was taken in the usual course of business or trade, is entitled to full protection. But that where he has received it for an antecedent debt, either as a nominal payment or as a security for payment, without giving up any security for such debt which he previously had, or paying any money or giving any new consid- eration, he is not a holder of the note for a valuable consideration, so as to give him any equitable right to detain it from its lawful owner. This principle, of protecting the bona fide holder of nego- tiable paper, who has paid value for it, or who has relinquished some available security or valuable right on the credit thereof, is derived from the doctrines of the courts of equity in other cases where a purchaser has obtained the legal title without notice of the equitable right of a third person to the property. It has been uniformly held by the courts of equity in such cases that the purchaser who has obtained the legal title as a mere secu- rity or payment of a pre-existing debt, without parting with any thing of value, is not entitled to hold the property as against the prior equitable owner. And if he has paid but a part of the consideration, or value of the property, he is only entitled to be STALKER V. m'DONALD. 171 considered as a bona fide purchaser pro tanto. Tliis last principle was applied l)y one of the courts in England to. the purchaser of a negotiable note, where the indorser of a note for £100, l)y hia re[)lication to the plea that it was indorsed to him without consid- eration, stated that it was indorsed to him for the consideration of £49 ; and he was only permitted to recover that amount against the defendant, from whom the note had been oljtained by the in- dorser without consideration. Edwards v. Jones, 7 Car. & Payne, 688. It is somewhat singular that Mr. Justice Story should rely upon the opinion of Chancellor Kent in the case of Bay v. Coddington, 5 Johns. Ch. 54, as evidence that the decision of this Court sustaining his opinion, and affirming his decree in the same case, was a de- parture from the law of this State as previously settled. And the previous case of Warren v. Lynch, 5 Johns. 2o'J, is not in conflict with the decision of tliis Court ; nor does it decide that a pre- existing deljt is a sufficient consideration to protect the holder of a .negotiable note wliich was not valid as between the original parties, against the equitable rights of the maker of the note, or against the rights of a previous owner. For the note in that case was given by Lynch for a valid and subsisting debt by the one to whom the debt originally belonged. Although it was taken in the name of another person, that person indorsed it in blank for the purpose of enabling the person to whom the debt belonged to negotiate it ; and it was then transferred to the plaintifl", imme- diately for aught that appears, partly in payment or security of a pre-existing debt. The question then arose whether other cred- itors of the former owner of the note were not entitled to it, as being still the property of Rose, the original owner, or of Robert- son, the indorser. What is said, therefore, as to the pre-existing debt, is merely as to its being a sufficient consideration as between the plaintiff and Rose, from whom the plaintiff received the note. For if the transfer was valid as between them, the creditors of Rose, who were also endeavoring to obtain payment of a pre- existing debt merely, acquired no right to the money due on the note, by their subsequent suit in the nature of a foreign attachment in the State of Virginia. The case of Birdscye r. Ray, 4 Hill, loO, cited by the {)laintiff's counsel on the argument, is a case of the same character. For both claimants in that case were en- deavoring to obtain preference in pa'yment of pre-existing debts. 172 HOLDER FOR VALUE, And the Court decided tliat one of them who had secured a specific lion upon tlie property by purchase from tlie owner, before the other creditor's execution was actually levied thereon, was entitled to hold it as against the execution, under the provision of the statute on that subject. In other words, that, as between cred- itors having equal equities, the debtor may lawfully prefer one to the other, before an actual levy upon his property has been made. There is no doubt that the cases of Wardell v. Howell, 9 Wend. 170 ; Rosa v. Brotherson, 10 id. 85 ; Ontario Bank v. Worthing- ton, 12 id. 593 ; and Payne v. Cutler, 13 id. 605, in the Supreme Court of this State, and of Francia v. Joseph, 3 Edw. Ch. 182, before the Vice-Chancellor of the first circuit, follow the decision of this Court in the case of Coddington v. Bay. And they fully estab- lish the principle that to protect the holder of a negotiable secu- rity which has been improperly transferred to him in fraud of the prior legal or equitable rights of others, it is not sufficient that it has been received by him merely as a security or nominally in payment of a pre-existing debt, where he has parted with nothing of value, nor relinquished any security upon the faith of the paper thus improperly transferred to him without any fault on his part. I may also add that many other decisions to the same effect have been made in this State, in the different courts of law and equity, within the last twenty years ; although most of them have not been reported. It is supposed, however, by the learned judge who delivered the opinion of the Supreme Court of the United States in the case before alluded to, that this strong column of decisions, supported as it is by the decree of Chancellor Ke^it in the case of Bay v. Coddington, by the opinions of Chief Justice Spencer and Justices Woodworth and Piatt in that case, and by every judge who has occupied a seat upon the bench of the Supreme Court since 1822, has been greatly shaken, if not entirely overturned, by two recent decisions of the Supreme Court. That the judges who made those two decisions do not themselves so understand them, how- ever, is evidenced by the fact that they have given judgment in the case now under consideration, in conformity with the principle of the decisions which they are supposed to have overruled. And 1 have not been able to discover any thing in the opiniojis of the Court, as reported in the cases of The Bank of Salina v. Babcock, 21 Wend. 499, and the Bank of Sandusky v. Scoville, 24 id. 8TALKBR V. m'dONALD. 173 115, wliich necessarily conlllcts with any previous decision of tlie Supreme Court upon the (juestion now under consideration. In the first case, the note was discounted at the bank in the ordinary way. And the proceeds thereof were applied, by the authority of the persons for whom it was discounted, to pay up and cancel three other notes which were then due to the bank ; upon two of which notes, amounting to nearly the whole of sucii proceeds, there was a responsil)le indorser. The Court held that the effect of the transaction was the same as if the parties for whose benefit the note was discounted had actually received the money therefor, and had afterwards applied it to pay and discharge the notes then due ; and that the indorser upon those notes was discharged from his liability. In the second case, the question arose under the usury law as contained in the revised statutes, which protects usurious notes in the hands of an indorsee or holder who shall have re- ceived the same in good faith, and for a valuable consideration. 1 R. S. 172, § o. And the Court considered the transaction the same as though the money had been actually paid to the person for whose benefit tlie usurious note was discounted, and he had then applied it in payment of the former note ; so that the original indebtedness was extinguished, and the bank had no other remedy to recover their money except upon the note which was alleged to have been originally tainted with usury. The question in that case was, whether the transaction was equivalent to an actual payment of the money for the usurious note, so as to make the bank a bona fide holder for a valuable consideration ; and not whether giving the note for a pre-existing debt was a payment of value. Under a similar provision in the English statute it has been decided that a negotiable note tainted with usury was invalid in the hands of an innocent party, who had merely taken- it in payment of an antecedent debt. Vallance v. Siddel, 2 Nev. <fe Per. 7<S. There is nothing in the reports of our own State theii, which is in conflict with the principle established in Coddingtoii v. Bay in this Court, that, to protect the holder of a negotiable secu- rity which has been passed to him in fraud of the rights of others, he must not only have taken it without notice, but must also have parted with something of actual value, upon the credit or faith thereof ; and that merely receiving it in security or payment of an antecedent debt, where by the settled rules of equity he would not be protected as a bona fide purchaser of property in other cases, is not sufficient. 174 HOLDER FOR VALUE. Nor have I been able to find an actual decision in the English reports whicli is in conflict with the uniform course of decisions on this subject in this State. On the contrary, tlie English judges, when speaking on this subject, generally use the words valuable consideration., in contradistinction from a mere valid or sufficient consideration as between indorser and indorsee. And that receiv- ing the note in payment or security of a pre-existing debt merely, is not understood as receiving it for a valuable consideration, in legal language, is evident from the decision of the case of Vallance V. Siddell, to which I have just referred. I think the learned judge was under a mistake in supposing that this question arose in England, and was decided in tlie case of Rose V. Van Mierop, 3 Burr. 1663. That was a suit brought against defendants who had actually agreed with the plaintiffs to honor their drafts for money previously advanced by them to a third person. And the only question was, whether the indebted- ness of a third person was a sufficient consideration for the writ- ten promise of the defendants to accept the bills on his account. One of the earliest English cases upon the question which we are considering, is the anonymous case before Chief Justice Holt.^ in 1698 ; where a bank-note payable to bearer was lost, and the finder passed it for a valuable consideration. In an action of trover brought by the loser against the person to whom it was thus passed, his lordship decided that the action did not lie against the defendant, because he had the note for a valuable consideration. 1 Ld. Raym. 738 ; 1 Salk. 126, S. C. The next in order of time was the case of Tlie Ex'rs of Devallar v. Herring, in 1727, 9 Mod. 45 ; where an annuity ticket was lost or stolen, and, after passing through several hands, came to Herring, the defendant, wlio purchased it for a valuable consideration. And it was decided that he was entitled to it, upon the ground that it had come to his hands bona jide^ and for a valuable consideration. In Haly v. Lane, 2 Atk. 181, which came before Lord Hardwiche in 1741, he thus lays down the rule : " Where there is a negotiable note, if it comes into the hands of a third or fourth indorsee, though some of the former indorsees might not pay a valuable consideration, yet if the last indorsee gave money for it, it is a good note as to him ; unless there should be some fraud or equity against him appearing in the case." The same principle of protecting the holder of a negotiable instrument, if received by him in the course of trade, STALKER V. m'DONALD. 175 and for a vnhmhle consideration, was recogiii/.od in the opinion of the Court of King's li^nch, in 1753, while Chief Justice Lee i>resided in that Court. Maclish v. Ekins, Say. 73. Then followed the case of Miller v. Race, 1 Burr. 452, hefore Lord Manafield and his associates in 175M, where a bank-note was stolen from the mail and came into the hands of the plaintiff, as the report states, for a full and valuable consideration, in the usual course and way of his Inisiness, and without any notice or knowledge that it had been taken from the mail ; but upon presenting it at the bank for payment, it was detained by the defendant, who was a clerk therein. And the decision of the Court was in conformity with what is now understood to be the settled law both in that country and in this. But that Lord Mansfield understood the holder must have given a valuable consideration for the note to entitle him to protection, is evident from what is said in his opinion in answer to a case cited by the defendant's counsel as having been decided by Lord Holt in 1700. Li reference to that case, he says : " But Lord Chief Justice H<jlt could never say that an action would lie against a person who, /or a valuable consideration, had received a bank-note whicii had been stolen or lost, and bona fide paid to 1dm, even though an action was brought by the true owner ; because he had determined otherwise but two years before ; and because bank- notes are not like lottery tickets, but money." And the words " for a valuable consideration," as well as " bona fide paid to liim," arc italicized in the opinion of Lord Mansfield, to sliow that l)oth are material and necessary to protect the holder of a note against the claim of the former owner thereof. This is also in accordance with wliat he actually did in the case of Grant v. Vaughan, 1 W. Black. 485 ; 3 Burr. 151(3, S. C, which was tried before him six years afterwards. There a bill of exchange payable to bearer was lost, and was found by a stranger to the plaintiff, who gave it to the plaintill'upon the purchase of a parcel of teas, and received the change, after the plaintiff had made in(piiry and ascertained that the drawer of the l)ill was a responsible person. And Lord Mansfield sub- mitted it to the jury to decide, 1st. Whether the plaintiff came by the bill bona fide for a valuable consideration ; and 2d. Whether such bills payable to bearer were negotiable. The jury having found a verdict for the defendant, a new trial was granted ; not upon the ground that the first direction was wrong, but because his lordship had erred iu submitting thS question as to the negotiability of such 176 HOLDER FOR VALUE. a bill to the jury, as a question of fact. And in answering. the objection raised by counsel to the negotiability of drafts payable to bearer, that it would be dangerous, because npon a casual loss the finder might maintain an action upon them as bearer, he again says : " but the bearer must show it came to him bona fide and upon valuable consideration." The next case was that of Peacock v. Rhodes, 2 Doug. 633, which came before the same Court in 1781, while Lord Mannfield still presided there. In that case ^ suit was brought against the drawers of a bill which had been indorsed in blank and was stolen, and had been passed to the plaintiff by a stranger professing to be the owner thereof, for its value, in payment of cloth and other articles in the way of the plaintiffs ti-ade as a mercer, and partly for cash. And the case was decided in conformity with the previous decisions. But I do not find an intimation in this, or in either of the previous cases, that if the person who received the note or bill had merely taken it in payment or security of an antecedent debt, without having parted with any thing of value on the credit or faith thereof, he would have been entitled to hold the note or bill against the former rightful owner. On the contrary, we may infer what Lord Mans- field's opinion would have been upon the question of applying it in payment of a precedent debt, from what he actually decided in 1777, in the case of BuUer v. Harrison, 2 Cowp. 565. There, money had been paid to an agent under a misapprehension of facts, and had been passed by him to the credit of his principal, in satisfaction of a previous indebtedness, before he had any notice or suspicion that the money was not justly and equitably due to such principal. And his lordship decided that the agent must refund the money, and resort to his principal to recover what was due to him before the money was so applied ; that, as no new credit was given, he had not been legally prejudiced ; and that applying the money to pay the precedent debt, was not equivalent to paying it over to his principal before he had notice of the plaintiff's equital)le rights. In the case of Collins v. Martin, 1 Bos. & Pul. 648, which came before the Court of Common Pleas in England, in 1797, the bills had been pledged by the plaintiff's bankers with the defendants upon an advance of money thereon. The only question there was, wheiher a banker with whom a negotiable security had been depos- ited for collection, could pledge it to a bona fide holder, for money advanced to him on the credit thereof. * And it was decided he STALKER V. m'DONALD. 177 could. But in that case the principle is again recognized, that to protect the holdei^of a negotiable instrument against the former owner, where it lias been fraudulently transferred, he must be a holder thereof for value. For C. J. Fi/re says, " if it can be proved that the holder gave no value for the bill, then indeed he is in privity with the first holder, and will be affected by every thing which would atfect the first holder." And in the case of Lowndes V. Anderson, 13 East, 180, which was decided in 1810, the ques- tion was, wiiether the defendants, who gave up a valid security which had been remitted to them in payment of a balance and to meet acceptances for a liankrupt, were answerable to his assignees fer money and bills which they had received from a stranger in payment of such security, although it turned out afterwards that such money and l)ills ))elonged to the bankrupt ; but which fact was concealed from their knowledge by the secret agent employed by him to transact the business. In that case again, the necessity of a valuable consideration is recognized by C. J. Ellenburoiigh. For in delivering the opinion of the Court, he says, " it would be a grievous inconvenience if bank-notes could be followed, in the man- ner now attempted, through the hands of bona fide holders for a valuable consideration without notice." I have carefully examined the several subsequent cases, relied upon in the opinion of Mr. Justice Story in Swift v. Tyson, to show that the decisions of the courts in England are in conflict with the set- tled law of this State upon the question now under consideration ; and as I understand those cases, only two of them, and these by im- plication merely, conflict in any degree with our decisions. I believe 1 have also examined every reported decision on the subject, down to the present time, in the English reports which have reached this coun- try ; though it is possible that some have escaped my researches. And I do not find another case, or dictum^ in hostility to the prin- ciple as settled by this Court in the case of Coddington v. Bay. The English cases subsequent to 1810, referred to by Mr. Justice Story as containing a contrary doctrine, are the cases of Bosanquet V. Dudman, 1 Stark. 1 ; Ex parte Bloxham, 8 Ves. 531 ; Hey- wood V. Watson, 4 Bing. 49G ; Bramah v. Roberts, 1 Bing. N. C. 469; and Percival v. Frampton, 2 Cromp., Mees. A: Roscoe, 180. In the first case it is evident there is a typographical error in substituting the word but ft)r icho^ in the fifth line of the state- ment of the case by the reporter. The suit was brought by the 12 178 HOLDER FOR VALUE. indorsees of a bill drawn by Rains upon the defendant, payable to his own order, and indorsed by him, and which ^ad been accepted by the defendant. Clarkson & Co., who were the owners of the bill, and who kept an account with the plaintiff's bankers in London, deposited the bill with them as collateral security for such accept- ances as they might make. And at the time the bill became pay- able, on the fifth of February, 1812, the plaintiffs were the holders of it, and had at that time accepted bills to a much larger amount than the cash balance in their hands. They were therefore undoubtedly entitled to hold it as against Clarkson & Co., for the excess of such acceptances beyond the cash balance. But as they held other collateral securities to a considerable amount, when tlrts bill was dishonored they returned it to Clarkson & Co. They sub- sequently remitted it again to the plaintiffs, requesting them to hold it for Clarkson & Co., and to place the same to their account when paid ; and the plaintiffs continued to hold the bill until Clarkson & Co. became bankrupts. Upon the trial of the cause, the defendant's counsel was proceeding to cross-examine the witness as to the comparative amount of the cash balance and collateral securities, and the amount of the acceptances on account of Clarkson & Co. at the time the bill fell due ; with a view, I presume, to show that the cash and other collateral securities were more than enough to meet all their acceptances, and that they had no lien upon this particular bill at that time, but that it belonged to Clarkson & Co. And it was in reference to that cross-examination, as I understand the case, that Lord Ellenhorough said he should hold that where collateral securities were placed in the hands of a banker, under such circum- stances all the collateral securities were held for value, whenever acceptances should be made from time to time, upon the credit and faith of such collateral securities, beyond the cash balance in the hands of the bankers. In other words, that it was immaterial how much the collateral securities amounted to. For if the acceptances which had thus been made on the faith of them, exceeded at any time the cash in hand to meet such acceptances, the bankers were holders of all the collateral securities for value, to secure the pay- ment of the deficiency ; and neither the depositors nor their assignees in bankruptcy could claim a return of any part of such securities, or prevent the bankers from collecting the money on them, to meet such deficiency. This was unquestionably good law, and is not a decision that, where a bill is fraudulently deposited STALKER V. M'DONALD. 179 with a banker in payment or security of a pre-existing debt, be is a bona fide bolder tbcreof for value, as against the party d(;frauded. And if tbc remark of bis lordsbij) in tbat case meant any tbing elae, it is inif)Ossible to tell from tbe report wbat be did mean. For tbero was no claim or pretence tbat tbe bill in question did not belong to Clarkson <fe Co. at tbe time it was deposited witb tbe plaintififs, and when it fell due ; although as between Rains, tbe drawer and indorser, and tbe defendant, the acceptor, it was a mere accommo- dation bill. Whether his lordship was right in holding tbat tbe return of tbe bill to the plaintiffs, after it was dishonored and had been paid to Clarkson & Co. by tbe drawer, who was in equity bound to piiy it, restored the plaintiffs to all their former rights as against the accommodation acceptor, is an entirely different ques- tion. And if tbc reporter is right in his statement of tbe facts, I think I should have decided, in such a case, tbat the jjlaintifis could not recover against the accommodation acceptor, or against Rains tbc drawer, even if they bad paid the whole amount of the dishonored bill, in money, to Clarkson <fe Co., upon the return thereof. Nothing further, however, is necessary to Ije said, in reference to this very imperfectly reported case, than that it decides nothing upon tbe question now under consideration. In Ex parte Bloxbam, Lord Eldon merely decided that where bills and securities are remitted to a banker by his customer, to meet acceptances which the banker may make from time to time for his customer, such banker, as between him and his customer, has a general lieu thereon for the amount of his acceptances for the customer. And that though some of the acceptances had not become due at the time tbe customer became a Ijankrupt, tlie banker was entitled to prove, under the commission, the amount for which he was liable upon the acceptances for tbe bankrupt. But that in making such proof to cover the acceptances, the proof must be made on the securities upon which the bankrupt's name appeared, and not upon a cash balance against the bankrupt which did not exist until after tbe bankruptcy. If there is any thing in that decision which has the least bearing upon tbe question now under consideration, I am not al)le to discover it. In Heywood v. Watson, the defendant and Morrall were cojiart- ners, and obtained permission to overdraw their account with the plaintiffs, their bankers, from time to time, to the extent of £2000 ; for which amount Morrall gave his promissory note to the plaintiffs 180 . HOLDER FOR VALUE. as collateral security. The next day he received from the defend- ant, his partner, a note payable to himself or order, for one-half of that amount, to meet his note as collateral security to the plaintiffs for their advances, and to secure to him the repayment of the defendant's moiety of such advances, or so much as he should individually have to pay the plaintiffs on account of the firm. The partnership was dissolved about a year afterwards ; at which time the plaintiffs had made advances for the firm to the amount of X1300, which neither of the partners had paid. Mor- rall had afterward's transferred the defendant's note to the bankers. But there was no evidence that he had done so without considera- tion, or that the plaintiffs knew for what the note was given. , And the Court held that the plaintiffs were entitled to recover, whether they did or did not know for what the defendant's note was given. It is true, C. J. Best says, if there was a good consideration be- tween Morrall and the plaintiffs, who were ignorant of the circum- stances under which Morrall took the note, they were entitled to recover. But it is evident he said this in reference to the legal rule that the indorsee of a negotiable instrument is presumed to have paid value for it, until the contrary is shown ; the onus of disproving which, according to the decisions of the English courts, is thrown upon the party contesting the right of the holder, except where the note or bill is proved to have been lost or stolen, or to have been obtained or put in circulation by fraud. What the Chief Justice said in that case is not even a dictum, much less a decision, in opposition to the principle of law as settled in this State. For there was not a particle of equity in favor of the de- fendant in that case ; as he was legally liable to the plaintiffs as a partner, for the whole amount of their advances, even if his note had been turned out by Morrall on account thereof. And all he had to do was to pay up the amount of his note, and the other £300, if they required it, and then sue Morrall for what he had paid beyond his share. The case of Bramah v. Roberts came before the Court upon questions arising upon the pleadings. The plaintiffs were the in- dorsees of a bill of exchange drawn and indorsed by W. Clare for £500, at three months, and accepted by the defendants. To the declaration on this bill the defendants pleaded first, the general issue ; secondly, that it was accepted by them without value, was delivered by one of them to T. Hunt for a special purpose, and STALKER V. m'DONALD. • 181 that lie fraudulently transferred the same to the plaintifTs, with notice of his want of authority, and tliat there was not any consider- ation or vahic given in jrood faith for the indorsement of tlie l>ill to them ; and ///m////, that one of tlic defendants fraudulently ac- cepted the l)ill, under a power to acccj)t it for all the defendants for a special ])urpose, for a different purpose from what was in- tended, and that the other defendants I'eceived no consideration or value for such acceptance. To the second plea the plaintiffs re- plied, in substance, that Ijefore the bill became due it was indorsed and delivered to them fairly and bona fide for a good and valuable consideration, that is to say, for moneys advanced by and due and owing to them, the plaintiffs; and without notice of the matters stated in the second j)lea, or of the want of power on the part of Hunt to transfer the bill on his own account. To the third plea they rci)lied substantially in the same manner, after denying the want of authority of one of tlie defendants to accept the bill for all of them. The defendants demurred specially to these replica- tions, assigning as causes of demurrer that the plaintiffs had not stated with suOicient certainty what consideration or value was given for the bill, nor when or to whom the moneys were ad- vanced, nor whether they were advanced at the time or had been previously advanced, nor whether the moneys advanced were suffi- cient to authorize them to recover the whole amount of the bill. The Court decided that the third plea was bad, as it only alleged that the defendants were defrauded of the bill, and that their ac- ceptance was without consideration ; but set up no want of con- sideration in the negotiation of the bill to the plaintiffs, or notice of the alleged fraud, at the time they received the bill. No ques- tion was therefore decided upon the sufficiency of the replication to that plea. As to the replication to the second plea, C. J. Tin- dal thought it was snifficient ; that it was only necessary for the plaintiffs to deny notice of the want of authority of the person from whom they received the bill, and aver that it was given to them for a full and valual)le consideration ; and that the replica- tion was sufficient to show there was a good consideration. He says, " if money passed from the present indorsees, it appears to mo sufficient, as against the acceptors of a bill of exchange, to allege that the bill was received for money advanced by and due and owing to them," &c. And after referring to the case of a replica- tion in which an averment that the plaintiff was parson, and took 182 HOLDER FOR VALUE. for tithes, was construed in reference to the time of severance, he again says, " a person of plain understanding will interpret this in the same way, that there has been a money consideration passing from the plaintiffs." But the Chief Justice went further, and declared his opinion to be that if the replication had contained a simple denial of the allegation of a want of consideration, it would be sufficient. From his language in this case I should infer that he understood the law to be that the holders of the bill must have received the same for a valuable consideration at the time of the transfer. But I admit that Mr. Justice Park uses the words valid consideration in his opinion. He says, " If the bill of exchange was indorsed and delivered to the plaintiffs for a good and valid consideration, that is to say, for money advanced by and due and owing to the plaintiffs, and they say that at the time it was in- dorsed to them they had no notice whatever of the fraud, it must be taken that the bill was taken for some antecedent debt." From this it may perhaps be fairly inferred that he thought that was sufficient to enable the holder of the note to recover thereon, al- though no other available security for such antecedent debt was given up or discharged upon the faith and credit of the bill, at the time it was so received by the plaintiffs ; but he does not say so. And Justice Bosanquet says, " I am disposed to think that the replication would have been quite sufficient if it had not added the words ' for money advanced by and due and owing to the plain- tiffs,' thereby setting out the nature of the consideration ; but that it was sufficient to say ' tliat after the bill was made, and before it became due and payable, on a specified day, the bill was indorsed and delivered to the plaintiffs fairly and hojia fide, and for a full and valuable consideration." But whatever may have been the opinion of the judges who decided that case, under the new rules of pleading in England, and in reference to the fact that under any form of replication which did not admit a want of a sufficient consideration, the onus of proving that the bill was not passed to the plaintiffs for a good and sufficient consideration would be upon the defendants, I think it is not entitled to the weight of a judicial decision upon the question now under consideration. In the other case, Percival v. Frampton, the defendant had in- dorsed the note for the accommodation of tlie maker thereof, to enable liim to obtain money thereon generally. And he got it discounted by his banker, who placed the proceeds to his credit, STALKER V. M'DONALD. 183 on which he afterwards drew out X198, and the residue was applied to tlic balance of his account. The Court lield that this was equivalent to an advance of the money to him. So far the decision was in accordance with the case of The Bank of Rut- land V. Buck, 5 Wend. G(!, and other cases decided in this State. For, the object of the indorsement being to enable the maker of the note to raise money generally, and not for any specific oliject in which the indorser had an interest, it was wholly immaterial to him whether the note was passed to the credit of the maker with his banker, or the banker advanced him the money on the note and then received it l)ack to make good his account, or the maker received the money from any other person upon the note, and then paid it to' the plaintilfs for their debt. But in that case Mr. Baron Parke expresses the opinion that if the note had been given to the plaintiffs as security for a previous debt, and they held it as such, they might be properly stated to be holders for valuul)le considera- tion. Prom which I infer that his opinion corresponds with that of the Supreme Court of the United States upon the question now under consideration. The question was raised by the counsel for the defendant in a subsequent case, Bartrum v. Caddy, Adol. & Ellis, 275, that a by gone debt is not a sufficient consideration to give a fraudulent assignee a title to recover. But as the judgment was given for the defendant upon other grounds, no opinion was expressed by the Court of Queen's Bench upon that point. And I do not think there is any decision in any court of England directly upon the question. I have not had leisure to examine the reports of most of our sister States in reference to this subject. But in addition to the case from Connecticut referred to in the opinion of the Court in Swift v. Tyson, there are two decisions in the State of Maine, Homes v. Smyth, 4 Shepl. [16 Maine] 177, and Norton v. Waite,2 Appl. [20 Maine] 17'), in which it was held that the holder of a negotiable security who had received it in absolute payment of a pro-existing debt, without notice, was entitled to recover thereon, notwithstand- ing any failure or want of consideration, or other equities previously existing between other parties. But as I understand the opinion of Judge Sheplcy in the first of those cases, a party who takes a note or bill as collateral security for the payment of such a debt, and not in absolute payment and discharge of the same, will not be entitled to protection in that State against the rightful owner. 184 HOLDER FOR VALUE. The decision of the Supreme Court of Pennsylvania in Petrie v. Clark, 11 Serg. & Rawlc, 377, appears to be in accordance with the decision of Judge Slieplcy in Homes v. Smyth. For Judge Gibson, who delivered the opinion of the Court, says, if the note had been delivered in discharge of the debt, there would be no difficulty in saying, in the absence of collusion, that taking it in the usual course of business, as an equivalent for a debt which is given up, would be a purchase of it for a valuable consideration. But as it was given in pledge for securing an antecedent debt which was not dis- charged, but suffered to remain, and as it does not appear that money was advanced, or any act done that would in law be a pres- ent consideration, the case presented was against the plaintiff. In the case under consideration, the notes wliich were improperly transferred by Gillespie in fraud of the rights of the owners, were not received by the plaintiff in error in payment or discharge of his debt, but as mere collateral securities for the payment thereof. He therefore would not be entitled to protection as a bona fide holder, for a valufible consideration, according to these decisions in the courts of our sister States. Nor do I think that the settled law of this State is so manifestly wrong as to authorize this Court to overturn its former decision for the purpose of conforming it to' that of any other tribunal, whose decisions are not of paramount authority. I must therefore vote to affirm the judgment of the Court below. Lott, Senator. As a general rule, the true and rightful owner of property is entitled to recover it from any person in whose possession it may be, whether obtained by the latter under color of a purchase or otherwise. An exception, however, founded on principles of commercial policy, has been made in favor of the holder of negotiable paper, received in the usual course of trade, for a valuable consideration, though from a person having no right to make the transfer, and without notice of the fraud. Under such circumstances the right of the holder is allowed to prevail against the claim of the previous owner. To bring a case within the exception, it is not enough to show that there was a consideration for the transfer, sufficient as between the holder and the party transferring, but the consideration must be such as the law denominates a valuable one. Ill Coddington v. Bay, 20 Johns. 637, a case decided by this Court, in which the STALKER V. M'dONALD. 185 principle of the exception was fully discussed, Mr. Justice Wood- worth said, " somctliinii: must have ))ccn paid in money or property, or some existhig deljt satisfied, or some new responsibility incurred in consequence of the transfer ; this would be paying value, and making out a consideration within the reason and meaning of the rule." lb. 646. Chief Justice Spencer there remarked : "1 under- stand, by the usual course of trade, not that the holder shall receive the bills or notes thus obtained, as securities for antecedent debts, but that he shall take them in his business, and as payment for a debt contracted at the time." lb. 651. Mr. Senator Vldie observed that, "though indemnity for responsibilities is undoubt- edly a good consideration for the sale or transfer of goods or nego- tiable paper, as against the party making it or his representatives, yet in none of the cases cited on the argument, and in no one that I have been a1)lc to find, has it ever been held to l)ar the true owner, upon a fraudulent transfer." lb. ()53. He added : " The true test I take to be, that when the holder is left in as good a condition, after a retransfer, as he would have l)een had no transfer taken place, there the title of the owner shall prevail. This allows the rule, so far as it is dictated by commercial policy, to have its full effect, while it protects the owner of negotiable paper, neces- sarily intrusted in the course of business to the care of agents, from an injury revolting to every principle of moral equity." lb. 657. If these doctrines are applicable to the case under consideration, and are to guide our decision, it appears to me the right of the defendants in error to the notes in question cannot be impeached. It was contended on the argument, however, that the withdraw- ing of the note of Gillespie and Edwards from the bank, where it had been deposited for collection, caused a loss or prcjudrce to the plain- tiff in error, which formed a sufficient consideration to entitle him to protection. It might be enough to say, in answer to this position, that the whole force of it is rebutted by the verdict of the jury ; for under the charge of the Court, the verdict must be understood as having found that no consideration was parted ivith by the plaintiff in error ^ on the credit of the notes in question. But apart from this view of the case, it appears that the note of Gillespie and Edwards was merely lodged in the bank for collection, and that there were no Jndorsers to be charged. A protest was therefore unnecessary, and no injury or prejudice in that respect could have resulted from the act of withdrawing it. True, it is said in the testimony that, 186 HOLDER FOR VALUE. after the note of Gillespie and Edwards was withdrawn, and before tlieir failure, they paid " one or more notes in bank, in the regular course of business ; " but the amount of these notes was not shown, nor did it in any manner appear that the note of the plaintiff in error would have been paid, had he suffered it to remain in the bank, altliough one of the firm of Gillespie and Edwards was exam- ined as a witncfffe upon the trial. It should be remarked also that there was no stipulation or agreement by the plaintiff in error, on withdrawing his note from the bank, that he would not enforce payment of it. On the con- trary, he ]iad still a perfect right to demand its immediate payment, and to enforce his demand by action. In every view which can be taken of this case, it appears to me the title of the defendants in error to the notes in question has not been divested, and that the judgment of the Court below ought to be affirmed. On the question being put, " Shall this judgment be reversed ? " all the members of the Court present, who heard the argument, except Strong, Senator, voted for affirming. See following case and note. Judgment affirmed. John Swift v. George W. Tyson. (16 Peters, 1. Supreme Court of the United States, January, 1842.) Paper taken in paynient of pre-existing debt. — The honajide holder of a bill of exchange, who has taken it before maturity, in payment of a pre-existing debt, without notice of any equities between the drawer and acceptor thereof, will not be affected by such equities. Authority of the decisions of State courts. — The 34th section of the Judiciary Act (1 St. at Large, 92), is limited to the laws of a State strictly local : that is, to the positive statutes of the State and their interpretation by the local tribunals, and tlie rights and titles to things having a permanent locality, such as real estate. It does not apply to questions of general commercial law, such as bills of exchange and prom- issory notes. The case is stated in the opinion of the Court. Story, J. This cause comes before us from the Circuit Court of the Southern District of New York, upon a certificate of division of the judges of that Court. SWIFT V. TYSON. 187 The action was brought by the plaintiff, Swift, as indorsee, against the defendant, Tyson, as accc))tor, upon a bill of exchange dated at Portland, Maine, on the first day of May, 1830, for the sum of $1540.30, payable six months after date and grace, drawn by one Nathaniel Norton and one Jairus S. Keith upon and ac- cej)ted by Tyson, at the city of New York, in favor of the order of Nathaniel Norton, and by Norton indorsed to the plaintiff. The bill was dishonored at maturity. At the trial, the acceptance and indorsement of the bill were admitted, and the plaintiff there rested his case. The defendant then introduced in evidence the answer of Swift to a bjll of dis- covery, by which it appeared that Swift took the bill before it became due, in payment of a promissory note due to him by Norton and Keith ; that he understood that the bill was accepted in part- payment of some lands sold by Norton to a company in New Yoi-k ; that Swift was a bona fide holder of the bill, not liaving any notice of any thing in the sale or title to the lands, or otherwise, impeaching the transaction, and with liie full belief that the bill was justly due. The j)articular circumstances are fully set forth in the answer in the record ; but it 'does not seem necessary fur- ther to state' them. The defendant then offered to prove that the bill was accepted by the defendant as part consideration for the purchase of certain lands in the State of Maine, which Norton and Keitii represented themselves to be the owners of, and also repre- sented to be of great value, and contracted to convey a good title thereto ; and that the representations were in every respect fraud- ulent and false, and Norton and Keith had no title to the lands, and that the same were of little or no value. The plaintiff object- ed to the admission of such testimony, or of any testimony, as against him, impcai-hing or showing a failure of the consideration on which the bill was accepted, under the facts admitted by the defendant, and those proved l)y him, by reading the answer of the plaintiff to the bill of discovery. The judges of the Circuit Court thcreuj)on divided in opinion upon the following point or question of law : Whether, under the facts last mentioned, the defendant was entitled to the same defence to the action, as if the suit was between the original parties to the bill, that is to say, Norton, or Norton and Keitli, and the defendant; and whether the evidence so offered was admissible as against the plaintiff in the action. And this is the question certified to us for our decision. 188 HOLDER FOR VALUE. There is no doubt that a bona fide holder of a negotiable instru- ment for a valuable consideration, without any notice of facts which impeacli its validity as between the antecedent parties, if he takes it under an indorsement made before the same becomes due, holds the title unaffected by these facts, and may recover thereon, although, as between the antecedent parties, the transaction may be withoiit any legal validity. This is a doctrine so long and so well established, and so essential to the security of negotiable paper, that it is laid up among the fundamentals of the law, and requires no authority or reasoning, to be now brought in its sup- port. As little doubt is there, that the holder of any negotiable paper, before it is due, is not bound to prove that he is a bona fide holder for a valuable consideration, without notice ; for the law j will presume that, in the absence of all rebutting proofs, and therefore it is incumbent upon the defendant to establish by way of defence, satisfactory proofs of the contrary, and thus to over- come the prima facie title of the plaintiff. In the present case, the plaintiff is a bona fide holder without notice for what the law deems a good and valid consideration, that is, for a pre-existing debt ; anfl the only real question in tlie cause is, whether, under the circumstances of the present case, such a pre-existing debt constitutes a valuable consideration in the sense of the general rule applicable to negotiable instruments. We say, under the circumstances of the present case, for the acceptance having been made jn New York, the argument on behalf of the defendant is, that the contract is to be treated as a New York con- tract, and therefore to be governed by the laws of New York, as expounded by its courts, as well upon general principles, as by the express provisions of the 34th section of the Judiciary Act of 1789, c. 20. And then it is further contended that, by the law of New York, as thus expounded by its courts, a pre-existing debt does not constitute, in the sense of the general rule, a valuable consideration applicable to negotiable instruments. In the first place, then, let us examine into the decisions of the courts of New York upon this subject. In the earliest case, War- ren V. Lynch, 5 Johns. 239, the Supreme Court of New York appear to have held, that a pre-existing debt was a sufficient con- sideration to entitle a bona fide holder without notice to recover the amount of a note indorsed to him, which might not, as between the original parties, be valid. The same doctrine was affirmed by SWIFT V. TYSON. 189 Mr. Chancellor Kent, in Bay v'. Coddiiigton, 5 Johns. Ch. .04.^ Upon that occasion he said that negotiable i)aj)cr can be assigned or transferred by an agent or factor, or by any other person, fraud- ulently, so as to bind the true owner as against the holder, pro- vided it be taken in the usual course of trade, and for a fair and valuable consideration, without notice of the fraud. But he added, that the holders in that case were not entitled to the benefit of the rule, because it was not negotiated to* them in the usual course of business or trade, nor in payment of any antecedent and existing debt, nor for cash, or property advanced, debt created, or responsibility incurred, on the strength and credit of the notes ; thus directly allirming, that a pre-existing debt was a fair and val- uable consideration within the [jrotcction of the general rule. And he has since alTirmed the same doctrine, upon a full review of it, in his commentaries. 8 Kent, Com. § 44, p. 81. The de- cision in the case of Bay v. Coddington was afterwards affirmed in the Court of Errors, 20 Johns. (>37, and the general reasoning of the Chancellor was fully sustained. There were, indeed, pecul- iar circumstances in that case'which the Court seem to have con- sidered as entitling it to be treated as an exception to the general rule, upon the ground, either because the receipt of the notes was under suspicious circumstances, the transfer having been made after the known insolvency of the indorser, or because the holder had received it as a mere security for contingent responsibilities, with which the holders had not then become charged. There was, however, a considerable diversity of opinion among the members of the Court upon that occasion, several of them holdifig that the decree ought to be reversed, otliers affirming that a pre-existing debt was a valuable consideration, sufficient to protect the holders, and otliers again insisting that a pre-existent debt was not suffi- cient. From that period, however, for a series of years, it seems to have been held, by the Supreme Court of the State, that a pre- existing debt was not a sufficient consideration to shut out the equities of the original parties in favor of the holders. But no case to that effect has ever been decided in the Court of Eiy-ors. The cases cited at the l)ar. and especially Rosa v. Brotherson, 10 Wend. 85 ; The Ontario Bank r. Worthington, 12 id. 593 ; and Payne v. Cutler, 18 id. 005, are directly in point. But the more recent cases. The Bank of Salina v. Babcock, 21 Wend. 499 ; and The Bank of Sandusky v. Scoville, 24 id. 115, have greatly shaken, 1 Ante, 172. 190 HOLDER FOR VALUE. if they have not entirely overthrown, those decisions, and seem to have brought back the doctrine to that promulgated in the earliest cases. So that, to say the least of it, it admits of serious doubt, whether any doctrine upon this question can at the present time be treated as finally established ; and it is certain that the Court of Errors have not pronounced any positive opinion upon it. But, admitting the doctrine to be fully settled in New York, it remains to be considered whether it is obligatory upon this Court, if it differs from the principles established in the general commer- cial law. It is observable that the courts of New York do not found their decisions upon this point upon any local statute, or positive, fixed, or ancient local usage ; but they deduce the doc- trine from the general principles of commercial law. It is, how- ever, contended that the 34th section of the Judiciary Act of 1789, c. 20, furnishes a rule obligatory upon this Court to follow the decisions of the State tribunals in all cases to which they apply. That section provides " that the laws of the several States, except where the Constitution, treaties, or statutes of the United States shall otherwise require or provide, shall be regarded as rules of decision in trials at common law in the courts of the United States, in cases where they apply." In order to maintain the argument, it is essential, therefore, to hold that the word " laws," in this section, includes within the scope of its meaning tlie deci- sions of the local tribunals. In the ordinary use of language, it will hardly be contended that the decisions of courts constitute laws. Tiiey are, at most, only evidence of what the laws are, and are not of themselves laws. They are often re-examined, reversed, and qualified by the courts themselves, whenever they are found to be either defective, or ill-founded, or otherwise incorrect. Tlie laws of a State are more usually understood to mean the rules and enactments promulgated by the legislative authority thereof, or long- established local customs having the force of laws. In all the various cases, which have hitherto come before us for decision, this Court have uniformly supposed that the true interpretation of the 34th section limited its application to State laws strictly local, that is to say, to the positive statutes of the State, and the con- struction thereof adopted by the local tribunals, and to rights and titles to things liaving a permanent locality, such as the rights and titles to real estate, and other matters immovable and intraterri- torial in their nature and character. It never has been supposed SWIFT V. TYSON. 191 by us that the section did apply, or was designed to apply, to ques- tions of a more general nature, not at all dependent upon local statutes or local usages of a fixed and permanent operation ; as, for example, to the constrnction of ordinary contracts or other written instruments, and especially to questions of general commercial law, where the State tribunals are called upon to perform the like functions as ourselves, that is, to ascertain, upon general reasoning and legal analogies, what is the true exposition of the contract or iilstrument, or what is the just rule furnished by the principles of commercial law to govern the case. And we have not now the slightest difficulty in holding that this section, upon its true intend- ment and construction, is strictly limited to local statutes and local usages of the character before stated, and does not extend to con- tracts and other instruments of a commercial nature, the true interpretation and elTcct whereof are to be sought, not in the deci- sions of the local tribunals, l)ut in the general principles and doc- trines of commercial jurisprudence. Undoubtedly, the decisions of the local tribunals upon such subjects are entitled to, and will receive, the most deliberate attention and respect of this Court ; but they cannot furnish positive rules, or conclusive authority, by which our own judgments are to be bound up and governed. The law respecting negotiable instruments may be truly declared, in the language of Cicero, adopted by Lord Mansfield in Luke v. Lyde, 2 Burr. 882, 887, to be in a great measure, not the law of a single country only, but of the commercial world. " Non erit alia lex Roraae, alia Athenis, alia nunc, alia posthac, sed et apud omnes gentes, et omni tempore, una eademque lex obtinebit." It becomes necessary for us, thcrelbre, upon the present occa- sion, to express our own opinion of tlie true result of the commer- cial law upon the question now before us. And we have no hesitation in saying, that a pre-existing debt does constitute a valuable consideration in the sense of the general rule already stated, as applical)le to negotiable instruments. Assuming it to be true (which, however, may well admit of some doubt from the generality of the language) that the holder of a negotiable instru- ment is unaffected with the equities between the antecedent par- ties, of which he has no notice, only where he receives it in the usual course of trade and business for a valuable consideration, before it becomes due ; we are prepared to say, that receiving it in payment of, or as security for a pre-existing debt, is according to 192 HOLDER FOR VALUE. the known usual course of trade and business. And why, upon principle, sliould not a pre-existing debt be deemed such a valuable consideration? It is for the benefit and convenience of the com- mercial world to give as wide an extent as practicable to the credit and circulation of negotiable paper, that it may pass not only as security for new purchases and advances, made upon the transfer thereof, but also in payment of and as security for pre-existing debts. The creditor is thereby enabled to realize or to secure his debt, and thus may safely give a prolonged credit, or forbear from taking any legal steps to enforce his rights. The debtor also has the advantage of making his negotiable, securities of equivalent value to casii. But establish the opposite conclusion, that nego- tiable paper cannot be applied in payment of, or as security for, pre- existing debts, without letting in all the equities between the original and antecedent parties, and the value and circulation of such securities must be essentially diminished, and the debtor driven to the embarrassment of making a sale thereof, often at a ruinous discount, to some third person, and then by circuity to apply the proceeds to the payment of his debts. What, indeed, upon such a doctrine, would become of that large class of cases, where new notes are given by the same or by other parties, by way of renewal or security to banks, in lieu of old securities discounted by them, which have arrived at maturity ? Probably more than one-half of all bank transactions in our country, as well as those of other countries, are of this nature. The doctrine would strike a fatal blow at all discounts of negotiable securities for pre-existing debts. This question has been several times before this Court, and it has been uniformly held, that it makes no difference whatsoever as to the rights of the holder, whether the debt, for which the negotiable instrument is transferred to him, is a pre-existing debt, or is contracted at the time of the transfer. In each case, he equally gives credit to the instrument. The cases of Coolidge v. Payson, 2 Wheat. QQ, 70, 73,i and Townsley v. Sumrall, 2 Pet. 170, 182,- are directly in point. In England, the same doctrine has been uniformly acted upon. As long ago as the case of Pillans and Rose v. Van Mierop and Hopkins, 3 Burr. 1668, the very point was made, and the objection was overruled. That, indeed, was a case of far more stringency than the one now before us ; for the bill of exchange, there drawn 1 Ante, 43. SWIFT V. TYSON. 193 ill discharge of a pre-existing debt, was held to bind the party as acceptor, upon a mere promise made by him to accept before the bill was actually drawn. Upon tliat occasion, Lord Ulannjield, likening the case to ^hat of a letter of credit, said that a letter of credit may be given for money already advanced, as well as for money to be advanced in future ; and the whole Court held the plaintiff entitled to recover. From that period downward, there is not a single case to i)e found in England, in which it has ever been held by the Court, that a pre-existing debt was not a valuable consideration, sufficient to protect the holder, within the meaning of the general rule, although incidental dicta have been sometimes relied on to establish the contrary, such as the dictum of Lord Chief Justice Alfhutt in .Smith v. De Witts, 6 Dowl. & Ryl. 120, and De la Chaumette v. The Bank of England, 9 Barn. & Cress. 208, where, however, the decision turned upon very different considerations. ^Ir. Justice Baijlci/^ in his valuable work on Bills of Exchange and Promissory Notes, lays down the rule in the most general terms. " The want of consideration," says he, " m lata or in part, cannot be insisted on, if the plaintiff, or any intermediate party betweeu him and tlie defendant, took the bill or note bona fide and upon a vali'd consideration." Bayley, Bills, pp. 499, 500, 5th London edition, 18:i0. It is observable that he here uses the words " valid consideration," obviously intending to make the dis- tinction, that it is not intended to apply solely to cases where a present consideration for advances of money on goods or otherwise takes place at the time of the transfer and upon the credit thereof. And in this he is fully borne out by the aiithorities. They go further, and establish that a transfer as security for past and even for future responsibilities, will, for this purpose, be a sufficient, valid, and valuable consideration. Thus, in the case of Bosanquet V. Dudman, 1 Stark. 1, it was held- by Lord Elleiiboroiiyli^ that if a banker be under acceptances to an amount beyond the cash l)al- ance in his hands, every bill he iiolds of that customer's, hoiut Jide^ he is to be considered as holding for value ; and it makes no differ- ence, though he hold other collateral securities, more than suffi- cient to cover the excess of his acceptances. The same doctrine was affirmed by Lord Ehhii in Ex j/artc Bloxham, 8 Yes. 531, as equally applicable to past and to future acceptances. The subse- quent cases of Heywood r. Watson, 4 Bing. 490, and Braraah v. 13 194 HOLDER FOR VALUE. Roberts, 1 Biiig. N. C. 469, and Percival v. Frampton, 2 Cromp., Mecs. & Rose. 180, are to the same effect. They directly establish that a bona fide holder taking a negotiable note in payment of" or as security for a pre-existing debt, is a holder for a valuable con- sideration, entitled to protection against all the equities between the antecedent parties. And these are the latest decisions which our researches have enabled us to ascertain to have been made in the English Courts upon this subject. In the American Courts, so far as we have been able to trace the decisions, the same doctrine seems generally, but not universally, to prevail. In Brush v. Scribner, 11 Conn. 388, the Supreme Court of Connecticut, after an elaborate review of the English and Ne\y York adjudications, held, upon general principles of commer- cial law, that a pre-existing debt was a valuable consideration, suf- ficient to convey a valid title to a bona fide liolder against all the antecedent parties to a negotiable note. There is no reason to doubt that the same rule has been adopted and constantly adhered to in Massachusetts ; and certainly there is no trace to be found to the contrary. In truth, in the silence of any adjudications upon the subject, in a case of such frequent and almost daily occurrence in the commercial States, it may fairly be presumed that whatever constitutes a valid and valuable consideration in other cases of con- tract, to support titles of the most solemn nature, is held a fortiori to be sufficient in cases of negotiable instruments, as indispensable to the security of holders, and the facility and safety of their cir- culatio i. Be this as it may, we entertain no doubt that a bona fide holder, for a pre-existing debt of a negotiable instrument, is not affected by any equities between the antecedent parties, where he has received the same before it became due, without notice of any such equities. We are all, therefore, of opinion, that the question on this point, propounded by the Circuit Court for our consideration, ought to be answered in the negative ; and we shall accordingly direct it so to be certified to the Circuit Court. Catron, J., said: Upon the point of difference between the judges below, I concur, that the extinguishment of a debt, and the giving a pos^ consideration, such as the record presents, will pro- tect the purchaser and assignee of a negotiable note from the in- firmity affecting the instrument before it was negotiated. But I am unwilling to sanction the introduction of a doctrine into the opinion of this Court, aside from the case made by the record, or ^ SWIFT V. TYSON. 195 argued by the counsel, assuming to maintain tliat a negotiable note or bill, pledged as collatoi-al security for a previous debt, is taken l)y the creditor iii the due course of trade ; and that he stands on the foot of him who purchases in the market for money, or takes the instrument in extinguishment of a previous debt. State courts of high auth^-ity on commercial (juestions have held other- wise ; and that they will yield to a mere expression of o{)inion of this Court, or change their course of decision in conformity to the recent English cases referred to in the [)i:inci})al oi)inion,is improb- able ; whereas, if the (piestion wei'C ])ormittod to I'cst until it fairly arose, the decision of it cither way I)y this Court, i)rol)al)ly would, and I think ought, to settle it. As such a result is not to be expected Irom the opinion in this cause, I am unwilling to em- barrass myself with so much of it as treats of negotiable instru- ments taken as a pledge. I never heard this question spoken of as belonging to the case until the principal opinion was presented last evening ; and therefore I am not prepared to give any opinion, even was it called for by the record. 'J'lic following opinion, delivered in 1854, in Atkinson v. Brooks, 26 Vt. .")74, contains a snnnnary of the decided cases at that time, and a statement of the several cjuestions involved. Rkdfikld, C. J. This case, as the defendant's testimony tended to prove, and as the jury seem to have found, in giving a verdict for defendant, was a bill of exchange, drawn by one Asa Low, at Bradford, Vermont, upon the defendant, at Sherbrook, Canada East, payable to the order of the drawer, at the Ijank in Boston, Mass., three months from date, and being accepted and indorsed, was de|)Osited with a firm of merchants in Boston to raise money for Low, and remit to him at Bradford. But they, before its maturity, passed it to one of their creditors as security for a note of some eleven hundred dollars, which ihey were owing them at the time, and which was ovi-rdue. The bill being dishonored, was duly protested, and is sued in tlu' plaintilf 's name for the benefit of the house to whom it was passed', as security (or their note. The defendant is merely an acconnnodatioii acceptor. The important question in the case is, whether the plaintilfs in interest can be regarded as holders for value. No question was made but that they took the bill in good faith, and without knowledge even of the di'lendant being merely an accouunodation acceptor, or of any confiiience between the parlies of whom they took the bill, and any prior ])arty. The impiiry seems naturally to resolve itself into two leading questions': — 1. Did the plaintiff, in fact and ujion principle, give value lor ihe bill, and can he, upon this ground nierely, l)e justly regarded as a Ixnui Jhlc holder for value? It seems now to be pretty generally conceded, that one who takes a note or bill indorsed while current, in payment and extinguishment of a pre- 196 HOLDER FOR VALUE. existing debt, must be regarded as a holder for value. This is certainly the general course of decision upon the subject, with some exceptions to be sure, and we do not well see how it can fairly be argued that one who gives up a debt and accepts a note or bill for the same, either on time or at sight, can be said to give no consideration for the same. He certainly does forego the pursuit of his own debt, and thus certainly puts himself, for the time, in a different, and, in law, a worse situation. And this must be regarded a^ prima facie a foregoing of some advantage by the indorsee and also an accommodation to the indorser, who may fairly be presumed to prefer this mode of meeting his debt. The trans- action, tlicrefbre, possesses both the cardinal ingredients which constitute the text-book (lelinition of a valuable consideration ; it is a detriment to the prom- isee, and an advantage to the promisor. And it is no satisfactory answer to the case, to say the party who takes such bill or note, which proves unproductive, is in the same condition he was before. This is by no means certain. He has for the time foregone the collection of his debt, and in such matters, time is the es- sence of the transaction. And the debtor thereby gains time, — it may be more or less, — but of necessity some time is thereby gained ; and in such matters this is always accounted an advantage, and is often of the most vital consequence to the debtor. How then can it iiairly be said that this mere suspension of the debt during the currency of the note or bill, is no consideration? It seems to me such reasoning upon other subjects — indeed upon any subject where one is not pressed to the wall by the necessities of his case — would almost be regarded as frivolous ; surely it is scarcely specious. But it has often been claimed that there is an essential difference in principle between taking a current note or bill in payment, and as security for a prior debt then due. The transactions are certainly different in form, at least. But it seems to me, the ordinary case of taking such a securitj^ as payment, or as col- lateral to the prior debt, is the same in principle. One whose debt is due, in the conmiercial world, must pay it instantly, or he becomes a bankrupt. If, in- stead of money, he gives a bill or note, either on time or at sight, whether this is in form, in payment, or collateral to his debt, he gains time, and saves the dis- grace and ruin consequent upon stopping payment. And, in either case, there is an implied undertaking that he shall wait upon his debtor till the result of the new security can be known ; and in both cases, when that proves unproductive, the creditor may pursue his original debt, or he may sue the prior parties on the new security, except his immediate indorser, and sue him upon the original debt; or he may sue him as indorser, and also all prior parties. In this State, and some other of the American States, where a note or bill, when taken as pay- ment, prima facie extinguishes the debt, it is more common to sue the debtor as indorser. But according to the English law, and the general commercial law, taking a current note or bill for a prior debt only suspends the right of action till the dishonor of the new security. According to the general commercial usage, there is, then, no essential difference in principle, whether a current note or bill is taken in payment or as collateral security for a prior debt, provided the note is, in both cases, truly and unqualifiedly negotiated, so as to impose upon the holder the obfigation to conform to the general rules of the law merchant in enforcing payment. If, indeed, the note or bill is not so negotiated as to make the holder a pai ty to it, or so as to require of him to pursue the strict rules of mercantile SWIFT V. TYSON. 197 usap;e in making di^mand of |)aynu'nt, and giving notii-o of dishonor, so as to chiiigc liis iiidorsor, witli all the prior parties, upon the peril of making the note or bill his own in payment of liis debt, then he eould not bi; regarded probably as having so taken the paper in the due course of business bona Ji<1e, and for vahie, as to shut out equitable defences existing between the original parties. But, ordinarily, we suppose it fair to conclude that one who takes a note or bill negotiated to hitn while eurrent, although merely as coll^ral to a prior debt, is expected to pursue the same course in enforcing payment, as if he paid money for the bill. And it is scarcely supposable that one so taking security for a debt, will not conduct diflTcrently on account of the security. It is of necessity he should, if he puts any confidence in its ultimate availability ; and one would scarcely part with such security, unless he expected more or less indulgence on account of it. And when the prior debt is suffered to remain uncollected, it is, under the circumstances, fair to conclude such was the stipulation. And the case of one who takes a note or bill so negotiated, whether in pni/ment or in secitritij of a prior debt, implicitly stipulating to forego the collection until the maturity of the collateral paper, when such paper proves unproductive, is the same in both altcrnntives. In either case he may pursue his remedy upon the negotiable paper against all the prior parties, including his immediate indorser, or omitting him, he may pursue the other parties to the bill or note, and sue his original debt eipially, wlicther he took the paper in ptiyiiient or as coll:iter.il security of such debt, so that the dilference between the two cases is merely, formal. And if, in case of negotiating current paper as collateral security for a prior debt, the holder is not regarded as having taken it upon a valuable con- sideration, then the indorser may recall it at will. For if there is no such con- sideration as to make the contract binding, it is revocable at will. And if not upon consideration as to one party, neither is it as to the other. And in such case the holder is merely the agent of the indorsee for purposes of collection, and, as such agent, subject to his control, and bound to surrender the security at will. This was the view taken in De La Chaumette r. The Bank of England, 9 Barn. & C 208. But that case turned upon the peculiar construction given to the facts of the case. Such is certainly not the common case of taking negotiable paper as collateral security for a del)t already due. The imlorser. in sui'h case, can no more recall or control the pa])er, than if he had received the money or goods in payment of the same. And when one takes a bill or note negotiated before maturity, in payment of money advanced or goods sold, such paper is, in fact, only collateral security for the money or the price of the goods, and suspends such debts only till the dishonor of the bill ; and is in law j)recisely the same thing as if the lender of the money or the vendor of the goods took a note for the money or goods, and a bill or note negotiated as collateral to such note, with the agreement to wait till such collateral was paid or dishonored. In all these cases, it would never be claimed that the indorser of such bill or note could take it out of the hands of the indorsee at will. But this he clearly might do, if such indorsee had not taken it upon consideration. If for instance, one holds a debt due six months hence, and his debtor, as a mere volunteer ser- vice, indorses a current note or bill as collateral security, the collateral being due in three months, it could not be made to appear that such transaction, be- fore the indorsee had been at any pains in the matter, was a contract upon cou- 198 HOLDER FOR VALUE. sidenition. The prior debt not being due, the creditor could forego nothing, and tlie debtor receive no iidvantage frcm the transaction. And the agreement to ap[)ly the colhiteral upon a debt not yet due — being without consideration — wouhi, prol)aljly, in the first instance, be revocal)le at will, and so, also, as long as the parties remained in the same situation. It seems needless to spend more time to show that, upon principle and in fact, one who, having a debt due, ac- cepts of his debtor a ciMrent note or bill indorsed to himself as collateral security for the debt, with the understanding that indulgence is to be shown on the prior debt, which in fact follows, docs take such paper upon consideration, and gives value. Upon careful examination of this matter, it seems strange that such a question should ever have been raised; and it probably never would have been, but from tlie indefiniteness of the implied obligations growing out of such a transaction. 2. The more important question growing out of the case is, perhaps, what is the true commercial rule establi.-ihed upon this subject? And it is of vital im- portance in regard to commercial usages, that they should, as far as practicable, be uniform throughout the world. And such is necessarily the ultimate desidera- tum, and will inevitably be the final result. It is, therefore, always a question of time as to uniformity in such usages. The basis of such uniformity is con- venience and justice combined ; and until such rules become measurably settled by practice, they have to be treated as matters of fact, to be passed upon by juries ; and when the rule acquires the quality of uniformity and the character of general acceptance, it is then regarded as matter of law. It is thus that most of the commercial law has, from time to time, grown up. In the case of Foster v. Pearson, 1 Cromp. M. & R. 849, Lord Lyndhurst, while Chief Baron of the Court of Exchequer, left it to the jury to determine, upon the evidence, as to general commercial usage in the city of London, whether the plaintiff had taken the bill in the due course of business, and the full Court h(dd that the question was prop- erly submitted .to the jury. But in this case it seems to be recognized as settled law, that one who fakes an indorsed note or bill still current as collateral securi- ty (or a prior debt, is a bona fide holder for value. So, too, as early as 1814, in Bosanquet v. Dudman, 1 Stark. 1, Lord Ellenborough said, " that whenever the acceptances exceed the cash balance, the plaintiff held all the collateral bills for value ; " and the Court of Exchequer, in Percival v. Frampton, 2 Cromp. M. & R. 180, decide the same point. Parke, B., says: "If the note were given to the plaintiffs as a security for a previous debt, and they held it as such, they might be properly stated to be holders for valuable consideration." This is in 1835. And the same rule is certainly recognized in Heywood v. Watson, 4 Bing, 496. So also in Bosanquet v. Forster, 9 Car. & P. 659, and Same v. Corser, ib. 664. Palmer v. Richard is a full authority to show that it is not material whether the note or hill be deposited as security for an advance, or in payment, as some of the American cas^s seem to siq)pose. (1851), 1 Eng. Law & Eq. 529; s. c, 16 Jur. 51. In Smith v. Braine, 3 Eng. Law & Eq. 379; s. c, 15 Jur. 41, the proper distinction between accommodation paper and paper fraudulently or illegally obtained or put in circulation is discussed, and placed upon the sensible and true ground no doubt, viz., that in the former case it is incumbent upon the maker or acceptor to show that the holder took it without consideration, the law mak- • SWIFT V. TYSON. 199 ing the ordinary presumption in favor of the holder of accommodation paper, which is, in fact, made for the purpose of being put in circulation ; and it being, therefore, fair to {jresunu! the holder took it for value, and bona Jide. But in case of a note or bill, il!e;,ral in its inception, or fraudulently put in circulation, if these facts be proved in defence, it has sometimes been held that it imposes upon the holder the necessity of proving in answer that he gave value for the sire ago declared by Lord Abiiujer, that the courts in VVesTminster Hall had,. upon consultation, determined so to decide the law. The same distinction between accounnodation paper and paper fraudulently put in circulation, obtains in many of the American States. Hut this distinction is not, perhaps, very important here, inasmuch as the defendant claims both want of consideration for iiis ac- ceptance, and fraud in putting the paper in circulation. Harvey v. Towers, 4 Law & Eq. 531 ; 8. c, 15 Jur. 544. But that the English law is fully settled in favor of the indorsee of current negotiable paper, who takes it as collateral security for a prior debt, there can, I think, be no doubt, since the decision of Poirier r. Morris, 20 Law & Eq. 103; s. c, 22 Law Journal (x. .s.), Q. B. :5i;3; 2 El. & Bl. 89, May, 18.^^5, long since the present action was pending. This was an action upon a foreign bill which was negotiated to j)laintiffs as security for a previous debt, and at the time of receipt passed to the credit of the debtor. It being dishonored was protested, and therefore charged in account against the debtor to balance the former cre<lit, with the addition of expenses. This would seem to be the usual course of doing business in Europe, and prol)abIy olitained to a consid(!rable extent in the Amer- ican cities, — bills and notes being credited on receipt and charged upon dishonor, and all the collaterals being thus holden for the ultimate balance. This case was decided upon the general ground of the plaintiff's title at the time he took the bill as security for the balance of his account. Lord Campbell, C. J., in giving judgment, says: "There is nothing to make a difference between this and a common case where a bill is taken as security for a debt, and in that case an an- teccilent debt is a sufficient consideration^ Crompton, J., says: '■'■Whether the hill was a collateral security, or whether it had the effect of suspending the pay- ment of the antecedent debt, is quite immaterial. The plaintiffs had a perfect right to keep it." We think, therefore, it must be regarded as settled law in England at the present day, that such a bill or note taken as collateral security for a prior debt, is taken in the due course of business and for value. Such being the settled rule of the English law, which is confessedly of great and para- mount force upon a question of this kind, it is certainly desirable that, in regard to conunercial law of such extensive application in the every-day transactions of business, the law of the American States should also be uniform, and, as far as reasonable and practicable, correspond with the acknowledged rule in other States and countries. The case of Swifr r. Tyson, 1(5 l\t. 1, upon the most elaborate examination an<l debate, adopts the English rule, and upon general grounds of settled commercial law. The decisions of the national tri- bunal are not indeed of any liiiuling authority upon the general rules of the law merchant in a State Court, further than they commend themselves to our sense of reason and justice. But such a decision as that of Swift v. Tyson, upon such a subject, could scarcely fail to be regarded as of very considerable force, and. 200 HOLDER FOR VALUE. if sound in principle, would, almost of necessity, ultimately form the basis of that uniformity of commercial law in these States wliicli, sooner or later, must, from its very great convenience, ultimately prevail. If not sound in principle, it would with difliculty be maintained even by that Court. Aside from our former remarks, going, as we think, to show the soundness of the rule laid down in Swift v. Tyson, the course of decision in the several States since the date of that decision, show a general disposition to adopt it. Indeed, in many of the States, a similar rule prevailed before that. In Pennsylvania, Petrie v. Clark, 11 Serg. & R. 377 (1824), recognizes fully the sufficiency of the consideration for the indorsement of a note or bill where it is taken in payment of a prior debt, and even as collateral security, if there is any agreement to wait on the prior debt, or any other damage is sustained in consequence, or the in- dorsee waives or temporarily foregoes any of his other rights. This ground, assumed by Oilmm, J., at that early day, is certainly a very near approacli to the rule of Swift v. Tyson, and the present English rule upon the subject. The ouIt diiference seems to be in not holding that one who takes such paper as col- lateral security, is presumed to conduct differently on account of it. Walker v. Geisse, 4 Wharton, 252, maintains very much the same ground. In Maine, Holmes v. Smith, 16 Maine, 177, decides that, if such paper be taken in payment of a pre-existing debt, it defeats all equitable defences between the original parties. So also in New Hampshire, Williams v. Little, 11 N. Hamp. 66. The decision in this case, that such paper being indorsed as collateral secu- rity for a loan made at the time, is not held for value, is certainly not justified by the decisions in any other State, so far as I can find. The New York courts, who have resisted this rule with the most unflinching pertinacity, do not so hold, but the contrary. Williams v. Smith, 2 Hill, 301 ; Watson v. Cabot Bank, 5 Sandford, 423; Carlisle v. Wishart, 11 Ohio, 172, adopts the view of Holmes v. Smith. Blanchard v. Stevens, 3 Cush. 162, holds tlie same. So also Norton v. Walte, 20 Maine, 175. So too, Bostwick v. Dodge, 1 Douglass (Michigan), 413. Bush V. Peckard, 3 Harrington (Delaware), 385, goes to the same extent. ' So also the case of Brush v. Scribner, 11 Conn. 388. In none of these cases ex- cept Williams v. Little, did the question arise, whether taking a note or bill indorsed as collateral security for a prior debt, is the same as taking it in pay- ment. There is, therefore, every reason to suppose that no such distinction will be attempted in any of those States, unless it be the latter State. The case of Barney v. Earle, 13 Alabama, 106, is to the same extent. In Reddick v. Jones, 6 Iredell (North Carolina), 107, all distinction between taking negotiable paper in payment and as collateral security is repudiated, and both held to be valuable and sufficient considerations. In this case the paper was taken in payment, to be sure. So also in Georgia, Gibson v. Connor, 3 Kelly, 47, expressly decides that taking such paper as collateral security for a prior debt, is sufficient to shut out e(|uitable defences. So also in Indiana, Valette v. Mason, 1 Smith, 89. And the same is held in New Jersey, Allaire v. Hartshorn, 1 Zabriskie, 665 ; and in Chicopee Bank v. Chapin, 8 Met. 40, the same rule is recognized, although there the debt was created at the time the paper was negotiated as collateral security. Thus, we think, most of the States may be regarded as virtually hav- ing adopted the rule laid down in Swift v. Tyson. Chancellor Kent, too, 3 Com. 96 and note, adopts the same rule, " as the plainer and better doctrine; " and SWIFT V, TYSON. 201 Allen V. Kinfj, 4 McLean, C. C. 128. It is to be borne in mind that, upon the othiT side. New York contends strenuously that such paper, taken either in pay- ment or as security for a prior debt, is not held upon any suflicient considerati<jn to shut out equitable defences. I think the N<'\v York courts are con.si>ti'nt and sound, in denying all distinction between taking such pai)er in payment, and as security for a prior debt. There obviously is no difference in regard to the consideration. Hut, even in New York, they have felt compelled to decide that, if such paper*is taken in payment of a prior debt, being indorsed irithout rcrour.sc, the holder acijuires perfect title, and may shut out equitable defences between the original parties. Bank of St. Albans r. Gilliland, 2.'! Wend. oil. And if one gives his own note for such paper, it makes him a holder for value even in New York. 4 Barb. S. C. 304. These two eases seem very much like an abandonment of the principle of the rule even there. In Kentucky, too, a similar rule to that in New York has prevailed. Breckinridge v. Moore, 8 B. Monroe, 629. It is claimed, too, tliat Virginia adopts the same ground inTPren- tice V. Zane, 2 Grattan, 2(J2 ; liut that case does not decide the point, a new trhl being awarded for defect in the special verdict. Similar decisions have been made in Tennessee. In Wormley v. Lowry, 1 Humphrey, 468, Greene, J., .says: " Where one receives a note for a pre-existing debt, he parts with nothing. He is in the same situation after a successful defence by the maker, that he was be- fore he took the note." This is certaiidy a remarkable instance of the iton sequi- tur. to have imposed any delusion upon the mind of an experienced judge. He is in tlie same situation. But how can that be made to appear? He has let the collection of his debt or its security surcease for the time, and time is often fatal in such matters, and has incurred the expense and vexation of litigation ; and is still in the same situation. Surely he is in one respect; his debt is still unpaid ; and in another also, which is somewhat important, he is again out of court. And it seems to me that all refinements upon such absurd premises are always liable to involve one in similar contradictions and incomprehensible con- clusions. I certaiidy feel no disposition to deal lightly or in a vainglorious spirit, with the general argument upon which this view is attempted to be main- tained. It will be found ably stated by Walworth, Cliancellor, in Stalker v. Mc- Donal.l. 6 Hill, 93.' Tliis euil>races most of the decisions upon the subject both in this country and in England. And we could scarcely (juestion that the decided and increas- ing preponderance is in favor of the plaintiff's claim to hold the bill free fi-om all efjuities of the acceptor ; and, coinciding as it does with our views of the reason and justice of the case, we could not hesitate to adopt it. We might probably have decideil the case upon the Massachusetts law, as the contract seems, upon its face, to have been made with reference to that i)lace. But as this (juestion was not made in the Court below, it does not properly arise here, prc)l)aiily. Anel we have chosen to put the case upon the general rule of tiie law merchant, the ordinary presumption being that the law of any particular place, in regard to commercial contracts, conforms to tlie general law, unless the contrary be shown. The party who claims the benefit of the law of a particular place, on the ground of its lieing different from the general rule of law on that sul)ject, must prove the law of that place to be difl'crent. as he would prove any other fact in the case. This leaves that question open. 1 Ante, 169. 202 HOLDER FOR VALUE. We do not understand the plaintiff to claim seriously that he can recover the balance of this bill above the amount of the note which was due at the time of the negotiation of the bill, and as security for which it was negotiated. We do not see how he could claim that. The valuable consideration must be lim- ited to the amount of the prior debt, due at the time of the negotiation of the bill. 1. A note or bill q^gotiated in security for a debt not yet due, is not upon sufficient consideration ordinarily, unless the creditor wait in faith of the col- lateral after his debt becomes due. 2. If the debtor is notoriously insolvent before the note or bill is negotiated as collateral security, it is said the creditor can only stand upon the rights of his debtor. 3. If a note or bill is taken merely to collect for the debtor, to apply when collected, the creditor not becoming a party by indorsement so as to be bound to pursue the rules of the law merchant in making demand of payment and giv- ing notice back, the holder is merely the agent of the owner. De La Chaumette V. Bank of England, supra. Allen v. King, 4 McLean, C. C. 128. 4. So too probably, if it were shown positively that the holder gave no credit to the indorsed bill, and did, in no sense, conduct differently on that ac- count, he could not be regarded as a holder for value. These four exceptions are probably based upon good sense, and may be found sustained by authority, but we have no occasion to say more in regard to them here. This case stands upon the general broad ground of paper taken in the due course of business as collateral security for a debt due, and, prima facie, the holder is under such circumstances to be regarded as holding the paper for a valuable consideration, and so entitled to recover against an accommodation acceptor. Judgment reversed. The following note, prepared for the " American Law Register," in 1861, 1862, Vol. I. N. s. 35, by one of its present editors is now adopted as the best view we could give of the law upon the questions discussed up to that date. Le Breton v. Peirce, 2 Allen, 8 ; s. c, 9 Am. Law Reg. One of the questions involved in this case is of great interest with business men ; and it seems almost incomprehensible how there should have been so much conflict in the decisions of the courts in this country in regard to it. It probably may have arisen from not clearly discriminating the precise state of facts upon which the different views found themselves. This will readily be perceived by carefully examining the opinions of the different judges. But we think something of this embarrajisment may be got rid of by careful classification. I. Where the negotiation of the note or bill, as between debtor and creditor, is understood to operate either as conditional payment, or to create an ex[)ecta- tion between the parties that the collection of the principal debt shall be delayed until the time of payment of the collateral security, there can be no question that, upon principle and authority, the creditor must be said to take the paper upon full consideration, and in tlie due course of business. The conflict in the cases seems to arise upon the question, what is implied by accepting a note or bill, on time, fur a pre-existing debt then due? SWIFT V. TYSON. ■ 203 1. This will (Icpond, to some extent, u[)on eoinmercial usage, and the ordi- nary counse of doing business, and tlie natural implications, from the mere ait of accepting the note or bill, and is, therefore, matter of fact, in part, at leafct. The implication, as matter of flact, is different in some respects, whether the new note or bill is for the precise amount of the existing debt, as in Michigan St;iti! Hank v. The Estate of Leavenworth, 28 Vt. 2U9 ; or for a different sura, either more or less, and es|)ecially when it is for a less sum. Where the new security is for' the [irecise sum of the debt, and is payable on time, there is, in fact, a very strong inii)li<ation that the creditor will wait until the maturity of the new security. And in that view the cases all agree that the new security is taken for value, and tliat all ecpiities in favor of other parties will be excluded. And a similar imj)lication results where the new security is for a larger sum than the existing debt, as in Atkinson v. Brooks, 26 Vt. 569, supra. 2. But where the security is of a different character from the original debt, as where the creditor takes a mortgage from the debtor for the payment of the sum due in six months, it is not understood there is any implication of a contract to delay the collection of the debt of other parties. United States v. Hodge, 6 How. U. S. 279. 3. And where the new security is not given in lieu, or on account of tlie ex- isting debt, but as a mere pledge, the title of the new security remaining in the del»tor, and not passing to the creditor, thus making the creditor the mere trus- tee or agent of the debtor for the collection of the new security, to be applied wlien collected, upon the existing debt, between them, as was hehl in the case of Austin t'. Curtis, 31 Vt. 64; the cases all agree that there is no implied under- taking not to collect the existing debt in the mean time. The following cases may therefore be regarded free of doubt, both upon prin- ciple and autiiority : — 1. If the collateral is given in security at the time the debt is created, and as an inducement for the credit, and is a negotiable instrument and still current, and is, in fact, negotiated to the creditor so as to make him a party to the paper and impose upon him the duty of demand and notice, according to strict com- mercial usage, the cases all agree, so far as they have comprehended the ques- tions involved, that all ccpiities of third parties are excluded. Chicopee Bank v. ("iiajiin, 8 Met. 40; (h-iswolil v. Davis, Ml Vt. :)90 ; Palmer v. Richards, 1 Eng. L. »t E(|. 529. The declaration in Williams r. Little, 11 N. Hamp. 6(). and many other cases to the contrary, is certainly not maintainable upon any fair view of the (piestion in that precise form of it. 2. If the ( ollateral is not so negotiated as to make the creditor a party to the paper, and thus impose upon him the iluly of making demand and giving notice, but making the creditor the mere agent of the debtor for the collection of the new bill or note, there is no ground of excluding equities in other parties, unless the creditor negotiates the security thus left in his hand to some third party for value and while current. Palmer v. Richards, 1 Eng. L. & E(j. 529; Atkinson v. Brooks, 26 Vt. 569; I)e La C'haumette v. Bank of England, 9 B. & C. 208; Allen v. King, 4 McLean, 128. In such case, the debtor, it would seem, may recall his collaterals, as the creditor, being his agent, is under his control. But this is certainly not the ordinary case of collateral security. 204 • HOLDER -FOR VALUE. 3. Whore there is either an express contract with the creditor, that he shall, in consideration of the indorsement of the new bill or note, as collateral, delay the collection of the existing debt until the maturity of the new security; or where such an understanding is reasonably to be presumed from the facts and circumstances attending the transaction, and the delay is thereby obtained, there is no ground of question, since they stand upon the same footing in point of prin- ciple, as if an ailvance were made upon the credit of the new security. Okie v. Spencer, 2 Whart. 253; s. c, 2 Am. Lead. Cas. 232, and numerous cases there cited. These cases are so obvious upon principle, to the mind of all lawyers, that it would be a useless labor to attempt to render them more perspicuous. "What is self-evident thereby becomes incapable of simplification, since there is nothing more obvious by which it can be illustrated. II. In coming to the inquiry, what is the precise legal implication, from the mere fact of receiving a negotiable security without surrendering any of the former securities for an existing debt, we encounter more perplexity. 1. This will depend, undoubtedly, to a great extent upon the course of doing business, and the commercial usages of the place. From all we can learn of this commercial usage in England, judging both from the reported cases and the elementary works, we infer that each new security is there credited as so much cash at the time it is received, and is charged to the debtor, in case of dishonor, with the addition of expenses attending the protest. Poirier v. Morris, 20 Eng. L. & Eq. 103; Bosanquet v. Dudman, 1 Stark. 1. In this last case Lord Ellen- horougli said, " that whenever the acceptances exceed the cash balance, the plain- tiff holds all the collateral bills for value." Ex parte Pease, 19 Vesey, 25. In this mode of transacting business, the new notes or bills, from time to time remitted to the creditor by his debtor,' are upon receipt, passed to his credit, and thus virtually discounted. This, we apprehend, is the usual course of doing business in this country, where one has an open account with banks or bankers, and not unfrequently with brokers. How far it obtains with merchants it is not very certain, depending upon the nature and the amount of the dealings. But whenever the business is conducted in this form, there would be no difference as to the right of the creditor to hold the collaterals, whether they were taken in payment, or as security, or whether any advances in money were made at the precise time the colkiterals were negotiated, since passing thet!i to the credit of the debtor as so much money, is strictly advancing the money upon them. This, we apprehend, is the true explanation of the reason why we find so little said, in the English cases, or treatises on bills and notes in regard to these distinc- tions, which occupy so much space in our own reports. The case of the Bank of the Metropolis r. The New England Bank, 1 How. U. S. 234, is precisely of this character, and the creditor was allowed to hold the collaterals free from all equities. 2. But in whatever mode the business is transacted, if we look carefully into the true principles involved, we shall come much to the same result. It has always seemed to us that most of the controvei'sy upon this subject has grown out of the different sense in which the terms used are understood. If the terra •' collateral " is understood to import that the bills thus held are not taken on account of the existing debt, but only to be held until due, and if paid, the amount to be applied, and in the mean time the creditor assumes no respon- SWIFT V. TYSON. • 205 siliility in regard to them, exti-pt as the mere af^cnt of the debtor for cullertion, tlieie eonld be no <;rouiid uf claim that any property passed, or tliat exi.sting ecpntit s in former parties were extinguished. The En<;lisli eases in bankruptcy show very ek'arly that, in such eases, the title in tlie bills does not pass to the assignee, but may be retained by the correspondent. Ex parte Pease, 19 Vesey, 2o ; I)e la Chaumette r. The Bank of England, supra. . o. fJut we apineliend this is not the ordinary aeeeptanec of the term collateral, or collateral security ; for it is no security at all. J'lie etymology of collateral security indicates that it is something running along with, and, as it were, par- allel to, something else, of a similar character. It is collateral to the original indebtedness. It is, of course, a security, but it need not be in the precise form of the original. A bond may be secured by a collateral indebtedness in the form of a bill or note, and vice i-ersa, and the collateral will always include otlier p irties. lUit as far as the debtor is concerned, they are holden for the jiayment of the debt, and tlie creditor is equally at liberty to pursue all in all legal modes, unless there is some express or implied restriction upon the title of the collaterals. In this sense the title passes, by the negotiation of a bill or note, as collat- eral, the same as if the money were advanced. The only dilference is, that this form is (lispeuscd with, and the creditor retains his original security. Ordinarily, tlie collateral may not l)ind the same parties as the original security, or not all of thciii. In such cases the creditor will wish to retain the original, so as to lose none ot his security. All that the word collateral imports is, that there is a prior or existing debt, and the collateral depends upon that, stands or falls with it, so far as the creditor is concerned. 4. Hut if the party takes the indorsement of a bill of lading, or of a bill of exchange, or note, he acquires no different rights as to the parties to these new instruments, whether he takes them in payment, or as collateral to an existing debt. In either case he becomes a party to the transaction or contract to the fullest extent, and, in the case of negotiable instruments is bound to pursue the law merchant in making demand and giving notice, at the peril of making them his own, in actual exoneration of the party negotiating them. ;'). In such cases it can be of little importance whether the original debt is treated as extin<?iiished or not, since, if the debtor negotiate the note or bill by his own indorsement, which is the nsual course, he is bound by such indorse- ment, and the double bond is of no essential importance. And if the creditor do not take steps to charge his debtor as indorser, he makes the collateral his own in payment of his debt, and the result is the same, whether he is bound doubly or singly, since the release extinguishes both or one, as the case may be. G. The mere giving of a negotiable note or bill for an existing debt, is only conditional payment in any case, by the general law merchant, unless there is an express agreement that it shall extinguish the original debt. Upon the dis- honor of the new note or bill the creditor may sue the original debt, or the in- dorser of the new bill or note, at his election, so that the note or bill is but a ^ collateral in any case, unless there is some special contract, or some special usage, as in the New England States, that the acceptance of the new note or bill shall, j)rima facie, extinguish the debt. These propositions are familiar, and scarcely require specific authority for tlieir sup|)ort. The cases are carefully collated, in 2 Am. Lead. Cas. 241-273. 206 HOLDF]R FOR VALUE. III. Most of the conflicts in the American cases, and in all the English cases, •will be readily reconciled by reference to the foregoing distinctions. And those anomalous cases in the American States, which will not cdbie into these distinc- tions harmoniously, have been decided without properly apprehending the true principles involved, and must be left in their appropriate solitude until they are either abandoned, or else the course of business, or the principles of natural justice bcfome so far modified that they can be adopted by others. 1. In the case of Poirier v. Morris, supra, Crompton, J., said : " Whether the bill was a collateral security, or whether it had the effect of suspending the pay- ment of the antecedent debt, is quite immaterial." And Lord Campbell said: " There is nothing to make a difTerence between this and the common case, where a bill is taken as security for a debt, and in that case an antecedent debt is a sufficient consideration." And in Percival r. Frampton, 2 Cromp. M. &R. 180, Farkc, B., said: " If the note were given to the plaintiffs as security for a pre- vious debt, and they held it as such, they might be properly stated to be holders for valuable consideration." The same rule is recognized in numerous other English cases. Heywood v. Watson, 4 Bing. 496 ; Bosanquet v. Forster, 9 Car. & P. 659; Same v. Corser, ib. 664; 2 Am. Lead. Cas. 250, 251. The rule is thus stated in the work last quoted, which has almost become a book of author- ity in the American courts. " The result of the English cases would seem to be, that accepting a note or bill payable at a future day, on account of a pre-exist- ing debt, will suspend the debt until the note reaches maturity. Byles, Bills, 6th ed. 304." " The law is clear," said Lord Kenyan, in Steadman v. Gooch, 1 Esp. 4, " that if in payment of a debt the creditor is content to take a bill or note payable at a future day, he cannot legally commence an action for his original debt until such note or bill becomes payable and default is made in the pay- ment." And the cases all agree that no recovery can be had in any case, upon the original debt, where the collateral, given in security, was indorsed while current, and is still outstanding. Price v. Price, 16 Mees. & W. 232, 243. And in every case where the party accepts a collateral as security for a previous debt then due, there is no implied obligation not to negotiate the collateral before maturity. In nine cases out of ten that is done among business men immedi- ately, for the purpose of raising the money which should have been paid when the debt matured ; so that the collateral is always received for the ease of the debtor, and it is not ordinarily received as a mere pledge, so that nogotiating it would be a breach of good faith. On the contrary, the security being negotiable, passes as money, and operates as payment conditionally, and it is expected to be passed into the market at once. All that is implied, then, by its being collateral is, that there is no agreement or implication that the original debt is extinguished. The creditor intends to hold on to his original debt and all other securities. The new security, then, is collateral to the previous debt : but the new security, as between the parties to it and the creditor, is not affected b\' its being collateral to the previous debt, any differently from what it would be if it were received in extinguishment of it. It is negotiated in the fullest manner, and subject to the law merchant, and with no restrictions upon its further negotiation. We think, therefore, that the English courts have taken the true view in saying that such paper passes for value, and in the ordinary course of business, and excludes all existing equi- SWIFT V. TYSON. 207 ties, without regard to tlie understanding, agreement, or implication, as matter of fiict, that the creditor sliouhl delay the enforcement of the existing fleljt until the maturity of the ne# security. And that they are also right in saying that it makes no difference in principle or legal effect, whether the existing del)t is extinguished or not, or wiiether the original evidence of debt, or the existing securities are surrendered or not. Kearslake v. Morgan, .') T. R. ;j14; liaker v. Walker. U Mees. & W. 4(5.-) ; Helsi.aw v. Bush, 11 C. H. 191, 200 ; Ford v. Beech, 11 Q. B. 852, 873. These transactions, indorsing negotiable securities on ac- count of previous debts, without special agreement as to the effect, are there treated as " necessary exceptions to the general rules of law, in favor of the law merchant." This ride has been adopted in this country by the national tribunal of last resort. Swift v. Tyson, 16 Pet. 1. This decision was made upon the maturest consideration, and has prevailed in most of the States, and is expressly extended to collaterals. Bank of the Metropolis v. New England Bank, supra. Petrie v. Clark, 11 Serg. & R. 377, as early as 1824, adopts al- most precisely the same view, except that it is not assumed as matter of necessary implication that one who accepts security for a debt will, to some extent, change his conduct in consequence. See also Walker v. Geisse, 4 Whart. 2.^2. In Holmes V. Smyth, Ki Maine, 177, it is decided that where negotiable paper is taken in payment of a jjrevious debt, it will exclude all equities in other parties. To the same extent is Williams v. Little, supra. The same view is a<lopted in Carlisle u. Wishart. 11 Ohio, 172; Norton v. Waite, 20 Maine, 175; Bostwick V. Dodge, 1 Doug. ]\Iich. 413; Bush v. Peckard, 3 Harrington, 385; Brush v. Scribner, 11 Conn. 388; Barney i'. Earle, 13 Alabama, 106. In these cases, except Williams v. Little, the question did not arise in regard to negotiable paper being taken as collateral security. But in many of the States, as well as in Swift v. Tyson, and the Bank of the Metropolis v. The New England Bank, supra, all such distinction is disclaimed, and held to have no existence in principle. Reddick v. Jones, 6 Iredell, 107; Gibson v. Conner, :5 Kelley, 47 ; A^alette v. Mason, 1 Smith, 89 (Indiana) ; Allaire v. Hartshorn, 1 Zaliriskie, 665; Blanchard v. Stevens, 3 Cush. 162. The fallacy of suppos- ing that the creditor is in the same condition after having failed to enforce the collection of his collaterals, as if he had not received them, is here placed in the clearest light by Dewey, J. : " If the party had not received the note as collateral security, he might have pursued other remedies to enforce the secu- , rity or payment of his debt. He might have obtained other securities or, l)erhaps, payment in money. It is a fallacy to say that if the plaintiffs are defeated in their attempt to enforce the payment of these notes they are in as good a situation as they wuuM have been if the notes had not been transferred to them. That fact is assumed, not proved, and from the very nature of the case is matter of entire uncertainty. The convenience and safety of those deal- ing in negotiable, paper seem to require and justify the rule that when a person takes a negotiable note not overdue or ajtparently dishonored, and without no- tice, actual or constructive, of want of consideration or other defence thereto, whether in payment of a precedent debt or as collateral security lor a debt, the holder would have the legal right to enlorce the same against the parties thereto, notwithstanding such defence might not have been effectual as between the orig- inal parties." And the Supreme Court of Rhode Island, after very careful and 208 SWIFT V. TYSON. thorouffh examination of the cases, have recently come to the same conchision. Bank of the Ri'[)ul)lic r. Carrington, 5 11. I. fjlS. See also Atkinson v. Brooks, 26 Vt. biVd, supra. It scarcely seems necessary to eniinieral# the cases in New York and some other States which have followed their lead, where it has been held that paper negotiated as collateral on account of a previous debt is not taken for xalue, and is subject to all equities. We think it most imquestionablc that the New York courts are right in saying there is no distinction in principle between taking such paper in payment, and as collateral to a pre-existing debt. But- the trutii undoubtedly is, that either foi'ms a good consideration, and the title of the creditor depends upon the character of the paper, and is an exception to all rules attaching to the delivery of other property as security for a debt. The main point of the decision in the very case before us, that the trust which unquestionably attached to the property which formed the consideration of the bills could nut attach to the bills after they had been bona Jide negotiated in the market, althougii merely between debtor and creditor, and no new advance made spe- cifically on such account, goes exclusively upon the peculiar quality and character of negotiable paper as to the transmission of its title. It passes in the market as money. No man is bound to make any inquiry into the title of the holder. And even carelessness, short of bad faith, will not defeat one's title to such pa- per, taken for value. Goodman v. Harvey, 4 Adol. & Ellis, 870, overruling Gill V. Cubitt, 3 Barn. & C. 466. See Goodman v. Simonds, post. And whether one advances money and then takes the money in payment of his debt, or takes the note or bill on account of the debt or as collateral security is not material, either in fact or in law. And to be consistent, we must either adopt the New York rule that in both cases there is no value given for the new note or bill, or else insist that value is given in both cases. It is impossible, as it seems to us, to successfully contend for the contrary, unless where the previous debt is not due, or the new security is such that no trust is reposed in it; and these are exceptional cases. In every other case, the creditor will conduct differently on account of the new security, and will delay the collection of the previous debt until the result of the new security is deter- mined. And then it is impossible to restore the creditor to his former position, since time is a very important matter in commercial transactions. AVe trust that, before many years, all our American courts will adopt the sensible views of the English <'Ourts upon this question, and not expend so much strength here- after in determining the precise difference between receiving a note or bill ' ' on account of," " in payment of," " as collateral to," and " as security for," an ex- isting deljt, since no one whose perceptions were not rendered very acute by the study of refinements and hair-breadth distinctions, would ever dream that there could be any essential difference in the rights of the creditor to have the full benefits of the new securities, and of " all the collaterals," in the language of Lord Kllenborouyh in Bosanquet v. Dudman, supra, until he obtained full satis- faction of his debt. Smce the preparation of the foregoing note for the Law Register, in 1861. the only important English case bearing directly upon the question mainly involved, is Peacock v. Purcell, 10 Jur. x. s. 178; s. c. U C. B. N. s. 728. It is here decided that where the defendant, being indebted to the plaintiff, indorsed to him a bill of exchange of which he was indorsee, as collateral security SWIFT V. TYSON. 209 for the debt, ami the plaintifT failed to present it when due, or to give the defend- ant notice of its dishonor wlien presented, ho eould not recover, either upon the bill or the original delft. This seems to confirm one im])ortant contention in the preceding note and opinion ; viz., that although the negotiable securities are, in tcxnis, indorsed as eollaleral to an existing debt, the creditor will nevertheless become a party to the securities indorsed, with all the rights and duties of any other boiut J'ulc holder, wliicli will of necessity cut off efpiitalile defences. It seems to have been considered in some of the American cases that indorsing and passing negotiable paper as collateral security for a prior debt, does not give the creditor the rights, or impose upon him the duties, of a bona Jide holder for value. But the case last cited is very explicit upon that point. The ('art.s of this case were that the defendant was indebted to the plaintiff in a larger sum tlian the amount of the bill, and first offered the bill in part-payment of the debt, and the lialance in cash. The j)laintiff declined to accept the bill in part-payment, and the defendant then consented to it being retained as collateral security for an amount of the debt etiual to the bill, paying money for the balance. Tiie judges were very clear and explicit upon the point of the creditor having become a party to the bill, with all the rii/hts and duties pertaining to that rela- tion. Ili/les, J., said : "That as depositees of the bill, as tliey had the riyJits [one of which must be to exclude e(iuitable defences], so they had the duties of hold- ers. " The Court do not seem here to consider that the legal rights of the creditor, as indorsee, would be materially affected by the precise form of the con- ditions upon which he accepted the paper, provided he took it in the ordinary course of business, and so as to become a legal and substantial party to the instrument. WiUes, J., said : " It may be taken for and on an account [of the debt] but with an understanding that the party receiving it is to have the option of suing lor the debt before the maturity of the bill." The forms of expression most in use in the English courts, to express the idea of accepting negotiable paper on account of a prior debt are, " for and on account of; " "in payment o( ; " " instead of payment ; " and as " collateral security for " the debt. And i( we assume that the new paper is so received by the creditor, as that he becomes a valid party to it, it does not seem important either to his rights or interests, in which of the preceding forms he receives it. If received in j)ayment of the debt, the (lel)t is not thereby extinguished, unless there is some special agreement to tliat edect, as it will be where money or other property is given in payment of a debt. In the latter case the debt is gone, and cannot be revived unless the property is wholly worthless, and there was fraud. But in the case of accepting negotiable paper in payment of a debt, the only effect is to suspend the debt until the maturity of the paper. If the latter is then paid, it operates as absolute pay- ment of the debt; if not paid, the debt remains as before, and the creditor may sue upon It, or upon the new security, or upon both, until he obtains satis- faction. If the new paper is accepted as collateral security, there is no certain implica- tion tiiat the right of action upon the prior debt is suspended. It may be, or it may not. If there is a dear implication, as there will be In most eases, from the fact that the new security is cither of the same or greater amount, or If there is an express agreement to that effect, or circumstances from which a jury may infer one, then there is no substantial dillerence between the creditor accepting nego- 14 210 HOLDER FOR VALUE. liable paper in payment, or as collateral security for a prior debt. In both cases, the cause of action is suspended until the maturity of the new paper ; in both, if paid at maturity, it absolutely extinguishes the debt ; if not so paid, in either case, the creditor may sue upon the debt, or upon the new securities, or upon both, and in both cases, if the creditor do not pursue the rules of the law merchant with the new securities, he loses all remedy. In the case of Peacock v. Purcell, supra, Erie, C. J., said : "It clearly would be payment if, at maturity, the money were obtained for the bill." And the learned judge further argued, that the creditor having so conducted as to defeat all remedy upon the bill, he makes it his own in payment of the debt, and continued : " The security is marred by the plaintiff's own laches." " The legal effect," says the learned judge, " of taking a bill as collateral security, is that if, when the bill arrives at maturity, the holder is guilty of iaehes, and omits duly to present it and to give notice of its dishonor, if not paid the bill becomes money in his hands, as between him and the person from whom he received it." This last case affords, as we understand it, full confirma- tion of most of the propositions attempted to be maintained in the preceding note and opinion; viz., that all which is required, when current negotiable paper is indorsed on account of an existing debt, in order to exclude equitable defences is, that the creditor should so receive the new paper as to assume the position of a bona fide party to it. It does not seem indispensable that there shall be any contract, either express or implied, to suspend the remedy upon the debt, in order to give the creditor the rights of a bona fide holder of the new paper, although that is a decisive circum- stance in favor of the creditor being a bona fide holder when it exists, as it more commonly does, in all cases where new paper is accepted " instead of pajTuent" of an existing debt. But where there is no evidence of such an understanding, and even when there is an express reservation on the part of the creditor of the right to pursue his remedy upon the debt, as will be necessary, in order to avoid impairing the claim against guarantors and sureties ; even in such cases the rights of the creditor to be regarded as a bona fide holder, are most unquestion- able in every instance where he assumes the responsibility of a party to the paper. That, of itself, is consideration sufficient to give him all the rights of a bona fide purchaser, to the extent of his interest ; that is, until his debt is paid. ,This, we think, must now be regarded as the unquestionable state of the English law, since the decision of Peacock v. Purcell, supra, and the American law, since the decision of Swift v. Tyson, is fast approaching the same quiet and rational line of demarcation and rest. It is clear, of course, that if the new paper received " instead of payment" of a prior debt is not negotiable, in form, or not in fact negotiated ; Whistler v. Fos- ter, 1-i Com. B. N. s. 248 ; Boody v. Bartlett, 42 N. Hamp. 558 ; Franklin v. Two- good, 18 Iowa, 615 ; or if the creditor accepts the new paper merely for collection and "to be applied when collected," and not assuming the responsibility of a party ; in either of the preceding cases he cannot claim the rights of a party so as to exclude equitable defences. See the learned opinion o£ Bosworth, C. J., in Hoffman v. Miliar, 1 Am. Law Reg. n. s. 676, 681, and cases cited ; Warner v. Lee, 6 N. Y. (2 Seld.) 144 ; Scott v. Ocean Bank, 23 N. Y. 289 ; s. c, 5 Bosw. 192. It could serve no useful purpose to discuss the numerous recent decisions in the American States upon this point. Tiiere will be found among them all a constant SWIFT V. TYSON. 211 tendency towards the line indicated by the English decisions, and by Swift r. Tyson, in our own national court of last resort; whose authority may well be rej^anied as of paramount wi'ighl in regard to (juestions of general commercial law. That rule is fully recognize I in Massachusetts. Stoddard v. Kimball, G Cush. 4t!y ; Ives v. Fanners' IJank, 2 Allen, 23G ; Fislier v. Fisher, 98 Mass. 'M)'.\. So also in Connecticut. Bridgeport City Bank v. Welch, 2'J Conn. 475 ; Osgood V. Thompson Bank, 30 Conn. 27. Rhode Island seems to have ailupted much the same view. Cobb v. Doyle, 7 R. I. 550. So also in Calilbrnia. Naglcc r. Parrott. 14 Calif. 450; Robinson r. Smith, ib. 94. New Hapipshire seems still tenacious of maintaining some distinction between the rights of the creditor, wlien he accepts current negotiable paper in payment of, and when he receives it merely as collateral security for a prior debt. Fletcher v. Chase, Ki N. Hamp. 38 ; Rice v. Riatt, 17 id. 116. And Maine may be reckoned in the same category. Nutter v. Stover, 48 Me. 163. And in Vermont the law upon this question has certainly been very considerably agitated ; and, as is not uncommon in such cases, is not yet very clearly settled. Atkinson v. Brooks, supra, was followed in Michigan Bank v. Leavenworth, 28 Vt. 209, without any division of tiie Court ; wliile in Austin v. Curtis, 31 Vt. 64, one of the same judges, who had silently concurred in the two former decisions, delivered a labored and learned opinion, to show that accepting negotiable paper "instead of payment" of a debt falling due, if called " collateral security," does not raise any implication of the suspension of the remedy. The majority of the Court, as then constituted, concurred in tiiis view. This is by no means fatal to the ground maintained in the former cases of Atkinson v. Brooks, &c., but removes one ground of argu- ment upon wliicli they rest. Since that, it has been there held, that where one gives his own note for negotiable paper, he is entitled to all the rights of a bona Jide holder for value, and equitable defences are excluded. Adams v. Soule, 33 Vt. 538 ; s. p., Meckles v. Colvin, 4 Beav. 304. This must be regarded as one of the most suspicious modes of shutting out equitable defences ; far more so than where the paper passes, in the ordinary course of business, "instead of payment" of an existing debt, although called "collateral security." There are some other States where the courts still ^eem to cling to the fallacy of attempting to maintain an equitable distinction between passing negotiable paper in payment of or only as collateral security for an existing debt. Ryan r. Chew, 13 Iowa, 589. And there are others where this distinction is not appar- entlv adlicred to. Stevens v. Campbell, 13 Wis. 375; Outhwite v. Porter, 13 Uk-h. 533 ; Manning v. IMcClure, 3i) 111. 490 ; Stevens v. Ileyland, 11 :\Iiun. 198 ; Citizens' Bank r. Payne, 18 La. An. 222. This distinction was mainly a New York invention, and from the high judicial and commercial character of that State, it became nearly universal throughout the country at one time, and until the decision of Swift v. Tyson. But the New York courts, in the full tide of their exjieriinent, were consistent in one particular at least; they denied all dis- tinction between accepting negotiable paper in payment of and as collateral secu- rity for an existing debt. In yielding by degrees to the tide of the more recent decisions, they seem to have yielded the former point altogether.. Brown r. Leav- itt, 31 N. Y. 113 ; Pratt v. Coman, 37 N. Y. 440. They hold, too, that if such paper is given as collateral security for a loan made at the time, it will exclude equitable defences. Bank of New York v. Vanderhorst, 32 N. Y. 553; Book- 212 HOLDER FOR VALUE. man v. Metcalf, id. 591. So also where other collaterals are surrendered at the time. Park Bank v. Watson, 42 N. Y. 490. In the case of Bookman v. Metcalf, the debt was upon an account stated at the time tlie collaterals were received, and the creditor had permission to dispose of them for money in the market. This seems to be coming so near the rule of the English courts that we should not expect to hear much more of the distinction between payment and collateral security by way of negotiable paper, even in the New York courts. They will find it much easier to yield the whole distinction, and become consistent in truth, as they. formerly were in error, than to struggle against yielding a fallacy which is sure to escajje their grasp, sooner or later. There are numerous cases in the different States where the precise rule, or ratio decidendi, as some express it. in Swift v. Tyson, supra, has been adopted. Conkling v. Vail, 31 111. 166 ; Foy v. Blackstone, id. 538. Indeed, the rule that where current negotiable paper is accepted as payment of a pre-existing debt, equitable defences will be excluded, has become so nearly universal in the Amer- ican States, that it would be a useless labor to further enumerate the cases. There has been a marked change since the preparation of the preceding note and opinion, from the effect of Swift v. Tyson. And since New York has given in her adherence to the rule, there seems little use in further debate upon that pre- cise point. The recent case of May v. Quimby, 3 Bush, 96, takes the same view, when the paper is received in payment of a prior debt ; but the late cases, even Swift V. Tyson, are not referred to. All courts seem involuntarily to yield the point that the indorsee of negotia- ble paper delivered at the time of creating a new debt, although expressed to be as collateral security, must be regarded as a bona fide holder for value. Stotts V. Byers, 17 Iowa, 303; Lyon v. Ewings, 17 Wis. 61; Curtis v. Mohr, 18 id. 615. So also where any new credit or indulgence is given in faith of the new paper, all agree that equitable defences must be excluded. Housum v. Rogers, 40 Penn. State, 190; s. p.. Trustees v. Hill, 12 Iowa, 462; Wa?:hington Bank v. Krum, 15 id. 53. In some cases the mode of doing the business, and whether the collaterals or new securities are passed to the credit ,of the debtor at the time they are received, or only when they are collected, seems by some courts, to be held decisive of the point whether the holder can be regarded as a holder for value or not. Scott v. The Ocean Bank, 23 N. Y. 289. This latter ques- tion seems to be the same as that between the creditor becoming a party to the new paper, and only receiving it as the agent of the debtor for collection, to be applied when collected. In the latter case, of course, the creditor is never a holder for value. In all cases where the creditor so receives the new paper as to become a party to it, he does become for the time a debtor for it, and if he keeps any account of such paper, the proper mode is to pass it to the credit of the debtor, and charge it off when it proves unproductive. We apprehend this is the common course of dealings among merchants and bankers. And in such case, if the creditor reserve the right to sue upon the prior debt, still he cannot recover judgment upon the debt until he return the collaterals. They are payment until restored, or, at the least, quasi payment. The Court cannot know, except by their surrender, that the creditor may not have negotiated them for value ; and, if so, how is the debtor to recover them? Enough has been before said upon the question how far accepting new paper SWIFT V. TYSON. 213 instead of payment of an existing debt, will siispeml the remedy until the matu- rity of tiie new paper. It seems to be considered on all hands that, if the new paper is in terms accepted in payment of a prior debt, the remedy is suspended until the maturity of the new paper. Sayer v. Wagstaff, .5 Beav. 415, 4G2, by Lord Lau(/dalc, M. K. Jle The Hank, «&c, 11 Jur. n. s. 316; National Savings Bank v. Tranah, Law Kep. 2 (". P. 556; The Kimball, .'5 Wallace, 'il. In all other cases the implication will depend u[)on the circumstances, and may be submitted to the jury where there is any ground of controversy. Okie v. Spen- cer, 2 Wliart. 253; 2 Am. Lead. Cas. 232, and notes; Michigan Bank v. Leav- enworth, 2!S Vt. 209; Austin v. Curtis, 31 Vt. 64, and cases cited. It nee<l hardly be said that, where the collatiirals are not negotiable, or, if so, not so negotiated as to m.ake the creditor a valid party to tliem, but are only de- livered for collection or as a pledge, the eflect is the same only as to suspending the remedy upon the debt, as in the case of pledging any other property as col- lateral security for a debt. The debt and the collaterals are wholly independent of each other, and the creditor is responsible only for actual negligence in the col- lection of the securities. Van Wart v. Woolley, 3 Barn. & C. 439. And where negotiable paper is tuken as security for a debt without indorsement, although while still current and indorsed after it falls due, it will not have the elfcct to exclude ccjiiitable defences. Lancaster Nat. Bank v. Taylor, 100 Mass. .18. And so if the indorsement is procured after the holder knew thfe paper to be fraudulent. Whistler v. Foster, 14 Com. B. N. s. 246, 248. There are some other questions incidentally connected with the one already discussed, which may be here briefly adverted to. There is always a presump- tion as to a negotiable note or bill, when the name of the pityee appears indorsed upon it, that it was done while the same was current, unless the contrary appear. Leland v. Farnham, 25 Vt. 553. And the admissions of the payee, made after he is thus presumed to have parted with his interest, are not competent evidence to show the time such paper was indorsed. Ibid. The cases are too numerous upon these points to need citation, and all in one direction. And where negotiable paper is taken while current, it raises the presumption that it was taken hona fide and for value. Pettee v. Prout, ;jo.s7, 217. And upon the maker showing that the same was given without consideration, or was fraud- ulently obtained, as between the original parties, the holder cannot be required to prove that he gave value for it unless his title is in some way impeached. Woodman v. Churchill, 52 Me. 58. A different rule at one time obtained in the English courts. Bassett r. Dodgin, 10 Bing. 40; s. c, 25 Eng. Com. Law, 25; Paterson r. Ilardacre, 4 Taunt. 114; Heath v. Sansom, 2 Barn. & Adol. 291. These cases are reviewed in Sanford r. Norton, 14 Vt. 228, and the doctrine indorsed. And there is no doul)t much to be said in favor of its justice and equity, and as a safeguard against dishonest practices. But the great incon- venience of the rule, and the embarrassment thereby produced among commercial men, has caused it to be long since abandoned, and the rule in Woodman v. Churchill, sujyra, to be adopted, which has now become nearly or quite univer- sal ; too much so to require the further citation of cases. What precise evidence will be recpiired to impeach the title of the holder, must depend largely upon the circumstances of each case. It must be shown that the note was in some way discredited when the bolder took it, in order to subject 214 HOLDER FOR VALUE. hira to such equitable defences as Avould be valid between the original parties, or that he knew of some defect in it. . If the note or bill were payable at a time certain, and that had passed when the holder became a party, the cases all agree that he holds it subject to all equitable defences. A note or bill overdue can- not be said to pass in the ordinary course of business. Farrington v. The Park Bank, 39 Barb. 045. And it has been held that, where a note is payable by instalments, and one of the instalments is overdue, the person who takes it will be subject to all equities, on the ground that the paper was discredited at the time of the transfer. Vinton v. King, 4 Allen, 562. But where more than one note is executed upon the same consideration, they are not all to be regarded as dishonored, when one of them is overdue and not paid. Boss v. Hewitt, 15 Wis. 260. Nor will the fiict that the interest had not been paid annually, ac- cording to the terms of the notes, discredit them. Ibid. But there is some conflict in the cases as to the time when paper payable on demand may be said to become dishonored or discredited. In one recent case it was held never to be so discredited until after demand and refusal of payment. Stewart v. Smith, 28 111. 397. In another lite case such paper was held not dis- credited when transferred three months after date. Herrick v. Woolverton, 42 Barb. 50. In Tomlinson Co. v. Kinsella, 31 Conn. 208, it is said that the time when a note payable on demand will become discredited will depend upon the circumstances of each case, and the understanding of the parties, and is a proper question for the jury. It has been held that a note payable on time and trans- ferred on the last day of grace, is discredited. Pine v. Smith, 11 Gray, 38. The fact that the paper has been before discounted at the bank and taken up by the party benefited, will not discredit the same if it is still current. Harpham v. Haynes, 30 111. 404. Slight discount from the amount of the paper will not ex- pose the holder's title to suspicion or defeat. Eckhert v. Cameron, 43 Penn. State, 120; Baily v. Smith, 14 Ohio, N. s. 396. But a sale very much below the fair value might have that effect. Ibid. But see Brown v. Penfield, 36 N. Y. 473, contra . It is scarcely necessary to say that one must pay value for a note or bill in order to be regarded a honajidc holder, so as to exclude equitable defences ; and it will not avail to that end that the paper was still current and in no sense discredited at the time of the transfer. Harpham v. Haynes, 30 111. 404. And if one who pays value for current paper leaves it with the payee for collection, and he trans- fers it for value to one ignorant of the facts, the first purchaser's title will fail, unless he can impeach the second transfer as against the holder. Livingston v. Littell, 15 Wis. 218. But notice to the purchaser of negotiable paper that it was given in paynient of a subscription to railway stock, will not entitle the maker to show that the same was obtained by fraud. Andrews v. Hart, 17 Wis. 297. The cases are all one way upon the point that even a bona Jlde holder can only recover to the extent of his interest at the time of the judgment. Easter V. Minard, 26 111. 494. This was where the plaintiffs' debt had been paid pend- ing the action. If the first indorsee takes negotiable paper while current, the title of his indorsee will not be affected by the fact that he acquired title after the same became due. Lickbarrow v. Mason, 2 Term, 63, 71 ; Robinson v. Reynolds, 2 SWIFT V. TYSON. 215 Q. B. 196, 211 ; Bassett v. Avery, Ih Ohio, N. s. 299 ; Peabody «. Rees. 18 Iowa, 571. See also Woodinaii v. C'hiircliill, 52 Me. 58. And tlie bona fide holder of negotiable paper is not allected by any knowledge obtained after his title be- comes perfected. Hoge r. Lansing, 35 N. Y. 13G. Where the time of payment of a negotiable note is extended by an agreement indorsed upon the back, one who takes it afterwards will be subject to all eijuitios between the parties. i\Iarcal v. Melliet, 18 La. An. 223. Wliere the acceptance of a bill appears upon its face to have been by procu- ration as it is called, that is, by the agent of the acceptor or by some one claiming to act as his agent, all purchasers will be affected by any want of authority in such agent. Stagg v. Elliott, 12 C. B. n. s. 373; s. c, 9 Jur. n. s. 158. But the acceptance of a bill drawn by procuration admits the power of the agent, and the acceptor is estopped to deny it. Ashpitel v. Bryan, 3 F. & F. 183 ; s. c, 9 Jur. X. s. 791. And where a note or bill is made or accepted in blank, this will enable the party intrusted with the paper so in blank to fill it with any amount unless there is some limitation by way of the stamp or figures in the margin. Henderson v. Bondurant, 39 Mo. 3G9. The law in regard to acceptances and other acts in connection with negotiable paper being made in blank, is considerably discussed in Van Duzer v. Howe, 21 N. Y. 531, and the authorities cited and commented upon. But one very impor- tant consideration connected with the subject is not here adverted to, and does not seem to have much attracted the notice of the profession or the courts. We refer to the proper limitations indicated by a signature in blank. The person who ac- cepts it of course understands that he may not use it beyond the amount for which it was given, and that if he do so he will incur the penalties of forgery. Rex V. Hart, 7 Car. & P. 652 ; Reg. r.-Wilson, 2 Car. & K. 527 ; Reg. v. Bateman, 1 Cox, Crim. Cas. 186. But nevertheless for the vindication of the title of a bona fide holder for value, he is permitted, as in some other cases, to trace his title through a transaction which was in fact felonious. But the party guilty can have no benefit of such a filling up of the blank signature, even to the extent for which it was given. And even an indorsee for value of a blank acceptance or signature thus wrongfully filled up, cannot recover upon it, provided he were cognizant of the fact that it was issued blank and fdled up by force of the author- ity confided to a former holder. It is the same as an acceptance by procuration. Knowledge of the fact of a note or bill having been made by virtue of an au- thority is sufficient to put any party taking the paper with such knowledge upon incpiiry as to the extent of such authority. And whether he make the inquiry or accept the paper without it, he will be subject to any defence depending upon an excess or abuse of such authority. This is fully recognized by Vice-Chancellor Stuart, in Hatch v. Searles. 2 Sm. & Gif. 147. The learned judge said : " If the holder has notice of the imperfection [that the signature was made in blank] he can be in no better situation than the person who took it in blank, as to any right against the acceptor or indorser who gave it in blank." This qualification of the general rule laid down in the leading case of Russel v. LangstaflTe, 2 Doug. 514, and others following it, seems to be entirely well established in the English courts. But we infer that it has not, as yet, obtained recognition with us to the same extent, although in principle it seems most unquestionable. But as a general rule it will not be sufficient to show facts known to the holder 216 HOLDER FOR VALUE. before purchase, suflicient to put him upon inquiry, as was formerly held in Gill V. Cubitt, 3 Barn. & C. 466. That case was overruled in Goodman v. Harvey, 4 Adol. & J^Uis, 870 ; and it is now entirely well settled that, in order to impeach the title of the purchaser of current negotiable paper, it must be shown that he acted in bad foitli, believing at the time of the purchase that there was some infirmity about the paper. This is rather an extreme view, and not required in any other similar case, but it has been considered necessary in order to protect the title to negotiable paper, and is settled beyond all question. See Goodman v. Simonds, post, 239. It could answer no good purpose to say what is most unquestionable, that the doctrine of Gill v. Cubitt will answer the necessities of fair dealers in most cases, since that class of holders will not ordinarily shrink from the strictest scrutiny in regard to the circumstances under which their title was acquired. The more recent decisions are all based upon Goodman v. Harvey ; and Gill v. Cubitt is never named except to be condemned. We recollect the time when the doctrine of the latter case was regarded as quite commendable, and entirely salutary. And while the English courts now require proof of bad faith in the purchase in order to impeach the title of the holder, it is not uncommon there to find cases submitted to the jury upon that question, where the evidence would not seem of the most conclusive character, not more so than that required in Gill V. Cubitt. We should not be surprised to have the pendulum of judicial opinion swing back more and more in that direction, until we reach the old equitable ground of notice sufficient to put the party on inquiry, — the same rule by which all our other legal and equitable rights are considered as suf- ficiently protected, and which might be sufficient for the holders of nego- tiable paper if it were not considered specially sacred. See Dailey v. De Frees, 11 W. R. 376 ; Steinhart v. Boker, 34 Barb. 436 ; Benior v. Paquin, 40 Vt. 199 ; Bassett v. Avery, 15 Ohio, n. .s. 299. But the doctrine of Goodman v. Harvey is now too well established to be called in question. We only desire that specu- lators in negotiable paper shall be content to shield themselves under the rule in that case, and not ask the courts finally to hold that nothing short of proof of a felonious intent shall impeach their title. There seems to be some conflict in the recent cases, how far the fact of nego- tiable paper being made or indorsed for the accommodation of the parties in interest will affiard ground of defence against holders for value, but who received the same when overdue, or with notice that it was accommodation paper. It was held at an early day, Charles v. Marsden, 1 Taunt. 224, that it affiarded no ground of defence to a note taken before due for value, that the indorsee knew at the time that the maker made it for accommodation of the payee. And the same rule has been since repeatedly recognized. Powell v. Waters, 17 Johns. 176 ; Grandin v. Leroy, 2 Paige, 509 ; Bank of Ireland v. Beresford, 6 Dow, 237. And if the indorsee knew of the fact of the paper being made for accom- modation at the time he received it, there could be no diffijrence whether he took it before or after it fell due. The question would be in either case, how far the fact of its being given for accommodation affiarded ground of defence in the hands of the holder for value. And that question, as it seems to us, will always depend upon whether the paper was used by the party accommodated in the manner contem- plated by the original parties, and especially by those signing or indorsing for accommodation. It is true that this question will not be important where the PETTEE V. PIIOUT. 217 pajjcr passes while current; hut where the paper is taken when overdue, or with knowledf^e tliat it was j^iven for accouunodation, the defence is eijually available. And in both cases the proper question seems to be, whether the paper was mis- applied by the party accommodated. If not, the holder for value may i ecover to the extent of his interest. East River Bank v. liutterworth, 4o Barb. 47G. But in a recent case, Chester r. Dorr, 41 N. Y. 279, by a divided court, a contrary rule seems to be declared. That was an action ajiainst an accouunodation in- dorser. No question is made in the opinion, whether the party accommodated used the paper diiferently from what he was expected to do. The majority of the Court seemed to consider that, unless the paper was negotiated while current, all parties sij^ning for accommodation might claim to be exonerated. This has certainly not hitherto been the understanding of the profession in regard to ac- commodation paper, unless the jiaper was in some way misapplied l)y the party acconunodatcd. The Court here argued that the indorser for accouunodation was entitled to make the same defence against a purchaser for value after the note fell due, which lie might if the action were for the benefit of the party ac- commodated. But this will surely not be so where the indorsement is made to ena- ble the party acconmiodated to negotiate the paper, to raise money, or to secure or pay his own debts. In sucli cases the indorser is equally l)ouud, whether the transfer is made before or after the paper falls due, and whether the purchaser kn< \v the indorsement was made for accommodation or not. To hold otherwise would be to encourage fraud, and to relieve the party from the very respon- sibility which he expected to meet, and which, upon every principle of justice and fair dealing, he should be compelled to abide by. Seneca Pettee v. Richard Prout. (3 dray, 502. Supreme Court of Massachusetts, September, 1855.) Piisiim/ilion of title. — In an action upon a note payable to A, or bearer, the production of tlic note by the plaintiff, H, is suthcient evidence of his title, tliou-^li he is the general agent of A, who, the answer alleges, is the owner of tiie note. Equities. — One to whom a note payable to A, or bearer, is transferred before matu- rity, takes it subject to no equities or rights of set-off which the maker might have against A. Action of contract on a promissory note for $50, dated ^farch 14, IS")!, signed by the defendant, and payable in one year to tlie Cheshire Iron Works or bearer, with interest. Tiie defendant, in his answer, denied that the phiintiff was the owner and bearer of the note sued u))on, and alleged that it was the property of the Cheshire Iron Works ; and also filed a declaration in set-off upon the following note: "$49.74. Cheshire, June 11, ISol. Six 218 HOLDER FOR VALUE. months after date we promise to pay to the order of Oilman Bow- ker, forty-nine dollars -{^\, value received, ten dollars of which is to be paid in goods, with interest. " Cheshire Iron Works, by S. Pettee, general agent." The case was submitted to the Court upon a statement of facts, in which it was agreed that the plaintiff was the general agent of the Cheshire Iron Works ; that the two notes were duly executed on the days of their respective dates ; that the note in set-off was assigned by the holder thereof to the defendant, for a valuable.con- sideration, with the intention of securing a debt against the Cheshire Iron Works ; that the Cheshire Iron Works were insol- vent, and had no property ; and that their stockholders, of whom the plaintiff was one, were individually liable for their debts. There being no evidence to whom the note sued upon belonged, beyond the note itself, the defendant contended that tlie plaintiff had not proved his title to the note ; and further contended that if he had, the note for $49.74 should be allowed in set-off. Shaw, C. J. The plaintiff brings his action, as bearer of a note made by the defendant to the Cheshire Iron Works or bearer. He therefore claims as the holder of a negotiable promissory note, payable on time, and not dishonored ; and if he establishes this title by proof, he is entitled to the same privileges and immunities as an indorsee, having taken a note by indorsement in the course of business, before it has become due. He is not subject to any equities as between the promisor and the original payee, nor to the set-off of any debt, legal or equitable, which the promisor may afterwards acquire. Wheeler v. Guild, 20 Pick. 545. By giving a note payable to bearer at a future day, which is strictly a nego- tiable note, the defendant agreed to pay the amount to any person to whom it should be transferred, before the day of payment, with- out claiming to set off any demand which he then had or might have, against the promisee. It is in this respect like mercantile notes (in use, we believe, in some of the States where the law allows set-offs and other equitable defences, even against indorsees of promissory notes),- payable " without defalcation," thereby meaning, by force of the contract itself, to bind the maker to pay the amount absolutely to the regular holder, and renouncing any benefit of set-off or other equitable defence against the payee. Then tlie question is, as to the proof. Where a plaintiff brings PETTEE V. PROUT. 219 the note flcclared upon in his hand, and olTers it in evidence, this is not only evidence tiiat he is the bearer, but also raises a pro- sumption of fact that he is the owner ; and this will stand as proof of title, until other evidence is produced to control it. Ordinarily, such bearer, relying on the general presumption, has no means of proving the transfer of the note to himself. The defendant contends that, as the plaintiff was the general agent of the corporation to whom the note was payable, and, as such, had the custody of all their notes, his possession may have been the possession of the corporation. But we think this fact alone is not sufiicicnt to rebut the general presumption. The demand relied on l)y the defendant is a note signed by the Cheshire Iron Works, payees of the note in suit, and payable to order; still it was not negotial^le, because payable in part in goods. A negotiable note must be payable in money. But though the defendant could not sue on this note in his own name, yet we be- lieve by the Rev. Sts. c. 9G, § 5, as the assignee of a chose in action, the holder of such note might use it as a set-off, in a proper case, as against a suit brought by the debtor, in the same manner as if it were a legal debt. But it is unnecessary further to remark on the validity of the set-off; the ground of our decision is, that the plaintiff held the note in suit under such a title that no de- mand of the defendant, legal or equitable, against the Cheshire Iron Works, could avail him as a set-off. Judgment for the plaintiff . % See Ellicott v. Martin, G Md. 509 ; Goodman i*. Simonds, pout, 239 ; Picquet v. Curtis, 1 Sumner, 478; Hunter v. Kibbe, 5 McLean, 279; Warren e. Gilman, 15 Me. 70; note to Swift v. Tyson, ante, 213; and the following case. 220 holder for value. John M. Way v. Ivory W. Richardson. (3 Gray, -112. Supreme Court of Massachusetts, March, 1855.) Presumption of title. — It is not competent for the defendant to deny that the plaintiff is the owner and holder of a note upon which he brings suit as such, without trav- ersing tlie signature, or the indorsement, or the delivery of the note ; and in such case evidence is inadmissible to prove that the plaintiff never owned the note, and never employed counsel to prosecute the action, and that he had no interest in the suit. Action op contract on a promissory note for 8100, made by the defendant, payable to his own order, and thus indorsed : " I. W. Richardson," " Without recourse, J. Wetherbee, Jr." Answer, that the defendant executed the note declared upon, without any consideration, and for the accommodation of Nathaniel Richard- son ; that the note was delivered by Nathaniel Richardson to "Wetherbee, and, at the time it fell due, was in the hands of Weth- erbee, and held by him, and was paid by Nathaniel Richardson to Wetherbee while it was so in his hands ; that Wetherbee is still the owner of the note, and that this suit is prosecuted for his ben- efit ; and that if the plaintiff is the owner of the note, he received it after it had been paid and was overdue, with a full knowledge that it was an accommodation note, and had been paid, and that he paid no consideration for it. Trial in the Court of. Common Pleas at January term, 1854, before Wells, C. J., who signed the following bill of exceptions : — " The plaintiff read the note declared on and the indorsements thereon to the jury, and rested his case. The defendant then offered to prove that the plaintiff in this action never owned the note declared upon, and never had said note in his possession, nor employed counsel to pursue or prosecute said action ; and that the plaintiff had no interest in the suit or judgment, should one be recovered in his favor ; and that the note was never assigned to the plaintiff by delivery or otherwise ; and that the plaintiff never paid any thing for said note. To this the plaintiff objected, upon two grounds : first, that it was not admissible under the defend- ant's answer ; second, that if proved, it would form no defence to this action. And the Court rejected the evidence. The defendant offered no other evidence, and the Court directed a verdict for the plaintiff. To all which rulings of the Court the defendant excepts." WAY V. RICHARDSON. 221 Shaw, C. J. The evidence offered by the defendant was rightly rejected. Indci)endcntly of" the consideration that it was not sjjecified in the answer, the evidence would have constituted no defence. The action was uj)on a note made by the defendant, payable to his own order, and by him itidorsed in blank, and then by Wetherbee indorsed in blank, by which the plaintiff, if holder, had a ri<2;ht to fill up the indorsements, and make the note payable to himself, as second indorsee, which we are to presume was done, or considered as done, at the trial. The genuineness of the sig- nature and indorsements was admitted. This, with the production of the note, was priiiKi farir evidence of title, and good unless rebutted ; for, although Wetherljee's indorsement was " without recourse," yet this was as effective to transfer the note, as if those words had not been used ; it was a blank indorsement. The plaintiff, by his attorney, whose authority to appear it was then too late to contest, produced the note at the trial ; the |)lain- titf's possession must be presumed to be lawful, and to have existed from the time of the indorsement, until the contrary ap- peared ; and no evidence to the contrary was offered. It was not competent for the defendant to deny that the plaintiff was the owner and holder of the note, without traversing the signature, or the indorsement, or the delivery of the note, which he did not offer to do. The plaintiff was not bound to prove that he gave value for it ; the first indorsee might have given it to him, or authorized him to sue on it as his trustee. If the plaintiff's possession of the note was lawful, it nuist have been delivered to him by the holder. Had the defendant even proved what in his answer he pro- posed to prove, — that the note was indorsed to the plaintiff after it was due, — this would not have been of itself a defence. A note does not cease to be ncgolial)le and transferaljle by indorsement or delivery, when it becomes due. Such proof wouUl merely have let in the defendant to j)roof that it had been paid to some ante- cedent holder, or that he had a good defence against the plaintiff's indorser. But no offer was made of any such proof. The cases cited by the defendant afford no authority to sustain a contrary view. In Richardson v. Lincoln, 5 ^let. 201, there was a constructive delivery of the note to the plaintiff's attorney, simultaneous with the indorsement. In Emmett v. Tottenham, 8 Exch. 88-4, the decision was placed distinctly on the ground that 222 HOLDER FOR VALUE. the action was brought upon a copy of the note, and that there was no delivery of the note to the plaintiff, or to any one as his agent, until some time after the commencement of the action. Exceptions overruled. See ante, note to Swift r. Tyson, p. 213, also the preceding case and citations. Davis et al. v. M'Cready et al. (17 N. Y. [3 Smith], 230. Court of Appeals of New York, March, 1858.) Defence of breach of executory agreement. — It is no ground of defence to an action against the acceptor of a bill that the holder was informed that it was accepted in consideration of an executory contract, if he had no notice of its breach. Action by indorsees against acceptors of a bill of exchange ac- cepted in part-payment for the price of a brig. It was agreed that the vessel should be put in good repair, and made tight, staunch, and strong. Defence that this agreement had not been performed. Plaintiffs paid full value for the bill, and took it with a knowledge of the said agreement ; but without knowledge of the breach. Denio, J. The sale of the brig and the executory agreement of the vendors to make the necessary repairs to render her sea- worthy, formed a good legal consideration for the acceptance of the bill. When, therefore, the plaintiffs at the time of receiving it were informed that it was accepted on that consideration, they were not notified of any fact which impeached its validity or ren- dered it in any respect suspicious. If they had known nothing of the consideration upon which it was given, they would nevertheless have been bona fide holders, and they are not in a worse condition because they had been informed that it was accepted on account of a transaction legal in itself, and which formed an adequate consideration for the undertaking of the acceptance. Considera- tions founded upon reciprocal promises of the parties are of com- mon occurrence in business, and bills and notes supported by such considerations have always been held valid. It is upon this prin- ciple that cross notes or acceptances for mutual accommodation have been upheld whenever they have come before the courts. DAVIS V. m'creadt. 223 Cameron v. Chappcll, 24 Wend. 94, and cases cited by Nelson, J. ; Dowc V. Schutt, 2 Dcnio, 021. In the first of these cases the acceptance sued on was given in consideration of a promise by the drawer to send the acceptor six Imndred busliels of wheat at the opening of navigation the ensuing year. The bill became payal)le the twelfth of May, after the time when the wheat should have been delivered, and it was shown it never had been deliv- ered. The Court held that the acceptance was not for accommo- dation, but was business paper, and was valid in the hands of the drawer, so that usury could not be set up against the plaintiffs, who had discounted it for a premium beyond the legal rate of in- terest. If one will issue his negotiable paper and send it into the world, in consideration of an engagement of the party with whom he deals to do some act for his benefit in future, he declares in effect that he will pay the note or bill according to its terms to any one who shall become the holder for value in the course of business, and rely for his own indemnity upon the promise he has received as the consideration for issuing it. The plaintiffs were not bound to inquire whether the vendors of the vessel had performed their agreement. A party receiving a bill is not put ui)on inquiry unless circumstances of suspicion have come to his knowledge ; ^ and I have already said that there was nothing suspicious or out of the common course of business, in the circumstances out of which this bill arose. The agent of the acceptors chose to rely upon the personal responsibility of the vendors of tlic vessel so far as the repairs were concerned. As they gave their acceptance upon time, which they knew might be transferred to a bona fid r holder the next day, so it is presumed they would have parted with their money upon the personal en- gagement of the vendors if a delay in payment had not been ma- terial to them. It would not, in my opinion, alter the case if it could be shown that the vendors, the payees of the bill, had broken their contract respecting the repairs before they negotiated tiie paper to the plaintiffs, it being found that the latter had no notice of the breacii. The plaintiffs were not bound to follow up the transactions between the original parties to the bill. To hold otherwise would attach an inconvenient and repugnant condition to such an acceptance. By accepting simply and unconditionally a negotiable bill, the defendants are to be held as intending to give ^ Nothing short of proof of bad faith will repel the prima facie title of the holder. See Goodman v. Simonds, post, 239. 224- HOLDER FOR VALUE. it all the qualities of commercial paper, one of which is that it shaU circulate freely for the purposes of business, and be available in the hands of any holder for value. To decide that one who proposed to purchase it, and who had a Icnowledge of the nature of the transaction upon which it was given, must await the con- summation of that transaction, would essentially impair its char- acter and legal effect. But in this case it was not known to any one tlfkt the payees had broken their agreement when the plain- tiffs took the bill. The payees insisted that they had sufficiently re- paired the vessel before she was sent to sea, and the plaintiffs' agent, though he distrusted her condition as to seaworthiness, concluded to receive and despatch her on her voyage to New York. Before she arrived at her destination the plaintiffs purchased the bill. After that it was demonstrated by the event that* the repairs were insufficient ; for she leaked to such an extent as to damage the cargo, and required extensive repairs upon her arrival. If, there- fore, the plaintiffs had made inquiries when the bill was offered to them they would have learned that the plaintiffs' agent had ac- cepted the brig as a seaworthy vessel, and had sent her to sea. So far from casting suspicion upon the bill this intelligence would have confirmed them in the belief that it ought to be paid according to its tenor. I conclude, therefore, that there were no merits in the defence. All the rulings of the referee to which exceptions were taken, but one, related to testimony concerning breach of the agreement of repairs, and the damages consequent thereon. The questions overruled were wholly immaterial, because the plaintiffs could not be affected by the breach and were not responsible for the dam- ages. There is an exception of a different character. Before the brig sailed, the defendants' agent made complaints to the vendors of the insufficiency of the repairs ; the latter declared them suffi- cient. The agent was sworn on behalf of the defendants, and testified that upon an occasion when he made such complaint, Mr. Davis, one of the plaintiffs, was present. This testimony was given without objection. Subsequently, the defendants offered to prove by the same witness that Davis was present when he made such a complaint, and it is stated that the referee overruled the offer. The desire seems to have been to repeat the evidence already given. The fact that one of the plaintiffs was present when the complaint was made had some tendency to show that he had knowledge of the breach of the condition ; and the ruling cannot be defended BREWSTER V. M'CARDEL. 225 except on the supnosition that the offtir was rejected because the fact was ahcady suniciently proved. It does not appear what4J,lie objection was which tiie plaintiffs' counsel made, or indeed that he did object. A party seeking a new trial on account of an erro- neous exclusion of evidence, must show that he may have been in- jured by the ruling. As the precise fact sought to be proved was already in evidence, no prejudice could result from the referee's refusing to have it repeated. These views lead to the affirinance of the judgment of the Court of Common Pleas. All the judges concurring, Judgment affirmed. In Craig v. Sibbctt, 15 Penn. State (3 Harris), 288, it is held that tlie mere knowledge of the holder of the terms of the arrangement between the drawer and acceptor is not material. In this case the holders were told that the bill was drawn against Hour shipped by the drawer to the acceptor, and the bill of lading was indorsed to them as security in case of non-acceptance. But the fact was that the signature of the bill of lading was fraudulently procured. Per Gibson, C. J. : *' The only additional matter is that the bill of lading was in- dorsed to the plaintiffs as a security in case of non-acceptance ; and that it was presented to the defendants with the bill of exchange ; whence an argument that, as the plaintiffs were apprised of the course of dealing, they must have known the acceptance was on a tacit condition that the flour should be forwarded. Has it ever been supposed that the purchaser of a bill drawn against cotton to be shipped to Liverpool is bound to guaranty the delivery of it? . . . The cases show that the payee looks only to the terms of the acceptance ; and that when he has acted in good faith, he is not to be prejudiced by the acts of the drawer." Brewster v. McC.\rdel. (b Wendell, 478. Supreme Court of New York, January, 1832.) Postdated jmper. — An indorsee for value of a postdated note may recover tliereon, though lie took it before tlie date at wliich it purported to be executed. The case is sufficiently stated in the opinion of the Court. SuTHEHLAND, J. The judgc erred in charging the jury that the circumstance of the note having been negotiated to the plaintiff" before the day when it bore date was a strong circumstance of suspicion sufficient to put him upon inquiry, and that he therefore 15 226 HOLDER FOR VALUE. took it subject to any defence which might be made as against the original payee. The nolo was actually made and delivered to the payee in Oc- tober, 1828, although it bore date in May, 1829, and was payable ninety days after date. It was transferred to the plaintiff for a valu- able consideration in February, 1829, six months before it became due. The date of the notes is in no respect material, except for the purpose of determining when it is payable. There is no legal objection either to antedating or postdating a note, and I am not prepared to say that either is, in itself, and disconnected from other circumstances, a legal ground of suspicion, so as to put the indorsee upon inquiry and subject him to all the equities existing between the original parties ; 7 Cowen, 337 ; Chitty, Bills, 77. The Court of King's Bench in Pasmore v. North, 13 East, 616, held that a note which was postdated^ and which was transferred to the plaintiff before the day when it bore date, could not be questioned or impeached by the maker. That case is not distinguishable from this, and I think was rightly decided upon the well-established principles applicable to negotiable paper. A new trial must therefore be granted, the costs to abide the event. See Chitty, Bills, 149 ; Story, Promissory Notes, § 48. Thomas Bayley et al. v. John Taber et al, (5 Massachusetts, 286. Supreme Court, May, 1809.) Note void hij statute. — Commercial paper declared void by statute is void even in the hands of a honajide holder for value ; and, therefore, where promissory notes were antedated to avoid a statutory proliibition ; held, that in an action against the maker he could prove the actual date at which they were made and issued, even against an innocent indorsee. The declaration in this action contained thirty-seven counts upon as many promissory notes, alleged to have been made by the defendants, each under five dollars, payable to bearer on demand, for value received, and bearing date between the third day of Octo- ber and the thirtieth day of December, 1804. BAYLEY V. TABKR, 227 The action was tried upon the general issue, before Parker, J., at the sittings after the present term. ^ At the trial, notes comporting with the several counts were pro- duced in evidence, all bearing the impression of plates, types, or printing. The signature of the defendants to all of them was admitted. The defendants offered to prove that some of the notes declared on were in fact made and issued by them after the first day of April, 1805, though bearing date before that day ; and that tiie notes which had been so made were antedated by tliem, to avoid the operation of the Statute of480-4, c. 58, which declares notes of the like description, made or issued after that day, to be utterly void. Parker, J. This cause was tried before me at the sittings after the last law term in Cumberland, in May last ; and I then inclined to the opinion, that the defendants should not be permitted to allege a falsity in an instrument made and signed by themselves, and which had by them been put into general circulation as money. Notes of this description, under the denomination of Taber's notes, to a large amount, having become a common currency in the dis- trict of Maine, it suddenly struck me as inconsistent with the com- mon principles of justice, and the policy of the law, that the promisors in those notes should be allowed to avoid payment of them to an innocent holder, by alleging that they bore false dates, and by showing that in uttering them they had contravened the laws of the Commonwealth. I therefore rejected the evidence offered ; but very soon after the trial, having revolved the question in my mind at more leisure, I came to doubt of the correctness of my opinion, and intimated my desire to the counsel, that the question should be reserved for the consideration of the wiiole Court. Thi§ was done in such manner as to cause very little delay, and no inconvenience to the parties or their counsel ; it having been agreed that the question should be taken up by the Court at tiiis adjourned session, and that the argu- ments of the counsel should be reduced to writing, and transmitted to the Court. Upon an attentive consideration of the question, and of the argu- ments sent to us, which on both sides are concise and perspicuous, we are unanimously and clearly of opinion, that the facts proposed 228 HOLDER FOR VALUE. by the defendants to be proved to the jury at the trial, constitute a good defence against the counts, to wliich those facts are applicable, and that it is competent to the defendants in this action to set up and maintain such defence. The Statute of 1804, c. 58, § 1, enacts that all bills, notes, checks, drafts, or obligations whatsoever, under the amount of five dol- lars, payable to bearer or to order, shall be wholly in writing ; and that all notes, &c., under the aforesaid amount, and payable as aforesaid, which should be made or issued after the first day of April then next, and which should bear the impression of types, plates, or printing, should be utterly void, and that no action should be thereon sustained in any court of law. The second section of the same statute imposes a penalty upon any person who should issue or pass any of the securities described in the first section, after the said first day of April, which was April, 1805. The same statute, c. 134, imposed an increased penalty upon any person who should, after the tenth day of the same April, issue or pass like notes, other tlian those of incorporated banks, for a less sum than five dollars, or whereon less than five dollars should be due, with intent that the same should be circulated as currency. The statute first cited is peremptory and unequivocal, in enact- ing that all notes like those declared on in this action, made or issued after the first day of April, 1805, shall be utterly void ; and it prohibits the sustaining of any suit upon them in any court of law. The defendants say, and they offered to prove, that some of the notes sued in this action were made and issued after that day. To reject the proofs of these facts, because the defendants are the original promisors, and because the plaintiffs may be supposed to be innocent holders of the notes for valuable considerations, would be, to all intents and purposes, to defeat the operation of the statute, and would amount to a judicial repeal of an act of tlie legislature. The maker of a note payable to bearer is generally the only per- son to be called upon for payment, it passing from liand to hand, on the credit of the promisor's name, like bank-bills, the receiver seldom requiring any guaranty from him who passes it. Now the declared object of the legislature was entirely to prevent the circu- lation of such paper. But if by giving a fictitious date to them, the maker is prevented from showing that they were made or issued after the time when they were declared by the statute to be void, BAYLEY V. TABER. 229 they would continue to circulate, as lon^; as there should be confi- dence in tiie ability of the makers to pay them. However hard the operation of the statute may appear to be against persons, into whose possession such notes, may liave come bona fide, and for a valuable con'sideration, it is an hardship created by law for the public good, and the courts of law are prohibited from granting any relief against it. Nor is it altogether certain that the receivers of such notes are free from blame, although not privy to the actual making or ante- dating of them. The laws of the government are presumed to be known l)y all the citizens. If the notes were in fact made or issued after they were declared void by statute, and after a penalty was attached to the passing of them, although no penalty is expressly enacted against the receiver ; yet the act of receiving was necessary to enable the ofTender to pass them, and in this view the receiver may be considered as having aided in the offence of passing. Nor is it improbable that the legislature contemplated the punishment of the receiver, when they took from him all power of coercing pay- ment of such notes in the courts of law. But be this as it may, whether the plaintiffs in this action are innocent or not, to author- ize them to maintain a suit, and recover judgment on notes of this description so situated, when the legislature has declared them to be utterly void, would be effectually to annul an act, the wisdom and policy of which the legislature alone had the right to deter- mine. Nor is it a novel doctrine, that a person shall be permitted to avoid his contract by alleging his own criminality, provided it con- sists in the violation of some positive statute of the government. Contracts, the consideration of which is money won at play, or loaned at unlawful interest, have always been subject to the same rule, not only against those who participated in the offence, but even against innocent indorsees, when* they have claimed the per- formance of such contracts. The case of Lowe v. Waller' shows this long to have been the law in England ; and it is understood that the like principle has been uniformly adopted and practised upon by the courts in this country. It has been suggested by the counsel for the plaintiffs in the close of their argument, that to make this a good defence, it should have 1 Doug. 736. 230 HOLDER FOR VALUE. been specially pleaded. But it is not necessary ; for in assumpsit, every thing which destroys the right of action may be given in evidence under the general issue. Indeed, there seems to be no room to doubt upon this question ; and nothing but a reluctance to permit a man to avail himself of a falsity in circulating these notes, and afterwards to avoid payment by showing the truth, could have caused a hesitation at the trial. The verdict must be set aside, and a new trial granted. See following case and note. Alexander Paton v. Augustus B. Coit et al. 3, (5 Michigan [1 Cooley], 505. Supreme Court, October, 1858.) Illegal consideration. Burden of proof. — Whenever the consideration of negotiable paper between the original parties has been illegal, especially if it is as to them in viola- tion of a positive prohibition of statute, proof of such illegality throws upon the indorsee the burden of proving that he took it bona fide, and gave value for it. Assumpsit against the acceptors of a bill of exchange given for intoxicating liquors sold in violation of the Prohibitory Liquor Law, which makes such paper " utterly null and void against all persons, and in all cases, excepting only as against the holders," " who may have paid therefor a fair price, and received the same ^^^ upon a valuable and fair consideration, without notice or knowl- edge of such illegal consideration." The plaintiffs were indorsees of the payees. IB '^N^ On the trial, the acceptance having been given in evidence, the plaintiff rested. The defendant then introduced a witness, and being required to state what he expected to prove by such witness, stated that he expected to prove that such acceptance was given in payment and as security for ten barrels of intoxicating liquor, called whiskey, purchased by defendant, of the drawers of said draft, on the thir- tieth day of March, 1857, in Detroit. The plaintiffs objected to such evidence, upon the ground that under the exception in section two of the Prohibitory Liquor Law of 1855, the presumption was that said draft was in the hands of PATON V. COIT. 231 bona fide holders, to wit, the })laintilTs ; and tliat the onus was on the defendant to show, or propose to show, notice before said testi- mony could be received. The Court sustained the objection, and refused to allow the testimony to be given ; and defendant ex- cepted. Judgment having been rendered for plaintiffs below, for the amount of the acceptance, the defendant brought the case to this Court by writ of error. Christiancy, J. Whether the evidence in this case was properly rejected, does not depend upon the question. Whether, standing alone, it would have constituted a complete defence against the draft in the hands of a bona fide holder for value ; but. Whether it would have been sufficient to throw upon the plaintiff the burden of proving himself to be such bona fide holder; or. Whether, in fact, the evidence tended, prima facie , to establish a defence. It is assumed by the counsel for the defendants in error (plain- tiffs below), that the only effect of the statute in reference to negotiable paper given for liquors sold, " is to render such paper without consideration as between the immediate parties," and that " the effect of the exception in section two is simply to put this statute equity on a footing with all other equities " between the original parties to negotiable paper. If this be the only effect of the statute, then, according to the prevailing current of recent decisions, the evidence was properly rejected, though the cases upon this point are by no means uni- form ; and we do not wish to be understood as giving any opinion upon the question presented by this hypothesis, as we do not think it involved in the present case. The defence here proposed was not merely the ivanl, but the illegality of consideration ; and this, being allowed as a defence between the original parties, irrespective of and even contrary to the equities of the parties, cannot, without perversion of laniruage, be called an equity. It is not on the defendants' account that sucli a defence is allowed, as will more fully appear in the sequel. The effect of the statute in question is not merely to render such paper without consideration, but absolutely void and illegal, between the immediate parties, and all others who have not ob- tained it for value, and without notice, — not only void in the 232 HOLDER FOR VALUE. negative sense of having no legal basis, but aflEirmatively illegal as violating the positive provisions of the statute. It was not even contended that the facts offered to be shown by the defendant would not have made 2i prima facie case of an illegal sale, without showing that the sale did not come within any of the exceptions of the statute ; and if the plaintiffs claimed to maintain the valid- ity of the sale under any such exception, the burden of proof (this being a civil case) rested upon them to bring it within the exception. Now, upon principle, as a question of statute construction, and without reference to any authority, when the statute expressly declares all such paper void and illegal, and forbids any action to be brought or maintained upon it, " except when brought by a bona fide holder who has received the same upon a valuable and fair consideration without notice or knowledge," &c., it would seem to follow as a logical necessity, that when the paper is shown to have been given for such illegal consideration, the plaintiff's right of recovery is cut off by the general prohibition of the stat- ute, unless, in avoidance of this, he gives evidence of those facts which alone can bring him within the exception. We do not propose to give a definite opinion upon the point, whether, the illegality being first shown, the burden of proof in this case would have rested upon the plaintiffs to show actual want of notice ; this might be requiring actual proof of a nega- tive. But we are inclined to the opinion that they should have shown the nature of the transaction accompanying the transfer ; and if that disclosed no suspicion of such notice, it might make a prima facie case of want of notice, and throw upon the defend- ant the burden of proving notice. But the amount of the consid- eration given by the plaintiff is distinct from the question of notice, and the absence of such consideration, in such a case, would be a defence, though the paper had been taken by the plain- tiff without notice. The amount of consideration given by the plaintiff is an affirmative fact peculiarly within his own knowl- edge, and not generally in that of the defendant, and being neces- sary to bring the plaintiff's case within the exception of the statute, should be proved by him. To allow him to recover with- out such proof, would be an evasion of the statute. Such proof (the illegality being first shown) is a necessary part of the plain- tiff's case, without which he shows no prima facie right to recover ; PATON V. COIT. 233 and tliough, in ordinary cases, this fact would be presumed in favor of the holder, this presumption can never be allowed with- out proof, when tiie paper was absolutely void between the original parties, on the ground of fraud, illegality, or duress. This construction of tlie statute is sustained by authority. In England, by tiie statute of Anne, a note or bill given or indorsed upon a usurious consideration, was void, even in the hands of a bona fide holder for value, Chitty, Bills, 9 Am. ed. 110 ; but the statute, 58 Geo. 111. c. 08, made such note valid in the hands of a bona fide holder for value without notice. In the case of Wyat V. Campbell, 1 Mood. & M. 80, where the note had been in- dorsed by a previous indorser upon a usurious consideration, and no notice given to plaintiff to prove consideration, it was con- tended that the plaintiff was not bound to prove it. But, by Lord Tenterden C. J. : " The statute, 58 Geo. III. c. 93, makes a note tainted with usury valid in the hands of a bona fide holder ; the onus is therefore upon the holder to prove he is such ; otherwise the statute does not apply, and the note is void under the statute of Anne." In that case, it is true, the exception was in a subsequent stat- ute ; here it is in the same statute ; but we are unable to perceive how this can make any difference as to the burden of proof. If the fact was not to be presumed in that case, it cannot be in this. But whether this conclusion be right or wrong, as depending purely upon a question of statute construction, can make little difference in this case. The rule as to the burden of proof is the same upon principle and authority at common law. "Whenever the consideration of the paper between the original parties has been illegal, especially if in violation of a positive prohibition of statute, proof of such illegality throws upon the holder the bur- den of proving that he got it bona fide^ and gave value for it. Northam v. Latouche, 4 Car. <fe P. 140 ; Bailey v. Bidwell, 13 Mees. & W. 73 ; Harvey v. Towers, 6 Exch. 656 ; Smith v. Braine, 16 Q. B. 201 ; Fitch v. Jones, 32 Vax^. L. & Eq. 134 ; Yallett v. Parker, 6 Wend. 615 ; Edwards, Bills, 686, 687 ; Chitty, Bills, 11th Am. ed. 661, 662 ; Story, Bills, § 193. The case of Bailey v. Bidwell is directly in point ; and Parke, B., gives a very satisfactory reason why the fact in question is not to be presumed for the plaintiff. " If," he says, " the note were proved to have been obtained by fraud, or affected by illegality, 234 HOLDER FOR VALUE. that afforded a presumption that the person who had been guilty of the illegality would dispose of it, and would place it in the hands of another person to sue upon it." The subsequent case of Fitch V. Jones, above cited, shows that in such case the original payee is still presumed to be the owner, and that the plaintiff sues for his benefit ; and it is to overcome this presumption that the plaintiff is required to prove himself a bona fide holder for value. The rule is the same as to the burden of proof, where it is shown that the paper was obtained by fraud or duress, and when stolen, or put in circulation by fraud. See authorities above cited, and Mills V. Barber, 1 Mees. & W. 425 ; Holme v. Karsper, 5 Binn. 469 ; Aldrich v. Warren, 16 Me. 465 ; N. Y. & Va. State Stock Bank V. Gibson, 5 Duer, 574. In fact, many of the cases, and most of the elementary works, place illegality in the same category with fraud or duress, as casting the burden of proof upon the holder. But while the result is the same, it is manifest that the basis of the rule in the case of illegality, though equally solid, is quite different. In the case of duress and fraud, as well as where the paper has been stolen, the equities of tlie defendant constitute the basis of the rule. But in the case of illegality of consideration, both parties are generally equally in fault ; and it is not to protect the equities of the defendant, but on broad grounds of public policy, — to uphold the law, and to discourage its violation or evasion, — that the burden of proof is cast upon the plaintiff. It is as much the duty of courts to discourage the violation or eva- sion of law as to protect the equities of parties. And it is upon this principle only that the naked defence of illegality is allowed. See opinion of Lord Mansfield in Holman v. Johnson, 1 Cowp. 341. And upon this principle, courts should be careful to avoid doing any thing to facilitate the enforcement of such contracts, unless it appear affirmatively that the plaintiff is not in fault, and that he has real equities to be protected. The evidence offered was improperly rejected. The judgment must be reversed, and a new trial granted. All the justices concurred. There is no controversy in regard to the law upon the subject discussed in the two preceding cases. Where negotiable paper is by statute declared void ab initio, it will be so held in the hands of a honajide holder. Aurora v. AVcst, 22 Ind. 88. But it was held in Marine Bank v. Clements, 31 N. Y. 33, that in order to render a note, transferred by an insolvent corporation void in the hands of a bona fide FOWLER V. BRANTLY. 236 holder, it must appear that the corporation was either insolvent at the time or then contemplating insolvency, and that the transfer was made to give a preference to particular creditors. But in the absence of statutory provisions declaring the securities void, the bona fide holder will not be affected by any ille<;ality in the consideration of negotiable securities. Story, Promissory Notes, § l'J2; Wil- liams V. Cheney, 3 Gray, 210: opinion by Bigelow, J., and cases cited; Hub- bard V. Chapin, 2 Allen, 328. Savage, C. J., in Vallett v. Parker,G Wend. 615, 622, lays down the distinction between paper declared ^'Did by the legislature and by the courts. He says : " Wherever the statutes declare notes void, they are and must be so in the hands of every holder; but where they are adjudged by the Court to be so, for failure or the illegality of the consideration, they are void only in the hands of the original parties, or those who are chargeable with or have had notice of the consideration." See Goodman v. Simonds, post, 239, and note ; ante, note to Swift v. Tyson, 186 ; also Bayley v. Taber, ante, 229 ; Fowler v. Brantly, infra. Samuel L. Fowler, Plaintiff in Error, v. Harris Brantly et al., Defendants in Error. (14 Peters, 318. Supreme Court of the United States, January, 1840.) What sufficient to put the holder upon inqinry. — A note made payable to the cashier of a bank, and drawn within a peculiar form to be within tlie usages of tlie bank, was sent to an agent to procure a discount at the bank. The note was rejected, and marked in pencil, with a mark employed by the bank to indicate that it liad been offered and refused. The agent then sold the note and applied the proceeds to his own use. Held, tliat the note on its face was sufficient to put the liolder upon inquiry, and that he could not recover thougli he had no knowledge of the fraud. The case is stated in the opinion of the Court. Catron, J. This is an action of assumpsit by the assignee of a note against the makers. The questions of law arising in this cause depend on the construction of a note of hand, in the following words : — " Selma, Dallas County, Alabama, March 1, 1836. " Eleven months after date, we, Harris Brantly, Peyton S. Graves, and Hugh Ferguson, jointly and severally promise to pay Andrew Armstrong, cashier, or bearer, $2000, value received, negotiable 236 HOLDER FOR VALUE. and payable at the Branch Bank of the State of Alabama, at Mobile. (Signed) Harris Brantly, Peyton S. Graves, Hugh Ferguson. "Credit: Diego M'Voy. Harris Brantly, Peyton S. Graves, Hugh Ferguson." The note had on it the two indorsements of Diego M'Voy and William D. Primrose ; and that of Taulmin, Hazard, and Company was stricken out. On the face of the note there was, in pencil, the figures " 169." The defendants, the three makers, introduced evidence to prove that the note, in its present form (except the indorsements), was sent by one of the makers to M'Voy, who was his factor in Mobile, to be offered for discount in the Branch Bank of the State, in that city, as an accommodation note ; the proceeds of which were to be forwarded to said maker. That the note was ofifered for discount and rejected. The factor then proposed to raise money on the note for his own use, without the knowledge of the makers, and intended to conceal the appropriation of the note from them. The first per- son to whom he ofifered to sell the note deemed the attempt a fraud, and refused to purchase. M'Voy then indorsed and trans- ferred the note to Primrose for $1200, communicating to him it had been offered for discount at the bank and rejected. Taulmin, Hazard, and Company held a note for $3250, on Black, indorsed by Vail and Dade, and by Primrose, and which was past due ; to discharge which, in part. Primrose transferred the note in controversy to Taulmin, Hazard, and Company ; and Taulmin, Hazard, and Company indorsed the same before its maturity, to the plaintiff. Fowler, and received credit on their account ; they being largely indebted to him at the time. The leading feature in the cause, involving the principle on which it turns, is this : the note was in the form prescribed by the bank to those who desired accommodations at it ; which form was not in use before its adoption there. The memorandum on the left-hand side of the note, and signed by the drawers, was designed to show the officers of the bank to whose credit the money was to be placed, FOWLER V. BRANTLY. 237 should the note be discounted ; and by tlie usages of the bank, no other person tlian the one thus named could receive the money. Primrose testified he knew from the pencil-mark on the face of the note, it had been offered for discount and refused, when he purchased it. The cashier proved the pencil-mark was made according to the usage of the bank on all notes offered for discount and refused. To a part of the first instruction, that held if the plaintiff took the note in payment of a pre-existing debt, due to him from Taul- min, Hazard, and Company, then the jury ought to find for the defendants, excei)tion is taken ; and the Court refused to instruct the jury, that, if tlie plaintiff took the note fairly in payment of a debt due to him, before its maturity, without notice of the purpose for which M'Voy had held it, then he was entitled to recover. And also refused to instruct, if the jury believed plaintiff took the note bona fide in payment of a previous debt, that he had no notice of any fraud, and there were no circumstances to put him upon an inquiry into any fraud committed on the part of M'Voy, he was entitled to recover. There were other instructions asked and refused ; but, as they are in effect the same as those recited, an answer to which will cover the whole case, they need not be further noticed. The known customs of the bank, and its ordinary modes of trans- acting business, including the prescribed forms of notes offered for discount, were matters of proof, and entered into the contract ; and the parties to it must be understood as having governed themselves by such customs and modes of doing business ; and this whether they had actual knowledge of them, or not ; and it was especially the duty of all those dealing for the paper in question to ascertain them if unknown. .Such is the established doctrine of this Court, as laid down in Renner v. The Bank of Columbia, 9 Wheat. 581 ; Mills V. The Bank of the United States, 11 Wheat. 431, and the Bank of Washington v. Triplett and Neale, 1 Peters, 32, 33. The note sued on is peculiar in its form ; it was made for the purposes of discount, and only intended for negotiation at the bank, and not for circulation out of it. The pencil-mark on its face when sold, was common to all rejected paper, and was put there by the othcers of tlie bank as evidence of the fact that it had been offered and rejected ; and those dealing for it, with the mark on its face, must be presumed to have had knowledge what it 238 HOLDER FOR VALUE. imported ; as the slightest inquiry would have ascertained its meaning. These were tlie legal presumptions attached to the con- tract, when the plaintiff purchased it ; and the explanatory evidence to prove the customs of the bank, was introduced to enlighten the Court and jury in regard to the rules governing the transaction, and furnishing the law of the case ; and which the plaintiff, when he purchased the paper, is presumed to have known and understood, as the Court knew and understood it after it was proved on the trial. This was the case, made up of law and fact, on which the Court was asked to charge the jury ; and not the abstract proposition whether, on a proper construction of the statutes of Alabama, nego- tiable paper, payable in bank, purchased bona fide, and without notice of an existing infirmity, but taken in discharge of a pre- existing debt, carried the infirmity with it into the hands of the purchaser ; for the reason that the mode of payment was not in the usual course of trade. A note overdue, or bill dishonored, is a circumstance of suspicion, to put those dealing for it afterwards on their guard ; and in whose hands it is open to the same defences it was in the hands of the holder when it fell due. 13 Peters, 79. After maturity, such paper cannot be negotiable " in the due course of trade ;" although still assignable. So the paper before us carried on its face circumstances of sus- |)icion, so palpable as to put those dealing for it, before maturity, on their guard ; and as to require at their hands strict inquiry into the title of those through whose hands it had passed. Failing to be thus diligent, they must abide by the misfortune their negligence imposed, and stand in the condition of M'Voy. As between him and the defendants, there was no contract or liability on their part ; nor as bearer of the note, could he lawfully pass it off in the due course of trade, so as to communicate a better title to another ; the face of the paper betraying its character and purposes, and M'Voy's want of authority. All the rulings of the Court below must be referred to this paper, and to the special case made by the proofs. Any instruction asked, which cannot be given to the whole extent asked, may be simply refused ; or it may be modified at the discretion of the Court. No instruction was asked that could have been lawfully given ; to every one the Court could well say, and did in substance say, that GOODMAN V. SIMONDS. 239 under no circumstances could a purchase of this note he made by the plaintifi", from Tauhnin, llazard, and Company, so as to exempt it in the hands of the assignee, from the infirmity it was subject to in the hands of M'Voy, And in regard to the last part of the first instruction, where the jury is in substa'hce told, that if they believed the note was taken in payment of a pre-existing debt, due to plaintiff, from Taulmin, Hazard, and Company, still, they should find for the defendants ; the Court might have gone further, and instructed the jury, that neither could the plaintiff recover had the note been purchased bona fide, and without notice of the fraudulent conduct of M'Voy. The judgment is, therefore, ordered to be affirmed. The distinction between the class of cases to which the above decision belongs, and that to which Goodman v. Simonds, infra, belongs, is this : In the latter case the paper was valid, and in itself clear of all suspicion ; while in the preceding case the paper bore upon its face the evidence of its defects. In Goodman r. Simonds, the bill or note could only be impeached by extraneous circumstances ; in Fowler v. Brantly the paper itself was its own impeachment. See Goodman r. Simonds, infra. Timothy S. Goodman, Plaintiff in Error, v. John Simonds. (20 Howard, 343. Supreme Court of the United States, December, 1857.) Bonajide holder's claim only to be rqyelled by had faith. — In an action by the holder of a bill of exchange placed by tlie drawer in tiie hands of the holder as collateral security for his debt, the following instruction was given to tlie jury : " That if such facts and circumstances were known to the plaintiff as caused him to suspect, or that would iiave caused one of ordinary prudence to suspect that the drawer had no interest in tlie bill, and no autiiority to use the same for his own benefit, and by ordinary diligence he could have ascertained these facts," the plaintifi' could not recover. Held, that the instruction was erroneous, and that notliing short of bad faith in the holder would overcome his title ; and the burden of proof is upon him who assails the title to show such bad faith. The case is stated in the opinion of the Court. Clifford, J. This was a writ of error to the Circuit Court of the United States for the district of Missouri. Timothy S. Goodman, a citizen of the State of Ohio, complained 240 HOLDER FOR VALUE. in the Court below of John Simonds, a citizen of the State of Missouri, in a plea of trespass on the case upon promises. The declaration was filed on the first day of March, 1854. It con- tained two counts ; one upon a bill of exchange, and the other upon an account stated. At the April term following, the defend- ant appeared and pleaded the general issue, which was joined, and several special pleas in bar of the action. The special pleas were held bad on demurrer, and at the October term, 1855, the parties went to trial on the general issue. Robert M. Nesbit, a witness called for the plaintiff, testified that he was a notary public of the county of St. Louis ; and that as such, on the fifteenth day of January, 1848, he presented the bill in suit for payment to John Si- monds, the acceptor, who refused to pay it, and that he afterwards gave due notice of the presentment and refusal to both indorsers. And the witness further testified that he was well acquainted with the signatures of all the parties to the bill, except that of the draw- er, and that they were genuine. Whereupon the plaintiff read in evidence the bill of exchange described in the first count of the declaration, together with the indorsements thereon, as they appear in the record. W. Nesbit & Co. were merely nominal holders of the bill, never having had any interest in it, and only indorsed it to the plaintiff for the greater convenience in bringing tlie suit. Evidence was then introduced on the part of the defendant, exhib- iting substantially the following state of facts : On the twenty- "first day of June, 1847, the defendant addressed a letter to Wallace Sigerson, who resided at Cincinnati, informing him that he wished to avail himself of banking facilities in that place to carry on cer- tain business in which he and John Sigerson had determined to engage, and asking his assistance as a correspondent, to negotiate discounts, inclosing at the same time his letter of credit for ten thousand dollars, and two bills of exchange, each for the sum of five thousand dollars, and suggesting in tlie same letter that they should require some twenty to twenty-five thousand dollars during the next four or five months, in sums of about five thousand dol- lars, as the same could be used from time to time. In the same letter also he instructed his correspondent to negotiate five thou- sand dollars immediately, authorizing him to use for that purpose either the letter of credit or the bills of exchange. When those bills were transmitted to Cincinnati they were in all respects per- fect bills of exchange, except that the name of the drawer was GOODMAN V. SIMONDS. 241 wanting, and tliey wore witliont date. They were l)otli made pay- able to the order of John Sigerson, and hy him indorsed in blank, and were accepted by the defendant. Soon after their receipt, Wallace Sigerson, as drawer, procured one of the bills to be dis- counted according to his instructions, and remitted the proceeds, or a part thereof, to the defendant ; and it also appeared that, dur- ing that season, he procured other lulls of the same kind to be discounted for the same jjarties, to the amount of twenty-five thousand dollars. The other bill forwarded at that time is the one now in suit. Wallace Sigerson had also large transactions of his own the same season, amounting to four hundred thousand dollars. Many of his own transactions were with his bnjther, John Siger- son, who was the payee and indorser of this bill, and was jointly engaged in the same business with the defendant. He and his brother interchanged accommodation paper, and some of their acceptances were regularly discounted in blank, and it did not appear that any complaint was made, either by the acceptor or indorser, that this bill had not been accounted for or returned. There were dealings, also, the same season, between T. S. Good- man & Co. and Wallace Sigerson. They made a settlement on the twelfth day of October, 1847, when it was ascertained that the amount due to T. S. Goodman & Co, was about five thousand six hundred dollars, arising principally from notes discounted, secured by bills of exchange as collaterals, on which nothing had been realized. At the settlement the debt was divided into two notesf one having sixty and the other seventy-five days to run ; and Wal- lace Sigerson testified that he gave his two notes in payment of the debt, and left this bill as collateral security to the notes, fixing the dates so that the notes would mature twelve or fifteen days be- fore the bill. Two drafts on Ravisess, Bulock, & Co., previously held as collaterals, were embraced in the settlement, and formed a part of the indebtedness for which the notes were given ; and Afc- Donald, who was the book-keeper of the plaintiff's firm, and a wit- ness for the defendant, testified he knew of no other collateral security than this bill, which the firm held for those noies. It would seem, therefore, that all the prior collaterals were surren- dered to the defendant at the settlement. There is some confu- sion, and perhaps uncertainty, in the evidenre reported, respecting the history of the bill from tlie time it went into the possession of Wallace Sigerson till it was thus placed in the hands of T. S. 242 HOLDER FOR VALUE. Goodman &, Co., as collateral security to the above-mentioned notes. It may, however, be gathered from the testimony of Wal- lace Sigerson, that he first oriered it for discount to the Ohio Life and Trust Company, and shortly afterward to the plaintiff, for the same purpose, and that the plaintiff declined to discount it, but soon after took it as collateral security for temporary loans. How long the bill remained in the possession of the plaintiff as collat- eral security for temporary loans does not appear, nor for whose benefit the money was obtained. When the settlement took place, Wallace Sigerson told the plaintiff that he had a right to use the bill, and the plaintiff agreed that it should not be sent to St. Louis^ for collection till after the maturity of the notes to which it was collateral. Nothing of the kind was agreed when it was left as collateral security for temporary loans. Wallace Sigerson became the drawer of this bill, as he had previously done with respect to the other, which was sent him at the same time, and filled up the date, but whether at the time of the settlement or previously, was liot entirely certain. He failed in business in November, 1847, and on the twentieth day of the same month, T. S. Goodman & Co. addressed a letter to C. W. Clark and Brothers, inclosing this bill, and requesting them to pass it at the least rate, not exceeding twelve per cent interest, saying : " We do not indorse it, as we are selling it for another ; " and when L. C. Clark, one of that firm, a few days afterward offered the bill for sale to the defendant, " he said it was a forgery of his name ; that Wallace Sigerson had no authority to use it." At the trial, the Court, on the prayer of the plaintiff, instructed the jury to the effect that, if the plaintiff ac- quired the bill of Wallace Sigerson as collateral security without notice of his want of authority to transfer it, that the plaintiff was unaffected by such abuse of trust, and that the defendant was pre- cluded from setting it up as a defence in this suit, to which no ex- ceptions were taken. We pass over the first instruction given to the jury on the prayer of the defendant, for the same reason that it was not excepted to, and proceed to examine the second, as amended by the Court, which presents the principal subject of controversy at the present time. It was to the effect that, " if such facts and circumstances were known to the plaintiff as caused him to suspect, or that would have caused one of ordinary prudence to suspect, that Wallace Sigerson had no interest in the bill, and no authority to use the same for his own benefit, and by ordinary dili- GOODMAN V. SIMONDS. 243 ^encG he could have ascertained these facts, then the jury will find for tlie defendant." I. The general question which the bill of exceptions presents, arising upon that instruction, is certainly one of very considerable importance, especially to the mercantile community, as it affects the transfer and free circulation of bills of exchange and promis- sory notes, which, by virtue of their negotiable quality, constitute the principal medium fur the transaction of their business affairs. There is, however, some reason to doubt whether the evidence at the trial furnished any proper basis for the application of the in- struction in this case, even supposing the principle announced to be correct as an alistract proposition ; and tliis gives rise to a pre- liminary question, which will be first considered, whether the in- struction ought not to be regarded as objectionable on that account. When a prayer for instruction is presented to the Court, and there is no evidence in the case for the consideration of tiie jury, it ought always to be withheld ; and, as a general rule, if it is given under such circumstances, it will be error in the Court, for the reason that its tendency may bo and often is to mislead the jury, by with- drawing their attention from the legitimate points of inquiry in- volved in the issue. All that was shown at the trial, in addition to the description of the bill, was the refusal of the plaintiff to discount it when it was offered for that purpose, his possession and control of it shortly after as a pledge for temporary loans, and the subsequent transfer of the bill to him as collateral security at the settlement, together with the circumstances of that transaction and what appeared in the letter of T. S. Goodman &, Co., trans- mitting the bill to St. Louis for sale. Other circumstances are adverted to in the printed argument for the defendant ; but as they do not appear to be sustained by the evidence in the case, they are omitted. Nothing transpired when the bill was offered for discount more than what occurs on similar occasiojis in the daily transactions among business men. It was offered and de- clined, and that was the whole transaction so far as it was dis- closed in the evidence. No reasons were assigned by the plaintiff for declining, and none were asked for by the holder who offered the bill. Mere speculative inferences are never allowable, and cannot be regarded as evidence. The refusal to discount the bill mi'uht have been for the reason supposed in the instruction ; and so also it might have been for a very different reason, such as a 244 HOLDER FOR VALUE. prior obligation to other customers, want of available funds, or from a desire for further information as to tlie pecuniary standing of the parties to this bill ; and whether it was for any one of the reasons suggested or some other, in the absence of any explana- tion, was a mere naked conjecture. Another answer may also be given to this suggestion which is equally decisive, and that is the subsequent conduct of the plaintiff in taking the bill as a pledge for temporary loans, which seems to negative the supposition alto- gether that the previous refusal to discount it was on account of any suspicion he entertained, either as to the genuineness of the paper, or of tlie authority of the holder to pass it. Some time elapsed after the bill was offered for discount, before it was finally transferred to the plaintiff, and tliat fact undoubtedly was well known to the plaintiff at the time of the transfer ; and so also was the more important one in this investigation, that during all that time the bill remained in the custody or under the control of Wal- lace Sigerson, as the ostensible owner, and that he claimed and exercised over it all the rights of a holder for value. If these cir- cumstances are taken in connection with each other, as they unques- tionably should be, there can be no doubt they were far better suited to inspire confidence in the title of the holder than to excite sus- picion in regard to his authority to pass the bill ; and if they had that effect, it was plainly the fault of the defendant in executing and forwarding the bill to his correspondent, and in intrusting it to his control, and suffering it to remain in his custody without inquiry or complaint. The want of date to the bill at the time it was offered for discount, under the circumstances disclosed in the evidence, was entirely an immaterial consideration. When the de- fendant sent the bill to Wallace Sigerson, indorsed in blank and without date, and intrusted it to his care and discretion to be used for his own benefit, he thereby empowered him to fill the blank as a necessary incident to the trust conferred, just as effectually as if the authority had been expressly delegated by the terms of the letter in which it was sent. Nor was it of any consequence that it was antedated, as compared with the time when it was passed to the plaintiff, inasmuch as it was filled up by his own correspondent before he parted with its possession and control, and was actually made to bear date subsequent to the time when it was received from the defendant. In filling it up he but carried into effect one of the purposes for whicli it had been forwarded, as is plainly in- r.OODMAN V. SIM0ND3. 245 dicatcd from the general scope and design of the letter. lie was authorized to use the hill to raise money for tliu henefit of the defendant ; and, in order to use the bill for tliat purpose, it must have been expected that he would become tiie drawer, and fill up the date at his discretion. Independently, however, of the terms of tlie letter, it may be asserted as a general i)rinciple that, where^ a party to a negotiable bill of exchange or promissory note intrusts ^ it to the custody of another, wlien it is without date, whether it be for tlie purpose to accommodate the person to whom it was intrust- ed or to be used for his own benefit, such bill or note carries on its face an implied authority to fill up the blank ; and, as between such party to the bill or note and innocent third parties, the per- son to whom it was so intrusted must be deemed the agent of the party who committed such bill or note to his custody, and as act- ing under his authority, and with his approbation. Mitchell v. Culver, 7 Cow, 33G, and note. The general doctrine on this subject, and the reasons on which it is founded, are stated by Shaw, C. J., in Androscoggin Bank v. Kimball, 10 Gush. 378, as follows : " Tlie rule is very clear, that if one party, intending to accopamodate another, signs his name to a blank paper, he authorizes the other to whom he delivers it, and for whose accommodation it was made, to fill up the blank ; and the filling up, being done by his authority, is his act, and he is bound by it ; and we concur in the principle, and think it applies with even more force when it was done for his own benefit, as in this case." Violett ik Patton, 5 Cranch, 142 ; Russel v. Langstaflfe, 2 Doug. 514 ; CoUis v. Emett, 1 H. Black. 313 ; Montague v. Per- kins, 22 Eng. L. <t Eq. 510. The circumstances thus far considered we think afforded no ground of inference wliatever to support the theory of fact assumed in the instruction. But it is more difiicult to dispose of those that follow in the same way, on account of the extremely indefinite nature of the inquiry arising under the instruction. One man is more readily influenced to suspect fraud in matters of business tiian another, and the same individual may be differently impressed by similar transactions occurring at different times under precisely similar circumstances ; so that in some cases, where the evidences to excite suspicion were slight, it might be impossible to determine whether they were or were not of a character to be regarded as tending to support an issue like the one presented under the first 246 HOLDER FOR VALUE. branch of the instruction, without first ascertaining the general characteristics of the mind of the individual who was tlie subject of tlie inquiry, and his usual habit in conducting his business affairs, A striking illustration of the difficulty attending the in- vestigation is to be found in the instruction itself, assuming for fthe present that it must, be understood according to the usual import of the language employed. Under its first branch it was necessary, in order to relieve the defendant, that the jury should find that such facts and circumstances were known to the plaintiff as caused him to suspect the title or authority of the holder to transfer the bill. But the jury might come to the conclusion that the plaintiff was thoughtless, confiding, or inattentive on the occa- sion, and that he in fact took the bill without any such suspicion; and to guard against the effect of such a finding, the second branch of the instruction was framed, and under that it was of no consequence whether the plaintiff himself suspected the title of the holder or not, as the defendant was nevertheless to be fully exonerated if the jury found that such facts and circumstances \^ere known to him as would have caused one of ordinary pru- dence to suspect, and by ordinary diligence he could have ascer- tained the true state of the title. Here was an attempt to prescribe a standard in the investigation, by which the degree of suspicion intended to be required to defeat the claim of the plain- tiff could be ascertained and measured by the jury ; but under the first branch of the instruction no such attempt was made, and no other criterion was furnished to guide the jury in their deliber- ations, than mere naked suspicion ; and consequently, if the jury believed, from the evidence in the case, that the plaintiff at the time of the transfer suspected the title or authority of tlie holder to pass the bill, no matter how slight his suspicions were, they were directed to return their verdict for the defendant. With this explanation as to the nature of the present inquiry, we will pro- ceed to notice the remaining circumstances relied on as evidence in the case to support the instruction. They consist of the knowl- edge that the plaintiff is supposed to have acquired at the settle- ment, that Wallace Sigerson was embarrassed in his business affairs, and of the subsequent conduct of his firm, in forwarding the bill to St. Louis before the maturity of the notes, and the re- mark in their letter that they did not indorse the bill, as they were selling it for another. These circumstances are consistent with GOODMAN V. SIMONDS. 247 the proposition of fact assumed in the instruction ; and though they arc susceptible of an entirely diiferent exj>lanation, yet per- liaps it woukl be going too far to say, as matter of law, that they afforded no ground of inference in the direction supposed Ijy the defendant. We think, therefore, that the judgment ought not to be reversed on the ground that there w^s no evidence in the case- to authorize tlie instruction. We say so, however, in reference to the peculiar issue arising under that instruction, and the form of the questions sul)mittcd to the jury, and not in respect to any different issue which may properly a»ise hereafter in cases of tliis description. There is a wide difference between suspicion and knowledge in respect to the subject-matter under consideration, and even as between the evidence of suspicion, and sucli as would show gross negligence on the part of a banker or business man when discounting or purchasing negotial)le paper transferable by delivery. A person may often suspect in matters of business what i» fact he does not believe, and experience teaches that he will sometimes suspect what he has no reason to believe, and that too when the evidences to excite suspicion are so slight that he himself would scorn to acknowledge them as the basis of his action in the premises. Evidence merely tending to show, as in this case, that a party, in acquiring a negotiable bill of exchange or promissory note, sus])ected the title of the holder at the time of the delivery, would clearly be insufficient to authorize the conclusion that he was guilty of gross negligence when the transfer was made, and it would hardly constitute an approach towards proof that he had knowledge that such holder, who was known to be dealing in such paper, and claimed the right to use it, was guilty of any breach of trust in passing it. II. The more important question, whether the instruction was correct, remains to be considered ; and in aj)proaching that (pics- tion it becomes necessary, in the first place, to ascertain what the instruction was, and to deduce from it the principle of commercial law which was apj)lied to the case. It was somewhat peculiar in its language, and, in fact, contained two distinct propositions, differing essentially in certain aspects, and not entirely reconcilable with each other ; and yet we cannot doubt that the Circuit Court, in giving the instruction to the jury, intended to apply the doc- trine to the case, that the title of the holder of a negotiable bill of exchange acquired before maturity is not protected against prior 248 HOLDER FOR VALUE. equities of the antecedent parties to the bill, where it was taken without inquiry, aud under circumstances which ouglit to have excited the suspicions of a prudent and careful man. Such was certainly the general scope of the instruction, especially its second proposition ; and such, it may be presumed, was the general prin- ^ciple intended to be embo4ied in the questions submitted to the jury. They have been so treated here in the oral argument for tlie plaintiff, and were treated in the same way in tlie printed argument filed for the defendant. Whether either or both of the questions, in the form in which they were submitted, were objec- tionable as involving a departure from the doctrine intended to be applied, it will not become necessary to inquire. One thing is cer- tain, — if the general principle cannot be sustained, there is nothing in the features of the departure from it, or the particular phrase- ology of the questions submitted, to benefit the defendant. Un- doubtedly the same general idea pervaded the instruction, though the questions were submitted to the jury in different forms, ill order to meet the different aspects of the evidence in the case. It was to the effect, that if the plaintiff had acquired the bill under tlie circumstances described in either branch of the instruction, then he had acted without due caution, and was not entitled to recover. All the other grounds of defence had been provided for in other prayers for instruction. This one was obviously prepared to raise the single question, whether the plaintiff had acted with due caution in acquiring the bill, and consequently assumed all the other requisites of a good title in favor of the plaintiff. The only question, therefore, arising under the instruction, is, whether tlie rule of commercial law applied to the case was correct. Bills of exchange are commercial paper in the strictest sense, and must ever be regarded as favored instruments, as well on account of their negotiable quality as their universal convenience in mercan- tile affairs. They may be transferred by indorsement ; or when indorsed in blank, Or made payable to bearer, they are transferable by mere delivery. The law encourages their use as a safe and convenient medium for the settlement of balances among mercan- tile men ; and any course of judicial decision calculated to restrain or impede their free and unembarrassed circulation, would be contrary to the soundest principles of public policy. Mercantile law is a system of jurisprudence acknowledged by all commercial nations ; and upon no subject is it of more importance that there GOODMAN V. 8IMOND9. 249 should be, as far as practicable, uniformity of decision throughout the world. A well-defined and correct exposition of the ri<rhts of a bo)ui fide holder of a negotiable instrument was given by tliis Court in .Swift v. Tyson, 10 Peters, 1,' as long ago as 1842 ; and we adoj)t that exposition relative to the point under consideration on the present occasion, as one accurately defining the nature and. character of the title to those instruments which such holder ac- quires when they are transferred to him for a valuable considera- tion. This Court then said, and we now repeat, that a bona fide holder of a negotial>le instrument for a valuable consideration, without notice of facts which impeach its validity between the antecedent parties, if he takes it under an indorsement made before the same becomes due, holds the title unaffected by these facts, and may recover thereon, although, as between the antece- dent parties, the transaction may be without any legal validity. That question was not one of new impression at the date of that decision, nor was it so regarded either by the Court or the learned judge who gave tlie opinion ; on the contrary, it was declared to be a doctrine so long and so well established, and so essential to the security of negotiable paper, that it was laid up among the fundamentals of the law, and required no authority or reasoning to be brought out in its support ; and the opinion on that point was fully approved by every member of the Court, and we see no reason to qualify or change it in any respect. Such being the settled law in this Court, it would seem to follow as a necessary consequence from the proposition as stated, that if a bill of ex- change indorsed in blank, so as to be transferable by delivery, be misappropriated by one to whom it was intrusted, or even if it be lost or stolen, and afterwards negotiated to one having no knowl- edge of these facts, for a valuable consideration, and in the usual course of business, his title would be good, and that he would be entitled to recover the amount. .The law was thus framed, and has been so administered, in order to encourage the free circulation of negotiable paper by giving confidence and security to those who receive it for value ; and this principle is so comprehensive in respect to bills of exchange and }jromissory notes, which pass by delivery, that the title and 'possession are considered as one and inseparable, and in the al)sence of any explanation the law pre- sumes that a party in possession holds the instrument for value until the contrary is made to appear, and the burden of proof is I Ante, 186. 250 HOLDER FOR VALUE. on the party attempting to impeach the title. These principles are certainly in accordance with the general current of authorities, and are believed to correspond with the general understanding of those engaged in mercantile pursuits. The word notice, as used by this Court on the occasion referred to, we think must be under- . stood in the same sense as knowledge, and indeed that is one of its usual and appropriate significations. Where the supposed defect or infirmity in the title of the instrument appears on its face at the time of the transfer, the question whether a party who took it had notice or not, is in general a question of construction, and must be determined by the Court as matter of law ; and so it was understood by this Court in Andrews v. Pond et al., 13 Peters, 65, where it is saiid that " a person who takes a bill which upon the face of it was dishonored, cannot be allowed to claim the privileges which belong to a bona fide holder. If he chooses to receive it under such circumstances, he takes it with all the infirmities be- longing to it, and is in no better condition than the person from whom he received it." And the same doctrine was adopted and enforced in Fowler v. Brantly, 14 Peters, 318,^ where, in speaking of a promissory note, so marked as to show for whose benefit it was to be discounted, this Court held that all those dealing in paper " with such marks on its face, must be presumed to have knowledge of what it imported." See Brown v. Davies, 3 T. R. 80. Other cases of like character, where the defect appears on the face of the instrument, are referred to in the plinted argument for the defendant as affording a support to tlie instruction under con- sideration ; but it is so obvious that they can have no such ten- dency, that we forbear to pursue the subject. Ayer v. Hutchins, 4 Mass. 370 ; Wiggin v. Bush, 12 Johns. 306 ; Cone v. Baldwin, 12 Pick. 545 ; Brown v. Taber, 5 Wend. 566. But it is a very different matter when it is proposed to impeach the title of a holder for value, by proof of any facts and circum- stances outside of the instrument itself. He is then to be affected, if at all, by what has occurred between other parties, and he may well claim an exemption from any consequences flowing from their acts, unless it be first shown that he had knowledge of such facts and circumstances at the time the transfer was made. Nothing less than proof of knowledge of such facts and circumstances can meet the exigencies of such a defence ; else the proposition as 1 Ante, 235. GOODMAN V. SIMONDS. 251 stated is not true, that a party who acquires commercial paper in the usual course of business, for value and without notice of any defect in the title, may hold it free of all equities l^etweeii the an- tecedent parties to the instrument. Admit the ])roposition, and the conclusion follows. And the (jucstion whether the party had such knowledge or not, is a question of fact for the jury, and, like other disputed questions of scienter, must be submitted to their determination, under the instructions of the Court; and the proper inquiry is, did the party, seeking to enforce the payment, have knowledge, at the time of the transfer, of the facts and circum- stances which impeach the title, as between the antecedent parties to the instrument? and if the jury find that he did not, then he is entitled to recover, unless the transaction was attended by bad faith, even though the instrument had been lost or stolen. Every one must conduct himself honestly in respect to the antecedent parties, when he takes negotiable paper, in order to acquire a title which will shield him against prior equities. While ho is not obliged to make inquiries, he must not wilfully shut his eyes to the means of knowledge which he knows are at hand, as was plainly intimated by Baron Parke, in May v. Chapman, 16 Mees. & W. 355, for the . reason that such conduct, whether equiv- alent to notice or not, would be plenary evidence of bad faith. Mere want of care and caution, which was the criterion assumed in the instruction, falls so far below the true standard required by law, which is knowledge of the facts and circumstances that im- peach the title, that we feel indisposed to pursue the general dis- cussion, and proceed to confirm the views we have advanced as to what the law is, by referring to some of the decisions in the Eng- lish courts, from which, as an important source of commercial law, most of our own rules upon the subject have been derived. Tiie leadini:; case, among the more modern decisions in that country, is that of (Joodman v. Harvey, -4 Adol. & Ellis, 870. That was a case in bank, on a rule nisi, which was made absolute. Lord Benman, in delivering judgment, said : " We are all of opinion that gross negligence only would not be a sufficient an- swer, where a party has given consideration for the bill ; gross negligence may be evidence of mala fides, but it is not the same thing. Where the bill has passed to the plaintiff without, any proof o[ bad fa nil in iiim, there is no objection to his title." That case was followed by Uther r. Rich, 10 Adol. & Ellis, 784, which 252 HOLDER FOR VALUE. was also argued before a full Court, and the same learned judge held that the only proper mode of implicating the plaintiff in the alleged fraud by pleading was to aver that lie had notice of it, leaving the circumstances by which that notice was to be proved, directly or indirectly, to be established in evidence ; and he fu» ther held, that an averment that the plaintiff was not a bona fide holder was not equivalent. According to the rule laid down in Goodman v. Harvey, which indubitably is the settled law in all the English courts, proof that the plaintiff had been guilty of gross negligence in acquiring the bill, ought not to defeat his right to recover ; and if not, it serves to exemplify the magnitude of the error assumed in the instruction, that any facts and circumstances which would excite the suspicion of a careful and prudent man were sufficient to destroy the title. It is clear that one or the other of these rules must be incorrect ; both cannot be upheld. Gross negligence is defined to consist of the omission of that care which even inattentive and thoughtless men never fail to take of their own property ; and if such neglect would not defeat the right to recover — and clearly it would not, unless attended by bad faith — it cannot require any further reasoning to demonstrate that tlie instruction was erroneous. Several cases have been decided in England upon the same subject, and to the same effect, and the rule laid down in Goodman v. Harvey is now adopted and sanctioned by the most approved elementary treatises upon com- mercial law. Raphael v. The Bank of England, 33 Eng. L. & Eq. 276 ; Palmer v. Richards, 1 Eng. L. & Eq. 529 ; Arbouin v. An- derson, 1 Adol. & Ellis, N. s. 498 ; May v. Chapman, 16 Mees. & W. 355 ; Chitty, Bills, 12th ed. 257 ; Story, Bills, 3d ed. § 416 ; Byles, Bills, 4th Am. ed. 121-126 ; Smith's Mer. Law, ed. 1857, 255 ; Edwards, Bills, 309 ; 1 Saund. PI. & Ev. 591 ; Wheeler v. Guild, 20 Pick. 545 ; Brush v. Scribner, 11 Conn. 368 ; Backhouse V. Harrison, 5 Barn. & Adol. 1098 ; Gwynn v. Lee, 9 Gill, 138. These cases, beyond controversy, confirm the rule laid down by this Court in Swift v. Tyson, and they also furnish the fullest evi- dence, by their harmony each with the other, as well as by their entire consistency with the principal case, that the law has been uniform since the decision in Goodman v. Harvey, which was de- cided in 1836 ; and we think it will appear, upon an examination, that it has always been the same, at least from a very early period in the history of English jurisprudence down to the present time. GOODMAN V. SIMONDS. 253 except for an interval of about twelve years, while the doctrine prevailed which is now invoked in support of the instruction in this case. Tlmt doctrine had its origin in Gill v. Cul>itt, -j Barn. & C. 466, and it was followed by the other cases referred to in |he printed art^uraent for defendant. It was decided in 1824, and it is true, as the cases cited abundantly show, that it was acqui- esced in for a time, as a correct exposition of the commercial law upon the subject undcM- consideration. At the same time, it is proper to remark, that there is not wanting respectable authority that it had been much disa}>proved of before it was directly ques- tioned ; and it is certain, that nearly two years before it was finally overruled, Parke, J3., in delivering judgment in Foster v. Pearson, regarded it as mere " dicta, rather than the decision of the judges of the King's Bench." See Raphael v. The Bank of England, '[supral per Cresswell. The reasons assigned for that departure from the long-established rule upon the subject are as remarkable and unsatisfactory as ilie change was sudden and radical, and yet their particular examination at this time is unnecessary. It is a sufficient answer to the case to say, that it has been distinctly overruled in the ti"ibunal where it was decided, and has not been considered an authority in that Court for more than twenty years. The doctrine, says Mr. Chitty in his Treatise on Bills, is now com- pletely exploded, and the old rule of law that the holder of bills of exchange, indorsed in blank and transferable by delivery, can give a title which he does not possess, to a person taking them bona fide for value, is again re-established in its fullest extent. It was not, however, accomplished at a single blow, but the error, so to speak, was literally broken up and destroyed by instalments. The foundation of the superstructure was severely shaken in Crook V. Jadis, 5 Barn. & Adol. 909, when the full bench first came to the conclusion that want of due care and caution was insufficient to constitute a defence, and that gross negligence, at feast, must be shown, to defeat a recovery. But it was left to the case of Goodman v. Harvey to announce a complete correction of the error, when Lord Dennian declared, we have shaken otf the last remnant of the contrary doctrine. A brief reference to some of the earlier cases will be sufficient to show that the decision in Gill v. Cubitt, was a departure from the well-known and long-estal)lislied rule upon the subject under consideration. One of the earliest cases usually referred to is that 254 HOLDER FOR VALUE, of Hinton's case, reported i» 2 Show. 247. It was an action on the case against the drawer upon a bill of exchange payable to bearer. The Court ruled that the holder must entitle himself to it on a consideration ; " for if he come to be bearer by casualty or knavery^ he sliall not have the benefit of it ; " and so in Anonymous| 1 Salk. 12G, wliore a bank-note payable to A, or bearer, was lost, and found by a stranger, and by him transferred to C, for value. Holt, C. J., held that " A might have trover against the stranger, for he had no title to it, but not against C, by reason of the course of trade, which creates a property in the bearer." And again in Miller v. Race, 1 Burr. 452, 462, where an inn-keeper received a bank-note from his lodger in the course of business, and paid the balance, Lord Mansfield held he might retain it, as he came by it fairly and bona fide, and for value, and without knowledge that it had been stolen. And on a second occasion, in Grant v. Vaughan, 3 Burr. 1516, where a bill payable to bearer was lost, and the finder passed it to the plaintiff, the same Court left it to the jury to find whether he came to the possession fairly and bona fide. But a still stronger case is that of Peacock v. Rhodes, 2 Doug. 632, where a bill of exchange, indorsed in blank, was stolen and passed to the plaintiff by a man not known. It was argued for the defendant, that a holder should not in prudence take a bill unless he knew the person. Lord Mansfield answered, " that tlie law is well settled, that a holder covamg fairly by a bill has nothing to do with the transaction between the original parties. . . . The question oi mala fides was for the consideration of the jury." And lastly, and to the same effect, is Lawson v. Weston et ah, 4 Esp. bQ, where a bill of exchange for X500 was lost or stolen, and was discounted by plaintiff for a stranger. It was insisted for the defendant, that " a banker or any other person should not dis- count a bill for one unknown, without usiny diligence to inquire into the circumstances." Lord Kenyan replied, that " to adopt the principles of the defence would be to paralyze the circulation of all the paper in the country, and with it all its commerce ; that the circumstance of the bill having been lost, might have been material, if they eoidd bring knowledge of that fact home to the plaintiff.'''' Tiie cases cited, commencing in 1694 and ending in 1801, are sufficient to show what the state of the law was in 1824, .when Gill v. Cubitt was decided, especially as the judges of the King's Bench, in giving their opinions on that occasion, did not GOODMAN V. SIM0ND9. 255 pretend that there were any later decidons in which it had been modified. 111. But, assuming that the in.struction was erroneous, it is still insisted by the course of the argument for the defendant, that it ^as immaterial ; and the arjrument proceeds upon the ground tliat the case, as made in tlie bill of exceptions, shows that the plain- tiff was not the holder of the bill foi* a valuable consideration, in the usual course of business. On the contrary, it is insisted that he held it merely as a collateral security for a pre-existing debt, without any present consideration at the time of the transfer, and that a party who takes negotiable paper under such circumstances does not acquire it in the usual course of business, and conse- quently takes it subject to prior equities. Whatever may be our impressions in a case like the one supposed, we think the question does not arise in the present record, assuming the facts to be as they are exhibited in the bill of exceptions ; and the answer to the argument will be based entirely upon that assumption, without prejudice to what may hereafter appear. When the settlement was made, the new notes were given in payment of the prior in- debtedness and the collaterals previously held were surrendered to the defendant, and the time of payment was extended and defin- itively fixed by the terms of the notes, showing an agreement to give time for the payment of a debt already overdue, and a forbear- ance to enforce remedies for its recovery ; and the implication is very strong that the delay secured by the arrangement constituted the principal inducement to the transfer of the bill. Such a sus- pension of an existing demand is frequently of the utmost impor- tance to a delator, and it constitutes one of the oldest titles of the law under the head of forbearance, and has always been considered a sufficient and valid consideration. Eltingu. Vanderlyn, 4 Johns. 437 ; Morton v. Burn, 7 Adol. & Ellis, 19 ; Baker v. Walker, 14 Mees. & W. 465 ; Jennison v. Stafford, 1 Gush. 108 ; Walton V. Mascall, 13 Mees. & W. 453 ; Com. Dig. action assumpsit, B. 1 ; -Wheeler v. Slocum, 10 Pick. 62 ; Story, Promissory Notes, § 186, and cases cited. The surrender of Other instruments, al- though held as collateral security, is also a good consideration ; and this, as well as the former proposition, is now generally ad- mitted, and is not open to dispute. Dupeau v. Waddington, 6 Whar. 220 ; Hornblower r. Proud, 2 Barn. & xUd. 327 ; Hideout V. Bristow, 1 Cromp. & J. 231 ; Bank of Salina v. Babcock, 21 Wend. 499 ; Youngs v. Lee, 2 Ker. 551. It seems now to be 256 HOLDER FOR VALUE. agreed that, if there was a*present consideration at the time of the transfer, independent of the previous indebtedness, a party acquiring a negotiable instrument before its maturity as a col- lateral security to a pre-existing debt, without knowledge of the facts which impeach the title as between the antecedent parties, thereby becomes a holder in the usual course of Ijusiness, and that his title is complete so that it will be unaffected by any prior equi- ties between other parties, at least to the extent of the previous debt for which it is held as collateral. White v. Springfield Bank, 3 Sandf. S. 0. 222 ; New York M. Iron Works v. Smith, 4 Duer, 362. And the better opinion seems to be in respect to parol con- tracts, as a general rule, that there is but one measure of the suffi- ciency of a consideration, and, consequently, whatever would have given validity to the bill as between the original parties, is suffi- cient to uphold a transfer like the one in this case. We are not aware that the principle as thus limited and qualified, is now the subject of serious dispute anywhere, and that is amply sufficient for the decision of this cause. Whether the same conclusion ought to follow where the transfer was without any other consid- eration than what flows from the nature of the contract at the time of the delivery, and such as may be inferred from the relation of debtor and creditor in respect to the pre-existing debt, is still the subject of earnest discussion, and has given rise to no small diver- sity of judicial decision. It seems it is regarded as sufficient in England, according to a recent case. Poiricr v. Morris, 20 Eng. L. & Eq. 103 ; Byles, Bills, pp. 96, 127. A contrary rule pre- vails in New York, as appears by several decisions. Codding- ton V. Bay, 20 Johns. 637 ; Stalker v. McDonald, 6 Hill, 93 ; and also in Tennessee, Napier v. Elam, 5 Yerg. 108. It is settled that it is a sufficient consideration in Massachusetts, Vermont, and New Jersey, and such was the opinion of the late Justice Story, as appears from his remarks in Swift v. Tyson, and in his valua- ble treatise on Bills of Exchange. Stoddard v. Kimball, 6 Gush. 469 ; Story, Bills, § 192 ; Chicopee Bank v. Chapin, 8 Met. 40 ; Blanchard ?;. Stevens, 3 Cush. 162; Atkinson v. Brooks, 26 V. 669 ; Allaire v. Hartshorne, 1 Zabr. QQb. We think, however, that the point does not arise in this case, for the reasons before stated, and consequently, forbear to express any opinion upon the sub- ject. The judgment of the Circuit Court is reversed, and the cause remanded Ibr further proceedings, with directions to issue a new venire. GOODMAN V. SIMONDS. 257 The doctrine of this case was aji^ain maintained in the Supreme Court of the United States, in Bank of Pittsburgh v. Neal, 22 How. Ii6, and in Murray r. Lardner, 2 Wall. 110; and in the latter, the doctrine of Gill v. Cubitt is again emphatically denied. Murray r. Lardner was a case of stolen coupon bonds, payable to bearer. It was held that the rules pertaining to ordinary coiniMercial paper applied to these ; and tiiat a purchaser, in good faitli, is unaffected by want of title in the vendor; the burden of proof resting upon the party who assails the possession. Mr. Justice tixvayne, in delivering the opinion of the Court, after stating the points decided in the principal case, proceeds to say : " Such is the settled law of this Court, and we feel no disposition to depart from it. The rule may perhaps be said to resolve itself into a question of honesty or dishonesty, for guilty knowledge and wilful ignorance alike involve the result of bad faith. Tliey are the same in effect. Where there is no fraud there can be no ([uestion. The circumstances meniioned, and others of a kindred char- acter, while inconclusive in themselves, are admissible in evidence ; and fraud established, whether by direct or circumstantial evidence, is fatal to the title of the holder. "The rule laid down in the class of cases of which Gill r. Cubitt is the ante- type, is hard to cumprehend, and dillicult to apply. One innoeent holder may be more or less suspicious under similar circumstances at one time than at another; and the same remark applies to prudent men. One prudent man may also sus- pect where another would not, and the standard of the jury may be higher or lower than that of other men ecjually prudent in the management of their affairs. Tiie rule established by the other line of decisions has the advantage of greater clearness and directness. A careful judge may readily so submit a case under it to the jury that they can hardly fail to reach the right conclusion.'' Upon the important subject of coupon bonds, he says: " We are well aware of the importance of the principle involved in this inquiry. These securities are found in the channels of commerce everywhere, and their volume is constantly increasing. They represent a large part of the wealth of the commercial world. The interest of the community at large in the subject is deep-rooted and wide- branching. It ramifies in every direction, and its fruits enter daily into the affairs of persons in all conditions of life. While courts should be careful not so to shape or apply the rule as to invite aggression or give an easy triumph to fraud, they should not forget the considerations of equal importance which lie in the other direction. In Miller r. Race [1 Burr. 452], Lord Mansfield placed his judgment mainly on the ground that there was no difference in principle between bank-notes and money. In Grant r. Vaughan [3 Burr. 1516], he held that there was no distinction between bank-notes and any other commercial paper. At that early period his f;\r-reacliing sagaiity saw the importance and the bearings of the subject." The doctrine of Gill v. Cubitt was however adopted in the courts of several States before the overruling case of Goodman r. Harvey had become generally known in this country. See Sandford r. Norton, 14 Vt. "JJS ; Hall r. Hale, 8 Conn. 336 ; Cone v. Baldwin, Vl I'ick. 545 ; Boyd i'. Mclvor, 11 Ala. 822 ; Nichol- son V. Patton, 13 La. 213 ; Smith r. Alechanics' Bank, 6 La. An. 610, Slulell,J., dissenting. Goodman v. Harvey is adopted in Worcester Bank i'. Dorchester and M. Bank, 10 Cash. 488. But see Mcrriam v. Granite Bank, 8 Gray, 254, 259. 17 258 HOLDER FOR VALUE. It is also the law in Georgia, Maryland, and Texas. Matthews v. Poythress, 4 Ga. 287, 306 ; Ellicott v. Martin, 6 Md. 509 ; Grenaux v. Wheeler, 6 Texas, 515. Goodman v. Harvey was directly denied in Pringle v. Phillips, 5 Sandf. 157 ; but this case was overruled in the Court of Appeals in 1866, and Goodman v. Harvey adopted. Magee v. Badger, 34 N. Y. (7 Tiff.) 247. See also Belmont Branch Bank v. Hoge, 35 N. Y. (8 Tiff.) 65, reaffirming Magee v. Badger, and stating that Gill v. .Cubitt has been repeatedly overruled, both in England and in America. Goodman v. Harvey is cited by all the text-writers as declaring the soundest law. See authorities cited by Mr. Justice Clifford, srqjrn. Also Story, Promissory Notes, § 197 and note ; Id. Bills of Exchange, §§ 194, 416 ; 3 Kent, Com. 81, 82, note. With so many strong authorities in favor of the rule in the principal case, there can be little doubt that the early cases which follow Gill V. Cubitt will eventually be overruled. It follows from the rule in the principal case that mere proof of want of con- sideration will not throw the burden upon the plaintiff of showing that he is a bonajide holder for value, and without notice. And so are the cases since Good- man I". Harvey. See Whittaker v. Edmunds, 1 Moody & R. 366 ; Mills v. Bar- ber, 1 Mees. & W. 425 ; Low v. Chifney, 1 Bing. N. C. 267 ; Smith v. Braine, 16 Q. B. 244, 253 ; Knight v. Pugh, 4 Watts & S. 445 ; Fletcher v. Gushee, 32 Maine, 587 ; Ellicott v. Martin, 6 Md. 509 ; Ross v. Bedell, 5 Duer, 462. George Fisher v. Daniel Leland, Jr., et al. (4 Gushing, 456. Supreme Court of Massachusetts, October, 1849.) Indorsee affected with notice. — One who has taken commercial paper by indorsement before it is due, with notice of fraud in its inception, is subject to the same de- fences, in an action against the maker, that could be raised against the payee to whom the fraud had attached. And the maker, against such indorsee, can give in evidence tlie fraudulent acts of tlie payee, and the admissions and confessions of the latter, while he was the holder of the note. The case is stated in the opinion of the Court. Shaw, C. J. The single question is, whether, after the defend- ant had proved that the plaintiff took the note in question by indorsement before it was due, but with notice that the promisors intended to defend on the ground that the note was obtained by the payee of the maker by fraud, they could give in evidence the fraudulent acts of the payee ; and wliether they could give in evidence the admissions and confessions of the payee, whilst he was the holder of the note and before the indorsement, to prove FISHER V. LELAND. . 259 such fraud. The distinction appears to be this : tliat when an indorsee takes a bill or note, by indorsement, before it is due, and without notice of fraud or other matter of defence, he takes it on an independent title by the indorsement, and will not be affected by any payment, set-off, fraudulent consideration, or other matter of defence, which the acceptor or promisor might have had against any i)revious holder or prior party. He is not in privity with such prior party, does not claim under him, and is not bound by the acts, frauds, or admissions of any such prior party. And in order to give the highest credit and the freest circulation to negotiable securities, transferred by indorsement, in favor of commerce, this principle is held with great firmness and strictness ; and by a series of recent decisions, the rule upon the subject, instead of being relaxed, is held with greater strictness than formerly. O'Keefe v. Dunn, G Taunt. 305 ; Dunn v. O'Keefe, 5 Maule & S. 282 ; Gill v. Cubitt, 3 Barn. & C. 466 ; Goodman v. Harvey, 4 Adol. & Ellis, 870 ; Foster v. Pearson, 1 Cromp., Mees. & R. 849 ; Arbouin v. Anderson, 1 Adol. & Ellis, n. s. 498. But where a negotiable note is found in circulation after it is due, it carries suspicion on the face of it. The question instantly arises. Why is it in circulation ; why is it not paid ? Here is something wrong. Therefore, although it does not give the in- dorser notice of any specific matter of defence, such as set-off, payment, or fraudulent acquisition, yet it puts him on inquiry ; he takes only such title as the indorser himself has, and subject to any defence which would be made, if the suit were brought by the indorser. The note does not cease to be negotiable ; the indorsee takes a title, and may sue, but he is so far in privity with his indorser that he takes only his title ; and if the defendant could make any defence against a suit brought by such indorser, he can make it against the indorsee. This rule is settled in the case of a suit by an indorsee taking the note overdue, by a series of authorities, which show not only that such defence may Ije made, but that it may be proved by the same evidence, i)y which it might have been proved if the in- dorser were plaintitit'; to wit, tlie admissions of such indorser, made whilst he was the holder. Sylvester v. Crapo, 15 Pick. 92 ; Barough v. White, 4 Barn. & C. 325 ; Phillips v. Cole, 10 Adol. & Ellis, 106 ; Beauchamp r. Parry, 1 Barn. & Ad. 89. These author- ities might be multiplied almost indefinitely. 260 HOLDER FOR VALUE. But the indorsement of a note overdue is only one mode of giving the indorser notice that there is some matter of defence relied on ; if he has express notice, he may take it and may sue the note, but he takes subject to such defence as the defendant might make against the indorser. Tlie case in an early volume of the reports of this Court, Wil- son V. Holmes, 5 Mass. 543, was one where tlie plaintiff had no- tice in the form of the indorsement, which was: " Pay T. W., or order, for our use, value received in account." See Humphries V. Blight, 4 Dall. 370 ; White v. Kibling, 11 Johns. 128. In the early leading case on this subject. Brown v. Davies, 3 T. R. 80, 83, Lord Kenyon^ who was not disposed to go quite the length of the doctrine held by Mr. Justice Buller, says, "1 agree, &c., if it appears on the face of the note to have been dishonored, or if knowledge can be brought home to the indorsee that it had been so." In a note to the same case, in Taylor v. Mather, where the defence was that the note was obtained by fraud, and where it was negotiated when overdue, Buller, J., says : " Such a note is nego- tiable, but if there are any circumstances of fraud in the transac- tion, I have always left it to the jury, on the slightest evidence, to presume that the indorsee was acquainted with the fraud." It seems, therefore, that it is not that the indorsement of a note after it is due is, per se, such as to render the note void, or to defeat the right of the plaintiff ; but if there are anterior circum- stances, such as fraud in obtaining the note, the fact that the indorsee takes it when overdue, is a circumstance of suspicion, which should put him on inquiry, and leads to a presumption that he knew, or by inquiry might know, of such fraud, and is deemed constructive notice of it. It identifies the title of the indorsee with that of the indorser. This being so, actual notice of such fraud, brought home to the knowledge of the indorsee at the time he took the note by indorsement, is equally availing to prove that he is not a bona fide holder, and to give the defendant the same ground of defence as he would have had against the indorser. Exceptions overruled. See Goodman v. Simonds, ante, 240, and note, 257, 258. IIASCALL V. WniTMORE. 261 William Hascall and "Roland TI. Gerry v. Joel AVniTMORK. (19 Maine, 102. Supreme Court, April, lS-11.) Indorsee with notice claimimj under holder without. — (Jne who purchases commercial paper for value, with notice of dcfi-ct in its inception, from a bonn Jul holder without no- tice, stands upon .the rij;hts of the latter, antl may recover the amount of the paper. The case is stated in the opinion of the Court. Shepley, J. The plaintiffs are joint owners of a negotiable promissory note purchased before it became payable. One of them is a holder for value without notice ; the other with notice, but deriving his title through others who were bona fide holders with- out notice. As between the original parties the note may be regarded as made without consideration. Andrews, who was the first and an innocent indorsee for value, did not indorse it, when he disposed of it, and he was properly admitted as a witness. Whitaker v. Brown, 8 Wend. 490. He could have collected it, for the want of consideration could not be set up against him. A knowledge of the facts acquired afterward would not affect his rights. He had not only a legal right to hold and collect it, but to negotiate it. And the maker could not impair that right by giving notice that it was made without consideration. Nor would he be injured by a transfer to one having a full knowledge of the facts ; for his position would not be more unfavorable than before. Bayley states, that the want of consideration cannot be insisted upon " if the plaintiff, or any intermediate party between him and the defendant, took the bill or note bona fide and upon a valuable consideration." Bayley, o.lO, ed. by Phillips k Sewall. The case of Thomas v. Newton, 2 Car. & P. 606, was assumpsit on a bill drawn by Wilson on the defendant and accepted, and by him indorsed to Dandridgc and by him to the plaintiff. The de- fence was a want of consideration. Lord Tenterden says, " if the defendant shows, that there was originally no consideration for the bill, that throws it on the plaintilf to show that he gave value for it, or that value was given for it by Dandridgc ; for if cither the plaintiff or Dandridgc gave value for it, the plaintiff may recover ; otherwise the defendant is entitled to recover." ^ « In Solomons v. The Bank of England, 13 East, 134, 135, note (6), 1 This doctrine has been exploded. See Goodman v. Sinionds, ante 240, and note 257, 258 ; also ante, note to Swift v. Tyson, p. 186. 262 HOLDER FOR VALUE. it appeared, that the bank-note had been obtained fraudulently from Batson & Co., who informed the bank of it. The plaintiff as holder claimed payment of the bank, and it was refused. He had received the bill of Hendricks & Co. ; and it did not appear, that he paid value for it before notice. Lord Keyiyon says, " upon this evidence 1 think Solomons must be considered to be in the same situation as Hendricks & Co." But as it did not appear, that they were holders for value without notice, the plaintiff did not recover. In Smith v. Hiscock, 14 Maine, 449, where a negotiable promis- sory note had been indorsed bona fide and for value before it was payable, the Chief Justice says, " the want of consideration is not an available defence against a subsequent holder, to whom it may have been passed after it was due. The promise is good to the first indorsee free from that objection ; and the power of transferring it to others with the same immunity is incident to the legal right which he had acquired in the instrument. By the first negotiation the want of consideration between the original parties ceases as a valid ground of defence." If the relations between the maker and holder only were to be considered, the want of consideration would be a good defence against one, who did not purchase for value, or who did so after it was once due. And yet it has been decided, that one so situated may avoid that defence by showing, that it could not have been interposed against a prior holder. The same principle appears to .be equally applicable to a holder who has purchased with notice. If the relations between himself and the maker only were to be considered he could not recover. But purchasing of one who had no notice he must be considered to be in the same situation and as entitled to the same protection. Defendant defaulted and judgment for amount due on the note. The doctrine of this case is well settled. See Boyd v. McCann, 10 Md. 118; Prentice v. Zane, 2 Grat. 262 ; Watson v. Flanagan, 14 Texas, 354 ; Howell V. Crane, 12 La. An. 126 ; Woodworth v. Huntoon, 40 111. 131 ; Bassett r. Avery, 15 Ohio State, 299 ; Lickbarrow v. Mason, 2 T. R. 63, 71 ; Robinson v. Reynolds, 2 Q. B. 196, 211 ; Story, Promissory Notes, § 191, where the rule is thus stated: " The partial or total failure of consideration, or even fraud between the antecedent parties, will be no defence or bar to the title of a bona fide holder of a note for a valuable consideration, at or before it becomes due, without notice* of any infirmity therein. The same rule will apply, although the present holder has such notice, if he yet derives a*title . . . from a prior bona fide holder for value. This doctrine, in both its parts, is indispensable to the security and cir- culation of negotiable instruments : and it is founded in the most comprehensive and liberal principles of public policy." grant v. ellicott. 263 Grant and Gary v. Ellicott. (7 Wendell, 227. Supreme Court of New York, May, 1831.) Accommodation paper. Holder with notice. — In an action by an indorsee of a bill of ex- change against the acceptor it is no defence tliat the bill was accepted for the accommodation, of the drawer, and tiiat the indorsee had knowledge of the fact when he took tlie bill. The case is stated in the opinion of the Court. Savage, C. J. The defendant says he ought not to pay the bill, because no consideration passed between him and Graham, and this was known to the plaintiffs : that is, the defendant accepted the bill for the accommodation of the drawer, which the plaintiffs knew. This is no defence ; it was so decided in Smith i\ Knox, 3 Esp. 46. Lord Eldon there held that where a bill is given for the accommodation of the drawer or payee, and is sent into the world, it is no answer to an action upon it against the acceptor, that lie accepted it for the accommodation of the drawer, and that the fact was known to the holder ; in such case the holder, if he gave a bona fide consideration for it, is entitled to recover, though he had full knowledge of the transaction. In that case the plaintiff pro- duced no proof but of handwriting of the parties to the bill. The case of Charles v. Marsden, 1 Taunt. 224, was very like this case. The action was brought by the indorsee against the acceptor. The defendant pleaded that it was accepted for the accommodation of the drawer, and without any consideration, and that this was known to the plaintifis when they took the bill, after it was due. Mansfield^ C. J., says : " There is no allegation of fraud in this plea, nor any allegation that the plaintiff did not give a valuable consideration for this bill ; it must therefore be presumed that he did." Lawrence, Justice, says : " In the present case, it is to be supposed that the party (drawer) persuades a friend to accept a bill from him because he cannot lend him money, would there be any objection, if, with the knowledge of tiie circumstance that this is an accommodation bill, some person should advance money upon it before it was due ? Then what is, the objection to his furnishing it after it is due ? For there is no reason why a bill may not be 264 HOLDER FOR VALUE. negotiated after it is due, unless there was an agreement for the purpose of restraining it." I know of no decision supporting this plea, and it would be extremely prejudicial to commercial paper if it could be supported. Tlie acceptor in a bill is considered in the same light as an indorser of a promissory note ; and it is well known that much of the paper discounted in our banks is accommodation paper, and it never has been supposed that the indorser in such case is not liable. Judgment for plaintiffs on demurrer, with leave to amend, on payment of costs. This rase enunciates an elementary principle, and does not require the cita- tion of authorities to sustain it. There are, however, some peculiar doctrines growing out of the law of accommodation paper; these are illustrated in the following cases. See also note to Swift v. Tyson, ante, p. 186. It is no defence that the paper was overdue when the indorsee took it with knowledge that it was accommodation paper. Thompson v. Shepherd, 12 Met. 311. Small et al. v. Smith. (1 Denio, 583. Supreme Court of New York, October, 1845.) Fraudulent diversion. — One who purchases accommodation paper with knowledge that the terms and conditions on which the accommodation was given have been vio- lated is not a bonajide holder as against the party who lent his name for accommo- dation. The case is stated in the opinion of the Court. Beardsley, J. If the evidence given on the trial was true, and that was for the jury to determine, it is perfectly clear that the note was delivered to the plaintiffs in violation of the agreement upon which it had been indorsed by the defendant. The plaintiffs therefore were not entitled to recover, unless they received it bona fide and upon a valuable consideration. Both were necessary. It must have been received in good faith, without notice of the arrangement on which the indorsement had been made, and tlie transfer must have been upon what the law regards as a valuable 8MALL V. SMITH. 265 consideration. These principles admit of no dispute ; and al- tliough upon some points of commercial law in close proximity to those I have stated, discordant opinions may l)e found, Stalker v. McDonald, 6 Hill, 93, Swift v. Tyson, 16 Peters, 1, there is entire harmony as to those I have mentioned. The judge charged that if the plaintiffs received the note in pay- ment and satisfaction of a deht due to them from Hulburt, the maker of the note, that was a sufficient consideration for its trans- fer, and they thereby became purchasers for value. This, as a legal proposition, is not questioned ; but the bill of exceptions fails to show any evidence to which this principle could be applied. There was no proof which tended to show that the note had been transferred in extinguishment of the debt of llull)urt. The judge, therefore, in my view of the case, erred in submitting that question to the jury. Bnt I shall not. dwell on this point, for the case may be disposed of on the question of good faith. It appears by the testimony of Hulburt, that he was indebted to the plaintiffs in a sum exceeding the amount of this note, and that Small, one of the plaintiffs, came to Vienna, where Hulburt resided, to secure payment of said debt. Small proposed to Hulburt to give a note at one year with security, and the defendant, who lived in another county, was spoken of for that purpose. Small said he would take the defendant as surety, and it was arranged that while Small was absent (as he was going "West for a few days), Hulburt should go to the defendant's residence in order to obtain him as such surety. Pursuant to this arrangement Hull)urt went to see the defeiulant, and told him what he wanted. At first the defend- ant refused to indorse, but it was finally agreed between them that he would indorse the note upon condition that one Austin, who then held a note given by the defendant, should deposit the same with a third person, there to remain until the defendant should be discharged from said indorsement. The note in question was ac- cordingly signed by Hulburt and indorsed by the defendant, but it was not to be transferred to Small, or used in any manner, until the one held l)y Austin had been deposited under said arrangement. Hulburt returned with the note to Vienna, where Austin lived, and told him of the arrangement under which the indorsement had been made. Austin declined to comply with that arrangement, but Hulburt, as he states, left the note in suit on Austin's table, and 266 * HOLDER FOR VALUE. did not see it again until Small had returned to Vienna. Hulburt first saw Small after his return at Austin's office, where, on arriv- ing at the office, according to the testimony of Hulburt, Small said to him : " We have fixed that matter, and Mr. Austin has let me have the note." The witness then inquired of Austin, in Small's presence, in what manner the note had been turned out, and whether the arrangement of the defendant had been complied with, to which Austin made no answer, but Small said he had pre- vailed on Mr. Austin to indorse the note and he had got it. This, according to the witness Hulburt, was all which passed at that time. Another witness (Paul), who was present, said the remark of Hulburt to Austin was, that he supposed he had not turned out the note without complying with the request of Mr. Smith, the defendant, to which Austin made no answer, but Small said he had prevailed on Mr. Austin to indorse the note and had released Mr. Smith. It is not material which of these witnesses was correct as to the form of the remarks made at that time. Both come to the same result ; for what was said, according to the statement of either witness, was full notice to Small that the indorsement had been procured upon some arrangement or condition which had not been complied with. Here, then. Small had actual notice that the in- dorsement was conditional ; and if the note was subsequently transferred to him, he would necessarily take it subject to that con- dition. When this notice was given, the note was in Small's hands. He had received it, as he said, of Mr. Austin. But it can- not be pretended he had received it of Austin upon any considera- tion moving between them. Indeed, the first remark of Small to Hulburt, and all that was said on that occasion, goes to show that whatever might have been done by Austin had been done for Hul- burt and not for himself, and in furtherance of the negotiation which had been commenced between Hulburt and Small. It is not shown that Austin had authority from Hulburt to transfer this note to Small on any terms, although it may be inferred that he was authorized to do so, on complying with the condition upon which the defendant's indorsement had been made. Small did not set up that he had received the note as the property of Austin, and the whole transaction shows he did not. He could not, therefore, upon the facts as disclosed by the witnesses, pretend that he had acquired title to the note in any manner before lie was apprised by Hulburt MOHAWK BANK V. COREY. * 2G7 that the indorsement was made on a condition which had not been performed. It is more a matter of inference than of any thing like direct proof, tliat Hullnirt at any time assented to the transfer of the note to Small ; bnt if he did so, after notice to Small of the condition on which tlic indorsement had been made, it is plain that the plaintiffs ought nut to recover, as the condition has never l)een performed. If the plaintiffs claim as purchasers of the note from Austin, they are met by two oVyections : first. Small, one of the plaintiffs, was aware that the note l>clongcd to Hulburt and not to Austin ; and, secondly, it is not shown that the plaintiffs paid or advanced any thing to Austin, or that any consideration passed between them for the transfer of the note. And as to Hulburt, if he assented to the transfer of the note to Small, it was after ex- plicit notice that the indorsement was conditional, as is proved by the testimony of both Paul and Hulburt. Had the case been put to the jury upon the point of notice, with suitable explanations, there is no doubt what the verdict should and would have been, unless these witnesses were wholly discredited. I think the case • was not so submitted to the jury, and that it should be sent back for a new trial. Neiv trial granted. See preceding and following cases. Mohawk Bank v. Corey and Livermore, Impleaded. (1 Hill, 513. Supreme Court of New York, July, 1841.) Accommodation paper. Diversion. — Where it does not appear tliat the acconinioilation party had any interest in tlie manner in which liis paper was to be applied, it is immaterial that it was not used according to agreement. The case is stated in the opinion of the Court. Bronson, J. The indorscrs, Corey and Livermore, lent their names to Borst, the maker, for the purpose of giving him credit, and he was at liberty to negotiate the note in any way he thought proper. Borst says, he got them to indorse it for the purpose of 268 " HOLDER FOR VALUE. enabling liim to get it discounted at the Albany City Bank, to raise money to buy barley. But it does not appear that the in- dorsers had any interest in having it discounted by the Albany City Bank, or that the use which Borst should make of the money was in any way important to them. They merely asked Borst what he was going to do with the money, and he told them he was going to purcliase barley with it. If the note had been made for the purpose of taking up another note in the Albany City Bank, to which the indorsers were parties, it would have presented a dif- ferent question. But here, although the indorsers had the curios- ity to inquire what use the maker designed to make of the note, they had no interest in the question ; and, so far as appears, they would just as readily have lent their names if the maker had told them he wished to take up his notes in the plaintiffs' bank, — the use which he afterwards made of the paper. Within the proper legal sense of the term, there has been no diversion of the note from the purpose for which it was made and indorsed. The in- dorsers lent their names for the purpose of giving the maker credit generally, and without any concern with the use which should be made of that credit. But if there had been a diversion of the note from its proper use, the plaintitfs would still be entitled to recover. They not only took the note in payment of two other notes which they then held against Borst indorsed by Voorhees, but they gave up those secu- rities. They also gave up, of course, the suit which had been commenced and was then pending on the two notes. This is a stronger case than that of the Bank of Salina v. Babcock, 21 Wend. 499. There have been several other decisions to the same eifect, which are not yet published.^ It is not denied that the plaintiffs are bona fide holders of the paper, and it is equally clear that they paid a valuable consideration for it. New trial denied. The rule is thus stated in Wardell v. Howell, 9 Wend. 170, per Sutherland, J. : " Where a note has effected the substantial purpose for which it was de- signed by the parties, an accommodation indorser cannot object that it was not effected in the precise manner contemplated at the time of its creation. . . . But where a note has been diverted from its original destination, and fraudulently put in circulation by the maker or his agent, the holder cannot recover upon it against an accommodation indorser, without showing that he received it in good faith, in the ordinary course of trade, and paid for it a valuable consideration." 1 Bank of Sandusky v. Scoville, 24 Wend. 115. STODDARD V. KIMBALL. 209 Charles Stoddard et al. v. John Klmuall. (6 Gushing, 469. Supreme Court of Massachusetts, October, 1850.) Misapplication. — In an action by the indorsee against the indorser who liad indorsed the paper for tlio maker's accommodation, the indorser cannot raise the defence that the note was misapplied by tlie maker, without showing that the plaintiff liad knowledge of the misapplication. Amount of recovery. — If accommodation paper has been tiken to secure a pre-existing debt of a less amount than tiiat expressed on the face of the paper, the holder can recover against the accommodation indorser only the amount of the debt, if he (the holder) is not liable to any third person for any surplus. The case is stated in tlie opinion of the Court. Shaw, C. J. This was a suit brouglit by the plaintiff as indorsee of a promissory note, against the defendant as indorser. The defence reHed on was, tliat tlie defendant indorsed the note, at the request and for tlie accommodation of the maker, for a special pur- pose, that of taking up another note, on which he was indorser, and that it was not so applied, but w-as negotiated to the plaintiffs, as collateral security for a debt due to them. The defendant also contended, that the plaintiffs, at the time of taking the note, had notice of the misapplication of the same, as above stated ; but this fact was left to the jury, who found that the plaintiffs had no such notice. It further appeared that some payments had been made by tlie maker of the note to the jjlaintiffs, towards the discharge of tlie debt, for securing which to the plaintiffs this note was received, and also that the maker being insolvent, the plaintiffs proved this debt against his estate, and received a dividend. The defendant contended that if liable at all, he was liable only for the balance of the debt diie the plaintiffs, if less than the amount of the note, and the judge, who tried tlie cause, so ruled, subject to the opinion of the whole Court, and in case they should be of opinion that the plaintiffs are entitled to recover the whole amount, the verdict is to be altered and amended accordingly. "We think the direction was right. An indorser of an accommo- dation note, passed by indorsement to a bona fide holder, in due course of business, is effectually bound to all the liability, to w'liich, 270 ^, HOLDER FOR VALUE. by law, the indorser of a business note is liable. He stipulates to take on himself the qualified obligation of one, who indorses and puts in circulation a note taken by himself for value in the course of business. If indeed an accommodation note is obtained from another, by fraud, deception, or false practices, or having been o1)taincd for one purpose, is fraudulently misapplied to another, and it is negotiated to one, even for value, with full notice of the fraud in obtaining or misusing it, he cannot recover ; he is not a bona fide holder ; an attempt to recover it would make him a partaker in the fraud ; and the same would be true of a business note. In the present case, it appearing that the note was negotiated to the plaintiffs before it was due, for a valuable consideration, and the jury having found that they took it without notice of the mis- application by the maker, it is clear that they have a right to recover ; and the only remaining question is, for what amount they may recover. In general, the holder of an indorsed note will be entitled to recover the whole amount of the face of the note, because the presumption of fact, in the absence of counter proof, is, that he gave the full value for it, or that he took it from some other holder for value, to collect the amount, receive a certain part to his own use, and account to the party from whom he took it for the surplus. Having taken it to secure a pre-existing debt, of a less amount, he is a holder for value in his own right, only to the amount of the debt due him. If, therefore, it appears in proof, that the plaintiff is not accountable to any third person for any surplus, then there is no reason why he should recover any more than the balance of the debt, for which he is a bona fide holder for value. Here, it appears that the plaintiff received this note of the maker, for whose accommodation the defendant indorsed it. It being obvious that the plaintiff can recover nothing as trustee for the party from whom he received it, he is liable over to nobody for the surplus, and therefore can have judgment only for the amount due to him- self, for his own use and in his own right, which is so much of the note as may be necessary to satisfy the balance of the debt, for the security of which he received it. Judgment on the verdict for the plaintiff for the smaller sum. See Allaire v. Hartshorne, 1 Zabr. 665, holding that, if the paper is invalid between the original parties for want of consideration, the holder can recover only the amount which he has actually advanced ; citing Edwards v. Jones, 7 BAXTER V. LITTLE. . 271 Car. & P. 633 ; s. c, 2 Meos. & W. 414 ; Robins v. Maidstone, 4 Add. & Ellis (n. .s.), 811 ; Chitty, Bills (Hth cd.), 81 ; Sedffwick, Damages, 241. This doctrine is also sustained liy the following authorities: Chicopee Bank v. Cha- pin, 8 Met. 40; Hilton i\ Smith, 5 Gray, 400; Ilolenian v. Ilobson, 8 Ilninph. 127; Williams v. Smith, 2 Hill, 301; Valotte v. Mason, 1 Smith, Ind. 89; WilFin V. Roberts, 1 Esp. 2G1 ; Jones v. Hibbert, 2 Stark. 304. See also Bond I'. Fitzpatrick, 4 Gray, 89. James Baxter v. William Little. The Same v. Joseph Harris, Jr. (6 Metcalf, 7. Supreme Court of Massachusetts, March, 1843.) Paper overdue. Set-off. — Wiien the first indorsee of a promissory note negotiates it after it is dishonored, and the second indorsee brings an action thereon against the maker or first indorser, the defendant cannot set off any claim which he has against the first indorsee, except such as existed at the time of the transfer of the note to tlie i)laintiff, although he had no notice of such transfer when he acquired Ills claim against the first indorsee. The Jirst of these actions was by the indorsee against the maker of a promissory note for $330, dated March 1, 1837, payable to Joseph Harris, Jr., in four months, and by him indorsed. The action was commenced October 4, 1889. At the trial before the Cliief Justice, the signatures of the maker and indorse.r were admitted by the defendant, and he relied upon a set-off of notes against the Franklin Bank, upon the ground that the note in suit was held by that bank, after it was due, and that he had a right to make the same defence against the plaintiff, as if the action were brought by the bank. In order to present the question of law, it was mutually con- ceded, that the note was discounted by the Franklin Bank, in the due course of business ; that it was held by the bank, when it be- came due ; that afterwards, and after the bank had stopped pay- ment, in pursuance of a vote of the directors to pay the debts of the bank in sucli securities as they liad, the note in question, on the twentieth of December, 1837, was delivered to the plaintiff, or to the person under whom the plaintitT claims title, in excliange for bills of said bank, at par, which bills were then at a discount in the market : That before this action was brought — upon notice 272 HOLDER FOR VALUE. of the plaintiffs' attorneys that they had such a note, and de- manded ])ayment thereof, but without notice to the defendant that the note had been transferred by the bank, — the defendant ten- dered to said attorneys, in satisfaction of the note, lulls of the Franklin Bank, which they declined to accept ; that the defend- ant has ever since had said bills, and has filed them in offset in this action, and now relies upon that tender and set-off. The second of these actions was by the indorsee against the in- dorser of tlie same note, and all the facts stated in the previous case were agreed to in this. The defendant further, in this case, relied upon a balance due to him from the Franklin Bank, by way of set-off to the note. And it was further agreed by the parties, that on the fifth of June, 1838, there was due to the defendant, on the books of said bank, a balance of $293.63, and that he had no notice of the transfer of the note to the plaintiff, until this suit was commenced ; that within a month or two after the twentieth of December, 1837, when the note was passed out of the bank, notice was given to the defendant by the cashier, that it was so passed out ; that the balance above mentioned, due to the defendant, on the fifth of June, 1839, arose from post notes deposited on that day, except $12.88, which previously stood to his credit ; and that the deposit then made cancelled all demands which the bank had against him, and left the above balance. It was agreed in each case, that judgment should be entered for the plaintiff, if in the opinion of the Court he was entitled to recover ; otherwise, that the plaintiff should become nonsuit. Shaw, C. J. When a negotiable note is indorsed and trans- ferred after it is due, and the defendant relies upon matter of set- off which he may have against the promisee, he can avail himself only of such matter of defence as existed between himself and tiie promisee, at the time of the actual indorsement and transfer of the note to the holder. A note does not cease to be negotiable, because it is overdue. The promisee, by his indorsement, may still give a good title to the indorsee. Notes or other matters of set- off, acquired by the defendant against the promisee, after such trans- fer, cannot be given in evidence in defence to such note, although the maker had no notice of such transfer, at the time of acquiring his demand against the promisee. Having made his promise negoti- able, he is liable to any bona fide holder and actual indorsee ; and BAXTER V. LITTLE. 273 therefore, even after the note has become due, in making payments to the original promisee, or in further dealings l>y whicli he gives him a credit, he lias no right to presume, without proof, that the promisee is still the holder of the note. Besides, in case of pay- ment of a negotiable note, or of a credit which the maker intends shall operate by way of payment, he has a right to have his note given up, if paid in full, or to see the payment indorsed, if partial. Should he insist on this rigiit, in the case proposed, he would at once perceive that the person to whom he is making payment or giving credit, is no longer the holder of the note. And this ap- pears to us to be the true distinction between the indorsement of a note overdue, and the assignment of a chose in action. In the latter case, notice of the assignment must be given by the as- signee to the debtor, to prevent him from making payment to the assignor. Without such notice, he has no reason to presume that the original creditor is not still his creditor ; and payment to him is according to liis contract and in the due and ordinary course of business. The assignee takes an equitable interest only, which must be enforced in the name of the assignor ; and, until notice, he has no equity against the debtor, which can be recog- nized and protected by a court of law or equity. The indorsee of a note overdue takes a legal title ; but he takes it with notice on its face that it is discredited, and therefore subject to all payments and offsets in the nature of payment.- The ground is, that by this fact he is put upon inquiry, and therefore he shall he bound by all existing facts, of which incpiiry and true information would ap- prise him ; but these could only apprise him of demands then acquired by the maker against the payee. We are aware that in the marginal note to Sargent v. South- gate, 5 Pick. 312, which is the leading case on this subject, it is stated, that " in an action by the indorsee against the maker of a negotiable note indorsed when overdue, the defendant may file in set-off a negotiable note made to him by the payee before he had notice that the note in suit was assigned." And the point is so stated in Minot's Digest, 640. No such decision was called for in that case, because all the demands, relied uj)on by way of set- off, were acquired by the defendant, whilst the original payee was holder of the note. But further; on a careful examination of the opinion, we think it will not be found that there is any such dictum in regard to notice. The inadvertence, in extracting the 18 274 HOLDER FOR VALUE. marginal note from the case, probably arose from the very obvious analogy between the case of the indorsement of a note overdue, and the assignment of a chose in action, especially as there was nothing in the facts or the argument to call for a distinction be- tween the two cases. The opinion of the Court in that case, therefore, is not an autliority opposed to the ground of decision adopted in this, namely, that this right of set-off must be con- fined to those demands against the payee or prior holder, which accrued to the defendant, whilst such payee or prior holder was the actual holder of the note, and will not extend to demands which accrued afterwards, although no notice of the indorsement was given to the debtor. The defendant Little, the maker of the note now in suit, not having shown that he held the bills of the Franklin Bank at the time that his note was transferred to the plaintiff, he cannot set them off in this suit. In a case in New York, it was held that bills of a bank, held by the defendant when his note became due, could not be set off in an action brought on the note by receivers appointed previously. Haxtun v. Bishop, 3 Wend. 13. The English rule, in allowing set-off in an action upon a note, is somewhat more limited than our own, confining such defence to equities arising out of the same note, or transactions connected with it. Burrough v. Moss, 10 Barn. & C. 558. Here, it has been held, that an independent demand may be set off, where in other respects the party is entitled to go into that defence. Sar- gent V. Southgate, 5 Pick. 312 ; Ranger v. Gary, 1 Met. 369, 375. Since the decision in Sargent v. Southgate, the principle de- cided by it has been confirmed, and the whole subject of set-off placed, by the Rev. Sts. c. 96, upon grounds more distinct and satisfactory than it was under the former statutes. The principles already stated apply a fortiori to the case of Harris, the defendant in the second action, who was indorser of the same note. The note was transferred to the plaintiff by the Frank- lin Bank, in December, 1837, soon after which, the defendant had actual notice of it from tlie cashier ; and it is found that the de- posit to the credit of the defendant, upon whicli he relies by way of set-off, was made, and the credit obtained, in June, 1838. It is stated indeed, that prior to that time there was a small balance to his credit, on deposit of $12.88, but there were other demands of the bank, at that time, against tlie defendant, exceeding that BAXTER V. LITTLE, ^ ( O deposit ; so that tlic whole of the defendant's demand against the bank, oirered in set-off", accrued subsequently to tiio transfer (;f the note, which is now in suit, to the plaintiff. Ji(i.l(jment, in both rases, for the jylaintiff. This qiu'stiun is discussed and decided in Britton v. Bishop, 11 Vt. 70. The facts in the case will sudicieiitly appear in the opiiiion of the Court by RKDriKLD, J. The only (piestion presented lor the consideration of this Court, arises upon the third and foin-tli pleas of the defendant. These pleas are sub- stantially the same, and amount to nothing more than an alleffed agreement on the part of Ballou, the original payee of the note in suit, to apply a lesser note, given by him to the firm of Buskirk and Proudfit, and by them indorsed to the defend- ants, upon the note now sued. It is alleged that this agreement was made on the twenty-ninth of August, 1S37, and that at that time, and for a long time thereaf- ter, to wit, twenty ilays, Ballou was the owner of the note now sued in the name of plaint ilV. The latter note lell due on the first day of September, 1837, and the above allegation is by no means equivalent to an allegation that Ballou nego- tiated the note to the plaintiff when the same was overdue. For the allegation by way of a continuendo, being under the videlicet, is immaterial, and the whole allegation is satisfied by proof that the payee of the note retained it till the twenty- ninth day of August. It is to be taken, then, that the note was negotiated while it was still current, and the signers cannot, as a<:ainst this plaintiff, avail them- selves of the defence attempted, without showing notice of such agreement brought home to the plaintiff at the time of receiving the note. The pleas in controversy contain no such allegation, and are therefore bad. But, as the counsel seem to understand the fact in the case to be that the note was negotiated to the plaintiff when overdue, and desire a derision upon the merits of the question thus presented, the Court have passed upon it. There can be no doubt that, at common law, the holder of a negotiable bill or note who receives it from the payee after it falls due, takes it subject to all defences which attach to the note or bill in the hands of the indorser. It was first doubted whether a bill or note, overdue, could be so negotiated as to enable the indorsee to sue it in his own name. But, upon the opinion of merchants, the Court of King's Bench decided such action would lie. Mitlbrd V. Wallicot, 1 Salk. 129. But in Brown v. Davies, 3 T. R. 80, and Tayler v. Mather, il). 84, it is expressly decided that the indorsee, in such case, takes the bill or note subject to all defences. In the former case some stress is laid upon the fact that the bill had been noted for non-payment, but in the latter case that was considered of no importance. This is the well-settled doctrine of the couunon law. In the case of Sargent v. Southgate, 5 I'ick. 312. it was holden that the maker of a note or bill negotiated when overdue, and sued in the name of the indorsee, might in his defence plead any matter in set-off, which he could have pleaded if the suit had been in the name of the payee. This was allowed by an ecjuitable construction of the Massachusetts statute of set-offs. No English decision has gone that length. The case of Burrough v. ]Moss, decided in the King's Bench, 1830, reported in 10 Barn. & C. O.J8, and in 2) Eiig. C. L. 128, puts this question upon the true ground. The Court there held that the 276 HOLDER FOR VALUE. indorsee of an overdue promissory note is liable to all equities arising out of the note transaction itself, and to the application of demands due the maker from the payee, when there was an agreement, either express or implied, to that effect. That rule would clearly enable the defendants in the present case to avail them- selves of the note mentioned in the third and fourth pleas, for the purpose of reducing damages, even after judgment or default. The recent American cases hold substantially the same doctrine. Barlow v. Scott, 12 Iowa, 63 ; 10 id. 208. All defences as between the original parties, so far as the note is concerned, are equally available against the indorsee who re- ceives the paper when overdue. Bates v. Kemp, 12 Iowa, 99. But a set-ofif against the holder of paper taken before maturity is not an admissible defence, even when known to the purchaser at the time of the indorsement to him. Bar- ker V. Valentine, 10 Gray, 341 ; Flint v. Flint, 6 Allen, ?A. But an agreement to accept payment by application upon other outstanding notes due the maker from the payee will be a valid defence in such case. Staley v. Mathers, id. 937. So where a promissory note, negotiable but not indorsed, was given for stock sub- scribed in a railway corporation, and at the time of its execution and being secured by mortgage, the company gave the maker a counter contract, guaranteeing him against loss upon the stock, such counter contract will be a defence against a bill for foreclosure of the mortgage, the stock having become worthless. Peck v. Bligh,37 111.317. An interesting and important question arose in Oulds v. Harrison, 28 Eng. L. & Eq. 524. It was there held that the right of an indorsee of an overdue bill of exchange to sue the acceptor is not defeated by the existence of a debt due from the drawer to the acceptor, and notice by the latter to the drawer, before indorse- ment, of his election to set off the amount against the Vjill ; nor is the indorsee of such overdue bill of exchange affected by the existence of a right of set-off as between the acceptor and the drawer, although the bill was indorsed without value and for the purpose of defeating the set-off. Parke, B., said : " This plea, though inaccurately stated, we think amounts to an averment that both the indorser and indorsee knew that there was a debt due, and that the defendant would probably set it off, if the action were brought by the indorser against the defendant, knowing there would probably be a set-off (because it was not quite certain that the debt would still remain due) ; but knowing there would probably be a set-off, they fraudulently, so far as it was a fraud in law, and no further, agreed that the bill should be indorsed ; and it was therefore indorsed without value to the plaintiff. . . The holder's power to circulate it is not restrained simply by the existence, at the time, of a debt of equal value, and his circulating it is no infringement of any existing right of the defendant. . . . Does it become a fraud in defeating the title, if he actually intends to do that which, under the circumstances, would be the necessary result of this act ? and would it become so, if he communicates that intention to the indorsee, and the latter agi-ees to assist him ? This we think is no fraud, and does not avoid the transaction." This doctrine proceeds on the ground that set-off, strictly so called, is not such an equity as can be interposed against the indorsee of commercial paper, whether taken before or after maturity. Whitehead v. Walker, 10 Mees. & W. 696 ; Way v. Lamb, 15 Iowa, 79 ; Arnot v. Woodburn, 35 Mo. 99. knight8 v. putnam. 277 William Knights v. Samuel Putnam. (3 Pickering, 184. Supreme Court of Massachusetts, September, 1825.) Usury. When maker can set up this defence. — Commercial paper which is valid in its inception cannot be tainteil with usury afterwards, except as between the imme- diate parties ; and, therefore, the maker of a note, valid when executed, cannot raise the defence against an indorsee that the latter purchased the note of the payee at a usurious rate of interest. Assumpsit upon a promissory note made by the defendant, pay- able to W. Putnam or order, and by him indorsed to the plaintiff. Plea, the general issue. At the trial before Putnam, J., the defendant offered the indorser as a witness, to prove that the consideration of the indorsement was usurious ; but he was rejected as incompetent, on the author- ity of Manning v. Wheatland, 10 Mass. 502. The indorser had released to the defendant all liis claims upon the note, and the defendant offered to prove by him that the note was pledged to the plaintiff' as collateral security for a debt much less than the amount of it, contending that the plaintiff ought not to recover more than the amount of such debt. This evidence was considered as irrelevant, and was rejected. A verdict was returned for the plaintiff", but if either of these determhiations was incorrect, a new trial was to be granted. "Wilde, J. As to the question of usury, the case of Manning V. Wheatland ^ is directly in point. But the authority of that case has been questioned, and the objection to the doctrine, as it was there laid down, is entitled to great consideration. The witness was held to be incompetent, not because he was in- terested, but on the ground of legal policy, which will not permit one who has transferred a negotiable security as valid, to invali- date it by his testimony .^ But in that case, as in this, there was no illegality in the original contract, and no usury except in the transfer, in which the plaintifif himself was the guilty party. No deception therefore was practised on him. The note was a valid 1 10 Mass. 602. '■* This subject is considered under Evidence ;xw^ 278 HOLDER FOR VALUE. contract ; precisely what he supposed it to be at the time of tlie transfer. But notwithstanding these objections, we arc of opinion that the case of Manning v. Wheatland was rightly decided. For if the witness was competent, we consider the point to which he was called to testify as immaterial, and that consequently his testimony was properly excluded. We are aware there are conflicting opinions and contradicting decisions on this point, but after examining all the cases, we are satisfied that the defendant cannot avail himself of the defence of usury, and that a note, valid in its inception, may be recovered against the maker by an indorsee, although dis- counted by him at a rate exceeding legal interest. It is a well-established principle that, if a note or security is valid when made, no usurious transaction afterwards between the parties or privies will affect its validity. Ferrall v. Shaen, 1 Saiind. 295, Williams's note. But it is objected that, as the transfer is usurious, the plaintiff's title fails, although the original contract remains good, 'and that he cannot derive title from an illegal transaction in which he was a guilty party. This objection would have weight if a usurious contract were malum in se or merely void. But it has been fre- quently held that a contract contaminated with usury is only void- able by the party injured or tliose claiming under him. Now it is manifest that the maker of a note is not affected by a usurious agreement between the indorser and indorsee. He is liable on his contract, and it is immaterial to him whether the action be brought in the name of the indorser or in that of the indorsee. But I hold further, that the transfer of a note on a usurious consideration is neither void nor voidable. So far as the indorsement operates as the transfer of the note it is an executed contract, and the statute against usury is not applicable. It only applies to the implied promise or guaranty of the indorser, which being an executory contract may be avoided. But in no case can an executed contract be set aside on the plea of usury. It is not, however, necessary to insist on tliis distinction for tlie purpose of sustaining the present verdict. It is sufficient for this purpose, that the transfer is voidable only, and that it is not competent for the defendant, he not being a party to the transfer, to avoid it. The note being free from usury between the immediate parties to it, no after transaction with another person can, as respects those persons, invalidate it. KNIGHTS V. PUTNAM. 279 In New York, this principle is fully established by repeated de- cisions. The cases of Bush v. Livingston, 2 Caincs's Cas. in Err. 60, and Braman v. Hess, 13 Jojins. 52, and Munn v. Commission Co. 15 Johns. 44, are directly in point. The only case which has been decided on a contrary doctrine is that of Lloyd v. Keach, 2 Conn. 175. It is somewhat remarkable that in this case and in the case of Munn r. Commission Co. it is said the point under consideration was too clear to be questioned, although the two decisions are directly contradictory. Tlie cases referred to by Gould, J., as establishing tiie principle laid down in the case of Lloyd I'. Keach, do not ajtpear to me at all decisive. It is true, in those cases the law seems to be taken for granted as it is laid down by the learned judge in the case of Lloyd v. Keach. But he does not appear to have taken into consideration an important distinc- tion in relation to these cases between notes or bills given on a valuable consideration and in the usual course of business, and accommodation notes or bills, made for the purpose of raising money, and not existing as valid contracts before they are dis- counted. The distinction is noticed and the law correctly stated by Spencer, J., in the case of Munn v. Commission Co. He says : " It is clear that, if a bill or note be made for the [iurpose of rais- ing money upon it, and it is discounted at a higher premium than the legal rate of interest, and where none of the parties whose names are on it can, as between themselves, maintain a suit on the bill when it becomes mature, provided it had not been discounted ; that then such discounting of the bill would be usurious, and the bill would be void." The reason of the distinction is obvious. In the case supposed, the bill or note is mere waste paper before it is discounted ; it is then that it first exists as a contract, and if tainted with usury it is voidable even in the hands of a bona fide holder. The case of Jones v. Brooke, 4 Taunt. 464, and the case of Churchill v. Sutcr, cited by Gould, J., fall within this class of cases, and wliethcr the other cases referred to were business notes or bills, or were made for the purpose of raising money, does not appear. Besides, these are nisi j}rii(s cases, and not at all decisive, nor can opinions incidentally expressed, and in support of which no reasons are given, be entitled to much weight of authority. In the case of Parr v. Eliason, 1 East, 92, it was decided that a l)ill free from usury in its concoction, may be sold at a discount greater than the legal rate of interest, without avoiding the bill in 280 HOLDER FOR VALUE. the hands of a bona fide holder. That was an action of trover, and it seems to be implied that, if it had been brought against the immediate indorsee, wlio was a party to the usurious transfer, it might have been maintained. But this is decided only by infer- ence, and it was a point not involved in the decision of that case. But if the inference be admitted to be just, it does not follow that the maker of the bill can take advantage of the usury. If the transfer was voidable only, and Lord Kenyon clearly so con- siders it, for he likens it to a sale which is fraudulent against cred- itors, I see no legal reason why the maker of the note should be allowed to avoid it. If, however, the transfer is merely void, as Crould, J., contends, then the case of Parr v. Eliason cannot be supported, for the bona fide holder in that case had no right to the bill. The transfer being void is a mere nullity, and it was imma- terial whether the holder was or was not a party to the usurious transfer. This is the necessary legal consequence of considering the transfer as absolutely void ; it is opposed to the current of the English authorities, and cannot be maintained either on principle or authority. Judgment according to verdict. A very full citation of authorities upon the points discussed in this case will be found in Perkins's edition of 3 Pickering. 4 Holmes et al. v. Williams. (10 Paige, 326. Court of Chancery of New York, 1843.) Usury. — Where the holder and apparent owner of negotiable securities sells them at a discount, to a bo7ia fide purchaser, who has no knowledge of the purpose for which such securities were made, the holder representing such securities to belong to himself, and to be business paper, the transaction is not usurious, as between the vendor and purchaser, though the representations of the vendor were false, the paper having been made to be sold at usurious discount in the market. The case is stated in the opinion of the Court. Gridley, V. C. The two first-named complainants constituted a mercantile firm in Utica, and were indebted to the defendant in a large sura of money. In the month of December last, S. Holmes, nOLME3 V. WILLIAMS. 281 one of the said firm, had in his liands a draft for 82500 drawn upon the house of Morgan, Cutler, c^- Co., of New York, hy Ford and Smith, D. Vanderbilt, and F. C. Chapman, and indorsed in blank by L. Harvey, which draft at the time had never been accepted or nego- tiated, but was acconunodation paper, belonging to the drawers, made and indorsed to raise money on, for their benefit, and placed in the hands of Holmes for that purpose alone. This draft Holmes negotiated, sold, and transferred by indorsement to the defendant, at a sum considerably below the amount due by its terms, and applying a portion of the consideration upon an existing demand of the defendant, and receiving the remainder in cash ; Holmes rep- resenting to Williams at the time that the draft was business paper, and was the property of himself or himself and partners. In Jan- uary following, the drawers api)lied to Holmes for the re-delivery of the draft ; whereupon he applied to the defendant to take \ip the draft, which was effected under the following agreement : That the two Holmeses, with Kellogg as surety, should give the defendant their note, due on May 4th, 1839, for the amount due on the draft, and that a suit should be commenced against the Holmeses, upon which they should give a cognovit, upon which judgment should be entered and execution issued and levied on the property of the two Holmeses, returnable at the next term thereafter. The bill prays that the defendant may be perpetually enjoined from prosecuting the judgment execution, and that the same may be decreed to be satisfied of record, by the said defendant ; and that he also may be decreed to deliver up the note to be cancelled. The first question material to be decided is whether the purchase of the draft was usurious so that it was a void security in the defendant's hands. Were this a new question of construction to be settled under the statute, I confess I should think it was not. There is a good legal reason why a security, actually tainted with an original act of usury, should be held void in the hand of a bona fide and innocent holder. For the statute has declared it so in terms, and in all such cases as of notes given in violation of the statute against gaming, horse-racing, &c. Courts have uniformly held the securities void not merely against the payees and holders, with notice, but against holders receiving them for value, and before maturity and without notice. But to hold a security purchased as this draft was, tainted with usury and void in the hands of the purchaser, the purchase must be decreed, pro hac vice, a. loan, — a 282 HOLDER FOR VALUE. mere contract of borrowing and lending. It is true that a contract of purchase in words is very properly held to be in construction of law a contract of loan, when such a -device is resorted to to cover a transaction which is really a loan. But how is such a transaction to be regarded as a loan upon principle when the purchase is bona fide ? Suppose the contract to be written out, describing A, the owner of a bond made by B, and setting out the sale of it for a sum less than the amount due on its face, and providing that a portion should be applied on a demand due from the seller to tlie purchaser and the residue paid in money ; and suppose, farther, that on the part of the purchaser it is a bona fide purchase, and not intended by him as a cover for a loan, there being nothing in the law making such a purchase (if real) unlawful ; it would seem to be doing vio- lence to the contract as it is set forth in words, and also as under- stood in the minds of the parties, especially of the purchaser, to hold it a loan and not a purchase. Was there ever an agreement to loan money in the case supposed, either in fact or intent ? Did two minds ever meet and assent in fact or intent upon any such contract, and does not the law by its potent power of construction, when it declares such a purchase usurious, annihilate the actual agreement of the parties, and substitute another in its stead totally different from it, thus changing an act in itself lawful into one which is declared to be a violation of a penal statute ? When one intentionally takes eight instead of seven per cent, though he may not intend to be guilty of usury, he is nevertheless guilty, for he intends to do what he does, but mistakes the law. Here, however, he buys a security which turns out to be accommodation paper, but he never agreed to buy any such paper ; he contracted to buy it as being business paper. He was mistaken in the fact, not in the law. Nevertheless, it is the settled doctrine of the courts that such a transaction is usurious. See 2 Johns. Cas. (jQ, 206, 2d ed. ; 15 Johns. 44, 355 ; 7 Wend. 569. The consequence of this doc- trine as applied to this case is, that the draft was, in the hands of the defendant, so far as respects his right to maintain an action on it, tainted witli usury and void. The next question is whether the note made by the complainants to secure the amount due upon the draft when such draft was taken up, is also usurious and void. Tiie complainant's counsel insists that it is a new security, substituted in the place of an usu- rious one, and therefore is itself tainted with usury. And such is IIOLMKS V. WILLIAMS. 283 uiidciiiahly tlie true doctrine as a|)j)lied to ordinary cases of new securities substituted in the place of usurious ones, and is illus- trated by the case of renewals of a usurious note ; and I apprehend that a change of a part, or even all of the names njjon the |)aper, would not alter the legal rule. The defendant's counsel admits the existence of this rule, but maintains that it is not a[)plicable to a case where the holder of the tainted security is innocent of the usury in fact ; and that the defendant in this case, though his pur- chase of tl\e draft was technically usurious, is entitled under this rule to stand in the })lace of an innocent holder. What then is the rule as to securities given in the place of usurious ones, to secure the amount to an innocent holder of the latter ? In Cuthbert et al. v. Haley, 8 Durnford & East, 390, the plaintiff brought del)t on a bond for £2080, conditioned to pay c£l-j-iO with interest, and the defendant pleaded tiiat the bond was given for securing money lent by one Plank to the defendant upon a usurious contract between Plank and the defendant, &c. On the trial, it appeared that Plank discounted eighteen promissory notes of the defendants, amounting to <£lo44 2s. 3f/., and took usurious interest on them. Plank afterwards carried them to the plaintiffs, his l)ankcrs, wlio gave him credit for them. When the notes fell due, the jilaintiff applied for payment, and the defendant paid him £44 2s. '6d. in money, and gave the bond in question for the res- idue. Lord Ke)ujijii was of opinion that the plaintiff should recover, and so ruled, allowing a rule to show cause. On the argument of the cause at bar, the defendant's counsel strenuously urged that the bond in (piestion was but a sul)stituted security, and cited various cases in which such securities had been held usurious. The Judges, however, were unanimously of opinion that this rule, though they fully admitted its existence, and its application in or- dinary cases, did not apply to a case where the substituted secu- rity was given to an innocent holder. So, too, in Powell v. Waters, 8 Cowen, 669, 690, 691, 692, Chancellor Jones (after having said that Parish, who discounted the first note, knew it was not business paper, and that his knowledge affected his partners), declares that the note then before the Court was a substituted security for the first, and therefore void ; and adds that such substituted security, given to an innocent holder, would l)c valid. He says that a new security taken by such a meritorious holder of the usurious note has a just claim to jirotection. The rule then is clearly 284 HOLDER FOR VALUE. established, that an innocent holder of paper substituted for usurious paper will be protected, and that the ordinary principle, which declares that a new security is infected with the same usury which tainted that for which it is substituted, is inapplicable to an innocent holder of usurious paper. Is the defendant to be^regarded as an innocent holder of the draft in question in this suit ? It is true that by a series of decisions, which I have already cited, the act of purchasing the draft (though he erroneously supposed it to be business paper, and therefore a lawful article of sale and purchase), was technically legally usurious. But was he guilty in intent and in fact ? Could he have been pun- ished by an indictment under the Act of 1837 ? On the contrary, was he not the innocent purchaser of this paper, and the victim of the civil disabilities incurred under the act by the most flagrant false pretences of one of the individuals who now asks a court of equity to visit upon him the consequences which flow from such fraudulent misrepresentations ? Though this draft be held void in the defendant's hands, yet, could he not sustain an action against S. Holmes for the loss he suffered by reason of his false affirmation that the draft in question was his own property, and therefore a lawful subject of purchase, when it was not ; by reason of which the very act of purchasing rendered the purchase void ? Could he not also recover in an action for money had and received, the money he advanced upon this purchase ; which was valueless, solely by reason of the fraudulent concealment and misrepresentation of a fact in relation to the draft ? Can a man by the grossest fraud, amounting, as I think, to the offence of obtaining money by false pretences, get another's money (without any intentional fault on the part of that other), and not be responsible for it at law ? I think not. I think S. Holmes was liable to the defendant for the ^money he obtained from him by the fraudulent transfer of paper which he falsely declared to be his own, and which, if it had been so, would have been a valid and available security in the defendant's hands. If, then, this money was really due and recoverable from Holmes, would not a note given by S. Holmes alone, to secure it, be good and available against him ? Suppose that the defendant had, while he held the draft, learned that it was not the property of Holmes, and that by Holmes's false representation he had parted with his money under circumstances which rendered the draft void in his hands, and had called on Holmes and charged HOLMES V. WILLIAMS. 285 liim with tlie fraud, and Holmes had tlien taken up the draft and given his own note instead of it ; could Holmes defend himself against a suit on such note on the ground of usury ? Would, it not be allowing him to succeed in a defence founded on his own fraud instead of the fraud of his antagonist ? Suppose he had transferred a forged note, or a note infected witli exiting usury, or void for any other cause, affirming it to be good, and denying the facts which rendered it void, would he not be liable ? And if he had got l)ack the void paper and given bis own note in its stead, could he defend himself in a suit upon such note ? I think the merits of his defence would be the same in all the cases I have supposed. If the new se- curity then would have been free from objection for usury, if exe- cuted by S. Holmes alone, it must be so notwithstanding others signed the note as sureties. In Cram v. Hendricks, 7 Wend. 569, 584, the chancellor, in commenting on the case of Munn v. Ruggles, 15 Johns. 57, says in express terms, that the l)roker who sold the bill to the purchaser was liable to him for the money advanced, though the note might be void in the hands of such purchaser, he, like the defendant in this case, supposing that the agent owned the bill. Tiiis opinion of the chancellor, though not necessary to the decision of that case, is entitled to great weight as tlie opinion of a learned jurist ; and the weight of that authority I think is somewhat strengthened by the fact that the chancellor was for holding the doctrine impeaching securities for usury with greater strictness and rigor than a majority of the court in the case then before them. I am not prepared to say that Holmes would have been responsible for more than the money he advanced, especially in an action for money had and received or money paid ; though he probably might be for the full amount of the draft in an action on the case. But however that may be, I do not think that embracing in the new note the whole amount of the draft would render that note usurious, provided it would not otherwise be so. If the false affirmation had been true, the draft would have been available to the defendant for the whole amount of it, and if Mr. Holmes had chosen to indemnify him by giving him a note for that amount, I do not see that it would be usurious ; or even that he could in a suit upon this note have set up a defence as to the excess. To sustain this bill, how- ever, the note must be adjudged void for usury, which, for the rea- sons before stated, I am of opinion cannot be maintained. To sustain it would be to make the Court the organ of great mjustice ; I 286 HOLDER FOR VALUE. do not mean merely by enforcing the statute against usury even in its utmost rigor, severe as that statute is ; for he who will know- ingly violate the statute must not complain if he is compelled to suffer the extreme penalties of the act ; but it would present Mr. Holmes in the attitude of fraudulently obtaining the defendant's money for worthless paj^r, and after receiving back the paper and giving his own note as an equivalent, then asking the Court of Ciiancery to make his fraud successful, and to protect him in tlic possession of its fruits, by declaring the note thus given void for usury. 1 cannot but think that to carry the principle to such an extent would be, in the language of Lord Kenyon in the case before cited from Durnford k East, extending it further than policy or the words of the act require. I have already remarked that in my judgment the securities must stand or fall with tliis principle, that if this note would be good if made by Sylvanus Holmes alone, it must be adjudged good though others unite with him in secur- ing a demand due from and legally collectible of him. The conclusion to which this view of the subject brings me, without examining the other questions raised and discussed by the counsel, is that the bill should be dismissed with costs. Walworth, Chancellor, said that he concurred in the opinion of the vice-chancellor, that where the holder and apparent owner of negotiable securities sells them at a discount to a bona fide pur- chaser who has no knowledge of the purpose for which such secur- ities were made, the holder representing such securities to belong to himself, and to be business paper, the transaction was not usu- rious as between the vendor and the vendee ; although the repre- sentation of the vendor was false, and the securities were in fact made for the sole purpose of being sold at an usurious discount in the market. Decree affirmed with costs. CAMERON V. CHAPPELL. 287 Cameron v. Chappkll et al. (24 Wendell, 94. Supreme Court of New York, May, 1840 ) «i f 'sitri/. — Acceptance of a bill in consideration tliat a shipment of wheat shall be made to the drawee by the drawer does not make the bill accommodation paper between the parties ; and such bill is not tainted with usury by the fact that the drawer afterwards procured it to be discounted at a rate of interest beyond tliat allowed by law. This was an action on Ijill of exchange, for 8797, drawn by Joseph Strangliam, on the defendants, dated 12th December, 1836, payable to his own order five months after date. The defendants accepted the draft in consideration of a promise on the part of Strangham, to send the acceptors 600 bushels of wheat, to be shipped on the opening of navigation at Buffalo. The wheat was in Canada, and the acceptors resided at Rochester. Strangham, before maturity of the bill, had it discounted by an agent of the Commercial Bank of Upper Canada, who charged him beyond the legal rate of interest of Canada, one per cent for agency, in collect- ing, (fee. The defendants insisted, by way of defence, that the bill was accepted merely for the accommodation of Strangham, and that consequently it having no legal inception until negotiated to the bank, they could avail themselves of the usury. Witnesses were examined on the part of the defendants to establish the facts alleged by them, and that not any wheat was received by the de- fendants from Strangham. The cause was heard by a referee, who reported in favor of the defendants. The plaintiff, in whose name the suit was prosecuted, for the benefit of the bank, moved to set aside the report and for a re-hearing. Nelson, C. J. The only question made in the case is whether the defendants are to be regarded as accommodation acceptors, and standing in the light of sureties upon the paper, or as having parted with it to Strangham for value, to wit, on an engagement upon his part to i)ay the amount at maturity in wheat. If the former is the true exposition of the case, then the accc{)tance had no inception till the negotiation with the agent of the bank, and, therefore, is tainted with usury ; if the latter, it is to be regarded t 288 HOLDER FOR VALUE. as business paper in the hands of Strangham, and the transfer by him valid witliin the case of Cram v. Hendricks, 7 Wend. 669. No doubt the promise thus to pay would be binding and consti- tute a good consideration for the acceptance of the draft, and the taking of it up by the defendants would be but the payment of their own debt, and not money paid for' the use of the drawer. This is abundantly settled in the cases of cross notes or accept- ances for the mutual accommodation of tlie parties ; they are respectively considerations for each other. Rolfe v. Caslon, 2 H. Bl. 570 ; Cowley v. Dunlop, 7 T. R. 565 ; Buckler v. Buttivant, 3 East, 72 ; Rose v. Sims, 1 B. <fe A. 521 ; Rice v. Mather, 3 Wend. 62 ; Byles, Bills of Exch. 62 ; Chitty, Bills, 443. Mr. Byles lays down the proposition thus : If a man gives his accept- ance to another, that will be a good consideration for a protnise, or for another bill, though such acceptance be unpaid. I have looked attentively into the facts of the case as disclosed by the three witnesses who were present at the arrangement between the parties, and am of opinion that the preponderance is decisively in favor of the conclusion, that the undertaking of Strangham to deliver wheat in the spring, constituted the consid- eration of the acceptance. His own account of it is express and precise, that he was to deliver 600 bushels, to be shipped at Buf- falo. The other two are less distinct, but in the main, rather con- firm than weaken this view of the transaction. They do not recollect that this precise quantity was fixed upon, but agree that it was the understanding to pay in wheat ; and one states that he thinks the price was not to exceed 10s. 6d., which would bring the quantity about as stated by Strangham himself. Again : what affords a strong corroborative circumstance of Strangham's account, and that he was not the mere agent of the acceptors, as contended, is, that neither of the two witnesses pre- tend that the acceptance was not to be used except in the purchase of wheat. On the contrary, Alleyn states that it was understood if wheat could not be purchased on satisfactory terms, then Strang- ham was to put the acceptors in funds to take up the draft at maturity ; impliedly conceding the right to use it as his own for any purpose, and that the acceptors would look exclusively to his personal responsibility for the liabilities they had assumed. In all the cases to which I have referred in respect to counter CAMERON V. CnAPI'ELL, 289 bills or notes, it is conceded that there can be no reraedy npon tlie implied promise of indemnity as in the case of principal and surety, or principal and agent, because the party had assumed his liability in consideration of a delivery of notes or acceptances to an equivalent amount, and therefore he must seek his remedy upon them ; that the implied promise was negatived by the facts, and could not be raised ultra the bills or notes. This ground is very fully and satisfactorily examined by Lawrence, J,, in Cowley V. Dunlop, and Lord EllcnburoKgh in Buckler v. Buttivant. So here, the defendants trusted to the undertaking to purchase and deliver the wheat as the consideration for the acceptance, and will be obliged to look to that for their remedy in case of failure to perform. They made the paper their own by the arrangement, and in taking it up they but pay their own debt. Upon the whole 1 am satisfied the referee has mistaken the legal effect of the proof, and therefore the report must be set aside, costs to abide the event. We have inserted the foregoing cases upon the law of usury, as affecting bills and notes, because they embrace some of the most essential and controlling questions upon that subject ; and we scarcely felt at liberty wholly to ignore all questions of that character which not many years since occupied so large a space in the reported oases upon our general subject, and are still of interest upon all questions of illegality in the consideration of bills or notes. But the present state of legislation, in most of the States, upon the subject of usury, seems to give a very decided indication, that there will soon be little occasion to discuss these questions in court. We shall therefore occupy no further space in regard to them. 19 290 PRESENTMENT AND DEMAND FOR PAYMENT. PRESENTMENT AND DEMAND FOR PAYMENT. Michael Musson and George O. Hall, surviving partners of William Noll, v. William A. Lake. (4 Howard, 262. Supreme Court of the United States, December, 1845.) Necessity of presentment. — The notary should present the paper when he demands pay- ment ; and this rule has not been changed by statute in Louisiana. Even if it had been there changed, as the defendant's contract was to be performed in Mississippi where the law merchant prevails in this particular, presentment could not be dis- pensed with. Protest, how far evidence. — A protest which only states that payment was demanded, is not evidence to prove presentment. The case is stated in the opinion of the Court. M'KiNLEY, J. The plaintiffs brought an action of assumpsit, in the Circuit Court of the United States for the Southern District of Mississippi, against the defendant, as indorser of a bill of exchange, drawn at Vicksburg, in said State, by Steele, Jenkins, & Co., for 86133, payable twelve months after the first day of February, 1837, to R. H. and J. H. Crump ; and addressed to Kirkman, Rosser, & Co., at New Orleans, .and by them afterwards accepted, and in- dorsed by the payees and the defendant. On the trial of the cause, the plaintiffs offered to read as evidence to the jury a protest of the bill of exchange, to the reading of which the defendant objected ; because it did not appear in the protest that the notary had presented the bill to the acceptors, or either of them, when he demanded payment thereof. And upon the ques- tion, whether the protest ought to be read to the jury as evidence of a presentment of the bill to the acceptors for payment, or as evidence of the dishonor of the bill, the judges were opposed in opinion. "Which division of opinion they ordered to be certified to MU8S0N V. LAKE. 291 this Court ; and upon that certificate the question is now before us for determination. The indorser of a bill of exchange, whether payable after date or after sight, undertakes that the drawee will pay it, if the holder present it to him at matnrity and demand payment ; and if he re- fuse to pay it, and tho holder cause it to be protested, and due notice to be given to tiie indorser, then he promises to pay it. All these conditions enter into and make part of the contract between these parties to a foreign bill of exchange ; and the law imposes the performance of them upon the holder, as conditions precedent to the liability of the indorser of the bill, A presentment to and demand of payment must be made of the accejjtor personally, at his place of business or his dwelling. Story, Bills, § 325. Bank- ruptcy, insolvency, or even the death of the acceptor will not ex- cuse the neglect to make due presentment ; and in the latter case it should be made to the personal representatives of the deceased. Chitty, Bills, 7th London ed. 246, 247 ; Story, Bills, 360 ; 5 Taunt. 30; 12 Wend. 439; 2 Douglass, 515 ; Warrington v. Furbor, 8 East, 242, 245 ; Esdaile v. Sowerby, 11 East, 117 ; 14 East, 500. The reasons why presentment should be made to the drawee are, first, that he may judge of the genuineness of the bill ; secondly, of the right of the holder to receive the contents ; and thirdly, that he may obtain immediate possession of the bill upon paying the amount. And the acceptor has a right to see that the person demanding payment has a right to receive it, before he is boui»d to answer whether he will pay it or not ; for, notwithstanding his acceptance, it may have passed into other hands before its maturity. And he, as well as the drawee, has a right to the possession of the bill upon paying it, to be used as a voucher in the settlement of accounts with the drawer. Story, Bills, § 361 ; Hansard v. Robin- son, 7 Barn. & C. 90. Mr. Justice Storij has given the form of a protest now in use in England, in his treatise on Bills of Exchange, by which it will be seen that the words " did exhibit said bill " are used, and a blank is left to be fdled up with '' the presentment, and to whom made, and the reason, if Assigned, for non-payment." Story, Bills, 302, note. This, with the authorities already referred to, shows that the protest should set forth the presentment of the bill, the demand of payment, and the answer of the drawee or acceptor. The holder of the bill is the proper person to make the presentment of it for 292 PRESENTMENT AND DEMAND FOR PAYMENT. payment or acceptance. Story, Bills, § 360. But the law makes the notary his agent for the purpose of presenting the bill, and doing whatever the holder is bound to do to fix the liability of the indorser. Every thing, tlierefore, that he does in the performance of this duty must appear distinctly in his protest. He is the officer of a foreign government ; the proceeding is ex parte ; and the evi- dence contained in the protest is credited in all foreign courts. Chitty, Bills, 215; Rogers v. Stevens, 2 T. R. 713; Brough v. Parkings, 2 Ld. Raym. 993 ; Orr v. Maginnis, 7 East, 359 ; Ches- mer v. Noyes, 4 Camp. 129. The evidence contained in the protest must, therefore, stand or fall upon its own merits. It rests upon the same footing with parol evidence ; and if it fails to make full proof of due diligence on the part of the plaintiff, it must be re- jected. But the counsel for the plaintiffs insists that the statute of Lou- isiana, and tlie interpretation given to it by the Supreme Court of that State in the case of Nott's Executor v. Beard, 16 Louisiana, 308, have so changed the law merchant, as to render unnecessary the presentment of a foreign bill for payment. After a careful examination of the opinion of the Court in that case, we are unable to perceive any intention manifested to depart from the settled usages of the law merchant ; but, on the contrary, they attempt by argument and authority to bring the case within that law. The question before that Court was the identical question now before us. The protest was objected to because it did not show that the bill had been presented by the notary to the acceptors for payment. To this objection, that Court said it might perhaps have been more specific, if, in the protest, it had been stated that the bill was pre- sented, and payment thereof demanded. And they admit the law is well settled, that, before the holder of an accepted bill can call on the drawer for payment, he must make a presentment for, or demand of payment, and give notice of the refusal. Here, then, is a definite proposition, asserting that a presentment for payment and a demand of payment are convertible terms, and that the proof of either would be sufficient. To support this proposition, they refer to Chitty on Bills, and Bayley on Bills, and the annotators on them. And as further proof and illustration, and to show that demand of payment should be preferred to presentment for payment, they refer to the statute of Louisiana, passed in 1827, in which they say the word " demand " MDSSON V. LAKE. 293 is used ill it, and that the word " presentment " is not ; and they refer to the statute, also, to show that notaries were vested witli certain powers by it, which gave authority to their acts ; and tiiat they being public officers, the presumption of law is, that they do their duty ; and therefore, if the protest wcrc^defective, and liable to the oljjection urged against it, this presumption of law would cover all sucii defects. This is substituting presumption for j)roof, in violation of all the rules of evidence. With all duo respect for that distinguished tribunal, we are con- strained to dissent from the general proposition they have laid down on the subject of demand and presentment, and from all their rea- soning in support of it. Due diligence is a question of law ; and we think we have shown, by abundant authority, that the holder of an accepted bill, to fix the liability of the drawer or indorser, must present it to the acceptor and demand payment thereof. It may be well here to repeat what Lord Tenterden^ C. J., said on this Jsub- ject, in delivering the judgment of the Court of King's Bench, in the case of Hansard v. Robinson, before referred to. He said : " The general rule of the English law does not allow a suit by the assignee of a chose in action. The custom of merchants, consid- ered as part of the law, furnishes in this case an exception to the general rule. What, then, is the custom in this respect? It is, that the holder of the bill shall present the instrument, at its matu- rity, to the acceptor, demand payment of its amount, and, upon receipt of the money, deliver up the bill. The acceptor paying the bill has a right to the possession of the instrument for his own security, and as his voucher and discharge pro tanto, in his account with the drawer. If, upon an oiTer of payment, the holder should refuse to deliver up the bill, can it be doubted that the acce})tor might retract his offer, or retain his money ? " This extract, we think, furnishes a full answer to all that has been said by the Su- preme Court of Louisiana to prove that it is not necessary to pre- sent the bill to the acceptor for payment ; and to the presumption of law relied on to cure the defects in the protest. But to show that, by the statute of Louisiana, the presentment of a bill to the acceptor for payment is not dispensed with, and that the presentment is, by a fair construction of the act, as much within its true intent and meaning as the demand, we proceed to examine its provisions. The princii)al object of the legislature in passing this statute seems to have been to give authority to notaries to give 294 PRESENTMENT AND DEMAND FOR PAYMENT. notices, in all cases of protested bills and promissory notes ; and to make their certificates evidence of such notices. And, therefore, all that is said on the subject of the demand and the manner of making it, and the other circumstances attending it, was not in- tended as a new enactment on these subjects, but as inducement to the powers conferred on the notary, which was the principal object of the statute, as will appear, we think, by reading it. That part of it which relates to this subject is in these words : " That all notaries, and persons acting as such, are authorized, in their pro- tests of bills of exchange, promissory notes, and orders for the payment of nwney, to make mention of the demand made upon the drawee, acceptor, or person on whom such order or bill of exchange is drawn or given, and of the manner and circumstances of such demand ; and by certificate, added to such protest, to state the manner in which any notices of protest to drawers, indorsers, or other persons interested were served or forwarded ; and whenever they shall have so done, a certified copy of such protest and cer- tificate shall be evidence of all the notices therein stated." It seems to have been taken for granted by the legislature, that the notaries knew how to make out a protest, and therefore they did not prescribe the form, but gave the substance of it, to which the notary was required to add a certificate ofthe manner in which he had given notices, and when done, according to the statute, a certified copy of the protest and certificate should be evidence, not of the demand and manner and circumstances of the demand, but of the notice only. This shows that the intention of the legisla- ture, in passing this part of the statute, was merely to authorize the notaries to give notices, and to make the copy of the protest, and the certificate added to it, evidence of notice in the courts of Louisiana. But independent of this view of the subject, we think the language employed in this statute includes the presentment of the bill for payment, and for all other purposes, as fully as it does the demand of payment. In giving construction to the act, the phrase, " and of the manner and circumstances of such demand," cannot be rejected, but must receive a fair interpretation. When taken in connection with other parts of the statute, what do these words mean ? The manner of making a demand of payment, we have seen, is by presenting the bill to the drawee or acceptor ; and so important is this part of the proceeding, that the omission to pre- sent the bill to the acceptor will justify his refusal to pay it, al- MUSSON V. LAKE. 295 though payment be demanded. The legislature cannot be presumed to iiave intended to make so important a change in the law mer- chant as tiiat ascribed to them by the counsel for the plaintiffs, witliout at the same time providing some other mode of obtaining the acceptance and payment of l)ills of exchange, and of holding drawers and indorsers to their liabilities. It is but reasonaljle, therefore, to give to the phrase before referred to such construction, if practicable, as will leave the law merchant as it stood before the passage of tlie statute, and carry into effect the main intention of the legislature. This, we think, may fairly be done without doing any violence to the intention or the language of the statute. The manner of the demand must, therefore, mean the present- ment of the bill for either acceptance or payment ; and the cir- cumstances of the demand, we think, means the place where the presentment and demand is made, and the person to whom or of whom it is made, and the answer made by such person. It is very clear, that bills payable at sight, and. after sight, are within the meaning of tlie statute ; because it provides for a demand of pay- ment of the acceptor of a bill. Now, how can therG be an acceptor of a bill, without a presentment for acceptance ? Until the bill become due, payment cannot be demanded of the drawee. This shows, that without the word presentment and the word demand also, the plain meaning of the statute could not be carried into effect. A bill, payable at a fixed period after its date, need not be presented for acceptance ; it is sufficient to present it and demand payment when it arrives at maturity ; but a bill payable at sight, or after sight, can never become due until after it has been accepted. How is the holder or the notary to obtain the acceptance of such a bill, under the decision of the Supreme Court of Louisiana ? Will it be sufficient to demand payment of the bill ? That would be a nugatory act, because it is not due ; then it must be admitted, tliat, by fair and necessary construction, the word presentment is within the plain meaning and intention of the statute, and that the bill may be presented for acceptance or for payment, and therefore neither the statute nor the decision of the Supreme Court of Lou- isiana has changed the law merchant in any of these respects. There is, however, another question, entirely independent of the statute and the decision of the Supreme Court of Louisiana, which may be decisive of the case before this Court ; and that question is, Wliether the contract between the holder and indorser of the bill 296 PRESENTMENT AND DEMAND FOR PAYMENT. ill controversy is to be governed by the law of Louisiana, where the bill was payable, or by the law of Mississippi, where it was drawn and indorsed. The place where the contract is to be performed is to govern the liabilities of the person who has undertaken to per- form it. The acceptors resided at New Orleans ; they became par- ties to the bill by accepting it there. So far, therefore, as their liabilities were concerned, they were governed by the law of Lou- isiana. But the drawers and indorsers resided in Mississippi ; the bill was drawn and indorsed there ; and their liabilities, if any, accrued there. The undertaking of the defendant was, as before stated, that the drawers should pay the bill ; and that if the holder, after using due diligence, failed to obtain payment from them, he would pay it, with interest and damages. This part of the contract was, by the agreement of the parties, to be performed in Mississippi, where the suit was brought, and is now depending. The construc- tion of the contract, and the diligence necessary to be used by the plaintiffs to entitle them to a recovery, must, therefore, be governed by the laws of the latter State. Story, Bills, § 366 ; 4 Peters, 123 ; 2 Kent's Comm. 459 ; 13 Mass. 4 ;' 12 Wend. 439 ; Story, Bills, § 76 ; 4 Johns. 119 ; 12 Johns. 142 ; 5 East, 124 ; 3 Mass. 81 ; 3 Cowen, 154 ; 1 Cowen, 107 ; 5 Cranch, 298. Whatever, therefore, may have been the intention of the legisla- ture in passing the statute, and of the Supreme Court of Louisiana in the decision of the case referred to, neither can affect, in the slightest degree, the case before us. In Mississippi, the custom of merchants has been adopted as part of the Common Law ; and by that law and their statute law, this case must be governed. We think, therefore, the protest offered by the plaintiff, as evidence to the jury, ought not to have been received as evidence of present- ment of the bill to the acceptors for payment, nor as evidence of the dishonor of the bill ; which is ordered to be certified to the Circuit Court accordingly. McLean and Woodbury, JJ., dissented as to the effect of the protest, regard- ing it as sufficient evidence of presentment. They agreed with the majority as to the necessity of presentment, — the point intended to be illustrated here. The principal case is supported, as to the necessity of presentment, by Ar- nold V. Dresser, 8 Allen, 435 ; Shaw v. Reed, 12 Pick, 132 ; Freeman v. Bojii- ton, 7 Mass. 483 ; Whitwell v. Johnson, 17 Mass. 449 ; Gilbert v. Dennis, 3 Met. 495. The loss of negotiable commercial paper will not dispense with the necessity RENNER V. THE BANK OF COLUMBIA. 297 " of due presentment and the subsequent proceedings necessary in ordinar}- cases to charge prior parties. Presentment in such case can be easily made upon a copy, if a new bill cannot be obtained, and will be sufBcient. Hinsdale v. Miles, 6 Conn. 331; Dehers v. Harriot, 1 Show. lG-1; Wain v. Bailey, 10 Adol. & Ellis, 616; Charnley r. Grundy, 2;3 Eng. L. & Eq. 318; Story, Bills of Ex- change, § 348; Kyd, Bills, 139 (3d. ed.) ; 2 Parsons, Notes and Bills, 260. If the lost paper was not negotiable, no presentment would be necessary in the case of a note, as there would be no one to charge by notice ; but in the case of a bill it would be necessary to make the presentment, in order to charge the drawer. Sec Lost Bills and Notks, j)ost. If the holder or notary has the paper with him when he makes the demand, but does not present it, yet so describes it as to leave no doubt that the payor may understand of what paper payment is demanded, this is sufficient. Etheridge V. Ladd, 44 Barb. 60. Renner, Plaintiff in Error, v. The President, Directors, &c., OF the Bank of Columbia, Defendants in Error. (9 Wheaton, 581. Supreme Court of the United States, February, 1824.) WTien demand should be made. Usage of hanks. — A custom of all the banks of the Dis- trict of Columbia to demand payment and give notice to indorsers of commercial paper on the fourth day after the day of payment named, which has been uniformly followed for upwards of twenty years, and whicli was known to and understood by the defendant when he indorsed the paper, is to be considered as entering into the contract, so that demand and notice on the fourth day are sufficient to charge the indorscr. The case is stated in the opinion of the Court. Thompson, J. This case comes up on a writ of error to tlie Cir- cuit Court of the District of Columbia ; and by the record it appears that the action in the Court below was prosecuted against Renner, the plaintiff in error, as indorser of a promissory note, drawn by James Poyles, and discounted at the Bank of Columbia. The note bears date on the ninth day of January, 1817, for four thou- sand six hundred dollars, and .is payable sixty days after date. In the declaration it is averred, that demand of payment of the maker was made on the fourteenth of March, wliich was ou the fourth day after tlie expiration of the sixty days, which the note had to run. 298 PRESENTMENT AND DEMAND FOR PAYMENT. Several questions, arising out of the record, have been presented for the consideration of the Court, The principal one, however, is that which relates to the time of demand of payment of the maker of the note, and grows out of a bill of exceptions taken upon the trial. This has been pressed upon the Court as a ques- tion of great importance, and the decision of which, in its appli- cation to the concerns of the bank, will have a very wide and extensive effect. We shall proceed to the consideration of this point, in the first place, leaving the others, which are of minor importance, to be noticed hereafter. The testimony given at the trial was for the purpose of showing that the Bank of Columbia had, from its first establishment, in 1793, adopted the practice of demanding the payment of notes discounted by it, on the fourtli day after the time limited for the payment thereof, according to the express terms of the note. And that such was the universal custom of all the banks in Washing- ton and Georgetown. That this custom was well known and understood by the defendant, when he indorsed the note in ques- tion. After this testimony had been received, without objection, the counsel for the defendant below called upon the Court to in- struct the jury, that upon the evidence so given by the plaintitfs, of a demand upon the maker of the note, on the fourth day after the time limited by the note for the payment, the defendant was not liable on his indorsement ; which instruction the Court re- fused to give, and a bill of exceptions was thereupon taken; This Court must, therefore, assume as established facts (and, looking at the evidence before the jury, no doubt could be enter- tained on the subject), that the custom of the Bank of Columbia, and all the other banks in Washington and Georgetown, from their first institution, had been, to demand payment of notes due them, on the fourth day after the time limited therein ; and that this custom was known and well understood by the defendant, Renner, when he indorsed the note in question ; and it may be added, with full knowledge and expectation, that this note was to be dealt with in the same way ; for it was a renewal of a discount, continued for a considerable time before, on other notes similarly drawn and indorsed, some of which had been demanded in like manner, and protested, and afterwards paid and taken up by himself. Under such circumstances, it would seem, that nothing short of some RENNER V. THE BANK OF COLUMBIA. 299 positive and unbending principle of law, could shield the defendant from responsil)ility. But, so far from trenching upon any such princij)le, \vc think his liability completely established, by well- settled rules of law. It seems to be assumed as the settled law of promissory notes, yiat in order to charge an indorser, demand of the maker must be made on the third day after that limited in the note ; and that this is so stubborn a rule, that parties are not permitted to violate it, even by their mutual agreement. We admit, in the most unqualified manner, that the usage of making the demand on the third day of grace, has become so gen- eral, that courts of justice will notice it ex officio ; and in the ab- sence of any proof to the contrary, will presume that such was the understanding of all parties to a note, when they put their names upon it. But that this rule has any attributes so inviolable as not to l)e touched by the parties to negotiable paper, cannot be admitted. It has its origin in custom, and that custom, too, com- paratively, of recent date ; and is not one of those, to the contrary of which the memory of man runneth not, and which contributed to make up the common-law code, which is so justly venerated. So far from this, that the allowance of any days of grace, is in derogation of the common-law rule, applicable to other contracts. They are, emphatically, the mere creatures of usage, varying in different countries, to suit the views and convenience of men in business, originally gratuitous, and not binding on the holder. The common law would require payment on the last day limited by the contract, and would also give to the maker the whole of that day. It is a settled principle of the common law, applicable to all contracts, that a party has until the last day limited by his agreement, to perform his engagement, and even until the last hour of the day. The common law knows of no fractions of a day ; custom, however, and that introduced, too, principally by banks, has limited the day to a few hours of business. But this, and whatever other rules have been adopted by consent, and merely for the convenience of commercial men, arc departures from the common-law doctrine. When, therefore, the allowance of only three days of grace, is said to be the law of the contract, by bills of exchange and promissory notes, nothing more can be intended, than that custom has so long sanctioned this rule, that all dealers in paper of this description, are understood to govern 300 PRESENTMENT AND DEMAND FOR PAYMENT. themselves by it. The law of the contract, properly speaking, is to pay when due ; and that time is to be ascertained, either from the contract j»er se, or that taken in connection with some known custom, which the parties are presumed to have tacitly consented should be made a part of the contract. And it is in this view only, that three days of grace are allowed, where the custom is recognized as the rule ; for a note, which upon its face has sixty days to run, is in truth and in fact a contract for sixty-three days, and interest is taken for that time. And how is it ascertained that it is a note for sixty-three days, but l)y looking out of the contract, and fniding what was the understanding of the parties ? Where the custom has existed for a long time, and has become general, courts of justice, as before observed, will notice it ex officio ; and where it has not, it is matter of proof. If this is not the light in which these transactions are to be considered, all banks are charge- able with usury ; for all take interest beyond what is allowed by law, if time is to be determined by the note itself. The general rule of law is, that demand of payment must be made of the maker when the note falls due ; and that time, as now settled, is on the last day of grace ; and even this rule is of recent date, for in the King's Bench in England, as late as the year 1791, about coeval with the institution of this bank, and the custom established by it, we find Leftley v. Mills, 3 T. R. 370, Lord Kenyon and Mr. Justice Buller differing on this very point ; the former holding that, by analogy to other contracts, the acceptor of a bill of exchange had the whole of the third day of grace to pay the bill, and that a demand on the fourth day was not too late. Mr, Justice Buller thought the demand ought to be made on the third day of grace ; that the nature of the acceptor's undertaking, was to pay the bill on demand, on any part of the third day of grace ; and he inferred this from its having been, as he said, the practice to make the demand on' that day. If it was a doubtful question in England, so late as the year 1791, whether the demand ought to be made on the third day of grace, or the day after, this bank is not chargeable with any culpable innovation upon long-established rules of law or usage, by adopting the practice of making the demand on the fourth day. It is said, however, that the effect of this testimony is, to alter and vary, by parol evidence, the written contract of the parties. If this is the light in which it is to be considered, there can be no RENNER V. THE BANK OF COLUMBIA. 301 doubt that it ought to Ijo laid entirely out of view ; for there is no rule of law l)ctter settled, or more salutary in its application to contracts, than that which precludes the admission of parol evi- dence, to contradict or substantially vary the legal import of a written agreement. Evidence of usage .or custom is, however, never considered of this character ; hut is received for the purpose of ascertaining the sense and understanding of parties by their contracts, which are made with reference to such usage or custom ; for the custom, then, becomes a part of the contract, and may not improperly be considered the law of the contract; and it rests upon the same principle as the doctrine of the lex loci. All con- tracts are to be governed by the law of the place where they are to be performed ; and this law may be, and usually is, proved as matter of fact. The rule is adopted, for the purpose of carrying into ellect the intention and understanding of the |)arties. That the note in question was to be paid at the Bank of Columbia, and to be governed by the regulations and custom of the institution, and so understood by all parties, cannot admit of a doubt. It would be a waste of time, to go very much at large into an examination of the various usages and customs, that are admitted in evidence and recognized in courts of justice, both in England and in this country, in almost every branch of business, and especially in commercial transactions, for the purpose of ascertain- ing the meaning and interpretation of contracts. A few only will be noticed, that are somewhat analogous to the present case. In the case of Cutter v. Powell, 6 T. R. 320, where was brought under consideration the legal effect of a promissory note, given to the mate of a ship for a certain sum of money, provided he pro- ceeded on her voyage, and continued to do duty to the port of destination. The legal construction to be given to this note was clear, and so considered by the Court, that nothing was due, im- less the mate continued to do duty to the port of destination. He having died, however, on the voyage, the Court directed an imjuiry into the usage of merciiants in such cases, declaring that if it sanctioned an allowance for the time the service was performed, the plaintiff should recover according to such usage. No intimation is here given, that such proof would be repugnant to the contract, although it was against the legal import of the note, if construed without reference to the usage ; and although the usage related to trade, it was very limited in its application. 302 PRESENTMENT AND DEMAND FOR PAYMENT. So in Noble v. Kennovvay, 2 Doug. 511, usage of trade was ad- mitted in evidence, to explain the understanding of parties, in a policy of insurance, although the usage had not existed three years. Lord Mansfield said, the usage could only l)e known by proof, and must be tried by a jury ; that underwriters must be presumed to be acquainted with the practice of the trade they insure, whether recently established or not. If it were necessary, cases miglit be multiplied almost without end, sliowing the same principle and same recognition of local and particular usages, in almost every branch of business. We liavc also in the State courts in our own country, the deci- sions of very enlightened judges, adopting the same principles, and governing themselves by the same rules ; and, in many cases, not unlike the one before us. In Jones v. Fales, 4 Mass. 245, 252, the same doctrine as to usages of banks, was fully sanctioned ; and although that particular usage might have been found, in practice, inconvenient, and not to meet public approbation, yet the principle which governed the decision of the Court, is not thereby weakened ; viz., that the usage with which the defendant was conversant, was proper evidence to be submitted to a jury, to infer from it the agreement of the party. And although, as suggested at the bar, this custom was altered by the banks, we do not find the courts of justice in that State at- tempting to control it, in its application to notes made in reference to the usage. The doctrine of this case was again fully recognized in tlie Lin- coln and Kennebeck Bank v. Page, 9 Mass. 155, where it was held, that bank usages, established respecting demands on makers of promissory notes, and notices to indorsers, being known to dealers in the banks, they were bound by them, and that the usage was proper evidence to be submitted to a jury. These cases are not referred to for the purpose of approving the particular usages, but to show that evidence of such usage was never considered as contradicting the written contract. Halsey v. Brown and others, 8 Day, 346, is a very strong case on this subject. The question was as to the liability of ship- owners, for the loss of money taken on freight by tlie captain. The defence set up was, that the master, according to established custom, was permitted to take money on freight, as a perquisite to himself, and the owners discharged from responsibility ; and the RENNER V. THE BANK OF COLUMBIA. 303 question directly presented to the Court was, wlietlicr a particular custom or usage could be given in evidence, to control the general law. And the Court says, it is a principle, that the general com- mon law may he, and in many instances is, controlled by special custom. So the general commercial law may, l)y tlie same reason, be controlled by a special local usage, so far as that usage extends, wliich will operate upon all contracts of this nature, made in view of, or with reference to, such usage. In Smith v. Wrigiit, 1 Caines, 43, this general principle is laid down ; the true test of a commercial usage is, its having existed long enough to have become generally known, and to warrant a presumption that contracts are made in reference to it. In the case of The Bank of Utica v. Smith, 18 Johns. 230, a note, payable at the Mechanics' Bank in New York, was presented and })ayment demanded, fifteen minutes after ])ank hours, and this was held sufficient ; it appearing, that although it was a quarter of an hour after the usual time of closing the bank as to other busi- ness, it was within bank hours, it appearing that, according to the general course of doing business at this bank, these fifteen minutes were the usual and accustomed time for these presentments, and of this course of business the defendant ought to have informed himself. It is unnecessary to pursue this subject farther by particular reference to decisions in the State courts. The same doctrine, as to the effect of particular usages in controlling the general law, will be found to accompany the administration of justice, wherever the sul))ect is brought under consideration. Wiiether these usages are, in all instances, wise and beneficial, may, perhaps, be ques- tionable, but where they do exist, they are considered as regu- lating and controlling contracts, made under and in reference thereto. The same principle is recognized by this Court, in the case of Yeaton v. The Bank of Alexandria, 5 Cranch, 49 ; 2 Cond. 18G. Tiic Chief Justice, in speaking of the effect of usage upon the legal o])ligation of parties, observes, if the case showed that such was the usage of the bank, and such the understanding under which notes were discounted, this Court is not prejiared to say that the undertaking created by the indorsement, would not be so fashioned as to give effect to the real intention of the parties. These cases are sufficient to show, in the most satisfactory man- 304 PRESENTMENT AND DEMAND FOR PAYMENT. ner, the light in which courts of justice consider contracts, made in reference to any particular usage, and the effect that such usage is to have upon them. And no good reason is perceived why these principles should not be applied to the case before us. The custom, under which this banii; has transacted business for five and twenty years, of demanding payment of the drawers of notes on the fourth instead of the third day after the time limited for payment, is not unreasonable or repugnant to any principles of general policy. It does not stand alone, but is in accordance with the usage of every other bank in Washington and Georgetown. The defendant indorsed the note in question, with full knowledge of the custom. A demand on the fourth day is in perfect harmony with the principles of the common law, if applied to the contract, the maker having the whole of the third day to pay his note, and not being in default until the fourth. The inconveniences sug- gested on the argument growing out of a usage here, differing from that which is in practice in other places on this subject, are not of great public concern. If they exist, they affect the banks and their customers only. And if felt to the prejudice of either the one or the other, we may rest assured it would be altered. Their private interest is a sure guaranty for this. But, admitting the practice to be inconvenient, and that a uni- formity, in this respect, with other parts of the country .would be desirable, the remedy is not in the hands of courts of justice, whose business it is to judge of contracts as made by parties themselves, and not to prescribe the manner in which they shall be made. We are, accordingly, of opinion that the Court below did not err in refusing to instruct the jury that the demand upon the maker of the note, on the fourth day after the time limited for payment thereof, discharged the defendant from liability on his indorsement. One of the minor points, which has been alleged as error, ap- pearing on the face of the record is, that the demand on the maker of the note should, at all events, have been laid on the third day after the time limited by the note for payment, and not on the fourth. This objection cannot be sustained at this time. Whether the declaration would not have been bad on demurrer, not, however, because the demand is laid on a wrong day, but be- cause it does not aver the usage, is a question not necessary now to decide. But if, as we have determined, the demand was prop- RKNNER V. THK BANK OF COLUMBIA. 305 erly made on the fourth day, it would have been bad if laid at an earlier day, because the maker would have l^eeu under no ob^ga- tion to pay, and, of course, not in default. If, therefore, the cause should be sent back to the Court below, no amendment in this respect ought to be made. T4ie want of an averment, so as to let in the proof of usage, cannot now be objected to the record. The evidence was admitted without objection, and now forms a part of the record, as contained in the bill of exceptions. Had an objec- tion been made to the admission of the evidence of usage, for the want of a proper averment in the declaration, aiid the evidence had, notwithstanding, been received, it would have presented a very different question. The time of the demand, as laid in the declaration, is according to the legal effect of the note. If made at an earlier day, it would have given no cause of action against the indorser, for he was not bound to pay until the default of the maker, and he was not in default until the fourth day. It is a general rule, in declaring as to time, that it must l)e laid after the cause of action accrues. The case of Rushton v. Aspinall, 2 Doug. 679, does not apply. The bill of exchange, ui)on which that suit was founded, was dated on the twenty-seventh of November, in the year 1778, pay- able three months after date. The declaration stated that the bill was presented for acceptance on the day of the date thereof, and duly accepted, and afterwards, on the same day, the acceptor was requested to pay, &c., but neglected and refused, &c., and then goes on to state the liability of the defendant, as indorser, and that be, on the same day, assumed and promised to pay, &c. It ap- pears, therefore, that the refusal of the acceptor, and the assump- tion of the indorser, are laid on the day of the date of the note, which was three months before it fell due. The plaintiff, there- fore, by his own showing, had no cause of action when he com- menced his suit. This was a defect which no verdict could cure. He had not set forth his cause of action defectively, but shown that he had no cause of action ; and this was the ground on which it was placed by the Court. A cause of action, defectively or in accurately set forth, is cured by the verdict, because, to entitle the plaintiff to recover, all circumstances necessary in form or in sub- stance, to make out his cause of action, so imperfectly stated, must bo proved at the trial ; but when no cause of action is stated, none can be presumed to have been proved. 20 306 PRESENTMENT AND DEMAND FOR PAYMENT. This case is not to be considered as if before us on demurrer to the^declaration. Tlicrc being no averment of the special custom as to the demand on the fourth day, and the general rule being that the demand must be made on the third, if tlie declaration alleges it to have been made on the* fourth, the joinder in demur- rer admits the fact, and, of course, that the demand was too late. But had the declaration contained an averment of the special cus- tom, it must allege a demand on the fourth day. That is according to the legal effect of the note ; and a demand laid on any other day would have been bad. We must now consider the case as if the declaration had contained a special averment of the custom, the proof liaving been before the Court and jury without objection, and now making a part of this record. Judgment affirmed. But the rule in the principal case respecting usage applies only in the case of paper discounted by the banks. Cookendorfer v. Preston, 4 How. 317. In this case Mr. Justice McLean, in delivering the opinion of the Court, said: " In the Bank of Washington v. Triplett and Neale, 1 Pet. 25, this Court sanctions the usage to make the demand of payment of a note, which was left in the bank for collection, on the day after the last day of grace, placing such notes, in this respect, on the same footing as notes discounted by the bank. And that such was the usage in 1817, when payment on the note or bill in question Avas de- manded, was proved in that case. But it was also proved, as appears from the record, that the usage was changed in 1818, by all the banks of Washington and Georgetown, so as to conform to the general commercial usage of demanding payment on the last day of grace. This referred to notes or bills sent to the banks for collection, and of course embraces all notes not negotiated in bank. . . . " Now if the usage, as sanctioiied in the cases above cited, governs this case, it is clear that such diligence has not been used as to charge the indorser. For, under that usage, the demand should have been made on the day after the third day of grace, when it was in fact made on the third day of grace. This objec- tion is met by the defendant in error by the proof of the usage as stated, which he nsists governs all notes not discounted by the banks of the District. The note in question was not discounted by the Bank of Washington, it being merely left there for collection. But it is insisted that this usage cannot be shown to overthrow that which has been sanctioned by judicial decisions. A local usage may be changed in the same mode by which it was established. But parol evi- dence is not admissible to show that the usage was dilfercnt, at the time, from what the courts have solemnly adjudged it to be. The law merchant is founded upon custom, and every modification of it, by local usage, shows that, like other laws, it may be changed. " The usage proved in this case, except in Bank of Washington v. Triplett and Neale, and that is explained by the evidence cited, does not conflict wiih tliat RENNER V. THE BANK OP COLUMBIA. "07 decided by this Court, if the latter be limited to notes discounted by the banks, and the former applies to all other notes payable in the District. In other words, that the law merchant should l)e modified by the usage as to demand and notice on notes discounted by the Ijanks. And it would seem from I he decision above cited, tiie usage to ilemaiid payment tiie day after the third day of grace, had its origin with tiie banks, and has not been extended, since 1818, to pajM-r not dis- counted by them. On all other paper a demand is made on the tiiird day of grace, and the usage is to extend the protest on the day on which the notice is given, stating the demand to have been made on the last day of grace, and the protest to be dated the same day on which tlie notice is dated. Now a demand and protest on the last day of grace, and a notice on the following day, come strictly within the law merchant. And this was the diligence used in the present case, except the formal date of the protest on the day of the notice. No con- fusion can therefore arise from this general commercial usage, as it conforms to the established law. No inconvenience has arisen, it is supposed, from the bank u.sage in the District, which has been so long and so firmly established." See, also, upon the subject of the usage of banks in the District of Cohimhia, Raborg V. Bank of Columbia, 1 Harris it (J. 2:51; Hank of Columbia v. Fitzhngh, ib. 239; Bank of Columbia v. Magruder, 6 Harris & J. 172; Adams r. Otterback, 16 How. .".39. Days of grace are allowed only to promissory notes and bills of exchange proper. Checks and notes payable on demand are not entitled to grace. Barbour r. Bayon, 5 La. An. 303; Chitty, Bills, 377; Story, Bills of Exchange, § 312. There was formerly some doubt as to -whether bills payal)le at siuht were en- titled to days of grace. In Beawes, Lex ]Mercatoria, PI. 2.06, it is said that they are not, though days of grace would be allowed if the bill were payable one day after sight. Kyd, Bills, 10, expresses the same view. But it may now be con- sidered as settled that days of grace enter into such bills, and that in this respect they dilfer from pa[)er payable on demand ; though the reason for any such dis- tinction is ntt apparent. See Dehers r. Harriot, 1 Show. 163; Coleman v. Sav- er, 1 Barnanliston, 303 ; Chitty, Bills, 377 ; Story, Promissory Notes, § 224 ; Oridge I'. Sherborne, 11 Mees. & W. 37-i. In tJanson l\ Thomas, 3 Doug. -121 (1784), it was held that a bill of exchange, payable at sight, was not a bill payable on demand within the exception of the statute of 22 Geo. 3, c. 49. Bidler, J., in this case says that, upon the point respecting days of grace there is doubt, but that the question was not new; "for in a case before Willis, C. J., in 16 Geo. 2, a special jury (of merchants) certified that on bills at sight three days were allowed." Mr. Justice Slor;/, as above cited, says: "lu England, davs of grace are allowed on all notes, whether they are payable at a certain time alter date, or after sight, or even at sight. As to the latter, there has been some diversity of opinion among the profession, as well as among the eleineiitarv wri- ters. But the doctrine seems now well established both in England ami .\meriea, tluat days of grace are allowable on bills and notes payable at siiflit. And the same rule has been applied, as in strict analojxy it should apply, to bank post- notes payable after sight ; for they diller in nothing from ordinary bills of ex- 308 PRESENTMENT FOR DEMAND AND PAYMENT. change. The same rule seems to apply to bills payable by instalments ; and the days of grace are allowed on the falling due of each instalment." Upon the last point mentioned see Oridge v. Sherborne, 11 Mees. & W. 374. It was formerly held doubtful also in some of our own courts, whether days of grace could be extended to inland bills and promissory notes ; and as to the lat- ter it was a vexata questio in England until the decision of Brown v. Harraden, 4 T. R. 148, in 1791, settled the question in favor of allowing days of grace. The doubt in both cases, in England and America, has been removed, and there is now no doctrine more firmly settled than that both inland bills of exchange and promissory notes are subject to days of grace. See 1 Parsons, Notes and Bills, 393, and note ; Bank of Washington v. Triplett, 1 Peters, 25 ; Wood v. Corl, 4 Met. 203. With regard to the question of usage respecting days of grace, presented in the principal case, a further step was taken in the subsequent case of Mills v. Bank of the United States, 11 Wheat. 431, post ; and it was there held that where commercial paper is made payable or negotiable at a bank whose invariable usage it is to demand payment on the fourth day of grace, the parties are bound by that usage, being presumed to agree to be bound by it, though they do not in fact know it. Story, J., in delivering the opinion of the Court, says that the decision is made " upon the principles and reasoning" of the principal case. This doctrine respecting usage has been denied in New York. In Woodruff I). Merchants' Bank, 25 Wend. 673, Nelso?i, C. J., said: "The effect of the proof of usage, as given in this case, if sanctioned, would be to overturn the whole law on the subject of bills of exchange in the city of New York. We need scarcely add, even if the witnesses were not mistaken, and the usage pre- vails there as testified to, it cannot be allowed to control the settled and acknowl- edged law of the State in respect to this description of paper." This was in the Supreme Court of New York, in 1841 ; and the decision was unanimously af- firmed in the Court of Appeals, 6 Hill, 174, in 1843. The principle is reaffirmed in Brown v. Newell, 4 Seld. 190. But this case occurs again in the Court of Appeals in 3 Kern. 290, on appeal from 2 Duer, 584, where it is held that the law of the place where a draft is made payable governs as to its being payable with or without days of grace ; and the draft in this case being drawn upon a bank in Connecticut, payable on a specified day, and it being proved that days of grace were not allowed on such paper in that State, it was held that the defend- ants were liable on presentment and notice on the day designated, though the law in New York, where the bill was drawn and indorsed, allowed days of grace. From this case it would seem that the ground of the decision in 4 Seld. 190, was that the usage was not satisfactorily proved. The former cases then seem to be virtually overruled. The general rule undoubtedly is, that the law of the place where the paper is payable will govern respecting the days of grace ; and the origin of the indul- gence being in usage, it seems consistent with reason that proof of the particular custom should be received. See Kilgore r. Bulkley, 14 Conn. 362; Bryant V. Edson, 8 Vt. 325; Ripley v. Greenleaf, 2 Vt. 129; Vidal v. Thompson, 11 Mart. La. 23 ; Goddin v. Shipley, 7 B. Mon. 575 ; 1 Parsons, Notes and Bills, 399. RENNER V. THE BANK OF COLUMBIA. 309 If commercial paper fall due on Sunday, or on a lioliday, it is payable tlie day before ; and evidence will be received to show usage respecting what are holi- days, in the absence of statutory provision. City Bank v. Cutter, 3 Pick. 41 -i. In this case the question was whether comniencenient day at Harvard College could be deemed a holiday. Parker, C. J., u\Hm this i)oint, said : " It is not in the language of the conunou law a holiday, though it is a day of festivity and amuse- ment in the neighborhood of the I'niversity. But it is a fit subject of a usage which will bind all those dealing with a bank which has adopted it as a day when business is not to be done. It is found to have been the usage of the City Bank to regard it in this light, and the report finds that the defendants had express knowledge of this usage." But proof of four instances within two years in which a bank departed from the law merchant as to the time ol' giving notice to an indorser, is not sufficient to establish a usage binding on the indorser. Adams r. Otterback, lo How. 539. Per McLean, J. : "To constitute a usage, it must apply to a place rather than to a particular bank. It must be the rule of all the banks of the place, or it cannot consistently be called a usage. If every bank could establish its own usage, the confusion and uncertainty would greatly e.xceed any local convenience resulting from the arrangement."' This reasoning is not at variance with that of Parker, C. J., above, as it is predicated of a case in which the defendant had no knowledge of the alleged usage. See also Dabney r. Campbell, 9 Humph. 680. The reasonable rule and the result of the cases seem to be that, to give a usage in respect to days of grace the force of law, it must at least be so general and have such a notoriety that an inference may be drawn that the parties con- tracted in reference to it ; or if it is not thus general and notorious, that the defendant had knowledge of the usage, or acquiesced in the particular instance. Mr. Justice Story mentions another important rule respecting days of" grace. It is that the days of grace are all to be counted consecutively and in direct suc- cession, no deduction being allowed by reason of the circumstance that a Sunday or holiday intervenes between the first and last day of grace ; or, he migiit have added, though the first day of grace falls on Sunday or a holiday. Story, Bills of Excliange, § 337. olo presentment and demand for payment. Ephraim Dana v. Samuel H. Sawyer. (22 Maine, 244. Supreme Court, April, 1843.) At ii-hat tiivc of day presentment should he made. — When a bill or note is not payable at a place where there are established business hours, presentment for payment maybe made at any reasonable hour of the day ; but presentment to the maker at near midnight, after he had retired to rest, is not a reasonable hour, and will not charge an indorser on notice, unless there was a waiver of any objection as to the time, or unless it appear that payment would not have been made upon a demand at a reasonable hour. This case was submitted on the following statement of facts. The action is on a promissory note, signed by T. Sawyer & Co., dated Dec. 24, 1838, for $202.50, on four months, payable to and indorsed by the defendant. It is agreed that on the day the note fell due, George W. Smith came to the house occupied by said Thorndike Sawyer and Samuel H. Sawyer, the defendant, in the evening, between eleven and twelve o'clock, called up said T. Sawyer from his bed, and presented the note to him for payment, which he did not pay, and left with him a notice and demand for payment, and delivered another notice of non-payment by the makers of the note, directed to said S. H. Sawyer, and demand of payment to said T. Sawyer for said Samuel, wJiich said Thorndike did not deliver to said Samuel. Said Samuel was then in the house, but was in bed. He had his residence in the same house. The Court were to enter a nonsuit or default, as they might determine to be the law in the matter. Shepley, J. This case is presented upon an agreed statement of facts, from which it appears that a demand for payment was made upon the maker of the note, between eleven and twelve o'clock at night on the day that it became payable, by calling him from his bed ; and that he did not pay it. There is no further statement of any thing else said or done, except that a notice and demand for payment was left with him. When a bill or note is payable at a banking-house, or other place, where it is well known that business is transacted only during certain hours of the day, the law presumes that the parties intended to conform to such established course of business, and requires that a demand should be made during those DANA V. SAWYER. 311 business hours. Parker v. Gordon, 7 East, 385. The cases of Garuett v. Woodcock, 1 Stark. 475, and of Henry v. Lee, 2 Chitty, 124, may show an exception to this rule that, when a person is found at such place after business liours, authorized to give an answer, the demand will be good. While it may be difficult to reconcile those cases with the case of Elford v. Teed, 1 M. & S. 28. When the lull or note is not payable at a place where there are established business hours, a presentment for {)ayincnt may be made at any reasonable hour of the day. Leftley v. Mills, 4 T. R. 174; Barclay v. Bailey, 2 Camp. 527; Triggs v. Newnliam, 10 Moore, 24<i ; Wilkins r. Jadis, 2 Barn. & Adol. 188. What hour may be a reasonable one has come under consideration in those cases. In the first of them Mr. Justice Buller observes, that " to say that the demand should be postponed till midnight, would be to establish a rule attended with mischievous consequences." In the second, Lord EUenhorough said, " if the presentment had been during the hours of rest, it would have been altogether unavailing." h\ the third, this remark, among others, is quoted and approved by C. J. Beat. In the fourth, Lord Tenterden remarked, that " a i)resent- ment at twelve o'clock at night, when a person has retired to rest, would 1)0 unreasonable." Those observations, so just and so appli- cable to this case, authorize the conclusion, that the demand was not made at a reasonable hour, unless the fact that the maker was seen and actually called upon at that time should make a difference. Perhaps in analogy to the exception already noticed, it might be proper to admit of one in this and the like cases, if it should appear from the answer made to the demand, that there was a waiver of any objection as to the time, or that payment would not have been made upon a demand at a reasonable hour. But there is nothing in this agreed statement to show that payment might not have been refused because the demand was made at such an hour, that the maker did not choose to be disturl)ed, or because he could not then have access to funds prepared and deposited elsewhere for safety. Plaintiff nonsuit. The general rule respecting the proper time of day at which presentment for payment shouM be made, — that it must be made within reasonable hours, — is the same as in the case of presentment for acceptaiue. Story, Bills of Ex- change, § :U9; Chitty, Bills, :W7. What is a reasonable hour will depend partly on the ])lai'e of business or dom- icile of the maker, and partly on the usage of trade where the paper is payable ; 312 PRESENTMENT AND DEMAND FOR PAYMENT. and in the case of paper payable at bank, while it must in general be presented during banking hours, still it may be presented after such hours, provided a per- son be stationed there by the bank to return answers, or if there is a custom of the bank which allows a certain length of time after closing for transacting such business. Bank of Utica v'. Smith, 18 Johns. 230; Chitty, Bills, 387; Story, Promissory Notes, § 226 ; Story, Bills of Exchange, § 349. If the presentment is made at unseasonable hours, either too early or too late, at a bank or banker's, or at the counting-house or dwelling-house of the maker, and there is no person there authorized to act, or ready to act, for the maker ; if the presentment is made before the counting-house is open or after it is shut ; in these cases the presentment will be a mere nullity. Story, Promissory Notes, § 226; Story, Bills of Exchange, §§ 236, 349. But in the case of presentment after the maker or acceptor has retired to rest, it is worthy of note that the rule in the principal case applies only when the party has retired at the usual or proper time. If he has retired at an unusual hour, a presentment before it has become unseasonably late will be good. Farnsworth v. Allen, 4 Gray, 453. In this case, presentment was made at nine o'clock in the evening, in the month of August, when it was found that the maker of the note had retired to rest ; and as it appeared that he lived ten miles distant from the residence of the holder, and due diligence had been used to find him, the presentment was held to have been made at a reasonable hour. And it would seem that the same rule should apply where the presentment is made in the morning at a reasonable hour, and the maker has not arisen. See Lunt v. Adams, 17 Maine, 230, holding pre- sentment at eight o'clock in the morning too early. With the above qualification it is undoubtedly true, as stated by Cotcen, J., in Cayuga County Bank v. Hunt, 2 Hill, 635, that, except where paper is due from a bank, proper hours of business range through the whole day down to bedtime; citing Chitty, Bills, 421, Am. ed. 1839, and cases there cited. It is held also in England that presentment between oight and nine o'clock in the evening, at the house of a trader or merchant, is sufficient. Triggs v. Newn- ham, 10 Moore, 249 ; s. c, 1 Car. & P. 631. And this, too, though the house be shut, and no one there to give an answer. Wilkins v. Jadis, 2 Barn. & Adol. 188, cited in the principal case. See Chitty, Bills, 388. So In Morgan v. Davison, 1 Stark. 114, In which the paper was presented at a trader's between six and seven o'clock in the evening, when no one was present but a girl taking care of the counting-house. Lord Ellenhoroiigh held that the hour was a proper one, and that the holder might reasonably expect to find the payor there. In Barclay v. Bailey, 2 Camp. 527, the distinction between paper payable at bank and elsewhere Is again observed. Lord Ellenhoroiigh said: " I think this presentment sufficient ; a common trader is different from bankers, and has not any peculiar hours for paying or receiving money ; if the presentment had been during the hours of rest, it would have been altogether unavailing ; but eight in the evening cannot be considered an unseasonable hour for demanding payment at the house of a private merchant who has accepted a bill." taylor v. snyder. 813 Taylor v. Snyder. (3 Denio, 145. Supreme Court of New York, May, 1846.) Where to be made. — Tlie place of date of a promissory note payable generally, is only prima facie tlie place of payment ; and though a note be made and dated in New York, if the maker tlien resided in Florida, and the holder knew this at the time the note was executed, and tiie maker hii.s not changed his residence since that time, demand must be made of the maker in Florida in order to charge an indorser. The case is stated in tlic opinion of the Court. Beardsley, J. As the note bears date at Troy, it is presumed to have been made at that place, although the maker then resided in Florida, as was well known to tJie original bolder, Morris, and to Stevenson, to whom it was subsequently transferred. The resi- dence of the maker had not been changed when the note fell due, his domicile still being in Florida. The indorser resided in Troy. It was not shown that he ever owned the note, or was under any other obligation for its payment than that of an ordinary indorser ; and it may fairly be inferred from the case that the note was given for a debt due from the maker to Morris, and was indorsed for his benefit at the request of the maker. Some months before the note fell due, the indorser had been asked by the then holder, Morris, if it would be paid at maturity, to which he replied that it would be ; that his brother, the maker, would send the money to him, and he should see the note was paid. But on being requested to stipulate, absolutely, to pay the note himself, he declined to do so. It does not appear that on this or any other occasion, any thing was said as to the place where pay- ment would be made, or where the note should be presented for payment at maturity. Upon the evidence as stated in the case, I think it (jannot be said that any thing has been done by the indorser to change or affect bis original liability or his rights, in tiiat character. He had not designated any particular place in Troy, or that city at large, as the place at which the note would be paid, or where demand should be made, nor had he been requested to designate any place for t 314 PRESENTMENT AND DEMAND FOR PAYMENT. that purpose. And althongh he certainly gave a strong assurance that the maker would remit the money to him,. and therefore that the note would be duly paid, he at the same time refused to bind himself absolutely for its payment. He chose to leave his own responsibility where his contract and the law had placed it ; and no one had a right to understand from what he said, that he in- tended to assume any new obligation, or to dispense with the per- formance of any act which the law required the holder of the note to perform. It does not appear to have been suggested on the trial, that the action was to be sustained on any such ground, nor was the judge requested to submit the question of a waiver of demand of payment, by the indorser, to the jury. It was doubt- less then urged, as it was on the argument at bar, that this note was by law payable at Troy, and therefore the defendant had been duly charged as indorser, and not that he had in any manner waived a demand at the proper place. What, then, is this case ? A debtor, whose residence is in Florida, being at Troy, makes a note, which he dates at that place, to his creditor, a resident of this State, for an amount due to him, and procures a friend residing at Troy to indorse the same. No place of payment is specified in the note, nor is there any thing to indi- cate a place, unless that follows fiom the note bearing date at Troy. The holder knows the residence of the maker to be in Florida, but when the note falls due, instead of making demand of the maker personally, or at his residence or place of business in Florida, pay- ment is demanded at Troy and not elsewhere. Was this a sufficient demand as respects the indorser ? It clearly was, if the note was by law payable at that place, and it, as clearly, was not, if the note was payable elsewhere. This is the only question to be determined. The date of a note at a particular place does not make that the place of payment, or at which payment should be demanded for the purpose of charging the indorser. This was expressly adjudged in the case of Anderson v. Drake, 14 Johns. 114. That was an ac- tion against the indorser of a promissory note, bearing date in the city of New iTork, but not made payable at any particular place. When the note was made, the maker lived in New York ; but before it fell due he removed to Kingston in the county of Ulster. The counsel for the plaintiff insisted " that as the note was dated in New York, and the parties resided there at the time it was made, it must be presumed, no particular place being designated for the TAYLOR V. SNYDER. 315 payment, that it was payable in New York ; that the removal of the maker from New York to any other place did not render it necessary for the holder to follow him for the purpose of demand- ing payment." But the Court thought otherwise, and held that a demand of the maker personally, or at his residence or pfcice of business in Kingston, as in ordinary cases, was necessary, and that the indorser could not be charged upon a demand made in the city of New York, although the note Ijoro date at that place. Tiiis I understand to be the settled and invariable rule where the maker has not removed from the State, but has a known residence within its limits. Where, after a note has been given, the maker absconds, removes into another State or country, or is without a fixed resi- dence anywhere, other principles, as we shall see, apply : but in no case does the date of a note, of itself, make that the place where payment should be demanded in order to charge the in- dorser. It has been supposed that the case of Stewart v. Eden, 2 Gaines, 121, countenances a different doctrine. Livingston^ 3.^ there said, " the note being dated in New York, the maker and indorser are presumed to have resided, and contemplated payment there." This remark was in part strictly correct, for the date of the note was presumptive evidence of residence; and in a general sense it may also be true that the date raises a presumption that the parties contem])latcd payment at that place. Judge Livingston did not say that the note was by law payable at the place of its date ; on the contrary, the form of expression conclusively repels that idea. He was not speaking of what the parties were bound to do by the terms of the note, of their legal obligations flowing from their engage- ments as maker and indorser, but simply of what they were pre- sumed to have contemplated. If the learned judge intended to affirm that a note, when no particular place of payment is otherwise indicated, is by law payal)le at the place where dated, he would have said so in direct terms, and would not have said it was to be presumed payment at that place was contemplated. -This would have been absurd. But in truth the question whether the note in that case was payable where it bore date, was not before the Court, nor was it tliere pretended that payment had not been duly de- manded. It was an action against the representatives of a deceased indorser, and although an objection was taken to the form in which the presentment for payment was alleged in the declaration, it was 316 PRESENTMENT AND DEMAND FOR PAYMENT. not pretended by any one that the demand of payment had not been strictly correct. The main question in the case was, as to the suflficiency of the notice to the indorser, and the remark of the judge was made in discussing that point. I admit that upon the question of du%diligence in giving notice to an indorser, it may have been very pertinent and proper to say that the parties are presumed to have contemplated payment at the place where the note was given and was dated, although such a remark would be altogether out of place in deciding upon the construction of an agreement, and whether the parties by its terms, were bound to make payment at a particular place. There is nothing therefore in this remark of Judge Livingston which can be made to countenance the idea that a note, when no other place of payment is specified, is by law pay- able at the place of its date. Anderson v. Drake, supra; Bank of America v. Woodworth, 18 Johns. 315, 322. Where a promissory note is not made payable at any particular place, the general rule of law is, that in order to charge the indors- er payment must be demanded of " the maker personally, or at his dwelling-house, or other place of abode, or at his counting- house or place of business." Story, Promissory Notes, § 235 ; Bank of America v. Woodworth, 18 Johns. 315 ; s.c, in error, 19 id. 391. But although such is the general rule, yet, under various circumstances, a demand in any form or manner may be dispensed with. It is a question of diligence, and if a demand is found to be impracticable, proper efforts for that purpose having been made, the indorser will still be held liable, due notice having been given to him by the holder. Thus where the maker has absconded, that will ordinarily excuse a demand, and notice of the fact is sufficient to hold the indorser. 1 Ld. Raym. 443, 743 ; 3 Kent, 5th ed. 96 ; Putnam v. Sullivan, 4 Mass. 45, 53 ; Lehman v. Jones, 1 Watts & S. 126 ; Chitty, Bills, 10th Am. ed. 354, n. 1 ; Story, Promissory Notes, § 237. Where the maker is a seaman on a voyage, having no domicile in the State, the indorser is liable without a demand being made. Barrett v. Wills, 4 Leigh, 114. But although the maker may be absent on a voyage, if he has a domicile in the State, payment must be demanded there. Dennie v. Walker, 7 N. Hamp. 199 ; Whit- tier V. Grafifam, 3 Greenl. 82. And in every case where the maker has no known residence or place at which the note can be presented for payment, the holder TAYLOR V. SNYDER. 317 will in like maimer be excused from making any demand whatever. Story, Promissory Notes, § 287 ; Whittier v. Graffam, supra; Put- nam c. Sullivan, sj/^^ra ; Duncan v. McCullough,4Serg. &Rawle,480. But in all such cases, the reason for not making a demand must be shown on the trial of the cause. It must a})pear that the %naker had absconded, was at sea, or had no known domicile or place where the note should be presented. The rule is strict, that a demand must be made, or a proper excuse shown for its omission. There is a further exception to the rule requiring a demand to be made of the maker, or at his domicile or place of business ; for where a note is made by a resident of the State, who, before it is payable, removes from the State and takes up a permanent res- idence elsewhere, the holder need not follow him to make demand, but it is sufficient to present the note for payment at the former place of residence of the maker. M'Gruder v. Bank of Washing- ton, 9 Wlieat. .")98 ; ^ Anderson v. Drake, supra ; Dennie i*. Walker, supra; Gillespie v. Hannahan, 4 M'Cord, 503; Reid v. Morrison, 2 Watts k S. 401; 8 Kent, 90. And this is just : for it is but reasonable to suppose that neither party, when the note was given, looked for a change of residence to a foreign country, and that each contracted upon the supposition that no such change would take place. Nevertheless, as was said in Dennie v. Walker, supra, " this is an exception to the general rule, and must be construed strictly." " We think," say the Court in M'Gruder v. Bank of Washington, supra, " that reason and convenience are in favor of sustaining the doctrine that such a removal is an excuse from actual demand. Precision and certainty are often of more impor- tance to the rules of law, than their abstract justice. On this point, there is no other rule that can be laid down, which will not leave too much latitude as to place and distance. Besides which, it is consistent with analogy to other cases, that the indorser should stand committed, in this respect, by the conduct of the maker. For his absconding or removal out of the kingdou), the indorser is held, in England, to stand committed." These exceptions to the general rule, it will l)e seen, all rest on peculiar reasons. In one, the maker has absconded; in another, he is temporarily absent, and has no domicile or place of business within the State ; in a third, his residence, if any he has, cannot be ascertained ; while in the fourth, he has removed out of the Post. 318 PRESENTMENT AND DEMAND FOR PAYMENT. State and taken up his residence in another country. In each of these instances, let it be observed, the fact constituting the excuse, occurs subsequently to the making and indorsement of the note ; and it is this new and changed condition of the maker, and that only, by whteh the indorser stands committed, without a regular demand. We are, then, to inquire whether these exceptions are to be multiplied, and extended to a case where no change in tlie condi- tion of either party has taken place ; where the maker, when the note was made and indorsed, had a known residence in another State, and which had remained unchanged at the maturity of the note. It is palpable that this exception, if made, must be placed on some new principle ; it cannot be allowed on the ground which upholds the others. The facts in this case are unchanged, and as the reason for making an exception does not exist, the exception itself should not be allowed. Unless, therefore, the general posi- tion is true, that one who indorses for a maker who lives in another State may be " held liable without any demand being made on the maker," I think the defendant was not liable in the case at bar. And if any such general rule of law, as I have stated, exists, it certainly may be shown ; but that it has no existence, is, as I be- lieve, not only according to the universal understanding amongst commercial men, but also according to the settled course of busi- ness in the commercial world. The indorsement of a note is an order to the maker to pay the amount to the indorsee or holder, as is specified and agreed in the note, and an engagement by the indorser that if the note is duly demanded of the maker and not paid, or if it shall be found im- practicable to make a demand, the indorser will himself, on re- ceiving due notice, pay the amount to the indorsee or holder. Now, where such an order is drawn upon a maker who resides in another State, and which is well known to the person in whose favor the order is drawn, upon what principle can it be said that a demand of the maker is unnecessary ? The indorsee volun- tarily consents to take such an order, and why should he not per- form the' condition on which the ultimate liability of the indorser depends ? I confess I see no reason why he should not. Here is no mistake, or misapprehension of fact, at the time the indorse- ment is made. The indorsee knows where the maker resides, and that it is in another State. He knows that by law, unless the in- tervention of a State line makes a difference, the maker must be TAYLOR V. SNYDER. 319 sought where he resides, and the demand must be made there. When the time for payment arrives, the maker is still at his former residence ; the facts of the case are precisely as they were when the order was drawn. Why, in such a case, should the State lino make a dilTcrcnce in the construction and legal elllect of this contract of 'the indorsur V It was fairly entered into between the parties ; let it then be fairly observed and performed by them. 1 can well understand why such an order made by an indorser upon the maker of a note then residing loithin this *State, but who removes into another State before the note Aills due, should re- ceive a different construction, and that it would be unreasonable to require the holder to follow the maker to his new residence in order to demand payment. Here, a new and unlooked-for event lias occurred, which, like the absconding of a maker, or an ina- bility to discover his residence, may very reasonably be held to excuse a demand. In these respects, the indorser should be held to stand committed by the act of the maker. But where the facts, in reference to which the parties contracted, were fully known to them, and are in no respect changed, I am unable to discover any principle winch will excuse the maker from making a demand, or using proper diligence to make a demand, as in orcUnary cases. The intervention of a State line has, in my opinion, no possible bearing on the question. I admit that I have not found any case in which this point has been expressly adjudicated, as I have stated it. It seems, how- ever, to have been taken for granted, in the case of M'Gruder i\ The Bank of Washington, already referred to. The case of Dun- can r. McCuUough, Adm'r, &c., 4 Serg. & Rawle, 480, was, in some of its features, nuich like the one at bar. It was an action against the administrator of an indorser of a note made by one Adams, bearing date at Baltimore, in Maryland, June 4, 1814, payable nine months from date, no place of payment being speci- fied in tlio note. It did not appear otherwise, than by its date, where the note was actiuiUy made ; and it may be inferred from the evidence, that Adams was, at that time, a resident at Green Village, Pennsylvania. It did not appear where he was when the note fell due, and no demand of payment had been made any- where ; nor was it shown that any search for the maker had been made. Here, then, was a note dated at Baltimore, no [)lace of payment being stated in it, the maker living in another State. So 320 PRESENTMENT AND DEMAND FOR PAYMENT. far it is the case in hand, yet it was not even suggested, by the counsel or the Court, that a demand was unnecessary, or that Bal- timore was the proper place to make the demand. The case was disposed of on other grounds, and which could not have been in any respect material, if a demand at Baltimore would have been proper, or if none whatever was necessary. On the trial, the Court charged that the plaintiff was bound to prove a demand of payment of the maker, or due diligence used for that purpose, and upon this part of the case the final opinion of the Court was thus stated by Chief Justice TilgJiman : " If the' plaintiff had proved that Adams had absconded, and was not to be found when the note fell due, a demand of payment would have been dispensed with, because it would have been impossible to make it. But no such thing was proved, and therefore a demand was necessary. The note being dated at Baltimore, would raise a presumption that Baltimore was the drawer's place of residence, as was decided by the Supreme Court of New York, in 2 Caines, 127. Baltimore, then, was the place at which inquiry should have been made. The Court laid down the law fairly. A demand, or at least due dili- gence in endeavoring to make a demand, was necessary." All this seems to me very just and proper. A demand was necessary : the note was dated at Baltimore, and if the residence of the maker was unknown, Baltimore was the place where the inquiry should have been made. But if, as is now urged, Baltimore was the place to demand payment, or, if no demand was required, the ar- gument of counsel in the case referred to and the views of the Court were entirely wide of the mark. And here let me observe, that, although the date of a note does not make it payable at that place, still the date may, in one respect, be very important. It raises a presumption that the maker resides there, although it is only presumption. 3 Kent, 96, 97 ; Lowery v. Scott, 24 Wend. 358 ; Galpia v. Hard, 3 M'Cord, 394. And where it becomes a question of due diligence in seeking to make a demand, it may be all important to show that inquiry was made at the place where the note"bears date. But here, this point is of no consequence, for the residence of the maker was known to all parties, and not the least effort was made to make demand of him where he lived, or at any other place than Troy, where the indorser resided, the maker then being at his home in Florida. I am aware that Judge Story ^ in his treatise on Promissory Notes, TAYLOR V. SNYDER. 321 after adverting to various grounds on which a demand of payment may be excused, says : " It seems also, tliat if the maker of a promissory note resides and has his domicile in one State, and act- ually dates and makes, and delivers a promissory note in another State, it will be sufficient for the holder to demand payment there- of at the place where it is dated, if the maker cannot personally, upon reasonable inquiries, be found within the State, and has no known place of business there." § 280. For this he refers to the case of Hepburn v. Tolcdano, 10 Mart. La. 643. It will be observed that Judge Story does not give to this position the authority of his name and character ; the point is stated doubtingly. It seems, he says, that under such circumstances the maker need not bg sought in the State where he resides, and hot that it is clear this will excuse the usual demand. The learned author was obviously doing no more than to state what seemed to him to have been de- cided in Louisiana, and he does it in a manner which precludes the idea that he intended to adopt the principle, or give to it any authority beyond that of the elevated and able tribunal by which the case was determined. I have looked at tlie report of the case of Hepburn v. Tolcdano. It was an action against the indorser of a promissory note dated at New Orleans, but not made payable there. When the note was payable the maker resided in Ken- tucky ; but where his residence was when the note was given, is not expressly stated. The only question in the case, as the Court said, was whether the holder was obliged to go out of the State to demand payment ; but whether that question arose upon a note given by a resident of Louisiana, who had subsequently removed to Kentucky, or by a ])erson who lived in Kentucky when the note was made, is a fact upon which I cannot satisfy myself from any thing to be found in the report of the case. We have already seen that where the maker removes from one State to another, after the giving of a note, the holder need not follow him. This was said in Anderson v. Drake, in 14 Johnson, 114, upon the authority of which the Louisiana case was decided. In the latter case, the Court say : " There is some difficulty as to the place where demand is to be made, when tiie maker of a note or acceptor of a bill has been a resident of the State, and before the time of payment had changed his domicile ; but if he lives in another country, the in- dorsees cannot be presumed to know his residence, and all that • the law requires of the holder is due diligence at that place where 21 322 PRESENTMENT AND DEMAND FOR PAYMENT. the note is drawn. Thus in the case cited by the appellant, 14 Johns. 116, it is stated by the Court to have been previously de- cided, that, where a note was dated at Albany, and the drawer of it afterwards removed to Canada, the demand where it was drawn was sufficient to charge the indorser." And it was held that the demand at New Orleans was sufficient. I must say that my im- pression upon this case is that the maker of the note had re- moved from Louisiana after the giving of the note ; but if the fact were otherwise, I think the decision should not be followed. The case is not strictly authority, although harmony in the decisions of the several State courts, upon such a point, is exceedingly de- sirable. But I cannot assent to the principle that where no change has taken place in the residence of the maker, between the mak- ing of the note and the time of its payment, the intervention of a State line dispenses with the necessity of making due demand of payment, or at all affects the question. I therefore think the non- suit was right, and a new trial should be denied. New trial denied. See following case and note. Chicopee Bank v. Philadelphia Bank. (8 Wallace, 641. Supreme Court of the United States, December, 1869.) Payable at hank. Negligence of collecting hank. — Though commercial paper be physi- cally in the bank at which it is payable, yet if the bank is ignorant of tliis by rea- son of the fact that the letter in which it was sent slipped through a crack in the cashier's desk and disappeared before it had been seen by him, then there is no pre- sentment, even though the acceptor liad no funds there, and did not mean to pay the bill. And such a disappearance carries a presumption with it of negligence in the collecting bank, and throws the burden of proof upon the bank to repel tliis presumption. In the absence of such proof, the bank is responsible to the holder for the amount of the bill or note. TfflS was a suit by the Seventh National Bank of Philadelphia against the Chicopee Bank of Springfield, Massachusetts, founded upon the allegation, that by reason of the neglect of the latter bank, the former lost its remedy against the prior parties on a bill of exchange ; to wit, the drawer and payee. CHICOPEE BANK V. PHILADELPHIA BANK. 323 The bill was drawn by one Coglin, of Philadelphia, on Mon- tague, of Springfield, payable to one Rhodes, of Philadelphia, for $10,000, and accepted by Montague specially payable at the Chico- pee Bank. The day of payment was Saturday, Feb. 18, 1865. On the loth, Rhodes, the holder, indorsed the bill for value to the Philadelphia Bank, which sent it at once by mail, inclosed in a let- ter to the Chicopee Bank, to receive payment. The course of the mail between Philadelphia and Springfield is two days. On the loth, this letter, with other letters and papers, was duly delivered by the postman, and placed on the cashier's table ; but (as was afterwards ascertained) this letter slipped from the pile through a crack in the table, into a drawer of loose papers, and its presence in the bank was not known to the cashier, and as the two banks had no previous dealings, he was not expecting any thing from the other bank. On the 18th, Montague, the acceptor, made no attempt to pay the bill, either by calling for it or depositing funds, and subsequently, at the trial, made oath that he intended not to pay the bill, and had a defence against it. The cashier of the Piiiladel- phia Bank, not receiving on the 17th an acknowledgment of the letter which he had sent on the 13th, felt somewhat anxious ; and on the 18th consulted the president. On Monday, the 20th, he telegraphed to the cashier of the Chicopee Bank as follows : — " Did not you receive ours of 13th instant, with Montague's acceptance, $10,000 ? " The despatch did not indicate either the time or place of payment of the draft ; and the reply was sent, — " Not yet received." This despatch was received by the cashier of the Philadelphia Bank at noon of the 20th. He testified at the trial that he wrote to Mr. Rhodes the same day, informing him of what he had learned, that he had no recollection of writing to Coglin, but, as he knew they were jointly concerned in dealings in petroleum lands, he presumed Rhodes would inform him. This was the only step the cashier took toward charging the prior parties. They both did business at that bank ; Coglin was a director ; both were Irequently there, and well known to the cashier. As the mail required two days, and the 19th was Sunday, there was no question but the cashier had until and including the 24th, to give notice to Rhodes and Coglin. After the receipt of the reply of the 20th, at noon, he took no steps, by post or telegraph, to ascertain from the Chicopee 324 PRESENTMENT AND DEMAND FOR PAYMENT. Bank whether the acceptor had or liad not been ready to pay on the 18th. The Pliiladelphia Bank brought no suit against Rhodes or Coglin,but sued the Chicopee Bank for the amount of the note, on the ground that, by its negligence, they had lost the power to charge the ])rior parties. Tlie Court below instructed the jury that the prior parties were absolutely discharged by what took place at the Chicopee Bank, on the 18tli ; that wliere a bill is accepted payable at a particular bank, the bank need not seek the acceptor, but that there must still be a presentment, in order to charge prior parties ; that the presence of the bill at the bank, ready to be delivered to the acceptor upon his tendering payment, was equivalent to a presentment, but that if the bill is not at the bank on the day of payment, ready to be delivered as aforesaid, there is a failure of presentment, and the prior parties are discharged, although the acceptor made no attempt to pay ; that in this case, therefore, the prior parties could not be held by any notice of whatever description, whenever or by whomsoever given ; and that if the loss or mislaying of the bill during the whole of the 18th was owing to the negligence of its cashier, the Chicopee Bank was liable for the amount of the note. After the charge was fully delivered, the Court was asked by the counsel of the Cliicopee Bank to instruct the jury as to the burden of proof. This the Court refused to do, considering that it had already sufficiently instructed the jury. The verdict and judgment were accordingly for the plaintiifs. Nelson, J. The case was put to the jury, whether or not the loss of the bill, and consequent inability of the collection bank to take the proper steps against the acceptors to charge the prior parties, was attributable to negligence, and want of care on the- part of the Chicopee Bank, and that, if it was, the bank was responsible. The jury found for the plaintiffs. In cases where the drawee accepts the bill, generally, in order to charge the drawer or indorser, the holder must present the paper, when due, at his place of business if he has one, if not, at his dwelling or residence, and demand payment ; and, if the money is not paid, give due notice to the prior parties. If he accepts the bill, payable at a particular place, it must be presented at that place, and payment demanded. In these instances, as a general rule, the bill must be present when the demand is made, as in case of payment the acceptor is entitled to it as his voucher. "When the CHICOPEE BANK V. PHILADELPHIA BANK. 325 bill is made payable at a bank, it has been held that the presence of the bill in the l)aiik at maturity, with tlie fact that the acceptor had no funds there, or, if he had, were not to Ije applied to payment of the paper, constitute a sufficient presentment and demand ; and, if the bill is the property of the bank, the presence of the paper there need not be proved, as the presumption of law is, that the paper was in the bank, and the burden rests upon the defendant to show that the acceptor called to pay it.* In the present case, it is ar}j:ued that the bill was in the Chicopee Bank at the time of its maturity, and, as the acceptors had no funds there, a sufficient presentment and demand were made, according to tlie law merchant. It is true, the bill was there physically, but, within tlie sense of this law, it was no more present at the bank than if it had been lost in the street by the messenger on his way from the post-office to the bank, and had remained there at maturity ; and this loss, which occasioned the failure to take the proper steps, or rather, in the present case, to furnish the holder with the proper evidence of the dishonor of the paper, so as to charge the prior parties, and enable him to liave recourse against them, is wholly attributable, according to the verdict of the jury, to the collecting bank. In the eye of the law merchant there was no presentment or demand against the acceptors ; and,- as a consequence of this default, the holder lias lost his remedy against the drawer and indorser, which entitles him to one against the defendant. The radical vice in the defence being the failure to prove a presentment and demand upon the acceptors at the maturity of the bill, the question of notice is unimportant. But if it had been otherwise, the notice itself was utterly defec- tive. That relied on is the answer of the defendant tu the telegram of the plaintiff of the 20th February, which was, that the liill had not yet been received. This was after its maturity, and it simply advised the holder and payee indorser, to whom the information was communicated the same day, that the drawer and indorser were discharged from any liability on the paper. It showed that the proper steps had not been taken against the acceptors to cluirge them. Some criticism is made upon the refusal of the Court below to charge as to which side the burden of proof belonged, in respect to the question of negligence and want of care, after the paper came 1 FuUerton v. Bank of United States, 1 Peters, G04 ; Bank of United States c. Carneal, 2 id. 543 ; Seneca Co. Bank v. Neass, 5 Denio, 329 ; State Bank v. Napier, 6 Humph. 270 ; Folgar i-. Chase. 18 Pick. 63. 326 PRESENTMENT AND DEMAND FOR PAYMENT. into tlic hands of the defendant. No objection is taken to the charge itself, upon this question, and, indeed, could not have been, as the point was submitted to the jury as favorably to the defend- ants as could have been asked. We think the Court, after having submitted fairly the evidence on both sides bearing upon the ques- tion, had a right, in the exercise of its discretion, to refuse the request. If, however, the Court had inclined to go further, and charge as to the burden of proof, it should have been that it belonged to the defendant. The loss of the bill by the bank carried with it the presumption of negligence and want of care ; and, if it was capable of explanation, so as to rebut this presumption, the facts and cir- cumstances were peculiarly in the possession of its officers, and the defendant was bound to furnish it. Where a peculiar obligation is cast upon a person to take care of goods intrusted to his charge, if they are lost or damaged while in his custody, the presumption is that the loss or damage was occasioned by his negligence, or want of care of himself or of his servants. This presumption arises with respect to goods lost or injured, which have been deposited in a public inn, or which had been intrusted to a common carrier. But the presumption may be rebutted.^ Judgment affirmed. Adams v. Leland, 30 N. Y. 309, is an additional authority on the point stated in the opinion in the principal case, Taylor v. Snyder, that where a note is made by a resident of a State, who, before it matures, removes from the State and takes up a permanent residence elsewhere, the holder need not follow him to present the note for payment. See also, to the same effect, Foster v. Julien, 24 N. Y. (10 Smith) 28. The question arose in Pearson v. Bank of Metropolis, 1 Peters, 89, in 1828, whether parol evidence could be received of an agreement of all the parties to a note that demand of the maker might be made at a certain place, — no place of payment being specified on the face of the note. The Court held the evidence admissible. Marshall, C. 3 ., in delivering the opinion, said : "The plaintiffs in error contend that the testimony ought not to have been admitted, because it is an attempt, by parol proof, to vary a written instrument. But this is not an attempt to vary a written instrument. The place of demand is not expressed on the face of the note, and the necessity of a demand on the person, when the parties are silent, is an inference of law, which is drawn only when they are si- lent. A parol agreement puts an end to this inference, and dispenses with a per- sonal demand. The parties consent to a demand at a stipulated place, instead of a demand on the person of the maker; and this does not alter the instrument, so far as it goes, but supplies extrinsic circumstances which the parties are at 1 Dawson v. Chamney, 5 Q. B. 164; Coggs v. Bernard, 2 Ld. Raym. 918; Day V. Riddle, 16 Vt. 48. CHICOPEE BANK V. PHILADELPHIA BANK, 327 liberty to supply. No demand is necessary to sustain a suit againjit the maker. His undertaking is unconditional, but the indorser undertakes conditionally to pay, if the maker does not ; and this imposes on the holder the necessity of tak- ing the proper steps to obtain payment from the maker. This contract is not written, but is implied. It is, that due diligence to obtain payment from the maker shall be used. When the parties agree what this due diligence shall be, they do not alter the written contract, but agree upon an extrinsic circumstance, and substitute that agreement for an act which the law prescribes only when they are silent." A Contrary doctrine is held in Pierce v. Whitney, 29 Me. (16 Shepl.) 188, citing Story, Promissory Notes, § 49, and note ; but Pearson v. Bank of Metrop- olis, supra, is not noticed in either place. And Mr. Justice Story, in support of his position, refers to the rule that parol evidence is not admissible to vary the terms of a written contract; a rule which Chief Justice Marshall very clearly shows is not infringed by the decision which he pronounces. Thompson, C. J., in Anderson v. Drake, 14 Johns. 114, decided in 1817, also makes the statement that parol testimony is inadmissible to show such an agreement ; disapproving a dictum to the contrary in Thompson v. Ketcham, 4 Johns. 285; but his statement was also a dictum ; that point not being involved in the case. In State Bank v. Ilurd, 12 Mass. 171 (1815), the note was made payable at the State Bank. By direction of the maker and indorser, notices were left at a certain shop for the promisor and for the indorser, the defendant. No other notice or demand was given or made. It was held that the agreement that no- tice left for the maker at the shop should be equivalent to a more formal demand upon him, removed the necessity of making demand at the bank, and the indorser was liable. And it is held in Sussex Bank v. Baldwin, 2 Harrison, 487 (184<J), that the indorser cannot object to presentment made at an improper place, where the maker alone had directed the holder to present the note at such place. But this may be doubted. The reason given in that case is this : The maker is estopped from objecting by his conduct; "and that which is good against the drawer is good against the indorser." The proposition in quotation marks may be generally true, so far as presentment is concerned ; but a drawer is not & maker. The drawer's liability is that of an indorser, while the maker's liability is absolute. The Court evidently confused the terms maker and drawer. On this point State Bank v. Hurd, supra, was cited ; but there is this mate- rial dilTerence between the two cases, that in the former the indorser and maker together gave the directions ; while in the latter case the indorser was not privy to the matter ; at least it is not stated that he knew any thing of it. And the ground taken in Pearson v. Bank of the Metropolis, supra, was that it was an agreement of all the parties. With respect to the place at which presentment should be made, it is not suf- ficient to charge an indorser that it was made in the street. When a bill is pay- able generally and not at a specified place, demand must be made at the place of business of the maker or acceptor, if he has one ; if not, at his residence. King v. Holmes, 11 Penn. State, 456. But it was held in this case that if the notary, on his way to the acceptor's place of business, meets him in the street and informs him of his business and where he is going, and the acceptor offers, if he will go to his 328 PRESENTMENT AND DEMAND FOR PAYMENT. place of business, to give bim only a cbeck on a broker, it is not necessary for the notary to proceed farther. The demand at the place of business is waived. In Sussex Bank v. Baldwin, sujna, the Court, Dayton, J., say that there is "no doubt where a person has an ofBce or known and settled place of business for the transaction of his moneyed cohcerns, whether he be a hanker, broker, merchant, manufacturer, mechanic, or dealer in any other waf^, a pre- sentment and demand at that place " as well as at his residence, will be^ffectual. " It must not, however, be a place selected and used temporarily for the transac- tion of some particular business, as settling up some old books or accounts mere- ly, but his regular and known place of business for the transaction of his moneyed concerns. The counting-room of a banker or merchant may be a proper place for a demand, though the manufactory or workshop would not. Yet if the manufacturer or mechanic have an office or known place of business for the pur- pose aforesaid, a good demand may be made there." In West V. Brown, 6 Ohio State, 542, it was contended that demand should have been made at the maker's residence, since he had no well-established place of business. But he had a room at which he received business calls, and where he directed them to be made. Demand was there made, and it was held sufficient, though the same office was occupied as a place of business by other persons. And if the maker or acceptor had neither place of business nor residence in the city in which the paper is payable, it is sufficient to charge an indorser or a drawer that the holder was there on the day of payment, ready to receive the money. Boot v. Franklin, 3 Johns. 207, Kent, C. J.; Mason v. Franklin, 3 Johns. 202 ; Maiden Bank v. Baldwin, 13 Gray, 154. See also Stivers v. Pren- tice, 3 B. Mon. 461 ; Deyraud v. Banks, 16 La. 461 ; Shamburgh v. Commagere, 10 Mart. La. 18. The result of the cases seems to be that if the maker or acceptor of paper payable' at no designated place has a regular place of business and an office, de- mand should there be made to charge the indorser, otherwise the demand should be made at his residence. Where the bill or note is payable at a particular bank or other place certain, in order to charge an indorser, " it is well settled, not only that the holder is not bound to present it to the promisor at any other place, but that a presentment at any other place would be unavailing." Per Shaw, C. J., in North Bank j;. Ab- bot, 13 Pick. 465. See also Bank of the United States v. Smith, 11 Wheat. 171; Watkins v. Crouch, 5 Leigh, 522; Shaw v. Reed, 12 Pick. 132; Bank of the United States v. Carneal, 2 Peters, 543. If the bank at which the paper is payable is owner of the same, all that " ought to be required is that the books of the bank should be examined, to ascertain that the maker had any funds in their hands ; and, if not, there was a default which gave to the holder a right to look to the indorser for payment." If the maker had any balance standing to his credit, "the bank would have a right to apply it to the payment of the note, and no default would be incurred by the maker, which would give aright of action against the indorser." Per Thompson, J., in Bank of the United States v. Smith, supra. See, to the same effect, Bank of South Carolina v. Flagg, 1 Hill (S. C), 177. But this is matter of defence, and need not be alleged in the declaration. State Bank v. Napier, 6 Humph. 270. A bill of exchange may be accepted payable at a particular place in the city CHICOPEE BANK V. PHILADELPHIA BANK. 329 or town in which the acceptor resides, though it be not his place of business. Troy City Bank v. Lauinati, 19 N. Y. (5 Smith) 477. But it cannot be made payable by the accejjtance in a city or town other than that of the acceptor's residence (the bill itself not stating such place of payment ?) so as to charge the drawer or inclorser by presentment at the place named in the acceptance. Niagara District Bank v. The Fairman, &c., Manufacturing Co., 31 Barlj. •403; Rowe v. Young. 2 Brod. & B. 165; Walker v. Bank of New York, 13 Barb. 636. But see Mason v. Franklin, 3 Johns. 202, in which the bill was drawn on a person in Liverpool, payable m London, and protested for non-acceptance and non-payment in the former place. Kent, C J., said: "We are of opinion that, as no place of payment in London was designated, the de- mand for payment and protest for non-payment were well made upon the draw- ees personally at Liverpool." It is said that, when the payor of comtnercial paper has become insolvent be- fore its maturity, and has abscondedyVo/n the State and gone into parts unknown, there must be a presentment and demand of payment at his last place of busi- ness or of residence, or due efforts should be made to find the one or the other, in order to charge the indorser. Grafton Bank v. Cox, 13 Gray, 503. But this statement does not seem to be strictly accurate ; and the learned judge perhaps had in mind the case of an ordinary removal by the payor into another juris- diction. It would seem from the language of the rule stated in lleid v. Morrison, 2 Watts & S. 401, that the party need not have left the State to dispense with presentment. Sergeant, J., says on p. 405: "The rule of law on this subject seems to be that, if the drawee has merely removed from his usual place of resi- dence to another in the same State or kingdom, it is incumbent on the holder to make every reasonable endeavor to find out whether he has removed, and, in case he succeed in such attempt, to present the note or bill for payment at that place. But if the drawee or maker has absconded, that circumstance will dis- pense with the necessity of making any further incjuiry after him," citing Chitty, Bills, 261 ; Bayley, 95; Duncan v. McCullough, 4 Serg. & R. 480. The connection of the two sentences indicates that the learned judge regard- ed as immaterial the place to which the payor had absconded ; whether he had left the State or not. At any rate, it seems highly probable that if he had thought that there was such a distinction, he would have mentioned it. And there seems to be no solid ground for the distinction. An absconding debtor always endeavors to cover up his tracks, and usually succeeds in doing so ; and how can it be determined whether or no he has left the State ? Shall the holder wait in the probably vain endeavor to ascertain whether the payor has passed the jurisdiction, in order to determine whether he must make presentment at the debtor's last place of residence ? Such a requirement would be unreasonable, if not absurd. If the absconding is any excuse at all, it should be so without ref-. erence to the locality of the hiding-place, unless this is within the jurisdiction and the holder knows where it is. In such a case it would certainly be his duty to present the paper at the debtor's residence or place of business. But this is not the case stated in Grafton Bank v. Cox, supra. That case speaks of an ab- sconding " into parts unknown." This view is confirmed by Duncan v. McCullough, 4 Serg. & R. 480. 2'il<jhman, C. J., said : " If the plaintiff had proved that Adams had absconded 330 PRESENTMENT AND DEMAND FOR PAYMENT. and was not to be found wlien the note fell due, a demand of payment would have been dispensed with, because it would have been impossible to make it." There was evidence that Adams had been seen in the State, and none that he had left the State. And Lehman v. Jones, 1 Watts & S. 12G, directly decides the point that presentment in such case need not be made at the payor's last abode. See also Foster v. Julien, 24 N. Y. (10 Smith) 28, 37 ; Ratcliflf v. Planters' Bank, 2 Sneed, 425, 555; Hale v. Burr, 12 Mass. 85, 89; Gist u. Lybrand, 3 Ohio, 307; Shaw v. Reed, 12 Pick. 132; Bruce v. Lytle, 13 Barb. 163; Edwards, Bills, 485-487, and note; 1 Parsons, Notes and Bills, 449, 450. But Pierce v. Cate, 12 Cush. 190, declares a more strict rule than that held in the early Massachusetts cases. It is there held that where the maker of a note absconds, leaving no visible property that may be attached, a want of demand or inquiry for liim is not thereby excused, though the indorser knew of the ab- sconding. Opinion by Shaw, C. J. It is not stated, however, in the report that this point was argued ; and It is said in 1 Parsons, Notes and Bills, 450, note, that " it is a fact personally known to us that this point was not argued, nor indeed raised by counsel in this case. The defence was based upon other grounds." See Story, Promissory Notes, §§ 205, 237 ; Chitty, Bills, 280, 330, 367. A very different question arises in the case of a mere removal by the payor into another jurisdiction ; but there is conflict upon the necessity of present- ment at the debtor's last abode, even in this case. The general rule is well settled that in such case the holder need not follow the maker or acceptor into another State ; but the question is, must he still make presentment at the payor's last place of residence ? Wheeler v. Field, 6 Met. 290, Wilde, J., holds the affirmative. Gist v. Lybrand, 3 Ohio 308, and Foster v. Julien, 24 N. Y. (10 Smith) 28, Mason, J., dissenting, held the negative. Reid v. Morrison, supra, says that the rule which applies in the case of an absconding debtor, applies equally in the case of the removal of the payor into another State. M'Gruder v. Bank of W^ashington, 9 Wheat. 598, merely decides that in case of such removal, presentment at the maker's last abode is sufficient ; but it does not hold that it is necessary. That point was not involved in the case. In 3 Kent, Com, 96, the rule is stated in the same way. It is there said: " If he [the payor] has removed out of the State, subsequent to the making of or accepting the bill, it is sufficient to present the same at his former place of residence." The reason of requiring presentment at the payor's last residence, is probably that he may have provided and left funds there for the payment of the paper ; which is indeed a strong argument for the recjuirement, and seems sufficient to decide the question in the case of an honest removal. It wholly fails, however, in the case of an absconding debtor ; such a person is not apt to leave funds with which to pay his debts. See note to M'Gruder v. Bank of Washington, post. WHEELER V. GUILD. 331 PAYMENT. [The subject to be illustnited here, in regular course, is the extinguishment of a bill or note by payment. Commercial jiaper received in payment of debt will be considered under Bank Bills, post ; and the effect of releases, extension of time, &c., will be considered under Dis- CHAKGING InDORSEH, pvst.'\ John Wheeler v. Albert H. Guild et al. (20 Pickering, 5-15. Supreme Court of Massachusetts, October, 1838.) Payment to one not authorized to receive it and before maturity. — The plaintiflF, holder of a note indorsed in blank, delivered it to B. and G., attorneys in partnership, to be held by them as collateral security for the payment of certain debts due from the plaintiff" to B. and G., and other persons ; and the note was placed among the pri- vate papers of G., by whom the business was transacted. Some time after pay- ment of the debts so secured, but before the maturity of the note, the maker paid to B. the amount due on the note, exclusive of interest, and took therefor a receipt signed by B. alone, setting forth that it was in full payment of the note, and that the note was to be delivered up to the maker. Held, that as the note was not in fact delivered up to the maker, and as the right of B. and G. to transfer or collect the note had ceased upon payment of the debts for which it was pledged, and as the note was paid before maturity, the payment to B. did not operate as a dis- charge of the note ; and that the plaintiff' might, notwithstanding such payment, recover the amount from the maker. The case is stated in the opinion of the Court. Shaw, C. J. The facts of this case present a very important question for the consideration of the Court. Whatever affects the negotiability, and the free currency of promissory notes and bills of exchange, is of the utmost importance to a mercantile commu- nity, the business of which is to a great extent transacted tlirough the medium of these instruments. . The facts which may be deemed material are these. The plain- tiff became the holder of the note in question by regular indorse- ment for valuable consideration* soon after it was made, being a note dated September 1, 1833, payable in three years, with interest, 332 PAYMENT. and the last indorsement bein*? in blank. Witbin a year from the date of the note, to wit, in March, 1834, the plaintiff, John Wheeler, as surety, joined with Daniel G. Wheeler in three promissory notes, one to Brigham and Goodrich, attorneys and partners, in Worces- ter, one to Tappan & Co., and one to Stewart & Co., of New York, for both of wiiicb parties Brigham and Goodrich were agents and attorneys. On that occasion, the plaintiff, John Wheeler, delivered to Brigham and Goodrich, as collateral security to his three joint and several promises, the note in question, indorsed in blank, and took their receipt, specifying that it was so received, and to be by them held, as collateral security for the payment of those notes. In September, 1885, these three notes had been fully paid. Though Brigham and Goodrich were in partnership as attorneys-at-law, yet Brigham was engaged in much other business, and had many separate negotiations, and the business in question had been done in the partnership name, but in fact by Goodrich. In Decem- ber, 1835, the plaintiff applied to Goodrich for the note, who then produced and exhibited it from a file of private papers, where it had been kept by him, and he would then have given it up to the plaintiff, but the plaintiff had not his receipt with him, to exchange for it. In the mean time, before this application of the plaintiff to Goodrich, viz., on the twenty-eighth of November, 1835, Brigham had received of Stafford, one of the firm of A. H. Guild & Co., and one of the defendants, $500 to pay the note in question, describing it as a note payable in September, 1836, and gave him a receipt, in his separate name, signed D. T. Brigham, stating that the $500 had been received in full payment of the note, and the note to be delivered up to Stafford. Soon after the application of the plaintiff to Goodrich above stated, viz., about the twenty-fourth of December, Stafford, one of the defendants, producing Brigham's receipt, applied to Goodrich for the note, who declined giving it, on the ground that Brigham had no right to receive pay for, and discharge the note, and by mutual consent it was placed in the custody of a gentleman, for the use of the party having the better title to it, by whom it was produced in this Court on the trial. Some inferences are to be drawn from this evidence, which may have a bearing on the case ; but we think they are plainly deducible from the circumstances stated, and they are these : that Goodrich did not assent to the payment received by Brigham, and did not in fact know of it till after he had been applied to by the plaintiff for WHEELER V. GUILD. 333 the note ; that Goodrich liad the actual j)ossession and custody of the note, and that at the time that Brighani received the money and gave the receipt, lie not only did not produce or exhibit the note, but that he had not the actual custody of it, nor was it so amongst the partnership papers, as that it was in the actual joint custody of the parties as partners. If he had it in his possession, or had regular access to it, in the ordinary way of business, there is no reason why he did not deliver it up to Stafford, instead of giving him a receipt, and a ])romise to deliver it. The law in regard to bills of exchange and promissory notes is so framed as to give confidence and security to those who receive them for valuable consideration, in tiie ordinary course of business, when payable to bearer or indorsed in blank, sp as to be transfer- al)le by delivery ; and in general a party taking such a bill under such circumstances, has only to look to the credit of the parties to it, and the regularity and genuineness of the signatures and indorsements. So that if such a bill or note be made without con- sideration, or be lost or stolen, and afterwards be negotiated to one having no knowledge of these facts, for a valuable consideration and in the usual course of business, his title is good and he shall be entitled to receive the amount. Miller v. Race, 1 Burr. 452; Pea- cock V. Rhodes, 2 Doug. 633 ; Grant v. Vaughan, 3 Burr. 1516. The credit which the law thus attributes to notes and bills of exchange which are transferable by delivery, arises mainly from the conlideiice inspired by the actual custody and possession, and the actual delivery of the security upon such negotiation. To so great an extent is this principle carried, that in regard to bank- notes, and in most respects in regard to all other bills and notes transferable by delivery, the title and the possession are con- sidered to be inseparable. And it will be presumed that the party thus in possession of a bill holds it for value, until the contrary appears ; and the burden of proof is on the party impeaching his title. Collins v. Martin, 1 Bos. & Pul. 648. But these rules are aih)pted with this limitation, that the party thus taking the note or bill docs it in the ordinary course of trade, when not overdue or otherwise dishonored by any thing ajjparent upon the face of it, and without notice that it had been lost or stolen, or that the holder had obtained it wrongfully, or iiad no just right to receive it in the way of IJusiness. Paterson v. Hardacre, 4 Taunt. 114. If one takes a note or bill with actual notice that it 334 PAYMENT. has been lost by the owner, he cannot hold it against the true owner. Lovcll v. Martin, 4 Taunt. 799. It has been argued that where a party has a legal title by indorse- ment and delivery, and the actual possession of the bill or note, although he holds without any just right to negotiate or collect it, still as he has a legal title, a transfer from him will vest a legal title in another, and authorize such other to take for his own use. But this consequence, we think, does not follow. The true ground is expressed by Eyre^ C. J., in the case above cited, Collins v. Mar- tin. He says, " for the purpose of rendering bills of exchange negotiable, the right of property passes with the bills themselves. The property and the possession are inseparable. This was neces- sary to make them negotiable, and in this respect they differ essen- tially from goods." In another part of his judgment, in assigning the reason why a person thus having a legal title may not enforce the collection of the bill, whether he has given value for it or not, he says : " If it can be proved that the holder gave no value for the bill, then he is in privity with the first holder, and will be affected by every thing that affects the first. This all proceeds upon an argumentum ad hominem. It is saying, you have the title, but you shall not be heard in a court of justice to enforce it against good faith and conscience." The same reasoning applies to other cases, where a party has the custody of a bill, without any just right or lawful authority to collect or negotiate it, as where it has been lost or stolen, or embezzled from the true owner, or intrusted to an agent, for a special purpose only ; if these facts are known to the party receiving it, he is in privity with the party from whom he receives it, and cannot be heard in a court of justice, though having a legal title to enforce an inequitable and unjust demand. Such a case is not within the reason of the rule, which is designed only to protect bills and notes, when taken in good faith, in the course of business. If a note is paid, not in the usual course of business, or to a person having the custody, but not authorized to receive pay- ment, and that known to the party paying, though the note be given up, it is no discharge against the true owner. Kingman v. Pierce, 17 Mass. 247. So payment of a bill or check, before it is due, will not be a dis- charge unless made to the real proprietor of it ; and therefore where a banker, contrary to usage, paid a check the day before it bore date, which had been lost by the payee, it was held that he was Ha- "WHEELER V. GUILD. 335 ble to repay the amount to the person losing it. Da Silva v. Fuller, Sel. Cas. 238, cited in Chitty, Bills (0th Eng. ed.) 148. In this case, although the holder had the legal title arising from the pos- session of the check; yet he was not boyia fide the holder with authority to collect, and as the banker paid it out of the usual course of business, he paid it at the risk of being obliged to pay it again, if the party presenting it had not just right to receive it. Most of the same principles and reasons apply alike to trans- fers and to payments. We think the rules dcducible from the cases are these : where a party takes a bill transferable by deliv- ery, not overdue nor otherwise apparently dishonored, for valuable consideration, in the usual course of business, and without notice, actual or constructive, that the holder came by it unlawfully or without title, and has no just right to collect and receive it, the party taking it shall hold it as a valid security, notwithstanding that it has been lost by the true owner, or stolen from him, or taken by the holder as a mere agent to keep, or for other special purpose, without any authority to collect or transfer it, otherwise he shall not be deemed to have a good title to hold and enforce payment of it, or to withhold the bill itself or the proceeds of it, from the party justly entitled. Bleaden v. Charles, 7 Bing. '246. The same rule applies to payments ; if a bill be paid at maturity, in full, by the acceptor, or other party liable, to a person having a legal title in himself by indorsement, and having the custody and possession of the bill ready to surrender, and the party paying has no notice of any defect of title or authority to receive, the payment will be good. But in both cases faith is given to the holder, mainly on the ground of his possession of the bill, ready to be surrendered or delivered, and the actual surren- der and delivery of it upon the payment or transfer. If, there- fore, upon such payment, the holder has not the actual possession of the bill ready to be delivered, and does not in fact surrender it, but gives a receipt or other evidence of the payment ; and if it turns out that the party thus receiving, had not a good right and lawful authority to receive and collect the money, but that another person had such right, the payment will not discharge the party paying, but will be a payment in his own wron^ ; he must pay the bill again to the right owner, and must seek his redress against the party receiving his money, on the pretence that he had a right to receive it as the holder of the bill, when in fact he had no such right. 336 PAYMENT. Applying these principles to the present case, the Court are of opinion, that the payment made by Stafford to Brigham, under the circumstances, did not operate as a payment and discharge of thig note, and that the plaintiff is entitled to recover. The plaintiff was the holder of this note by indorsement, before it was pledged to Brigham and Goodrich, and had the complete legal and equitable title to it, and the whole beneficial interest in it. Being transferable by delivery, when transferred to Brigham and Goodrich, they took the legal title, with a right to collect it, and apply the proceeds to the payment of the notes, for the secu- rity of which it was pledged, if they should not be otherwise paid. But when those notes were paid, all right of Brigham and Good- rich to transfer or collect it ceased, and they had the mere naked possession of it for the plaintiff, to be surrendered on demand. Now whatever might have been the effect of an actual surrender and delivery of this note to one of the promisors, on receiving payment, it is very clear that, according to all the rules applicable to this subject, without surrendering and delivering up the note, the payment must be considered as made at the risk of the party paying ; and as the party receiving in fact had no right to receive payment, such payment and receipt did not discharge the note, as against the true owner. It is not necessary to consider whether Brigham was acting in his partnership capacity or not ; because after the purpose was accomplished, for which the note was pledged to the partners, they had no just right or lawful authority to transfer or collect the note, as against the plaintiff. If they had jointly transferred it in the due course of business, although their transfer without notice might have held it, it would be in virtue of the law which protects such transfers to a party without notice, in order to give effect to the currency of bills and notes, and not because Brigham and Goodrich had any right or lawful authority. If therefore they had given a transfer in writing with a promise to deliver the note, not delivering or producing it, no title would have passed as against the plaintiff, because such transfer without delivery would not be within the reason or prin- ciple of the rule. But we think the other point is equally decisive. Brigham not only did not produce or exhibit the note, but he had not the actual custody or possession of it. He did not profess to act for the partnership, but signed the receipt in his own name. . Had Brig- WHEELER V. GUILD. 337 ham and Goodrich, as partners, been the true holders of the note, or if they had had a Joint authority to collect it, it iflay well be j^dmittcd, that the act of one or the receipt of one would Ijind both. But all the right and autliority which they ever had over the note, except to give it back to the plaintiff, agreeably to tlicir contract, had ceased. A rcccij)t of one therefore in his own name and not purporting to be for the use of both, was not within tiie scope of the partnership autliority, and did not bind his partner. The de- fendant Stafford gave credit to Brigham only. For though his receipt purports to be, not merely executory, but a present dis- charge of the note, yet as he had no authority to discharge it, either by himself, or for himself and partner, and as he had not the note to surrender and give up, the legal effect and operation of his receipt was, an executory undertaking, that he would procure a discharge of the note and surrender it. The consequence is, that Stafford paid his money to the wrong person, and must look to him for an indemnity. Besides, the note was not paid in the due course of business. It was paid many months before it was due ; the full sum was not paid, there being more than two years' interest due on the notes, wliich was wholly relinquished ; no notice was given to Goodrich, the partner who transacted the business of taking these notes, and giving the receipt for them, and who had the actual custody of this note, all of which would be strong evidence to go to a jury, to establish the fact of constructive notice to Stafford, that Brig- ham had no right, either in his own name or as a partner with Goodrich, to receive payment of, or to discharge tliis note. But the other grounds are sufficient, without relying upon these circum- stances. The grounds upon which the Court place their judgment are these : The plaintiff had once a good title to the note. It was delivered to Brigham and Goodrich, for a special purpose, which was accomplished^ After that, Brigham and Goodrich liad a mere naked custody of the note for the plaintiff and had no rigbt or lawful authority either to negotiate or collect it ; a fordori, Brigham alone had no such authority. The defendant Stafford was not lawfully called upon to pay Brigham, as having the posses- sion and custody with a, prima facie title, because he had no such custody or possession, and the note was not due. StatTord was not deceived into. taking the note by the production and delivery of it, 22 338 PAYMENT. because it was not delivered or produced ; if he paid it therefore to BrighanV, without having [taken] up his note, he did it on the faith that Brighani iiad good right to receive ])ayment and discharge it, and of course under the liability to pay it over again to the right- ful proprietor if Brigham had not such right. In fact and law, Brighani had no such right, but the plaintiff was at the time the rightful proprietor, and of course the defendants obtained no dis- charge by such payment, but upon the maturity of the note they were bound to pay it to the plaintiff. The note having been put by Mr. Goodrich into the hands of a common friend, for the use of the party entitled, and the plaintiff having shown himself entitled, the note was rightly brought in by the person to whom it was thus intrusted, as evidence for the plaintiff. Judgment for plaintiff. The rule then is, in the case of negotiable paper, that the promisor is not dis- charged, ^?'6-^, if he pays to one not entitled to receive payment; or, secondly, if he pays before the maturity of the paper, unless payment is thus made to the real holder and the paper surrendered, or unless the indorsee was informed of the payment before he took the paper. See White v. Kibling, 11 Johns. 128; Hortsman v. Henshaw, ante, p. 57, and note; Dod v. Edwards, infra. The learned judge who delivered the opinion seems to lay considerable stress upon the circumstance that the note was not surrendered to the maker when he made the payuient to the agent ; but this was, perhaps, to show more clearly the want of authority in the latter to grant a discharge, and not that the delivery of the note would have aided the plaintilf 's case. The other objection, that the pay- ment was made before maturity, would still have been in the way. See Eckert V. Cameron, 43 Penn. State, 120; De Silva v. Fuller, Chitty, Bills, 392; Gris- wold V. Davis, 31 Vt. 390; Morley v. Culverwell, 7 Mees. & W. 174; Burridge V. Manners, 3 Camp. 193; Story, Bills of Exchange, § 417. So it is no defence to an action by an indorsee against the acceptor of a bill, that the drawer, who had made the bill payable to his own order, had given the acceptor a general release before his own indorsement, unless it is shown that the indorsee knew of the release. Dod v. Edwards, 2 Car. & P. 602, per Lord Tenterden. It is held that, in an action against the acceptor, evidence is admissible to show that the person who indorsed the bill in question as payee was not the real payee, though he had the same name. Mead v. Young, 4 T. R. 28. In this case, Ashurst, J., said: " In order to derive a legal title to a bill of exchange, it is necessary [for the holder] to prove the handwriting of the payee ; and there- fore, though the bill may come by mistake into the hands of another person, though of the same name with the payee, yet his indorsement will not confer a title." Buller, J., said: "lam of opinion that it is incumbent on a plaintiff who sues on a bill of exchange to prove the indorsement of the person to whom it is really payable. Here it is clear that the indorsement was not made by the WIIRRLER V. GUILD. 339 sariK! II. Davis to whom tlie hill was payabk-, and no indorsemotit by any other pirsoM will give any title whatever.'" • A creditor, residing in Mendota, 111., requested his debtor, residing in New York, to send him the amount of his debt " in a check on the Marine IJank of Chicago, or any other way that is safe." The bill was drawn payable to the order of the creditor, without any further description, either by stating his resi- dence, or otherwise designating him. By a mistake of the debtor, the bill was directed to La Salle, 111., instead of to Mendota, at which place there resided a person of the same name as that of the creditor, the payee of the bill. The mistake, however, was corrected, and the letter sent to Mendota ; but it was de- livered to this other person instead of to the creditor. He sold the draft to one who had no notice of the facts, and itVas paid in the usual and regular course of business. The creditor after this payment assigned his interest to the plain- till", who sued the acceptors in trover; and the Court held him entitled to recover; Roostvelt, J., dissenting. Selden, and Strong, JJ., expressed no opinion. Graves v. American Exchange Bank, 17 N. Y. (3 Smith) 205. Mr. Justice Roosevelt, in his dissenting opinion, said: "The payee had no desig- nation but his name ; none at all events was given by the drawer. The bank in good faith paid the draft to a person presenting it with the indorsement of Charles F. Graves, a genuine indorsement, but not the indorsement, it is said, of the genuine Graves. Which of the two, under these circumstances, should bear the loss ; the drawer who carelessly omitted all designation, or the drawee who innocently paid the wrong person in consequence of such omission ? As between these parties, the loss, it seems to me, should fall on the former. Nor do I perceive that the payee, the qnaai assignee of the drawer, occupies any better position than his assignor. Hurd was his debtor, and bought the draft to remit in payment of the debt. Ilurd directed the form. He did nothing to sup- I)ly the drawer's omission, but aggravated the error by another of his own ; he mailed the.draft to Charles F. Graves, La Salle, 111., intending it, he says, for Charles F. Graves, Mendota, 111., the two places being only fifteen miles apart. ... He thus by his own act put the draft into the hands of the La Salle Graves, and held out the La Salle Graves as the real payee. Can he complain, then, that the Exchange Bank recognized his indorsement? Must they pay twice because he, after ' full warning' as he ailmits, chose to be careless of his own interests ? *' If the drawer put a bill into circulation bearing a forged indorsement of the payee, and the acceptor pay the same to a honajide holder, he cannot, on discov- ering the Ibrgery, recover the sum paid. He must pay the bill twice. See Ilortsuian v. Ilenshaw, ante, p. 57, and note. The rule in the principal case as to the time of payment, relates of course to negotiable paper. In the case of unnegotiable bills or notes, payment may be made before maturity ; for here there can be no party not affected with notice as in the case of an innocent indorsee of negotiable paper. The assignee of un- negotiable paper stands oidy on the rights of the assignor and payee ; and as the defence of payment can always be raised between the original parties, so it can be raised against the assignee in this case. Story, Bills of Exchange, §§ GO, 199, 201, and cases cited. See Whistler v. Forster, 14 Com. B. (n. 8.) 2-4G. See following cases. 340 • PAYMENT. SwoPE et al. V. Ross et al. (40 Pennsylvania State, 186. Supreme Court, 1861.) Paper not accepted discounted hy drawee before maturity. — The drawee of a bill not ac- cepted by him may discount the same before maturity and thus become holder of the paper. Sucli proceeding is not a payment, and the drawee can recover against the drawer at the maturity of the paper, upon taking the usual proceedings to charge him. Assumpsit between George Ross & Co., plaintiffs, and Swope and Karns, in which the following case was stated for the opinion of the Court in the nature of a special verdict. Ross Forward gave to Swope and Karns the following instru- ment of writing : — " Somerset, Pa., August 18, 1859. " George Ross & Co., bankers, pay to Swope and Karns, or order, ninety days from date, six hundred and sixteen dollars. " Ross Forward." On or about the first of September thereafter, Swope, one of the firm of Swope and Karns, delivered this paper, (indorsed Swope and Karns) to the plaintiffs' bank, had the same dis- counted, and received the money thereon, less the discount, $16.40. At the time this check was given, and wlien it was discounted at the bank, Ross Forward was one of the firm of George Ross & Co., but went out on the nineteenth of September, 1859. Wlien the day of payment named in the check came round. Forward had no funds in the bank, and the paper was regularly protested for non-payment on the nineteenth of November, 1859. If the Court be of the opinion that on the above state of facts, ihe plaintiffs are entitled to recover, the judgment to be entered in favor of plaintiffs for 8616, with interest from November 19, 1859 ; otherwise judgment for defendant with costs. Notice of dishonor of the bill was admitted in the argument. The Court below entered judgment for plaintiffs for $616, with interest from November 19, 1859. SWOPE V. ROSS. ■ 341 The defendants thereupon sued out t\\h writ, and assigned tlie entry of judgment for plaintiffs for error. Strong, J. The question presented l>y the case stated is (juite novel, and we liave not been able to find that it has been adjudi- cated. Undoubtedly the acceptor of a bill of exchange is the principal delator, and the drawer and indorsers are l)ut sureties. Of course the acceptor, even after ])ayinent, cannot sue either the drawer or indorscr of the bill unless his acceptance was supra protest. His payment of the bill extinguishes it, but tlie case stated finds that the plaintiffs discounted the bill for the payees before it became payal»lc, not that they accepted it or paid it. Discounting a bill, though it be done by the drawee, is neither acceptance nor payment: Acceptance is an engagement to pay the bill according to its tenor and effect when it becomes due, not be- fore. A l)ill is paid only when there is an intention to discharge and satisfy it. In Burbridge v. Manners, 3 Camp. 194, Lord EUenhoroiujIi said " that even payment of a l)ill before it became due, does not extinguish it any more than if it were merely dis- counted," and added that " payment means payment in due course and not by anticipation." His lordship evidently thought that discounting a bill by a drawee is neither payment nor extinguish- ment. In Attenborough v. McKenzie, in the English Court of Exchequer, 36 Eng. L. <fe Eq. 562, it was held that if the ac- ceptor of a bill discounts it, he may reissue it so as to charge the drawer ; that nothing will discharge the drawer but payment ; i. e., payment when due, or payment for the purpose of discharging and satisfying the bill. Therefore, if the acceptor discounts the bill for the drawer and then indorses it away, the drawer will be liable upon it to the holder, and the transfer by the drawer to the acceptor will operate as an indorsement, although, at the time, the drawer does not intend to transfer by way of indorsement, being under the impression that the bill is discharged by coming into tiie hands of the acceptor. Nor will the payment of the amount less the discount, be deemed a payment of the bill by the acceptor. In that case the holder of the bill took it by indorsement after it was due, from the transferee of the acceptor. The ruling goes to the length that even the accepting drawee of a bill may take it as an indorsee, and as such may issue it. It also decides that he does take it as an indorsee when he discounts it. Can then the drawee 342 PAYMENT. of a bill, payable on time, who has discounted it, maintain an action on it against the drawer or indorser if it be protested for non-payment and notice be given ? He is not a party to the bill until he has accepted it. Until then, he has not assumed the position of principal debtor, nor undertaken any obligation in re- gard to it. His discounting has neither paid nor extinguished it, and it is not a promise to pa yaccording to its tenor and effect. Is he precluded from becoming an indorser by the fact that the bill was directed to him ? It seems well settled that the drawee of a bill may accept or pay it, swpra protest, for honor of the drawer or indorser, and if he takes it up he stands in the position of an indorsee paying full value for it, has the same remedies to which an indorsee would be entitled against all prior parties, and can of course sue the drawer or indorser.- Chitty, Bills, 375. In such cases the fact that the bill was drawn upon him does not inca- pacitate him from acquiring the rights of an indorsee. No reason is apparent for a different rule where the drawee becomes the holder by discounting the bill before its dishonor. Uncertain whether the drawer will put funds into his hands to meet the bill at maturity, he may well refuse to accept, and yet may discount it on the credit of botli the drawer and indorser. If he does not accept he is as much a stranger to it as any other person dis- counting it for the drawer or indorser ; is but purchasing the con- tract, and the contract thus purchased is that the drawee will pay the bill on presentment, when it shall fall due, or in case of his failing to do so, that the parties whose names are already upon it will pay, if due notice of its dishonor be given to them. The promise is made by the parties to the bill. The purchaser enters into no engagement. These views accord with the doctrine laid down in Desha Sheppard <fe Co. v. Stewart, 6 Ala. 852, a case which more closely resembles the present than any we have been able to find. In it the Supreme Court of that State ruled that the drawees of a bill may sue the drawer or indorsers after it has been dishonored, even though they obtained the bill before its dishonor ; and that until acceptance they are strangers to the bill, and may acquire riglits to it, and stand in the same condition as any other holder.. It was said that tliere is no legal presumption if the drawee comes into possession of the bill previous to its dishonor, that he takes it with the obligation to accept. EASTMAN V. PLUMER. 343 Such being in our opinion the law, it was not error that the Court of Common Pleas gave judgment for the plaintiff upon the case stated. Tiie fact is not distinctly found that notice of dis- honor of the l)ill was duly given to the defendants, but it was conceded on tiie argument that such was the fact, and tbat such is the meaning of the case stated. The judgment is affirmed. So where the maker of an indorsed note offers it for discount before maturity, this is not notice to the purchaser of payment. Eckert v. Cameron, 43 Penn. State, \'10, citing the same authorities as those referred to in the principal case. But if the paper comes into the possession of one o( the parties liable to pay it, after it has been negotiated, such possession is prima J'acie evidence of pay- ment. McGee v. Prouty, 9 Met. 547 ; Dugan v. United States, 3 Wheat. 172. See also Fisher v. Marvin, 47 Barb. 159. See also upon the subjects discussed in the princi[)al case, 2 Parsons, Notes and Bills, 455, 456, and cases cited. Eastman v. Plumer. (32 New Hampshire, 238. Supreme Court, December, 1855.) Wrongiful payment (>>/ principal debtor. Effect as to surety. — Tlie defendant signed a negotiable note as surety for the principal maker. Tlie note was indorsed in blank, and the indorsee called upon tlie principal debtor for payment. The latter brought the money, paid the amount, and received tlie note. In point of fact this money paid by the principal had been furnished by a third person, who sent it to purchase the jiaper through the principal as his agent, though this fact was unknown to the holder. This third person, the owner of the money, brought an action on the note against the defendant, the surety. Held, that the payment by the principal discharged the paper as to the surety, and that the action could not • be maintained. Assumpsit upon a promissory note, payable to order, and in- dorsed in blank. Defence, payment. The defendant, a surety, proved that the note had been paid to the indorsee of the payee by the principal maker, and the note delivered to bini. The plaintiff then proved that the j)rincipal debtor had received the money from himself, under an arrangement not connnunicated to the holder, Ijv which the plaintiff was to become purchaser of the note ; that, on pay- ment of the money to the holder, the principal received the paper 344 PAYMENT. and delivered it to the plaintiff; and that he had acted in the matter as the plaintiff's agent. Perley, C. J. The defendant signed the note in question as surety for Young, the other maker ; the note was indorsed in blank by Roby, the payee, and the indorsee and holder called on Young, the principal, for payment. Young came with the money, paid it over to the holder, and took the note. The holder called for pay- ment of the party primarily bound to pay, and received of him the amount of the note, as and for payment, without notice of any interest that a third person had in the money paid. The holder therefore made no contract to transfer the note. Tlie contract of the defendant was to pay the note to Roby, the payee, or his order. By his indorsement in blank, Roby ordered the note .to be paid to the indorsee, or to such other person as should become the holder of the note by transfer of the note from Roby. But the holder under Roby's indorsement has made no transfer of the note as an existing security. He has received the amount due on the note from the principal debtor, and given up the note to him, as paid and discharged. Looking at the case, then, as a mere matter of contract, according to his original undertaking on the note, the defendant has not bound himself to pay it to this plaintiff, because Roby, the payee, has never ordered the contents to be paid to him. The holder of the note was not bound to assign it. He might insist that the note should be paid and discharged before he deliv- ered it out of his hand. If he transferred the note by delivery merely, though he would not be liable as indorser, his assignment would still be a contract involving certain liabilities on his part. He would, for instance, be held to warrant that the note was gen- uine. Story, Bills, 118. In this case there was no assignment of the note, in any proper sense of those terms, by the holder to this plaintiff, and the de- fendant made no contract to pay, except to the payee, or an as- signee under him. This has little resemblance to the case where the surety pays a debt and the law subrogates him to the securities which the cred- itor holds from the principal debtor ; or to the case of one inter- ested in a mortgage, who discharges an incumbrance to protect his own interest, and holds a security on the mortgaged property for EASTMAN V. PLUMER. 345 the money he has advanced. In siicli cases, though the form of tlie transaction is payment, and though it operates as payment, so far as to discharge the original debtor from any action on his contract to recover the money, the hiw keeps the security on foot to jjrotcct tlie erpiitahh} interests of the i)arty who has })aid hi» money under such circumstances. This defendant was surety, and was interested that the note should be ])aid by the princijial. The holder called on the princi- pal to pay, and he came with the money, paid it over, and the note waiS given up to him by the holder, with- the understanding on his part that it was paid and discharged. So far as the holder of the note and the surety had any information, the note was paid, and the surety was discharged, and had a right to rely on the transac- tion as a payment. But if the plaintilT can maintain this action, the surety might be called on to pay the debt at any time within six years after it fell due, in virtue of a secret arrangement between the plaintiff and the principal debtor, by which the principal would be ena])led to deceive his surety with every apj)carance of having paid the debt, and so relieved the surety from his liability. The manifest object of the arrangement with the plaintiff, as stated by the principal debtor, was to gain time, and defer payment longer than the holder of the note would allow, by getting the plaintiff to advance the money and wait for repayment. If the plaintiff intended to resort to the surety for payment, the arrange- ment was unfair towards him ; and if the bargain had been positive to wait on the principal for a defuiite time, it would have discharged the surety, without regard to any other defence. On this case we think there was no sucli transfer of the note to the plaintiff as would give him a right of action on it against this defendant, and that as to him it must be regarded as paid and discharged. According to the agreement of the parties, the verdict must be set aside, and judgment entered for the defendant. With respect to the kindred .subject of payment by the drawer or indorser, there seems to be some confusion among the cases ; but it is believed that tlie confusion has arisen from not carefully distinguishing between ordinary and accommodation paper. It is plain that in the case of accommodation paper, the party accommodatccL is the real and ultimate debtor; and in sound reason pay- ment by him should discharge the paper. See Lazarus v. Cowic, o Q. 15. 459. But in tile case of ordinary commercial paper, the maker or acceptor is the real 346 PAYMENT. debtor, and he alone as it should seem ean give a valid discharge. Mechanics' Bank V. Hazard, 13 Johns. 353. Cresswell, J., in Jones v. Broadhurst, 9 Com. B. 173, discusses this subject in an able manner, both on principle and authority. In delivering the opinion of the Court he said : — " The declaration in this case charges the defendant as the acceptor of a bill of exchange fur £49, drawn by W. & C. Cook, payable to their order at three months alter date, and indorsed by the drawers to the plaintiffs ; and, among other pleas not material to be noticed on the present occasion, the defendant by his fourth plea alleged that, after the indorsement of the bill of exchange to the plaintiffs, and before the commencement of the action, the drawers of the bill had delivered to the plaintiffs, and the plaintiffs had accepted, divers goods of the value of £oO in full satisfaction and discharge of the said bill of exchange, and all damages and causes of action in respect thereof; and that the plaintiffs, from the time of the said satisfaction of the said bill of exchange to the time of the pleading of the plea, had always held the same against the will and consent of the said drawers, and so still held the same ; and that the plaintiffs commenced this action, and still prosecuted the same, against and in opposition to the will and consent of the said drawers. To this plea the plaintiffs replied de injuria ; and a verdict was found for the defendant upon the trial of the issue joined on that plea. A rule has since been obtained by the plaintiffs, calling upon the defendant to show cause why judgment should not be entered for them non obstante veredicto, in respect of the insufficiency of that plea. Upon this record the bill of exchange must be taken to have been accepted upon a good consideration. The interest of the acceptor, therefore, is not lia- ble to be affected by the state of accounts or equities between any other parties connected with the bill ; and the only question in which he has any interest is, whether the party seeking to enforce payment by him is the legal owner of the bill, and whether recovery by and payment to such party will enure as a satisfac- tion and absolute discharge of his liability upon the bill. By the indorsement averred in this declaration, and not traversed, the plaintiffs became the legal owners of the bill ; and the recovery of the amount thereof will have the effect of discharging the defendant from all future liability. The plea does not allege whether such satisfaction was given and accepted before or after the bill became due ; nor is it averred to have been at the request, or for, or on behalf of the defendant, or in satisfaction of his liability upon the bill, or of the cause of ac- tion of the plaintiffs against him ; nor does it in any way connect the defendant with the transaction, or show any privity between him and the parties to the sat- isfaction given, except so far as such parties were the drawers of the bill, and the defendant was the acceptor. As the plea did not allege that the satisfaction was made at the request, or for or on behalf of the defendant, or in respect of the cause of action stated in the declaration, the defendant was not required to give any evidence to such effect, to entitle him to the verdict he obtained ; and therefore the verdict will not war- rant an intendment of any such facts, or of any other fact lending to extend the import of the plea as stated upoiH the record ; and the ([uestlon raised by the plea according to its terms is, whether satisfaction of a bill as between a drawer EASTMAN V. PLUMER. 347 or indorscr and an indorsco, made before or after the l)ill becomes duo, enures as a satisfaction on behalf of tlie acceptor, and operates to discharge him from liability to the indorsee. In support of the rule it was contended that the plea did not show sufficient matter to bar the plaintiffs from judgment, because the satisfaction therein ^et forth was not, as before stated, averred to have been made at the request, or for or on behalf of the defendant, or for or in respect of the cause of action de- clared upon ; and that no legal privity was shown between the parties who made satisfaction, and the defendant, and therefore the satisfaction made did not enure as a discharge of the defendant ; and that the satisfaction was made by parties who were under a personal liability upon the bill declared on, either absolute or contingent ; and that the plea imports that the satisfaction made by them re- ferred and was limited to their own pers(jnal liability, and was not shown to have extended beyond; and that the satisfaction to the indorsee of a bill made by the drawer or indorser did not, as a legal consequence, enure as a satisfaction of the bill (pioad the acceptor or any other person other than those who, if called upon by the indorsee to pay the bill, would have a remedy over against the party who made the satisfaction, and thereby subjecting such party to a lia- bility to make double satisfaction. It was also insisted that the plea did not show any legal privity between the drawers who made the satisfaction and the defendant ; and that the plea, there- fore, at most amounted to a plea of satisfaction made by a stranger, and, as such, could not be pleaded in bar against the plaintiffs. On the part of the defendant, it was contended, upon showing cause, that, upon principal and authority, satisfaction made by the drawer of a bill to an in- dorsee, eiuired by law as a satisfaction by or on behalf of the acceptor, and might therefore be pleaded in bar to any action afterwards brought by the indorsee against the acceptor ; and that the drawer and acceptor's being parties to the same bill was a sufficient legal privity to make satisfaction by the drawer enure as a discharge of the acceptor, as against the indorsee who received the satisfaction ; and further, it was contended that it was competent to any one to plead in bar satisfaction, even by a stranger, for the cause of action sued upon, which had been accepted by the plaintiffs. The case was very elaborately argued, and many authorities were referred to on both sides. The Court has examined all the authorities referred to, and con- sidered the case, and in the result is of opinion that the plea, as proved and sus- tained by the verdict, does not show sufficient matter to bar the plaintiffs, and that the rule to enter judgment for the jjlaintiffs non obstante veredicto, must be made absolute. In considering the case upon principle, it will be proper to advert to the legal relation in which the respective parties stand towards each other, upon the effect of whose acts and rights the determination of the rule must depend. It is to be observed that the drawers and acceptor are parties to the same instru- ment as contractors with each other, and not as joint contractors with a thtfd person; and that, by the indorsement of the bill, independent and different con- tracts arise on the respective, parts of the drawers and the acceptor, with the indorsees. The acceptor is primarily and absolutely liable to jiay the bill, according to its tenor. The drawers are liable only upon the contingencies of 348 PAYMENT. the acceptor's or drawee's making default, and of the holder's performing certain conditions precedent, such as presenting the bill according to its tenor, and giv- ing due notice of the failure of the acceptor or drawee to pay upon a proper presentment. The contracts created by the bill, as regards the drawers and the acceptor, are therefore essentially distinct ; and thei'e seems to be no legal ground why the indorsee of a bill may not accept satisfaction of the contingent or absolute lia- bility of the drawer, without, by so doing, discharging the acceptor. The competency of an acceptor to pay may be doubtful ; and no valid reason is apparent why the indorsee may not release and discharge the drawer or an indorser by competent legal means, either upon consideration more or less valu- able, or without, and retain his remedies against the acceptor ; unless in the case of an accommodation bill, in which case the acceptor is a mere surety as between him and the drawer, and entitled to recover against the drawer whatever he may be compelled to pay in discharge of his suretyship. In such a case, where an indorsee who has received satisfaction from the drawer with notice sues the accept- or, a different question may arise ; but upon the record in this case' the bill must be taken to have been a bill accepted for value, and which the acceptor therefore ought, in all events, to pay ; and, having received value, it is difficult to discover any valid reason why he should be discharged from his liability to make the pay- ment, which for value he has contracted to make, by reason of any arrangements between others to which he is no party, in which he is not shown to have inter- fered, or his rights and liabilities are not shown to have been in the contempla- tion of the parties to any such arrangements, and by which his interests are not in any respect compromised or affected. By the indorsement of a bill, the indorsee becomes the legal owner of it ; and satisfaction of the contingent or absolute liability of the drawer, or of an indors- er, does not necessarily vacate or avoid the effect of the indorsement, or destroy the title of the indorsee to the ownership of the bill. Payment of the bill by a drawer or an indorser may or may not, according to circumstances, entitle the party paying to the possession of the bill ; there may be a satisfaction of the bill between such parties, which may not entitle them to the possession of the bill. The plea in question has no statement to the effect that the drawers, by reason of the satisfaction made, were entitled to have the bill delivered up ; it only states that the plaintiffs hold the bill against the will and consent of the drawers, which is by no means equivalent to a statement that they were entitled to have the bill delivered to them. The plea does not aver that the value of the goods delivered in satisfaction was equal to the amount of the bill ; and it is consistent with the language of the plea that the drawers may have made satisfaction of the bill, so far as regarded their lial)ility, by any small composition, leaving the plaintiffs with all their remedies in point of law against the acceptor, and other parties to the bill ; and yet the drawers may afterwards have dissented from the plaintiffs' retaining the bill, or suing the acceptor upon it. ^ The terms of the plea do not import that the satisfaction was made upon any contract or condition, either that the bill should be delivered up, or be deemed to be satisfied as between the plaintiO's and the acceptor ; and, when the nature of the relation in which the respective partie's stand towards each other is consid- ered, no principle is apparent upon which, as a consequence in law, the satisfac- EASTMAN V. PLUMER. 349 faction of a bill as between the indorsee and the drawer, should operate as a satisfaction and discharge in favor of the acceptor. Supposing the effect of the plea to be that the plaintiffs are suing as trustees for the drawers, but against their consent, such matters would furnish no legal bar to the plaintiffs, as the law can take no notice of the trust, nor, consequent- ly, whether the trustee is enforcing his legal rights against a third j)erson witii <jr against the consent of his cestui que inist. And we are of opinion that the de- fendant has not established any legal principle which will entitle him to judgment upon this plea. But it has on his behalf been contended, that the plea ought to be supported, and judgment given for the defendant upon authority. We have reviewed the autliorities relied upon, and they do not appear to us to entitle the defendant to judgment. The case of Bacon v. Searles, 1 II. Bl. 88, was cited ; and it nmst be ad- mitted that in that case, according to the report, it was held that the indorsee of a bill who had received from the drawer a part of the amount of the bill, was entitled to recover from the acceptor only the balance ; and Lord Loughborough then Chief Justice, is reported to have said that, " if the drawer of a bill antici- {)ates the acceptor, and pays the money himself, he thereby releases the acceptor from his undertaking; " and he adds : " so that, if the acceptor were to pay the bill after notice given to him that the drawer had already paid it, an action would lie for the drawer against the acceptor to recover back the money so paid." Lord Loughborough concludes his judgment by saying: " Another reason which weighs much with me is, the great mischief which would ensue to merchants, among whom accommodation bills are circulated to a vast extent, if, after a bill had been taken up by the drawer, the acceptor should be called upon for pay- ment." The report of this case is not satisfactory. Lord Loughborough is made to say that, if the drawer anticipates the acceptor and pays the money himself, he thereby releases the acceptor from his undertaking ; and yet he is said to have added, " that if the acceptor were to pay the bill, after notice given to him that the drawer had already paid it, an action would lie for the drawer to recover it back again ; " which, as applied to the facts of the case, is not very iutelligiljle. If it was meant that, supposing the drawer should sue the acceptor upon the bill tlie acceptor could not plead in bar the payment to an indorsee, after notice that the drawer had paid it, it is intelligible, but not, upon the liicts stated, very sat- isfactory. The point in judgment was, whether an indorsee, after having re- ceived payment of part of the bill from the drawer, was entitled, in an action against the acceptor, to recover the whole amount of tiie bill, or only the balanee of the bill remaining unpaid ; and it was held that the balance only was recov- erable. As a decision upon that point it has been overruled. The observations made by the judges render it uncertain whether it was the case of a bill lor value, or an accommodation bill ; but those observations are of doubtful accuracy in either view of the case. If it was a bill for value, the remark is not correct that payment by the drawer discharged the acceptor from his promise ; because the acceptor in such a case would be clearly liable to the drawer, who, by his pay* ment to the indorsee, would become entitled to sue the acceptor upon tiie bill; and if it was tiie case of an acconnnoda||on lull, the remark is uniutelligihlf that, if the acceptor, who would be surety only for the drawer, was to pay ll;e bill 350 PAYMENT. after notice, the drawer, who was the principal debtor, might recover the money- back again IVoni the acceptor, his surety. It may be that what was intended to be said was that such a payment by the acceptor would make the indorsee a trustee for the drawer, and liable to refund to him what should be paid by the acceptor; but it is by no means clear that this was intended to be said, because the remarks refer to tlie acceptor's lia- bility to refund, in terms, and speak of a payment by the acceptor after notice of payment by the drawer, — which would be quite immaterial upon the ques- tion whetlier the indorsee would become a trustee for the drawer, in regard to the sum received from the acceptor. The doubt whether it was the case of a bill for value or an accommodation bill, is increased by the observations of Mr. Justice Wilson, who referred to a case of Beck v. Robley. Considering tliis case of Bacon v. Searles with reference to the point decided, — that part of a bill (accepted for value) being paid by a drawer or indorser, disentitles the indorsee to recover from the acceptor more than the balance remaining unpaid, — it has been overruled by^ modern decisions, and is not now to be deemed to be law ; and, if it is to be considered as the case of an accommodation bill, it is inapplicable to the questions which arise upon this plea. Mr. Justice Wilson referred to the case of Beck v. Robley, reported in a note to Bacon v. Searles, and which, it would seem from the statements in the report, was the case of an accommodation bill. The facts were these : Brown drew the bill upon Robley, payable to Hodsou, and gave the bill to Hodson as security for an advance made to him by Hodson. Robley accepted the bill, and Brown, the drawer, took it up when due, in Hodson's hands, and received back the bill with Ilodson's indorsement upon it. Brown, after the bill had become due, paid it to Beck, who brought the action against Robley. The action was belli not to be maintainable ; and correctly so, as, after the bill had become due, the drawer could only negotiate it subject to such equities as existed against him ; and, it being an accommodation bill, Brown, the drawer, could not have sued the acceptor, and so neither could a subsequent holder claiming under him after the bill bad become due. The decision against the plaintiff, therefore, would have been correct, irrespectively of another fact relied upon in that case, viz., that Beck, the plaintiff, was compelled to claim through the indorsement of Hodson, the payee ; and the Court was confirmed in its decision against the plaintiff, upon the ground, that, if effect were given to Hodson's indorsement under the circumstances, Hodson himself might be rendered liable, — a result which ought not to occur. It is unnecessary to consider the correctness of that opinion ; but both the cases of Bacon v. Searles and Beck v. Robley would be well decided, if the bills upon which those actions were brought were accommo- dation bills ; and Beck v. Robley, in that event, might be considered as an authority for the determination of Bacon v. Searles. Upon Bacon v. Searles being cited as an authority, in Purssord v. Peek, 9 Mees. & W. 196, as deciding that a payment by the drawer of a bill discharged the acceptor pro tctnto, Lord Abimjer, C. B., said, that, "if that were the prin- ciple of that case, it might be a question whether, if it were now considered, it would not be overruled." • The case of Johnson v. Kennion, 2 Wils. 262, was cited as an authority, on EASTMAN V. PLUMKR. 3.01 tlie part of th(! plaintifTs, that the contract created by tlie liill, could not he sev- creil and niad(! tlie <;roiiMd of two actions, and tliat the lioldcr must brin<^ an action fur the whole, and be considered trustee for the drawer, for so much as he had paid. Mr. Justice Wilson is said to have referred to the case of Beck v. Robley, as contrary to that position ; but it is not obvious that such is the effect of lieck V. Roljley. .Johnson r. Ivennion, however, distinctly decided that the indorsee was entitled to recover the whole amount of the l)ill, althon<^h he had received a part from the drawer: and, unless IJacon r. Searles and Beck v. Rob- ley were distinjiui.shable, u])un the ground of the actions being upon acconuno- (lalioM hills, it does not a|)pear how the authority of Johnson t'. Ivennion was avoiileij. Assuuiinj,^, however, Bacon i". Searles and ]5eck v. Robley to be authorities that the acceptor of a bill for value is discharged altogether, or pro iaiito, by l)aymints made by a drawer or indorser to an indorsee, wlio afterwards sues the accej)tor, they cannot be considered as binding authorities; and they are incon- sistent with Callow r. Lawrence, 3 M. & S. l»a, where the continued liability of the acceptor is distiix tly determined; and Hubbard i". Jackson, 1 M. & P. 11 [K. C. L. R. vol. 17] ; s. c. 4 Bing. 390 [E. C. L. R. vol. 13, 15] ; 3 Car. & P. 134 [E. C. L. R. vol. 14] is a decision to the same effect, following the authority of Callow r. Lawrence; and, in both cases, Beck v. Robley was treated as a decision upon the ground that the plaintiff" could not claim through llodson's indorsement. Pierson v. Diinlop, 2 Cowp. 571, was an action against the acceptor of a bill for £300. The drawer having, paid £180, the plaintiffs took a verdict for the whole amount, which the Court compelled them to reduce, at their own cost. There can be little doubt that this also was the case of an acconnnodation bill ; as it appears, that, after the verdict, a bill in equity was filed to obtain a discov- ery of the payment, and reduction of the verdict; and, if the ce.s-(ui que iriist of the plaintiffs was not entitled to receive the £180, the Court, in its equitable jurisdiction, could not have permitted their trustee to recover it. The case would resolve itself into that of a payment by the principal debtor, in ease of the surety. In the ease of Walwyn v. St. (.^uintin, 1 Bos. & Pul. t)52, the plaintilfs were re (juired to give the acceptor credit for the amount of the payment made by the drawer, the Court holding the bill to be an acconnnodation bill. The several other cases which were cited on the part of the defendant, are no authorities for the purpose for which they were cited : indeed, they are rather against him. In Purssord i'. Peek, 9 Mees. cV: W. 19(5, the Court held that the plea was bad fur duplicity : it alleged that the defendant, the acceptor of a bill of exchange, had accepted it I'ur the acconnnodation of the drawer, and that the drawer had ' satisfied the bill ; and it further stated, that, at the time of the action, the plain- tiff was a holder of the bill without consideration or value. Reynolds v. Blackburn; 7 Adol. & Ellis, 161 [E. C. L. R. vol. 34] ; 2 N. & P. 137, was an action by indorsee against the acceptor of an accommodation bill ; and the plea alleged, by way of discharge, notice to the plaintiff, and that, after such notice, he received other bills liom the drawer, and agreed to give time upon the bill sued upon, until such other bills should become due, and be 352 PAYMENT. dishonored ; the plea proceeded to state that the biHs were so delivered and accepted in payment of the l)ills in the declaration, and that the agreement was made without the defendant's knowledge, privity, or assent. The plaintiff re- plied de injtiria ; to which the defendant demurred, for duplicity. The Court said the replication was as good as the plea, which had set up two defences, and gave judgment for the plaintiff. Surd V. Rhodes, 1 Mees. & W. 153; Tyr. & G. 298; 4 Dowl. P. C. 743; 1 Gale, 376, was also an action against the acceptor of an accommodation bill, in which the defendant pleaded, that the bill was an accommodation liill, and that the drawer had given another note, for a larger sum, in payment and satisfaction, which the plaintiff ha'd accepted. The plaintiff replied that the note so given was dishonored. The defendant demurred, and the replication was held ill, and the plea good. In each of the three last-mentioned cases, the pleas alleged the bills to be accommodation bills, — showing what is now understood to be the law in regard to payments or arrangements between subsequent parties to the bill, which can have little application to the present case, which is that of a bill accepted for value. . Field V. Carr, 5 Bing. 13 [E. C. L. R. vol. 15] ; 2 M. & P. 46 [E. C. L. R. vol. 17] is also inapplicable: it was an action by bankers, as indorsees, against the acceptor; the drawer having delivered the bills to the plaintiffs, his bankers, as security, and the acceptor having paid the amount of the bills to the drawer without obtaining the bills, which remained in the hands of the bankers : and the point really in contest was, whether, upon, the application of the rule in Clayton's Case, 1 Meriv. 572, 604, the bills, as against the bankers, the plaintiffs, were to be considered as satisfied ; the Court held that they ought to be so con- sidered. The case of Thomas v. Fenton, 5 Dowl. & L. 28, was argued before ]\Ir. Jus- tice Coleridfje. It was an action against the drawer of an accommodation bill ; and it appeared that, the bill being dishonored, an action had been brought by one Clark against the acceptor, and that the plaintiff, as a volunteer, — being the son-in-law of the acceptor, — had paid the debt and costs, and obtained the bill from the then plaintiff, with the defendant's indorsement upon it, and brought the present action upon the bill. One question was, whether the bill ought to be deemed an accommodation bill. A further question was, whether there was a sufficient dispensation of giving notice of the dishonor ; also, whether the pay- ment which had been made supported the plea of payment by the acceptor. An objection was also made that the bill required a new stamp. Mr. Justice Coleridge held that the bill did not require a new stamp, inasmuch as it had never been paid, payment meaning payment by the party ultimately liable, and the payment in question not being such a payment. He also held, that sufficient excuse was alleged for not giving notice, the bill being an accommoda- tion bill. And the learned judge distinctly intimates that payment by an inter- mediate party is no discharge to the acceptor. Hemming v. Brook, Car. & M. 57 [E. C. L. R. vol. 41], was an action against the acceptor, where the drawer had paid part of the bill. The cause was undefended ; the counsel for the plaintilf was instructed as to the payment, but altogether uninformed whether the bill was an accommodation bill, and of EASTMAN V. PLUMER. 353 every other oircumstaiK* respecting it. The judge, therefore, recommended that a verdiet should be taken, giving credit lor the payment. Pownal V. Ferrand, i\ Barn. & C. 439 [E. C. L. R. vol. l:J], 9 Dowl. & Ryl. 603 [E. C. L. R. vol. 22], determined tliat the indorser of a bill, paying a part of the bill to the holder, might recover from the acceptor the amount so paid, as money paid to his use. It is to be observed, that the plaintiff in that case had paid £40 on account of a bill indorsed by him, and which had been accepted by tlie defendant, for £3o0. After the payment of £40 by the plaintiff, the holiler of the bill brought an action upon the bill against the defendant, the acceptor, and recovered a verdict for the whole amount of the bill, £'ioO, but afterwards levied the balance only due to him, giving credit for the £40 which the plaintiff had paid ; and, in consequence of the defendant's having thus de- rived the benefit of the plaintiff's payment, the action was brought by the plain- tiflT, to recover the amount as money paid to the defendant's use, when it was contended that the j)laintilf could only sue upon the bill; but the Court held, that there might be a dilliculty in suing upon the bill, by reason of a judgment having been recovered against him for the whole amount of the bill, by a former holder; and that the defendant having had the benefit of the payment, an action for money paid might be maintained. Lane v. Ridley, 10 Q. B. 479 [E. C. L. R. vol. 59], was to the same effect as Reynold v. Blackburn, Purssord v. Peek, and Pascoe v. Vyvyan, 1 Dowl. n. s. 939 ; viz., that where the plea is double, it is no objection that the replication is also double.' Reference has thus been made to the several cases which were cited, with some regret, as the only result is to show that they are inapplicable to this case, and afford no assistance to the Court in determining the question raised upon the record ; and in fact no determination has been brought to the notice of the Court showing this plea to be good, although there are some expressions in some of the older cases which have that aspect, but which dicta were not necessary to the decision of the cases in which they are to be found ; and such dicta are not consistent with subsequent determinations. It eertainly has been no rare prac- tice for indorsees of bills of exchange and promissory notes, to take verdicts for the full amount of the instruments, after having received partial payments from other parties to such instruments ; and there are reporte<l authorities in distinct affirmation of the right so exercised by the plaintiffs. Callow v. Lawrence, be- fore mentioned, Reid v. Furnival, 1 Cromp. & M. .538, and numerous cases in bankruptcy, where proof is admitted against the acceptors of bills and makers of notes for the full amount, notwithstanding partial payments made by other par- ties. In Ex parte l)e Tastet, la re Corson, 1 Rose, 10, Warren and Bruce were held entitled to prove against the estate of the bankrupts, who were the accept- ors for £13(J4, and take dividends for that amount, notwithstanding they had received payments from other parties, reducing their demand to £420. We think, therefore, that this plea is contrary to principle, and that it has no authority to support it. The plaintiffs stand upon the record the legal owners of the bill, and the de- fendant as having failed to perform hi.s contract, without any legal excuse for the broach. The defendant was the party primarily liable, and by his plea he sets up, by way of discharge, satisfaction by one not in privity with him in relation to 23 354 PAYMENT. such satisfaction, and which we think did not enure to his discharge ; and we think the plea, therefore, bad, and the plaintiffs entitled to judgment as prayed/' An indorsee for value of a bill of exchange, who became such before its matu- rity, and in ignorance that it was given for accommodation, has a right to treat all parties thereon as liable to him according to their relative positions on the bill, and to regard the acceptor as the principal debtor, and the liability of the drawer as collateral ; and this right is unaffected by any subsequently acquired knowledge that the bill was given for accommodation. In such case a release of the drawer by the holder has no effect upon the ultimate liability of the acceptor. Farmers and Mechanics" Bank v. Rathbone, 26 Vt. 19, given in full as a leading case under Discharging Indorser or Drawer, post. See also Carstairs v. Rolleston, 5 Taunt. 551 ; s. c. 1 Marsh. 207. Payment by a stranger of the amount of a bill of exchange to the bankers at whose house the bill is payable, under an arrangement with such bankers where- by the party paj^ing obtains possession of the bill for a collateral purpose of his own, is not payment by the acceptor. Deacon v. Stodhart, 2 Man. & G. 317. But if a stranger makes payment of a note overdue, and declines to have the same cancelled, but takes it away with him, this will be * regarded as payment and satisfaction against a party who afterwards received the note from the stranger ; the latter not being a bona fide holder. Burr v. Smith, 21 Barb. 262. The fact that the holder of a bill, accepted for the drawer's accommodation, sends it to a bank for collection, and the bank passes the amount to the credit of the holder at the maturity of the paper, will not constitute such payment as to discharge the acceptor. Pacific Bank v. Mitchell, 9 Met. 297. It is no discharge of a note given with security to a bank for the purpose of obtaining credit, which is given to the amount of the note, that the maker at one time had a balance in the bank exceeding the amount of the note. Pease v. Hirst, 10 Barn. & C. 122. If the drawer retain the acceptor's funds in his hands, for the express purpose of meeting the bill, the holder's releasing the acceptor does not discharge the drawer. Sargent v. Appleton, 6 Mass. 85. Upon this subject, see Discharging Indorser ob Drawer, post. BURKE V. m'kay. 355 PROCEEDINGS ON NON-PAYMENT. Glendy Burke v. Robert McKay. (2 Howard, 66. Supreme Court of the United States, January, 1844.) Protest of promissory note. — It is not necessary in Mississippi, or by the general law merchant, that a promissory note siiould be protested by a notary, or that he should give notice of dishonor. The case is stated in the opinion of the Court. Story, J. This is a writ of error to the Circuit Court of the District of Mississippi. The plaintiff in error brought an action of assumpsit in that Court, against the defendant in error, as in- dorsee upon a promissory note, dated at Clinton, Mississippi, Jan- uary 20, 1837, whereby R. E. Stratton, Samuel W. Dickson, and B. Garland, or either of them, on the first day of January, 1840, promised to pay Robert Mathews, or order, $2800, for value re- ceived. The note was indorsed by Mathews as follows : " I assign the within note to Robert McKay, and hold myself responsible for the same, waiving notice of demand and protest, if not paid at maturity." The note was afterward indorsed by McKay (the defendant), as it should seem, in blank, and the plaintiff in error, in his declaration, made title as immediate indorsee to McKay. At the trial of the cause, upon the general issue, the plaintiff read the note and the indorsement, and also proved that, at the maturity of the note, due demand of payment was made of the makers by S. W. Humphreys, a justice of the peace of Hinds county, Mississippi, styling himself "acting notary public;" who, upon the non-payment, made due protest thereof (the protest being by consent admitted as evidence of the facts), and gave due notice thereof to the payee of the note and to all the indorsers. The 356 PROCEEDINGS ON NON-PAYMENT. defendant (McKay) also admitted that, in £^ settlement with the makers of the note, in some other transactions, the present note was included, and the defendant released the makers from all lia- bility thereon, but he denied that he had ever received of the makers full payment of the said note ; and that, upon a compro- mise of all claims and controversies between them, he released the makers from all liability to the defendant ; and he agreed that the same statement should be read and received at the trial of the case by the Court and the jury. Tiie district judge (who alone sat in the cause) instructed the jury that, in order to charge the indorser of a promissory note, the plaintiff must prove that it was protested on the day of its maturity by a notary public, and demand made, and notice of non-payment given by him ; that the statement of Humphreys admitted as evidence, not proving that fact, they must find for the defendant. Whereupon the jury returned a verdict for the defendant, and judgment passed accordingly. A bill of exceptions was taken by the plaintiff, to the instruction of the Court at the trial ; and the cause now comes before us upon the writ of error to examine the correctness of that instruction. And we are all of opinion that the instruction was incorrect, and not maintainable in point of law. In the first place, by the gen- eral law merchant, no protest is required to be made upon tlie dishonor of any promissory note, but it is exclusively confined to foreign bills of exchange. This is so well known that nothing more need be said upon the subject than to cite the case of Young V. Bryan, 6 Wheat. 146, where the very point was decided. It is true tliat it is a very common practice for a notary public to be employed to make demand of payment of promissory notes from the makers, and also to give notice of the dishonor to the indorsers thereon. But this is a mere matter of convenience and arrange- ment between the holder and the notary, and is by no means a requisite imposed or recognized by law as binding upon the holder. Unless, therefore, there be some statute in Mississippi requiring the intervention of a notary in such cases (as we understand there is not), or some general usage equally binding, it is clear that the instruction proceeded upon a mistaken ground. In the next place, it is no necessary part of the official duty of a notary (subject to the like exceptions) to give notice to the indorsers of the dishonor of a promissory note, although certainly it is a very convenient and useful course in the transactions of such affairs in commercial BTIRKE V. m'kay. 357 cities. In the next place, if a protest were necessary, it is equally clear that it is not indispensable in all cases that the same sliould he actually made by a person who is in fact a notary. In many cases, even with regard to' foreign bills of exchange, the protest may, in the absence of a notary, be made by other functionaries, and even by merchants. IJut where, as in Mississippi, a justice of the peace is authorized by positive law to perform the functions and duties of a notary, there is no ground to say that his act of protest is not equally valid with that of a notary. Quoad hoc he acts as a notary. See Howard and Hutchinson's Statutes of Mis- sissippi, c. 37, § 24, p. 430. In the next place, in the present case, under the circumstances, the indorser (McKay) was not entitled to any notice whatsoever of the dishonor. He had actually discharged the makers from all liability for the payment of the note by his release and settlement with them. Of course, the notice could be of no use or value to him ; for he would in no event be entitled to any recourse over against them ; and, therefore, no notice to him would have been necessary, although it fully appears that he 'had received due notice of the dishonor. For these reasons, we are of opinion that the judgment ought to be reversed and venire facias de novo awarded. Nor is a protest of inland bills necessary ; and a protest either of a promis- sory note or inland bill of exchange is not evidence of the statements made in it. Union Bank v. Hyde, 6 Wheat. 572. Fees for protesting promissory notes or inland bills cannot be recovered. City Bank v. Cutter, 3 Pick. 414. 358 PROCEEDINGS ON NON-PAYMENT. Mills, Plaintiff in Error, v. The President, Directors, «&c., OF the Bank of the United States, Defendants in Error. (11 Whcaton, 431. Supreme Court of the United States, February, 1826.) Form of notice. — Notice to an indorser is not defective by reason of not stating the name of the iiolder, or by reason of a misdescription of the date of the note in question, provided tliere was no other note payable at the same place and made and indorsed by the same parties. Nor is it fatal to the notice that^it did not con- tain a formal allegation that payment was demanded at the bank when the note became due. It is sufficient that it states the fact of the non-payment of the note, and that the holder looks to the indorser for indemnity. "Whether the demand was duly and regularly made is matter of evidence to be established on the trial. The case is stated in the opinion of the Court. Story, J. This is a suit originally brought in the Circuit Court of Ohio, by the Bank of the United States, against A. G. Wood and George Ebert, doing business under the firm of Wood and Ebert, Alexander Adair, Horace Reed, and the plaintiff in error, Peter Mills. The declaration was for $3600, money lent and ad- vanced. During the pendency of the suit. Reed and Adair died. Mills filed a separate plea of non-assumpsit upon which issue was joined ; and, upon the trial, the jury returned a verdict for the Bank of the United States, for $4641, upon which judgment was rendered in their favor. At the trial, a bill of exceptions was taken by Mills, for the consideration of the matter of which the present writ of error has been brought to this Court. By the bill of exceptions, it appears that the evidence offered by the plaintiffs in support of the action, " was, by consent of counsel, permitted to go to the jury, saving all exceptions to its competence and admissibility, which the counsel for the defendant reserved the right to insist in claiming the instructions of the Court to the jury on the whole case." , The plaintiffs offered in evidence a promissory note, signed Wood and Ebert, and purporting to be indorsed in blank by Peter Mills, Alexander Adair, and Horace Reed, as successive indorsers ; which note, with the indorsements thereon, is as follows ; to wit : " Chili- cothe, 20th July, 1819. $3600. Sixty days after date, I promise MILLS V. BANK OF THE UNITED STATES. 359 to pay to Peter Mills, or order, at the office of discount and deposit of the Bani< of the United States, at Chilicothe, -"ji^fJOO, for value received. Wood and Ebert." Indorsed, " Pay to A. Adair, or order, Peter Mills." " Pay to Horace Reed, or order, A. Adair." " Pay to the President, Directors, and Company of the Bank of the United States, or order, Horace Reed." On the upper riglit- hand corner of tiie note is also indorsed : " 3185. Wood and Ebert, '^oOOO, Sept. l.S-21." It was proven that this note had been sent to the office at Chilicothe, to renew a note wiiich had been five or six times previously renewed by the same parties. It was proven, Ity the deposition of Levin Belt, Esq., Mayor of the town of Chilicothe, that, on the 22d September, 1819, immediately after the commencement of the hours of business, he duly pre- sented the said note at the said office of discount and deposit, and there demanded payment of the said note, but there was no person there ready or willing to pay the same, and the said note was not paid, in consequence of which the said deponent immediately pro- tested the said note for the non-payment and dishonor thereof, and immediately thereafter prepared a notice foV each of the indorsers respectively, and immediately, on the same day, deposited one of said notices in the post-office, directed to Peter Mills, at Zanesville (his place of residence), of which notice the following is a copy: " Chilicothe, 22d of September, 1819. Sir, — You will hereby take notice that a note drawn by Wood and Ebert, dated 20th day of September, 1819, for ."JBGOO, payable to you, or order, in sixty days, at the office of discount and deposit of the Bank of the United States at Chilicothe, and on which you are indorser, has been protested for non-payment, and the holders thereof look to you. Yours, respectfully. Levin Bolt, Mayor of Chilicothe." (^Peter Mills, Esq.) It was further proven by the plaintiffs, that it had been the custom of the banks in Chilicothe, for a long time pre- viously to the establishment of a branch in that place, to make demand of promissory notes and bills of exchange on the day after the last day of grace (that is, on the sixty-fourth day), that the Branch Bank, on its establishment at Chilicothe, adopted that custom, and that such had been the uniform usage in the several banks in that place ever since. No evidence was given of the handwriting of either of the indorsers. The Court charged the jury : 1. That the notice, being sufficient to put the defendant upon inquiry, was good, in point of form, to charge him, although it did not name the 360 PROCEEDINGS ON NON-PAYMENT. # person who was holder of the said note, nor state that a demand had been made at the bank when the note was due ; 2. That if the jury find that there was no other note payable in the office at Chilicothe, drawn by Wood and Ebert, and indorsed by defendant, except the note in controversy, the mistake in the date of the note, made by the notary in the notice given to that defendant, does not impair the liability of the said defendant, and the plaintiffs have a right to recover ; 8. That, should the jury find that the usage of banks, and of the office of discount and deposit in Chilicothe, was to make demand of payment, and to protest and give notice on the sixty-fourth day, sucli demand and notice are sufficient. The counsel on the part of the defendant prayed the Court to instruct the jury, " that before the common principles of the law relating to the demand and notice necessary to charge the indorser, can be varied by a usage and custom of the plaintiffs, the jury must be satisfied that the defendant had personal knowledge of the usage or custom at the time he indorsed the note ; and also that before the plaintiffs can recover as the holder and indorser of a promissory note, they must prove their title to the proceeds by evidence of the indorsements on the note," which instructions were refused by the Court. Upon this posture of the case no questions arise for determina- tion here, except such as grow out of the charge of the Court, or the instructions refused on the prayer of the defendant's (Mills') counsel. Whether the evidence was, in other respects, sufficient to establish tlie joint promise stated in the declaration, or the joint consideration of money lent, are matters not submitted to us upon the recprd, and were proper for argument to the jury. The first point is, whether the notice sent to the defendant at Chilicothe was sufficient to charge him as indorser. The Court was of opinion that it was sufficient, if there was no other note payable in the office at Chilicothe, drawn by Wood and Ebert, and indorsed by the defendant. It is contended that this opinion is erroneous, because the notice was fatally defective, by reason of its not stating who was the holder ; by reason of its misdescription of the date of the note ; and by reason of its not stating that a demand had been made at the bank when the note was due. The first objection proceeds upon a doctrine which is not admitted to be correct ; and no authority is produced to support it. No form of notice to an indorser has been MILLS V. BANK OF THE UNITED STATES. 3G1 prescribed by law, 'J'lie wliolu object of it is to iiifonn the party to whom it is scut that jjayiuent lias been refused by the maker ; that he is considered liable ; and that payment is expected of him. It is of no consequence to the indorscr who is the holder, as he is equally bound by the notice, whomsoever he may be ; and it is time enough for him to ascertain the true title of the holder when he is called upon for payment. The objection of misdescription may be disposed of in a few words. It cannot be for a moment maintained that every variance, however immaterial, is fatal to the notice. It must be such a vari- ance as conveys no sulTicient knowledge to the party of the par- ticular note which has been dishonored. If it docs not mislead him, if it conveys to iiim the real fact, without any doubt, the variance cannot be material, either to guard his rights or avoid his responsibility. In the present case the misdescription was merely in the date. The sum, the parties, the time and place of payment, and the indorsement, were truly and accift'ately described. The error, too, was api)arent on the face of the notice. The party was informed that, on the 22d September, a note indorsed by him, payable in sixty days, was protested for non-payment ; and yet the note itself was stated to be dated on the 20th of the same month, and, of course, only two days before. Under these circumstances, the Court laid down a rule most favorable to the defendant. It directed the jury to fnid the notice good, if there was no other note payable in the office of Chilicothe, drawn by Wood and El)ert, and indorsed by the defendant. If there was no other note, how could the mistake of date possibly mislead the defendant? If he had indorsed but one note for Wood and Ebcrt, how could the notice fail to be full and unexceptionable in fact ? The last objection to the notice is, that it does not state that payment was demanded at the bank when the note became due. It is certainly not necessary that the notice should contain such a formal allegation. It is sufficient that it states the fact of non- payment of the note, and tliat the holder looks to the indorscr for indemnity. Whetlier the demand was duly and reguhiily made, is matter of evidence to be estal)lishcd at the trial. If it be not legally made, no averment, however accurate, will iielp the case ; and a statement of non-payment and notice is, by necessary impli- cation, an assertion of right by the holder, founded upon his having complied with the requisitions of law against the indorscr. In 3G2 PROCEEDINGS ON NON-PAYMENT. point of fact, in commercial cities, the general if not universal practice is, not to state in the notice the mode or place of demand, but the mere naked non-payment. Upon the point then, of notice, we tliink there is no error in the opinion of the Circuit Court. As to the deci.sion in this case respecting usage, see note to Renner v. Bank of Cokimbia, ante, 308. Tlie concluding portion of the opinion in the case of Bank of Alexandria v. Swann, 9 Peters, 33, post, 383, relates to this subject of the fonn of notice, and is given here in further illustj-ation of the doctrine of the principal case. Per Thompson, J. : "The next question is, whether, in the notice sent to the indorser, the dishonored note is described with sufficient certainty. " The law has prescribed no particular form for such notice. The object of it is niertdy to inform the indorser of the non-payment by the maker, and that he is held liable for the payment thereof. " The misdescription complained of in this ease, is in the amount of the note. The note is for $1400, and the notice describes it as for the sum of $1457. In all other respects the description is correct ; and in the margin of the note is set down in figures 1457, and the special verdict finds that the note in question was discounted at the bank, as and for a note of $1457 ; and the question is, whether this was such a variance or misdescription as might reasonably mislead the in- dorser as to the note, for payment of which he was held responsible. If the defendant had been an indoi-ser of a number of notes for Humphrey Peake, there might be some plausible grounds for contending that this variance was calculated to mislead him. But the special verdict finds that from the filth of February, 1828 (the date of a note for which the one now in question was a renewal), down to the day of the trial of this cause, there was no other note of the said Humphrey Peake, indorsed by the defendant, discounted by the bank, or placed in the bank for collection or otherwise. There was, therefore, no room for any mistake by the indorser as to the identity of the note. The case falls witbin the rule laid down by this Court in the case of Mills v. The Bank of the United States, 11 Wheat. 431 [the principal case], that every variance, however immaterial, is not fatal to the notice. It must be such a variance as conveys no sufficient knowledge to the party of the particular note which has been dishonored. If it does not mislead him, if it conveys to him the real fact without any doubt, the variance cannot be material, either to guard his rights or avoid his resj)onsibility. In that case, as in the one now before the Court, it appeared that there was no other note in the bank indorsed by Mills ; and this the Court considered a controlling fact to show that the indorser could not have been misled by the variance in the date of the note, which was the misdescrip- tion there complained of" Mr. Justice Story, in his Treatise on Promissory Notes, § 348, after stating the general rule thai no precise form of words is necessary to the notice, states that it should, however, either expressly, or by just and natural implication, con- tain in substance these matters : — 1. A true description of the paper, so as to ascertain its identity. 2. An assertion that it has been duly presented at maturity and dishonored. GILBERT V. DENNIS. 363 3. That the liolder, or otlier person givinj^ the notice, looks to the person to wlioni the notice is given, lor reimbursement and indemnity. The first rule lias been sufBeiently considered in the principal cas« and note, supra. The following authorities, collected in Story, Promissory Notes, §§ 348, 349, are added as throwing additional light on the rule. Hartley ». Case, 4 Bam. & C. 3;>ti ; Heauchamp r. Cash, Dowl. tt R. C. N. P. 3 ; lleedy v. Seixas, 2. Johns. Cas. 337 ; Bank uf Rochester v. (iould, 9 Wend. 279 ; Smith v. Whiting, 12 Mass. 6, 7; Cook v. Litchfield, 9 N. Y. (5 Seld.) 279; Cayuga Bank v. Warden, 1 Comst. 413; Ransom i;. Mack, 2 Hill, .087-593; Bradley v. Davis, 13 Shepl. 45; Clark v. Eldridge, 13 Met. 96; Wheaton v. Wilraarth, 13 Met. 422; Young.s V. Lee, 18 Barb. 187. In the last case it was held sufficient that the no- tice gave the names of the maker and indorser, and the amount. See to the same effect, Beals v. Peck, 12 Barb. 245. See also Bank of Cooperstown v. Woods, 28 N. Y. 545; Snow r. Perkins, 2 Mich. 238, a misdescription in the amount, as in Bank of Alexandria i;. Swann, supra, and held not fatal for the same rea- son, that the indorser could not have been misled. Dennistoun v. Stewart, 17 How. 606, a misdescription of the name of the acceptor held not fatal. But if the name were omitted, that would vitiate the notice. Home Ins. Co. J^. Green, 19 N. Y. (5 Smith) 518. See also Stockman v. Parr, 11 Mees. & W. 809 ; 8. C, I Car. & K. 41 ; Rowan v. Odenheimer, 5 Sm. & M. 44; Routh v. Robertson, II Sm. & M. 382. The second rule is illustrated in the following case. Caleb C. Gilbert v. Louis Dennis. (3 Metcalf, 495. Supreme Court of Massachusetts, March, 1842.) Form oftiolicn. — jMere notice of non-paj'nient, wliicli does not express or imply demand and dislionor, is not such notice as will render the indorser liable. The case is stated in the opinion of the Court. After considering the subject of presentment, the Court say, — Shaw, C. J. But tlie more formidable objection to the plaintiff's right of recovering is, that the notice, wiiich is recited in the report, did not inform tlie defendant that demand had been made of the promisor, and payment refused, or in any otiier way, by express declaration or reasonable implication, inform the indorser that the note was in fact dishonored. No particular form of notice is necessary. It may be either written or verbal. Tindal v. Brown, 1 T. R. 1G7. Nor will a mistake or misdescription of the note render the notice insuffi- cient, if on the whole it cannot mislead the indorser, and if it so 364 PROCEEDINGS ON NON-PAYMENT. designates and distinguishes the note, as to leave no reasonable doubt in the mind of the indorser, what note was intended, and that it was the same with the note in suit. Smith v. Whiting, 12 Mass. 6 ; Bank of United States v. Carneal, 2 Peters, 543. But though no special form of notice is requisite, still in some form the fact to be notified is, that the note is dishonored by the default of the promisor ; and this may be done verbally or in writing, in any language which communicates the information to the indorser, in terms, or by reasonable implication. Indeed the same formula, in terms, may communicate this information or not, according to circumstances. Suppose a note payable at a bank, in terms, or by the agreement of parties, or tacit agreement arising from usage or otherwise ; it is the duty of the promisor to pay it at such bank on the last day of grace. The dishonor of such note by the promisor consists in the non-payment at the bank. If then, after the time of payment has elapsed, notice be given to the in- dorser that the note is unpaid, it is notice that it is dishonored ; whereas, in case of a private holder, in regard to a note, which requires presentment and demand to fix the holder with a default, notice in the same words, that the note is unpaid, would not neces- sarily imply that it was dishonored, because that fact might be strictly true, though the note had never been presented, nor pre- sentment waived or excused. But whatever may be the form of the notice, whether written or verbal, we think the result of the decided cases is this : that the notice should be such that it will inform the indorser that the note has become due and be^n dishonored, and that the holder relies on the indorser for payment ; that this information may be express, or may be inferred by necessary implication, or reason- able intendment, from the language ; construing such language in reference to its accustomed meaning, when applied to similar sub- jects, and with reference to the terms of the note, the time and place at which the note is to be paid, as fixed by express or tacit agreement, or inferred from general or particular usages. It is not necessary to inform the indorser of the time, place, or mode of presentment and demand, nor the means by which it was dishon- ored, nor matter of excuse or waiver. Whatever legally fixes the promisor with dishonor, is sufficient, on due notice given, to charge the indorser. If, for instance, the promisor had absconded before the note is due, without having made provision for its payment, GILBERT V. DENNIS. 365 80 that no presentment and demand can be made, that is a dis- honor, of which the holder may, immediately after the note has become due, notify the indorser; or if the promisor has agreed that notice left at a particular place shall be deemed a good sub- stitute, and notwithstanding notice is so left, he does not make payment, this is likewise a dishonor. But without considering further what constitutes a dishonor, it may be useful to examine more particularly, in reference to the present case, the authorities in relation to the effect and purport of the notice to be given to an indorser. The rule is laid down in general terms by the text-writers, that notice is to be given of the fact of dishonor. Bayley states the duty of the holder. He is under an implied undertaking to every party to the bill or note, who would be entitled to bring an action on paying it, to present, in proper time, the one for acceptance and each for payment ; to allow no extra time for payment, and to give notice without delay to such person, of a failure in the attempt to procure a proper accej)tancc or payment. Bayley, Bills, 1st Am. ed. 124. In general, it is incuml)cnt on the holder to give notice of the dishonor to those persons to whom he means to resort for payment ; otherwise they will be discharged. Chitty, Bills, 893. In Tindal v. Brown, 1 T. R. 167, and 2 T. R. 186, note, it was held that no particular form of notice was necessary, but that such notice must come from the holder of the bill or note, or some party to it, and that mere knowledge of the fact of non-payment, coming to the indorser from any other source, would not be suffi- cient. It ought to purport that the* holder looks to him for pay- ment. The Court do not say, in terms, that the notice mugt directly, or by implication, state the fact of dishonor, but it is im- plied. The case decides that the holder must do an act, electing to assert his right to recover the note of tiic indorser, whicli right can only exist in case of a dishonor of the promisor. The case did not call for a decision as to what must be the tenor or purjjort of the notice, as to the fact of dishonor. It ought, said Mr. Jus- tice BuUer, to purport that the holder looks to him (the indorser) for payment. In regard to this it may be remarked, that when notice is given by the holder to the indorser, of the dishonor of a note, it necessarily implies that he looks to him for payment. That is the natural, and may in general be regarded as the neces- sary inference from the fact of giving such notice. 366 PROCEEDINGS ON NON-PAYMENT. This question seems not to have arisen in England until a re- cent period ; but since the point has been started, there have been a series of decisions on the subject. The first was Hartley v. Case, 4 Barn. & C. 339 ; s. c, 6 Dowl. & Ryl. 505. The notice from the holder was, " I am desired to apply to you for the payment of the sum of £150, due to myself on a draft drawn by Mr. Case on Mr. Case, which 1 hope you will on receipt discharge, to prevent the necessity of law proceedings, which otherwise will immediately take place." The Court held it insufficient, because it did not apprise the party of the fact of dishonor. They said, the lan- guage used must be such as to convey notice to the party what the bill is, and that payment of it has been refused by the ac- ceptor. This was in 1825. The next case was that of Solarte v. Palmer. On a trial before Lord Tenterde7i, he expressed an opinion, that the notice was in- sufficient. A bill of exceptions was taken, and the case brought before the Exchequer Chamber, who confirmed the decision. 7 Bing. 530 ; 5 Moore & P. 475 ; 1 Cromp. & J. 417 ; 1 Tyr. 371 ; On appeal to the House of Lords, the judgment was affirmed. 8 Bligh, N. R. 371, 874 ; s. c, 2 CI. & Fin. 93 ; 1 Bing. N. R. 194 ; 1 Scott, 1. The action was brought by the assignees of a bankrupt, and the notice was given by the attorneys of the assignees. It described the bill, and stated that it had been put into their hands by the assignees, with directions to take legal measures for the recovery thereof, unless immediately paid. In giving judgment in the 'Exchequer Chamber, Tindal, C. J., states the rule to be, that the notice does not require the formality of a regular protest, but it should at least inform the party to whom it is addressed, either in express terms, or by necessary implication, that the bill has been dishonored, and that the holder looks to him for payment. This was decided in the House of Lords, June, 1834. The next case, I believe, is that of Boulton v. Welsh, 3 Bing. N. R. 688 ; s. c, 4 Scott, 425. The notice to the ihdorser was thus : " The promissory note for .£200, drawn by, &c., dated 18th July last, payable three mouths after date, and indorsed by you, became due yesterday, and is returned to me unpaid. I therefore give you notice thereof, and request you will let me have the amount thereof forthwith." It was strongly urged GILBERT V. DENNIS. 3G7 that the words returned nnjiaid would import to the understaiiditig of mercantile men that the note had been dishonored. But the Court held themselves bound by the case of Solarte v. Palmer, and l)elicving this case to be within it, held the notice insufficient, although all the judges expressed their regret at the result. But they state the rule of law, as it had before been stated, that the notice should show a presentment to the maker, a demand of pay- ment, and a refusal. As to any thing further than the general rule, this case is of no autiioiity, unless in a case where the form of notice is precisely the same. Whether in such case the words retnrmd loi/mid would import the fact of dishonor, would depend much upon the usage of each mercantile community in which they should be used, and the conventional use and meaning of particular forms of expression used in such community. This was a decision of the Court of Common Pleas, Easter term, 1<S87.^ About the same time was decided, in the Court of Exchequer, the case of Hedger v. Steavenson, 2 Mees. & W, 799, where the attorney addressed a letter to the defendant, informing him that his note, describing it, became due the day before, and had been re- turned unpaid, and requested him to remit the amount, with Is. Qd. noting ; and the notice was held to be good. The case of Messenger v. Southey, 1 Man. & G. 76, and 1 Scott, N. R. 180, was decided in the Court of Common Pleas, in 1840. The notice was as follows : " This is to inform you tliat the bill I took of you for 15/. 28. 6d. is not took up, and 4s. ijd. ex- pense ; and the money I must pay immediately." Held, it was insufficient, because it did not state or intimate, by intelligible in- ference, that the note had been dishonored. About the same time, the case of Lewis v. Gompertz, G Mees. & W. 899, came before the Court of Exchequer. The notice from the holder to the indorser stated that the bill bearing iiis indorse- ment had been presented to the acceptor, and returned dislionored, " and now lies overdue and unpaid with me, as above, of wlucb I give you notice." This was held sufficient, as giving all the re- quisite information, although it did not, in terms, require payment of tJie indorser. The remarks of Mr. Baron Pfirkc, in this case, are well worthy of consideration, as showing the extent to which the Court con- sidered the authority of Solarte /'. P^mer as going, and the qual- ifications with which it is to be taken. 1 Boultoii V. Welsh was overruled in 1842 by Uobson v. Curlewis, Car. & M. 378. 368 PROCEEDINGS ON NON-PAYMENT. In Grugeon v. Smith, 6 Adol. <fe Ellis, 499, the notice to the drawer of a bill was, that the bill had been returned with charges ; and the immediate attention of the drawer to it was requested. This was held sufficient, as implying a demand and refusal, and noting for non-payment. See Houlditch v. Cauty, 4 Bing. N. E. 411 ; s. c, 6 Scott, 209 ; Strange v. Price, 10 Adol. & Ellis, 125 ; Burgh v. Legge, 5 Mecs. & W. 418 ; Shelton v. Brothwaite, 7 Mees. & W. 436 ; Cooke V. French, 3 Per. & D. 596; s. c, 10 Adol. & Ellis, 131, note. These are all recent cases, bearing more or less directly upon the question, but do not essentially vary the result. Where, in the notice, it is stated that the bill has been noted, or returned with charges of protest, or the like, it is held to be notice, by rea- sonable implication of the fact of dishonor. It was contended at the argument, that although it has been settled by recent authorities in England, that the notice to the indorser must state the fact of dishonor, yet that the American authorities would show that it was unnecessary. It becomes therefore necessary to examine and compare them. Mills, in error, v. U. S. Bank, 11 Wheat. 431.^ The note was in terms payable at the branch of the U. S. Bank at Chilicothe, and indorsed by the original defendant, plaintiff in error. It was de- manded at the proper time at the bank, but there being no person there ready and willing to pay the same , it was immediately pro- tested, and notice given to the defendants. The notice described the note by the date and amount, the time and place of payment, and as a note on which the defendant was indorser, and stated thus : " which has been protested for non-payment and the holders thereof look to you " (Signed by the Mayor of Chilicothe acting as notary, and addressed to the defendant). It was objected that the notice was defective, because it did not state who was the holder ; because there was a misdescription of the date ; and be- cause it did not state that a demand had been made at the bank, when the note was due. As to the misdescription, it was held to be of no importance, if there was no other note to which it could apply, if it was so described as to indicate the note in suit, and if it did not mislead. As to the sufficiency of tlie notice, the opinion was delivered by Mr. Justice Story. Some particular expressions, taken alone, 1 Ante, 358. GILBERT V. DENNIS. 3G9 would seem to warrant the position for which it is cited. But taking the whole together, and in reference to the case then before the Court, we think it is not opposed to the rule as stated in the English cases. Speaking in reference to the first objection, that the no- tice did not state who was the holder, the judge says, " no form of notice to an indorser has been prescribed by law. The whole object of it is to inform the party to whom it is sent, that payment has been refused by the maker ; that he is considered liable ; and tiiat payment is expected of him." In reference to the objection, that it did not state that payment was demanded at the bank when the note became due, he says: " It is certainly not necessary that the notice should contain such a formal allegation. It is sufficient that it states the fact of non- payment of the note, and that the holder looks to the indorser for indemnity." He then speaks of the fact of presentment and de- mand, as matter of fact to be proved, and adds, " a statement of non-payment and notice is, by necessary implication, an assertion of right by the holder, founded on his having complied with the requisitions of law against the indorser." One of these requisi- tions is, of course, presentment and demand. And the learned judge concludes, upon this point, by adding, that " in point of fact the general, if not universal practice is, not to state in the notice the mode or place of demand, but the mere naked non-payment." In the case then before the Court, the notice contained a full and precise statement of the presentment, demand, and non-payment by the maker. The objection with which the Court were dealing was, that the notice did not specify the time and place of demand. The answer made was, that such particularity was unnecessary, and that it is sufficient that it states the fact of non-payment. Ap- plied to the facts of that case, it may be construed to mean non- payment after due presentment. So when the learned jndge speaks of the practice of commercial cities, he speaks of notice of the mere naked non-payment, in contradistinction to stating, in the notice, the mode and place of demand. That such is the mean- ing, may be inferred from the passage before cited, in wliich he speaks of the object of the notice, which is to inform the indorser that payment has been refused by the maker. Refusal inqilies non-payment on demand, or under such circumstances as render a presentment and demand unnecessary. Indeed, in many cases, simple notice of non-payment is notice of dishonor ; as where the 24 370 PROCEEDINGS ON NON-PAYMENT. note is in terms, or by usage or special agreement, payable at a bank, a notice stating tlie date and terms of the note, showing that it has become due, and averring that it is unpaid, is equivalent to an averment that it is dishonored. In Smith v. Whiting, 12 Mass. 6, no question was raised as to the sufficiency of the notice. It was notice from a bank. It de- scribed the note as due and unpaid ; and by usage it was held to be payable at the bank. Of course it was dishonored, by not being paid at the bank by the maker. So in State Bank v. Hurd, 12 Mass. 172, notice was left at a place agreed l)y the parties as a substitute for notice at the house or place of business of the maker ; and it was licld sufficient, being equivalent to a more formal demand ; and failure of the promisor to pay, on such notice, rendered the indorser liable. The case of Bank of Rochester v. Gould, 9 Wend. 279, is a case of mere misdescription. The notice to the indorser stated expressly that the note had been protested for non-payment ; and the only qiiestion was, whether it was well described. It there- fore does not affect the present question. The case of Bank of United States v. Carneal, 2 Peters, 543, may be considered as throwing some light on the subject of in- quiry. It is lield, that when the note is payable at a bank, and the bank is itself the holder of it, no demand is necessary. It is the duty of the maker to go to the bank within the usual hours of business and pay it ; and if he fail to do so, the note is dishonored. Towards the close of tlie opinion, given by Mr. Justice Story^ it is stated thus : " A suggestion has been made at the bar, that a letter to the indorser, stating the demand and dishonor of the note, is not sufficient, unless the party sending it also informs the indorser that he is looked to for payment. But where such notice is sent by the holder, or by his order, it necessarily implies such respon- sibility over. The purpose may be reasonably inferred from the nature of the notice." We have thus attempted, at the risk of being somewhat tedious, to ascertain what the rule is upon this subject, on account of the extreme importance of certainty and uniformity in the rules of law applicable to the rights and duties of holders and other parties to notes and bills of exchange. And we take that rule to be, that as an indorser is liable only conditionally for the payment, in case of a dishonor of the note at its maturity by the maker, and notice niLBERT V. DENNIS. 371 • thereof to the indorser, in order to charge him, notice of such dishonor must be given him by the holder or his agent, or some party to the bill ; that mere notice of non-payment, which does not express or imply notice of dishonor, is not such notice as will ren- der the indorser lia)»le. In order to apply tlu; rule thus stated, to the present case, it will be necessary to look at the facts stated in the report. It ap- pears that the presentment and demand on the promisor were made on the morning of the day on which the note fell due. Afterwards, at about eleven o'clock, the plaintiff caused a written , notice to be left at the defendant's dwelling-house, of which the following is a copy : " Boston, May 4, 1838. Mr. Louis Dennis. Sir, — I have a note signed by C. E. Bowers and indorsed by you for seven hundred dollars, which is due this day and unpaid ; pay- ment is demanded of you. C. C. Gilbert." This notice comes from an individual, not from a l)ank. It was delivered at eleven a.m. There would then be no defiiult and no dishonor, unless a demand had been made on the j)romisor. An averment, therefore, that it was unpaid, did not, by necessary im- ])licatiou or reasonable intendment, amount to an averment or in- timation that payment had been demanded and refused, or that the note had been otherwise dishonored. The Court are therefore of opinion, that the notice was not sufficient to render the indorser legally liable. . It will be seen that there is some confusion among the English authorities on this subject ; and we cannot perhaps do better than to add to Chief Justice Shaw's review the opinion of Lord I>cnham, in Furze v. Sliarwood, 2 Q. B. 388, 409. lie says : — "Lord Mannfield, after observing, in the case of Tindal v. 15rown [1 T. R. 167 ; 2 T. R. 186], that certainty is of the highest importance in mercantile trans- actions proceeded to settle the question there raisfed, whether the notice of dis- honor was, in point of law, too late. The whole Court alhrmed that proposition, and more than once set aside a verdict founded on the opposite assumption. Noth- ing more was required for the decision. lUit i\Ir. Justice WiUca took a second objection ; and Mr. Justice Ashhurst a third. ' Notice,' said his lordship, ' means something more than knowledge ; because it is competent to the holder to give credit to the maker. It is not enough to say that the maker does not intend to pay ; but (it ought to be further said) that he (the holder) does not intend to give credit. In the present case, there is no notice : for tlie party ought to kit)w wiiether the holder intends to give credit to the maker, or whether he intends to resort to the indorser.' This is repeated with great approbation by Biillcr, J. Near forty years after, the sufficiency of a notice of dishonor was canvassed in an action between 372 PROCEEDINGS ON NON-PAYMENT. « Hartley v. Case [4 Barn. & C. 339] , decided by Lord Tenterden at Nisi Prius. It ran tlms : ' I am desired to apply to you for the payment of the sum of £150, due to myself on a draft drawn by Mr. Case, which I hope you will on receipt discharge, to prevent the necessity of law proceedings, which otherwise will immediately take place.' The report says : ' The Lord Chief Justice was of opinion, as this letter did not apprise the party of the fact of dishonor, but contained a mere demand of pay- ment, it was not sufficient ; and the plaintiff was nonsuited.' After argument, on a rule for setting aside the nonsuit, his lordship said : ' There is no precise form of words necessary to be used in giving notice ' of dishonor, ' but the language used must be such as to convey notice to the party what the bill is, and that payment of it has been refused by the acceptor. Here the letter in question did not convey to the defendant any such notice ; it does not even say that the bill was ever accepted. We therefore think the notice was insufficient.' This short judg- ment, in which the whole Court concurred, comprising Bayleij, HoJrotjd, and Lit- tledale, JJ., is perfectly correct in Its statement of the fact and the law, and has the merit of adhering closely to the point raised In argument. It has never been questioned by any judicial authority. The same learned Chief Justice was after- ■ wards called upon to decide on the sufficiency of the following notice : ' A bill of £683, drawn by ' A, upon B C, ' and bearing your indorsement, has been put into our hands by the assignees of Mr. J. R. de Alzedo, with directions to take legal measures for the recovery thereof, unless immediately paid to, gentlemen, your very obedient servants, J. and S. P.' Here was no statement of the dis- honor, the presentment, or the acceptance. If any notice of the dishonor, as a distinct fact, is necessary, this document is plainly worthless. It was so held by Lord Tenterden ; but, from the magnitude of the sum and the importance of the question, his lordship suggested that a bill of exceptions might be tendered. This was done, and the case brought by writ of error into the Exchequer Cham- ber, when, as might have been expected, the Lord Chief Justice delivered a unanimous judgment, that Lord Tenterden^s direction to the jury was right, and the notice insufficient. It was, however, thought right to bring the matter before the House of Lords, where the late Mr. Justice Parke delivered the opinion of all the judges present (nine in number) to the same effect. Thus, without one dissentient voice, the judges of all the courts, on these different occasions, con- curred with Lord Tenterden in holding express notice of the fact of dishonor to be necessary; the only point on which he had given an opinion. This Avas the celebrated case of Solarte v. Palmer [7 Bing. 530 ; s. c, 1 Bing. N. C. 194]. The Lord Chief Justice, in the Exchequer Chamber, laid down this rule, that ' The no- tice of dishonor should at least inform the party to whom it is addressed, either in express terms, or by necessary implication, that the bill has been dishonored, and that the holder looks to him for payment of the amount.' Parke, J., when deliver- ing the judges' opinion to the lords, omits the latter clause, and merely says, that ' such a notice ought. In express terms, or by necessary implication, to convey full information that the bill had been dishonored.' This decision, therefore, did not turn upon or require any allusion to the doctrine of Ashliurst and Duller, JJ., in TIndal V. Brown, on the necessity of stating that the holder looks to the party addressed, and does not give credit to any other person. But much controversy has arisen on the branch of the notice, as to which the Lord Chief Justice and Parke, J., agree, requiring notice of dishonor in express terms, or by necessary implication ; and GILBERT V. DENNIS. 373 « hence the task of examiniiifr all the tlecisions is imposed upon us. In Grugeon v. Suiitli, tliisCourt held the dishonor of a bill to he suniciently notified hythe phrase * The 1)111 is this day returned with charges.' A few days after, but without being aware of this decision, the Court of Common Pleas, Boulton v. Welsh pj Bing. N. C. G88], held the notice insuilicient, where it is said : ' The promissory note ' ' be- came due yesterday, and is returned to me unpaid ; ' the Lord Chief Justice there observing, that he did not sec how it was ' possible to escape from the rule estab- lished by the two decided cases, without resorting to such subtile distinctions as would make the rule itself useless in practice. The rule requires that, either expressly or by necessary inference, the notice shall disclose that the bill or note has been dishonored.' Upon which we will merely observe in passing, that there is no necessary difference of opinion between the two courts, as Parke, B., sup- posed in Iledger v. Steavenson [2 Mees. & W. 799]. The Common Pleas might have held, that ' returned with charges' did necessarily imply presentment and dis- honor. And it does not follow from any thing we said, that we nn'ght not have thought ' returned to me unpaid ' insuUicient. But the case of Hedger v. Steaven- son brought the Court of Exchequer into direct collision with the Common Pleas, not indeed on the sufficiency of the notice, for it was not identical in the two cases,, but on the principle of decidmg. The note, &c., ' is returned impaid,' was the form which the Common Pleas held wrong. The same form, with the addition of \s. Qd. for noting, the Exchequer held right; and Parke, B., while submitting to the au- thority of Solarte r. Palmer, excej)ts to the reasons given for the judgment, and the language in which they are couched, and doubts whether he could go so far as to say that' it ought to appear upon the face of the instrument " by express terms or necessary implication, that the bill was presented and dishonored " ; ' thinking it ' enough if it appear by reasonable intendment, and would be inferred b}- any man of business, that the bill has been presented to the acceptor, and not paid by him.' lie remarks, however, that, even if the rule were properly laid down in those words, it ought to receive a more liberal construction than the Common Pleas appeared to have adopted, in which sentiments Barons Bolland and Alder- son agreed, having been two of the judges consulted by the lords when Parke, J., promulgated their opinion there. The next case, in order of time, is Iloulditch V. Cauty. There the general doctrine was discussed ; and the Lord Chief Justice declared his adherence to Boulton r. Welsh, but distinguished the case then before him. The sulUciency of the written notice was not directly in question ; for it had been followed by a verbal communication between the plaintiff and defendant. Strange r. Price [10 Ad. & E. 125] followed. This Court there held it insufficient to ' inform Mr. James Price ' * that Mr. John Betterton's acceptance, £87 0,9., is not paid.' A fortiori, the Common Pleas would have agreed with us. I do not believe that the Exchequer would have differed. In Easter term, 1840, doubts springing from the same fruitful source were stirred in the C ourt of Common Pleas (Messenger r. Southey, 1 Man. & G. 76), and the Exchequer (Lewis V. Gompertz, 6 Mees. & W. 399) ; the former condemning, the latter supporting, the notice in those respective cases but the forms were so entirely different, that the judgments given might have been consistently formed by either Court. But Messenger v. Southey shows a great relaxation of the rigor of the rule laid down in the Exchequer Chamber and House of Lords, on the part of the Lord Chief Justice, who admits that Grugeon V. Smith might have been well decided bv force of the words ' returned with 374 PROCEEDINGS ON NON-PAYMENT. charges,' and possibly Hedger v. Stcavenson also, because the notice declared the bill to have been ' returned unpaid.' But these are the very words which were held insufficient under the operation of the rule in Boulton v. Welsh, a case decided by the Common Pleas reluctantly, from deference to what was decided in Solarte v. Palmer, and which can hardly be now deemed a satisfactory authority. Upon the whole, it is to be feared, that none of the rules for con- struing this brancli of the instrument designed to be a notice of dishonor will be found capable of very general application. The advantage of clear- and certain rules, where it can be secured, is, indeed, inestimable. Perhaps Lord Mansfield never conferred so great a benefit on the commercial world as by his decision of Tindal r. Brown, where his perseverance compelled them, in spite of themselves, to submit to the doctrine of requiring immediate notice as a matter of law. But in the matter in hand we can scarcely hope to attain such a rule. For if we are to refer the question to a reasonable intendment, and what a man of business would naturally conclude from the words, we can hardly decide it without the intervention of a jury, whose opinions will naturally vary with the circumstances of each case ; and if, on the other hand, the Court must decide on examination of 4the document according to legal and grammatical rules of interpretation, we shall frequently give it a sense in which neither party could ever have understood it. If we adopt the middle course, requiring at least a necessary implication, but qualifying these words by Lord Eldoii's comment in Wilkinson v. Adam, we have just seen that (if the reports be accurate) the same eminent judge, who gave them one sense in Boulton v. Welsh, may admit them to be susceptible of a sense directly opposite in Hedger v. Steavenson. This rule, however, was recom- mended by great authority, twice asserted by the Court of Exchequer, not repu- diated by the Court of Common Pleas. Perhaps it goes no farther than to require that the Court must see that, by some words or other, notice of dishonor has been given. We have entirely excluded the supposition, that the mere fact of making a communication respecting the non-payment of the bill at the proper season can extend the meaning of the words conveying notice of dishonor. This exists in almost every case ; and, as one can hardly conjecture any other motive for giving the information, so the party addressed can hardly fail to infer that it is given in order to fix hiui with liability. Yet no one disputes that the fact must be stated, the notice of dishonor plainly given. But, if this be done, we may now inquire where is the authority establishing the position oi Ashliurstdind Bul- ler, JJ. (unnecessary for the case before them), that the notice must also tell the party addressed that he looks to him for payment ? If not, why send the notice ? True, he may have sonie other reasons for informing the party ad- dressed of the dishonor, while looking elsewhere for his money. But, unless he tells him this, the receiver of such a notice cannot but be certain that the sender means to call upon iu'm for payment. The protest, for which notice was substi- tuted, has no such clause, but begins and ends with the history of the dishonored bill, including the protest itself. Where notice has been given by another party than the holder, there may be good sense in requiring that it shall be accom- panied by a direct demand of payment, or a statement that it will be required of the party addressed ; but in no case has the absence of such information been held to vitiate a notice in other respects complete, and which has come dirfectly from the holder. Nothing now remains but to declare our opinion on the several forms of notice set forth in the special verdict. And the second, of July 11th ; GILBERT V. DENNIS. 375 the third, July 20th; the fourth, July 13th; the fifth, September 11th; the sixth, September 2oth ; and the eighth, September 2Gth ; we think bad, because they contain no notice of dishonor according to any of the decisions, or within any of the rules. Consistently with all that is set forth, the plaintiff, either from ignorance or inadvertence, or because he may really have looked to another, may have abstained altogether from presenting any one of these bills. But this amount reduces the plaintid's claim below the defendants' set-off. Our judgment must then be for the latter, even on the supposition that it would be against them on all the important general points that have been raised." Boulton V. Welsh, cited so frequently above, was overruled in Robson v. Cur- lewis, Car. & M. .378; s. c, 2 Q. B. 421. So the English rule now is not so strict perhaps as the American rule declared in Gilbert v. Dennis. Ramieij, J., in Townsend v. Lorain Bank, 2 Ohio State, 355, quotes the rule in the principal case of Gilbert v. Dennis witli approval, and states that to be the present rule in New York, Massachusetts, Pennsylvania, and Ohio. See also Pinkham v. Macy, 9 Met. 174; Clark v. Eldridge, 13 Met. 96; Ransom v. Mack, 2 Hill, 587 ; Arnold r. Kinloch, 50 Barb. 44 ; Dole v. Gold, 5 Barb. 490; Ettingu. Schuylkill Bank, 2 Barr, 356; Sinclair v. Lynch, 1 Spears, 244; Graham v. Sangston, 1 Md. 60; Armstrong v. Thruston, 11 Md. 118, 157; Lockwood r. Crawford, 18 Conn. 361. That the rigor of the early Englisii rule in Solarte v. Palmer, has been con- siderably relaxed, may be seen in Caunt v. Thompson, 7 Com. B. 400, 410, decided in 1849, and in Metcalfe v. Richardson, 20 Eng. L. & Eq. 301 ; 11 Com. B. 1011, decided in 1853. In the former case, Cresswell, J., said: "In Solarte v. Palmer, which was finally decided in the House of Lords, a very strict rule was adopted ; but that has not been adhered to." And it was held in this case that knowledge derived from the holder that the bill has been dishonored, where the drawer is himself the party who is to pay the bill, as when he is executor of the acceptor, amounts to notice. See jjost, p. 428. In Metcalfe v. Richardson, supra, it was held that the jury might infer dishonor from a state- ment that the .icceptor " could not pay." See also Lewis v. Gompertz, 6 Mees. «fe W. 399 ; Armstrong v. Christiani, 5 Com. B. 687 ; Houlditch r. Cauty, 4 Bing. N. C. 411 ; Smith v. Boulton, 1 Hurl. & W. 3. Notice without date, stating that the paper has been " this day presented for payment " is fatally defective. Wynn v. Alden, 4 Denio, 163. The word " protested " in the notice, clearly implies dishonor. 1 Parsons, Notes and Bills, 471 ; citing Crawford v. Branch Bank, 7 Ala. 205 ; Spies r. Newbury, 2 Doug. Mich. 495 ; DeWolf v. Murray, 2 Sandf. 166, and other authorities. See further upon this branch of the subject, Clark i'. Eldridge, 13 Met. 96; Everard v. Watson, 18 Eng. L. & Ec}. 194 ; Dole v. Gold, 5 Barb. 490 ; Cayuga Bank v. Warden, 1 Comst. 413 ; Story, Promissory Notes, §§ 350, et .sr*^. The third rule, which was also followed ([uite strictly at one time, — requiring the notice to state that the holder looks to the party to whom it is addressed for indemnity, — has lost much of its force, and become nearly ob.«olete. Story, Promissory Notes, § 353. It is stated in Solarte i'. Palmer, 7 Bing. 530, supra, that such information should be given to the drawer or indorser either expressly or by necessary im- plication ; but it is the more recent doctrine that the very fact of notice necessa- rily implies that the holder looks to the party notified for payment. Chard v. 376 PROCEEDINGS ON NON-PAYMENT. Fox, 14 Q. B. 200; Furze v. Sharwood, supra ; King v. Bickley, 2 Q. B. 419; Micrs V. Brown, 11 ]\Iees. & W. 372; Metcalfe v. Richardson, 20 Eng. L. & Eq. 301 ; Caunt v. Thompson, 7 Com. B. 400 ; Townsend v. Lorain Bank, 2 Ohio State, 354; Bank of the United States v. Carneal, 2 Peters, 543; Cowles v. Harte, 3 Conn. 316; Warren v. Gilman, 17 Maine, 360; Barstow v. Hiriart, 6 La. An. 98 ; Burgess t'. Vreeland, 4 Zabr. 71 ; Story, Promissory Notes, § 354; 1 Parsons, Notes and Bills, 472. Stephen B. M.unn v. Luke Baldwin et al. " (6 Massachusetts, 316. Supreme Court, March, 1810.) Manner of sending) notice. Post-office. — Putting a letter into the post-oflSce, directed to the indorserof a bill of exchange, and containing notice of protest for non-payment, is sufficient, though it does not appear that the letter was ever received. Assumpsit upon a bill of exchange drawn in Boston on Justin Smith, of Philadelphia, in favor of the defendants, and by them indorsed to the plaintiff. The facts agreed were, that the notary in Philadelphia, who pro- tested the bill for non-payment, on the day of the protest, or on the morning of the next day, before the mail for Boston was closed, put a letter into the post-office in Philadelphia directed to the de- fendants in Boston, and containing the necessary notice ; but the case adds : " It does not appear that the defendants ever received that letter." Parsons, C. J. The only question in this action is, whether the defendants had legal notice of the protest for non-payment of the bill of exchange. After taking a little time to advise, we are all of opinion that the notice is prima facie sufficient. The holder of the bill made use of the usual mode of conveying notice, by put- ting the letter containing it into the post-office ; and a mode to which- the indorsers must be considered as assenting, or the nego- tiating of bills payable at a distance would be greatly embarrassed, if not obstructed. For who would buy a bill, to be presented for payment in a remote part of the United States, if it was to be un- derstood, that if not paid, he must be at the expense of some private messenger, whose accidental sickness or detention on the road would defeat his remedy ? When a letter is put into the regular post-office, we presume that , MUNN V. BALDWIN. 377 it was sent and received agreeably to its direction, unless the con- trary is proved. Here there is no evidence on tliat point ; the case only stating, that it does not appear that the letter was received by the defendants; and vet, they might, in fact, have received it. If it was agreed that the letter miscarried, and that the defendants did not receive it, it might l>c a question at whose risk the letter was sent by the mail ; and whether, the regular mail being the method of conveyance assented to by the defendants, they must not be answerable for the miscarriage, in the same manner as if a letter sent by their private servant had not been delivered by him. On this last point, however, it is not necessary now to decide. But on the facts stated, we are satisfied that the notice must be consid- ered as sufficient to make the indorsers liable, and that the plaintiflf ought to recover. Therefore, conformably to the agreement of the parties, let the defendants be called. See the following authorities : Saunderson v. Judge, 2 H. Bl. 500; Scott v. Lifford, 9 East, 347 ; Leftley v. Mills, 4 Term, 174 ; Shed v. Brett, 1 Pick. 401 ; Jones t'. Warden, 6 Watts & S. 399 ; Walker v. Stetson, post, 397 ; Chitty, Bills, Co8 : Story, Promissory Notes, § 328; Ibid., Bills of Exchange, § 300 and cases cited. These authorities further show that it is wholly immaterial whether the notice ever reached the indorser or drawer or not. If the notice is duly mailed, the liability is absolutely fixed. This of course is said of the case of an indorser residing in a different town from that of the holder. If he lives in the same town the notice should not be sent by mail, except where there is a penny-post. Pierce v. Pendar, 5 Met. 352 ; Ransom v. Mack, 2 Hill, 587 ; Bank of Colum- bia i\ Lawrence, 1 Peters, 578, post, 404, 407. This subject is more fully consid- ered, in Bowling v. Harrison, infra. As to the employment of messengers to serve notice, it is decided that if the holder resorts to this method, instead of using the public mail, his responsibility continue* until delivery of th« notice, either personally to the party to be charged, or at his place of business or resi- dence. See pvst, pp. 408, 409, 410. 378 PROCEEDINGS ON NON-PAYMENT. John D. Bowling, Plaintiff in Error, v. Jilson P. Harrison. (6 Howard, 248. Supreme Court of the United States, December, 1847.) Notice to be given personaUy, when. — If the parties reside in the same city or town the indorser is entitled to personal notice of the dishonor of the bill or note, either ver- bally or in writing, or a written notice must be left at his dwelling-house or place of business. Notice by the mail in such case is not sufficient. And a memoran- dum on a note, in these words : " Third indorser, J. P. Harrison, lives at Vicks- burg," is not an agreement to receive notice through the post-office. The case is stated in the opinion of the Court. Grier, J. The first assignment of error in this case is to the instruction given by the Court to the jury: "That, to charge an indorser if he lived in the town in which the note was made paya- ble, the notice must be personal, unless he had agreed to receive it elsewhere, or unless, by custom and usage of the bank at which the note is payable, the notice of «on-payment was left at the post- office." As the only question on the trial of the cause was the sufficiency of notice left at the post-office at Vicksburg, to charge an indorser residing there, and not whether a copy left at his dwelling-house or place of business would be proper, the phrase " personal notice " was evidently intended and understood to include the latter in opposition to the former. This instruction is, therefore, not ob- jected to on the ground of any inaccuracy of expression on that point. But the complaint is, that the rule of law on this subject was erroneously enunciated by the Court, in stating the conditions under which a personal service of notice on an indorser is required to be " residence in the town where the note was made payable." It is true, the terms in which the rule of law on that subject is usually stated differ from those used by the Court on this occasion. In Williams v. United States Bank, 2 Peters, 96, 101, it is thus stated by this Court : " If the parties reside in the same city or town, the indorser must be personally noticed of the dishonor of the bill or note, either verbally or in writing, or a written notice must be left at his dwelling-house or place of business." Mr. Justice Story^ Story, Bills, § 312, states the rule in these words : " Where the party entitled to notice and the holder reside • BOWLING V. HARRISON. 379 in the same town or city, the general rule is, that the notice should be given to the party entitled to it, either i)Crsonally, or at his domicile or place of business." The indorsee or owner of the note in this case resided in Mary- land, and the indorser in Vicksburg ; and it is contended that, as they are the only parties, and do not reside in the same place, the rule is inapplicable to the case. But we are of opinion that, whether we regard the reasons upon which this rule is founded, or a correct construction of the terms in which it is usually stated, the instruction given by the Court below was correct, and not such as to mislead the jury in the application of the law to the circumstances of the case before them. The best evidence of notice is proof of personal service on the party to be alTccted by it, or by leaving a copy at his dwelling. Depositing a notice in the post-oflfice affords but presumptive evi- dence of its reception, and is permitted to be substituted for the former only where the latter would be too inconvenient or expen- sive. Hence, when the convenience of the public post is not needed for the purpose of transmission or conveyance, there is no reason for its use, or for waiving the more stringent and certain evidence of notice ; and therefore, in the practical application of the rule, the relative position of tlie person giving the notice and the party receiving it forms the only criterion of the necessity for relax- ing it. A very large portion of the commercial paper used in this coun- try is similar to that which is the subject of the present suit. They are notes made payable at a certain bank. The last indorsee or owner transmits it to that bank for collection ; if funds are not deposited there to meet it when due, it is handed to a notary or agent of the bank, who makes demaird and protest, and gives notice of its dishonor to the indorsers ; if they live in the same town or city where the bank is situated and the demand made, and " where the note was payable," he serves it personally, or at their residence or place of business ; if they live at a distance, so that such a service would be inconvenient and expensive, lie sends the notice by mail to the nearest post-office, or such other place as may have been designated by the party on whom it is to be served. This is and has been the daily practice and construction of the rule in question over the whole country, and the only one consonant with reason. 380 PROCEEDINGS ON NON-PAYMENT. • This practical application of the rule is correctly stated by the Court in their instruction to the jury as connected with the circum- stances of the case before them, and also within its terms as it is usually stated in the books. The term " holder " is properly ap- ••if, plied to the person having possession of the paper and making the demand, whether in his own right or as agent for another. The Planters' Bank of Yicksburg were the " holders " of this note for collection, and were bound to give notice to all the indorsers. Smedes v. The Utica Bank, 20 Johns. 372. The notary, also, who held the note as agent of the owner for the purpose of making demand and protest, may be properly considered as the " holder " within the letter and spirit of this rule. On a careful examination of the very numerous cases in the books in which the rule under consideration has been enunciated in the terms above stated, they will be found not essentially to differ from the present in their cir- cumstances. In some instances, also, the rule has been stated in the terms used by the Court below. See Bayley, Bills. An exception is taken, also, to the instruction of the Court : " Tliat the memorandum attached to the note in this case was not a sufficient agreement to receive notice at the post-office, and to dispense with personal notice on the iudorser ; and that tlie custom and usage of the bank, as proved in this case, were not sufficient to dispense with personal notice." The memorandum is in the following words : " Third iudorser, J. P. Harrison, lives at Vicksburg." The only direct evidence of usage was, " that, for several years prior to the maturity of said note, it had been the usage of the Planters' Bank of Vicksburg to have notice served personally upon the indorsers resident in Vicks- burg, unless there was a memorandum on the note designating a place where notice was to be served ; then the notice was left at such place." This is, in fact, no usage peculiar to Vicksburg, but the general rule of commercial law. The notary appears to have mistaken this memorandum for an agreement to receive notice at the Vicksburg post-office ; and, however willing to excuse himself, he has not ventured to swear directly that there was any known usage to justify this construction, or rather misconstruction, of this memorandum. The counsel for plaintiff in error complain that the Court did not submit it to the jury to say whether an inference might not be drawn, from some equivocal or obscure expressions of the witness, that there was such a usage. BOWLING V. HARRISON. 381 It is true, the jury are the proper judges of the credibility and weight of testimony, Ijut the Court should not instruct them to presume or infer important facts, unless there be testimony which, if believed, would justify such a conclusion. It is of the utmost importance to commercial transactions, tliat the rules of law on the subject of notice which is to charge an in- dorser be stable and certain, and not suffered to fluctuate and vary with the notions or caprice of banking corporations or village nota- ries. A usage, to be binding, should be definite, uniform, and well known. It should be established by clear and satisfactory evi- dence, so tiiat it may be justly presumed that the parties had ref- erence to it in making their contract. Every day's experience shows • that notaries, in many places, fall into loose ways of per- forming their duties, either through negligence or ignorance ; and courts should be cautious how they encourage juries to presume usages and customs contrary to the settled rules of law, in order to sanction the mistakes or misconceptions of careless or incompe- tent officers. It was as easy to have written the memorandum on this note : " The indorser, J. P. Harrison, agrees to receive notice at the Vicksburg post-office," as to write it in its present form ; and one can hardly conceive of the possibility of a well-known and es- tablished usage, that a written memorandum should be construed without any regard to its terms or plain meaning. Those who affirm the existence of such a strange usage should be held to strict proof of it ; and the Court were right in not submitting it to the jury to infer such an improbable and unreasonable custom, by forced or astute construction of equivocal expressions from a willing witness. Let the Judgment be affirmed. The rule established in the above case has beenfollowed throughout the Union, though its reasonableness has in several instanees been questioned ; and tlu- rule itself has been circumscribed within narrow limits. In 1 American Leading Cases, 40.), it is said that the rule " has lost its rea- sonable force, and exists only by authority." In Eagle Bank v. Hathaway, 5 Met. 212 (1842), the rule is qualified to this extent : That where the parties to the transaction to be notified live in different places, a holder may send notice to an indorser residing in a different place, and the latter may use the mail to notify a prior party in the same place. The same doctrine substantially is held in ^Manchester Bank v. Fellows, S Foster, 302, and in Warren D. Gilman, 17 Me. (5 Shepl.) .%0. In Eagle Bank v. Hathaway, Shaw, C. J., said : ♦' Were it an original question, it is far from certain that no- 382 PROCEEDINGS ON NON-PAYMENT. tice by the post-ofTice would not frequently reach an indorser as soon and as certainly as notice at his domicile. Perhaps in large commercial cities, where bankers, merchants, and active men of Ijiisincss usually send to the post-office several times a day, notice by the post-oflice would be as prompt as any other. In smaller communities, however, and places more sparsely settled, such notice might be likely to linger in the post-office. But it is not a new question. A long course of judicial decisions, either following or governing the usage of mer- chants and men of business, has settled it." The rule is again qualified in Shaylor v. Mix, 4 Allen, 351. In tliis case the cashier of the bank at which the paper in suit was payable, deposited in the post- office at Stockbridge a notice of the non-payment, addressed to the indorser at Curtisville (a distinct village within the town of Stockbridge) at which place (C.) the indorser lived, and where there was a post-office at which he usually received his letters. The notice was held good. It is proper to observe, however, that the notice was duly received by the indorser. Bigelow, C. J., said : " The general rule that notice of the dishonor of a bill or note may be sent by mail to a drawer or in- dorser who resides in a different city or town from that in which the holder resides, is founded on the universal usage of all persons engaged in commercial and other business transactions, to resort to the public post as a safe and certain medium of communication between places from and to which there is a regular transmission of the mails. Indeed, if such was not the rule, and it was necessary in order to charge a drawer or indorser either to give him personal notice of the dishonor of a bill or note or to leave a notice at the place of his domicile, it is obvious that in many eases a very serious burden would be put on the holder of negotiable paper, and its free circulation beyond the limits of the domicile of the parties would become almost impracticable. . . . " The same reasons exist for holding a notice by mail sufficient, where the drawer or indorser and the person who is to give the notice reside in the same town, municipality, or district, but in distinct and separate villages, parishes, or settlements, at a distance of several miles from each other, between which there is a regular intercourse by mail, and where it is shown that the party to whom the notice is .addressed is in the habit of receiving letters sent to him in the course of his business at the post-office of the village in or near which he resides. On the question, the fact that the parties both live within the territorial limits of a large town and under the same municipal government, may be quite immaterial. The real inquiry is, whether there are regular communications by mail from the place where the notice is deposited to that where the drawer or indorser resides, and a separate post-office in the latter place, to which he is in the habit of re- sorting to receive letters which are forwarded to him there by mail." We have quoted so much at length from these important cases as indicating the tendency of the courts to take a departure from the old rule. See also note to Bank of Columbia v. Lawrence, ]jost, p. 404. The reasons set forth above for the exceptions mentioned, Avill apply with equal force to all our large cities in which letters are delivered by carriers several times a day ; and so are the authorities. See Story, Promissory Notes, § 323 ; Ibid. Bills of Exchange, §§ 289, 291, 882; Chitty, BiUs, 473; 3 Kent, Com. 107; Pierce v. Pendar, 5 Met. 352, 356 ; Smith v. Mullett, 2 Camp. 208 ; Ransom v. Mack, 2 Hill, 587 ; Sheldon v. Benham, 4 Hill, 129, 133 ; Bank of Columbia v. Lawrence, j^ost, 404, 408. CHANOINE V. FOWLER. 383 F. & II. Chanoine v. Fowler. (3 Wendell, 173. Supreme Court of New York, August, 1829.) By whom notice should be given. — Notice of dishonor cannot be given by a stranger ; it sliould be given by tiie liolder, or by one who is a party to it, and who would, on the same being returned to liim, iiave a rigiit of action on it. Assumpsit by the payees against the drawer of a bill of ex- change. The circuit judge, in charging the jury, instructed them that if the defendant had information in due season of the non- acceptance of the bill, it was good, no matter who sent it. Marcy, J. To determine whether the defendant had legal no- tice of the non-acceptance of the bill, it will be necessary to see when it was given, and from whom it came. Messrs. Sewalls had transmitted the bill to France, and received information of its non- acceptance on the fourth or fifth of April. H. D. Sewall says he did not himself give notice thereof to the defendant, nor does he know that notice was given by his house ; although it was their custom to give notice in such cases, and he has no doubt the de- fendant received it. He learned, from a conversation with the defendant between the time of receiving notice and the fourteenth of April, that he had knowledge that the bill was dishonored. The judge, at the trial, ruled that if the defendant had notice in due time of the non-acceptance of the bill, it was no matter whence it came, it was available to the plaintiffs. The rule of law in relation to the notice was, I apprehend, laid down in a manner too broad and uncjualified. Tlie rule has heretofore fluctuated ; but it never has been authoritatively stated, as I can find, to be as the judge laid it down on the trial, except in tlie case of Shaw v. Coates, at the sittings Ijefore Lord Kenyon^ mentioned in Selwyn's N. P. 320, n. 25.^ Repeated decisions since, both in term and at nisi prius, have qualified and restricted the broad proposition of the judge in tliis case, and of Lord Kenyon in the case of Sliaw v. Coates. In some instances, it has been decided that the holders or their agents are the only persons to give notice of the disiionor of bills ; but it seems to be now settled that it is not absolutely 1 This citation should probably be Shaw v. Croft, cited in Selwyn's N. P. 354. 384 PROCEEDINGS ON NON-PAYMENT. necessary that the notice should come from the holder of a bill, but may be given by any person who is a party to it, and who would, on the same being returned to him, have a right of action on it. Chitty, Bills, 229 ; 2 Camp. 373 ; 1 Stark. 29 ; Bayley, Bills, 161. A notice from a mere stranger is not sufficient; and the charge of the judge was broad enough to sanction such a notice. Nevj trial granted. The point determined in this case, that a stranger cannot give notice of dis- honor, is well settled. See Story, Promissory Notes, § 301, and authorities cited. See also Juniata Bank v. Hale, post, 423, and note, 428. But as indi- cated by the Court, there has been some conflict in the cases upon the question •whether a prior party having notice from the holder, may give notice to antece- dent parties which shall be binding in favor of the holder. The earlier cases, however, of which Tindal v. Brown, 1 T. R. 167; s. c, 2 T. R. 186, is the leading case, may now be considered as overruled, and the doctrine established as stated in the principal case. Chapman v. Keane, 3 Adol. & Ellis, 193, decided in 1835, Lord Chief Justice Denman, in delivering the judgment of the Court in this case, said: "On the trial of this action by the indorsee against the drawer of a bill of exchange, the Lord Chief Justice of the Common Pleas directed a nonsuit for want of due notice of dishonor. The bill had been indorsed by the plaintiff by the desire of Wiltshire, who had discounted it and left it in the hands of the plaintiff's clerk, with instructions to obtain payment or give notice of dishonor. He did give notice to the defendant, but in the name of the plaintiff, not in that of Wiltshire, the then holder, who had deposited the bill with him." The objection to the plaintiff's recovery was founded on the case of Tindal v. Brown, 1 T. R. 167 ; 2 T. R. 186 ; in which all the Judges of this Court, except Lord Mansfield, considered a notice given by one who was not the holder as no notice, on the ground that the drawer was not thereby apprised of the holder's intention to look to him for payment ; and this case was distinctly recognized and its principle adopted by Lord Eldon, in Ex parte Barclay, 7 Ves. 597. Notwithstanding these high authorities, it is clear from Jameson v. Swinton, 2 Camp. 373, Wilson v. Swabey, 1 Stark. 34, and also from the learned trea- tises on Bills of Exchange, that the contrary doctrine has prevailed in the pro- fession ; and we must presume a contrary practice in the commercial world. It is universally considered that the party entitled as holder to sue upon the bill may avail himself of notice given in due time by any party to it. In the nisi prius cases just referred to, no express allusion was made to Tindal v. Brown, or Ex'parte Barclay ; but we can hardly conceive that they were not present to the recollection of Lord Ellenborour/h and Mr. Justice Laurence, or the counsel engaged. These learned judges indeed decided tlieni at nisi ]iTius, but without question. We are now compelled to determine whether the case of Tindal v. Brown, as to this point, be good law. We think that it is not. If it were, the holder might secure his own right against his immediate indorser by regular no- tice ; but the latter and every other party to the bill would be deprived of all remedy against anterior indorsers and the drawer, unless each of those parties CHANOINE V. FOWLER. 385 should in succession take up tlie bill iiiniieiliately on receiving notice of dishonor, :i supposition which cannot reasonably be uiado. We may add that this point was not necessary for the decision of the case, as this Court, including Lord Manxjitld, granted a new trial on a different ground." The rule in this case is declared the settled law in Harrison v. Ituscoc, 15 Mees. & W. 231, 234, and in l\owe v. Tijjper, 20 Eng. L. & Eq. 220, 222 ; o[.in- ion of Jeri'is, C. J. The rule declared in Tmdal r. lirown, supra, is stated with approval in Harris V. Robinson, 4 How. 33G, though that point was not involved in the latter case. The question was whether a notary acting for a collecting bank — tiie agent of the holder — might give notice of dishonor, and it Avas held that he could. The rule as declared above by Lord Denman, is stated to be the law in the text- books. Mr. Justice Story, Promissory Notes, § 302, says: "But a person who is- a party to the note, is not ordinarily to be treated as a mere stranger in the sense of the rule [which denies the validity of notice by a stranger]. If he be a party to the note, and at all events if he be at the time entitled to call for payment or for reimbursement, notice from him will now be held sufficient, although formerly it seems to have been otherwise held." See, to the same effect, 3 Kent Com, 108; Story, Bills^of Exchange, §§ 2'J4, 303, 304; Thompson, Bills, 357, 358 (Wilson's ed. 1«()5)*; Chitty, Bills, 494, 495, and cases cited. ' It is important to observe, however, that for the holder to avail himself of notice by a prior party to a still earlier party not notified by the holder, the latter must have given notice to such prior party. In other words, notice by a prior to a still earlier party will not avail the holder, if he has neglected altogether to give notice. His laclies should not be excused by the diligence of another ; he must have rendered this prior party liable to himself, in order to have the advan- tage of his notice. The same in reason should ajjply to an indorser who attempts to gain the benefit of notice given to an earlier indorser, by a party prior to him- self. It must be admitted that the rule has not in every instance been clearly stated in this way, though ]\Ir. Justice Bayley so states it. Bills, c. 7, § 2, pp. 254-250, 5th ed., where he says : " Though a holder or any other party give no notice hut to the person of tvliom he took the l>ill, yet if notice be cuminuui- catcd without laches to the prior parties, he may avail himself of such communica- tion." In Thompson, Bills, 357 (Wilson's ed. 1865), the rule is thus stated: "Although the holder of a bill or note should give notice qnhj to his immediafe mdorser, he may avail himself of notice to any prior party, whether it proceeds from his indorser or from some earlier indorser, to whom the latter has given no- tice." Story, Promissory Notes, §§ 302, 303, states the doctrine in substantiallv the same language. Ibid., Bills of Exchange, §§303, 304. Bfit if there be any doubt upon the point, the case of Lysaght v. Bryant, 9 Com. B. 46, settles the question. It was here held that the holder of a bill of exchange may, in an action agai^ist the drawer, avail himself of a notice of dis- honor given in due time liy any party to the bill ichose lidlnlity to the holder has been fixed. Mr. Justice Cresswdl said: "It seems, from the cases, that the holder of a bill may avail himself ol' a notice given in due time by a prior in- dorsee, provided he himself is in a condition to sue the party by whom the notice was given. Here Lysaght the younger, hoMing the bill as his father's agent duly presented it, and had it returned to him dishonored. Notice of that fact to 26 386 PROCEEDINGS ON NON-PAYMENT. bim therefore, operating as notice to the firm, the present plaintiff was entitled to sue them, and consequently is in a condition to avail himself of the notice of dishonor given by them to the defendant." Mr. Justice Wilde said: "As to the notice of dishonor, the case seems to fall within the authorities. The facts show that Lysaght and Smithett had due notice of the dishonor of the bill, — one of them having caused it to be presented, and having liad it returned to him. A notice therefore by Lysaght and Smithett, then being under a liability to the present plaintiff, atcording to the authorities inures as a notice to the defendant." See also United States Bank v. Goddard, 6 Mason, 366, 372. Turner v. Leech, 4 Barn. & Aid. 451 ; Roscow v. Hardy, 12 East, 434. The rule in the principal case will exclude the holder from taking advantage of notice from a party who has been discharged by laches or otherwise. Harri- son V. Ruscoe, 15 Mees. & W. 231. In two English cases it seems to have been held that notice by the acceptor of a bill will avail the holder. Shaw v. Croft, per Lord Kenyan, Chitty, Bills, 494 (1798); Rosher v. Kieran, 4 Camp. 87 (1814). But Mr. Justice Bayley explains this on the supposition that the acceptor in these cases had a special authority to give notice. Bills, 254, 5th ed. And it is said in Thompson, .Bills, 359 (Wilson's ed. 1865), that "this explanation is now considered satisfactory, it being held as settled that an indorser is not bound to regard a notice unless it come from a party who would be entitled, on paying the bills, to demand reim- bursement from him." Certainly the notice is bad if given by a drawee who refuses acceptance. Stanton v. Blossom, 14 Mass. 116. As to the effect of notice to anterior parties in favor of intermediate indors- ers, see next case. Simpson v. Turney. (5 Humphreys, 419. Supreme Court of Tennessee, December, 1844.) Intermediate parties. — Notice given by the holder of a promissory note to the second indorser too late to fix his responsibility, will not avail an intermediate indorser, though it would have been in due time if given by him. The case is stated in the opinion of the Court. Reese, J. The Branch Bank of the State of Tennessee was the holder of a promissory note, payable at said bank, made by James H. Jenkins, to Anthony Dibrell, and indorsed in the following order: A. Dibrell, S. Turney, and Jno. W. Simpson. Turney's residence is within one mile of the bank at Sparta, so known to be to the bank, and to all the other parties to the note. The note SIMPSON V. TURNEY. 387 was legally due on the first day of February, 1843, that being the third day of grace. It was on that day protested. On the second day of February no notice of tiie protest for the non-payment of the note was either served upon Turney personally, or left at his residence. He had notice from the bank, the holder, on the third day of February. John W. Simpson, the plainti^, the immediate indorser of Turney, gave him no notice whatever. Tiiese facts being specially found by the jury in the case, the Circuit Court gave judgment for Turney, and the plaintiff has appealed in error to this Court. It is not insisted for the plaintiff here that the notice of the bank to Turney, the only notice he received, was in time. But it is urged, that if Simpson had given him notice on the day he received notice from the bank, such notice would have been good ; and that is certainly so : and tlie plaintiff further insists, that the notice given by the bank shall inure to his l>enefit. If the notice had been in time and valid, it would by law have inured to his benefit, he being an intermediate party. But a notice of no benefit to the bank, because not fixing the liability of the party notified, cannot inure to the benefit of another. So to hold, would be to introduce a new principle into the law merchant. Suppose there were ten indorsers upon a note : if the holder ten days after the protest gave notice to the first indorser, this, according to the argument, would fix all the indorsers, for it would be just the time necessary to them to have given notice to each other succes- sively. It is perhaps a universal principle, where substitution exists at all, that the matter or thing to be substituted to must be valid and effective in behalf of the principal ; if it be ineffectual in his behalf, it is difficult to see how it can inure to the benefit of others. Upon the direct question raised in tliis case, Bayley on Bills expressly says : " Nor is it any excuse that there are several intervening parties between him who gives the notice and the defendant to whom it is given ; and if the notice had been commu- nicated through those intervening parties, and each had taken the time the law allows, the defendant would not have had the notice the sooner." The same principle is also decided in the case of Turner v. Leech, 4 Barn. & Aid. 454. We have been referred by the plaintiff to what has been said by 388 , PROCEEDINGS ON NON-PAYMENT. this Court in the case of McNeil v. Wyatt, 3 Humph. 125, 128. The bank at Lagrange in that case gave notice to one Glover on the 14th, to be served on Wyatt and McNeil. Wyatt was served on the 14th, and McNeil on the 15th. But Glover proved in the Cir- cuit Court that he was the general agent of Wyatt, to serve notices for him when his name was on paper. And the Circuit Court left it to the jury to say whether Glover, who served the notice, was not Wyatt's agent as well as the agent of the bank ; and if he was, then the notice to McNeil on the 15th, one day after Wyatt re- ceived notice, was sufficient. This Court held that there was not any error in this part of the charge ; and placing the validity of the notice, as this Court did, upon that special ground, is a distinct recognition of the general principle maintained by us in this case. Upon the whole, we affirm the judgment. That notice by the holder or any other party inures to the benefit of all inter- mediate indorsers, though they may not have notified the prior parties, when given in time to fix the liability of the notified party to him who gives notice, see Marr v. Johnson, 9 Yerg. 1 ; Beale v. Parrish, 20 N. Y. 407 ; Palen v. Shurt- leflF, 9 Met. .581; Stanton v. Blossom, 14 Mass. 116; Chitty, Bills, 494; Story, Promissory Notes, § 303 ; Story, Bills of Exchange, § 294. See also Etting v. Schuylkill Bank, 2 Penn. State, 355. The President, Directors, &c., of the Bank of Alexan- dria, Plaintiffs in Error, v. Thomas Swann. (9 Peters, 33. Supreme Court of the United States, January, 1835.) When the notice should be sent. — It is sufficient to charge an indorser that notice of the default of the maker of a note be put into the post-office early enough to be sent by the mail of the succeeding day. The holder is not required to give notice the day upon which the demand was made. The case is stated in the opinion of the Court. Thompson, J. This suit was brought in the Circuit Court of the District of Columbia, for the county of Alexandria, upon a promissory note made by Humphrey Peake, and indorsed by the BANK OF ALEXANDRIA V. SWANN. 389 defendant in error. Upon the trial the jury found a special ver- dict, upon which the Court gave judgment for the defendant, and the case conies here upon a writ of error. The points upon which the decision of tlie case turns, resolve themselves into two questions. 1. Whether notice of the dishonor of the note was given to the indorscr in due time ? 2. Wiiether such notice contained the requisite certainty in the description of the note ? The note bears date on the twenty-third day of June, 1829, and is for the sum of -f'HOO, payable sixty days after date at the Bank of Alexandria. The last day of grace expired on the twenty-hfth of August, and on that day the note was duly presented, and demand of payment made at the bank, and protested for non-pay- ment ; and on the next day notice thereof was sent by mail to the indorser, who resided in the city of Washington. The general rule, as laid down by this Court in Lenox v. Rob- erts, 2 Wheat. 373, 4 Cond. 163, is, that the demand of payment should be made on the last day of grace, and notice of the default of the maker be put into the post-office early enough to be sent by the mail of the succeeding day. The special verdict in the present case finds, that according to the course of the mail from Alexan- dria to the city of Washington, all letters put into the mail before half-past eight o'clock p.m., at Alexandria, would leave there some time during that night, and would be deliverable at Wash- ington the next day, at any time after eight o'clock a.m. ; and it is argued on the part of tlie defendant in error, that as demand of payment was made before three o'clock p.m., notice of the non- payment of the note should have been put into the post-office on the same day it was dishonored, early enougii to have gone with the mail of that evening. The law does not require the utmost possible diligence in the holder in giving notice of the dishonor of the note ; all that is required is ordinary reasonable diligence ; and what shall constitute reasonable diligence ought to be regulated with a view to practical convenience, and the usual course of busi- ness. In the case of the Bank of Columbia v. Lawrence, 1 Peters, 578, 583,1 it; ig gaid by this Court to be well settled at this day, that when the facts are ascertained, and are undisputed, what shall constitute due diligence is a question of law; that this is best cal- l Post, 404. 390 PROCEEDINGS ON NON-PAYMENT. Ciliated for the establishment of fixed and uniform rules on the subject, and is highly important for the safety of holders of com- mercial paper. The law, generally speaking, does not regard the fractions of a day ; and, although the demand of payment at the bank was required to be made during banking hours, it would be unreasonable, and against what the special verdict finds to have been the usage of the bank at that time, to require notice of non- payment to be sent to the indorser on the same day. This usage of the bank corresponds with the rule of law on the subject. If the time of sending the notice is limited to a fractional part of a day, it is well observed by Chief Justice ITosmer, in the case of the Hartford Bank v. Stedman and Gordon, 3 Conn. 489, 495, that it will always come to a question, how swiftly the notice can be con- veyed. We think, therefore, that the notice sent by the mail, the next day after the dishonor of the note, was in due time. The second point in this case is given in full in the note to the case of Mills v. Bank of the United States, ante, p. 358, as illustrating the subject of misdescription in the notice. There is nothing in this pai't of the case relating to the time of sending notice. In the case of several successive indorsements, the rule is that each indorser has the same time within which to notify antecedent parties, after the receipt of notice himself, that the holder has ; and this, in the case of a daily mail to the place in which the party to be notified resides, is until the next day. But if no mail leaves the next day, or if a mail leaves before business hours, he need not post the notice until the next regular mail. But the party, whether holder or indorser, must in all cases send his notices to antecedent parties at the same time that he would to his immediate indorser ; he will not be allowed as many days as there are intermediate parties. These rules are so well settled that it will not be necessary to cite the cases. They will be found in 1 Parsons, Notes and Bills, 506, et seq. ; Story, Promissory Notes, §§ 319, et seq. The holder, however, will have the advantage of every notice duly sent by a prior party whose liability he has fixed by notice. See note to Chanoine v. Fow- ler, ante, p. 383. There has been some doubt concerning the proper interpretation of the term " one day," used by some of the text- writers, whether it means that the party giving notice has twenty-four hours within which to do so, or whether the ex- pression means that he shall only have until a seasonable mail of the next day. The subject is learnedly discussed by Mr. Justice Bartley, in Lawson v. Farmers' Bank, 1 Ohio State, 206, 212. He said: — " Touching the second question, then, did the Court of Common Pleas err in charging the jury that, if the notice to the indorsers of the demand and non- payment of the bill was deposited in the post-office at Pittsburgh at any time durinj the day after the day of dishonor, without regard to the time of the BANK OF ALEXANDRIA V. SWANN. 391 departure of the mail for that day, it would be sufficient notice ; and, moreover, that if it was found inconvenient to deposit tlie notice in the post-ofh<e in time for the mail of tliat day, it was in proper time if the notice was depositeil in time to be sent otF by the next mail of the day next after the day following the day of the dishonor of the bill ? Tiiis involves a very important question of the law merchant, and it is not a little surprisinj^ tliat there should remain any doubt or uncertainty at this late day, upon a question of such vital importance to the interest of commercial countries, respecting the duties and liabilities of holders and parties to dishon- ored paper. And it is a matter of no small moment, that a question which en- ters so largely as does this into the every-day business transactions of different commercial states and countries should be settled, not only upon a certain and unvarying, but also upon a uniform basis. The liability of the indor.«er is strictly conditional, dependent both upon due demand of payment upon the maker or acceptor, and also due and legal notice of the non-payment. The purpose and object of such demand and notice is to enable the indorser to look to his own interest, and take immediate measures for his indemnity. The demand and notice being conditions precedent to the indors- er's liability, it is incumbent on the holder to make clear and satisfactory proof of them before he can recover. The plaintiffs in error in this case, being accom- modation indorscrs, may well insist upon strict proof of due diligence in giving notice of the dishonor of the bill. The law does not require the utmost diligence in the holder, in giving notice to the dishonor of a bill or note. All that is requisite is ordinary or reasonable diligence. And this is not only the rule and requirement of the law merchant, but a statutory provision of this State. But what amounts to due diligence or reasonable notice is, when the facts are ascertained, purely a question of law, settled " with a view to practical convenience, and the usual course of business." The question was at one time strenuously contested, whether due diligence did not recjuire that where the parties reside in the same place, the notice of non- payment should be given on the day of the dishonor of the bill ; and where the parties reside in different places, should be sent by the mail of that day, or the first possible or practicable mail after the default. Tindal i\ Brown, 1 T. R. 107 ; Darbishire v. Parker, East, ;] ; iSIarius, Bills, 24. But the rule was established and is supported by great weight of authority, that, where the parties reside in different places, and the post is the mode of conveyance adopted, — although it was in no case necessary to send the notice by the post of the same day of the dishonor, or of the knowledge of the dishonor, the holder being entitled to the whole of that day, being the day of the dishonor, or knowledge of the dis- honor, to prepare his notice, — yet that the notice would be insufficient unless put into the post-office in time to go by the next mail after that day. And this is in conformity with the rule laid down by Mr. Chitty in his learned treatise on Bills of Exchange, in the following explicit language : " When the parties do not reside in the same place, and the notice is to be sent by general post, then the holder or party to give the notice, must take care to forward notice by the post of the next day after the dishonor, or after he receives notice of such dis- honor, whether that post sets off from the place where he is early or late ; and if there be no post on such next day, then he must send off notice by the very next post that occurs after that day." Chitty, Bills, 485. 392 PROCEEDINGS ON NON-PAYMENT. This is in accordance with the rule as settled by the Supreme Court of the United States. In Lenox v. Roberts, 2 Wheat. 37;^, Chief Justice Marshall' says: " It is the opinion of the Court that notice of the default of the maker should be put into the post-office early enough to be sent by the mail of the day succeeding the last day of grace." And in the case of the Bank of Alexandria V. Swann, 9 Peters, ."3 [the principal case], Mr. Justice Thompson approved of the general rule laid down in the case of Lenox v. Roberts, holding that notice of the dishonor need not be forwarded on the last day of grace, but should be sent by the mail of the next day after the dishonor. The same rule was adopted by Mr. Justice Washington in the case of the United States v. Parker's Administrators, 4 Wash. 465 ; and in which case subsequently that decision was affirmed on error by the Supreme Court, 12 Wheat. 559. The same rule received the sanction of Mr. Justice Story, in the case of the Seventh Ward Bank v. Hanrick, 2 Story, 416, although, in the case of Mitchell v. Degrand, 1 Mason, 180, he appears to have been disposed to even greater strictness, holding that when a bill is once dishon- ored, the holder is bound to give notice by the next practicable mail, to the par- ties whom he means to charge for the default. This, however, is explained by Mr. Justice Washington in the case of United States v. Parker's Administrators, to mean that the notice should be put into the office in time to be sent by the mail of the succeeding day. This rule, adopted by the Supreme Court of the United States, and which is supported by the great weight of authority in Eng- land and in the several States of the Union in which the question appears to have been settled by reported adjudications, is subject to some qualification re- laxing its rigor. If two mails leave the same day on the route to the place of the residence of the indorser, it is sufficient to deposit the notice in the post-office in time to go by either mail of that day, inasmuch as the fractions of the day are not counted. Whitewell v. Johnson, 17 Mass. 449, 454; Howard v. Ives, 1 Hill, N. Y. 263. And for the reason that the mail of the day succeeding the day of the default may go out in some places soon after midnight or at a very early hour in the morning, and is sometimes made up and closed the evening preceding, it has . been adjudged that, inasmuch as the holder is allowed till the day after the day of default to send off the notice, reasonable diligence would not require him to deposit the notice in the post-office at an unseasonably early hour, or before a reasonable time can be had for depositing the notice in the post-office after early business hours of that day. The rule, as qualified and settled by the late author- ities, and which I take to be the correct one, is that where the parties reside in the same place or city, the notice may be given on the day of default ; but if given at any time before the expiration of the day thereafter, it will be sufficient ; and when the parties reside in different places or States, the notice may be sent by the mail of the day of the default ; but if not, it viust be deposited in the office in time for the mail of the next day, provided the mail of that day be not made up and closed at an unreasonably early hour. If, however, the mail of that day be closed before a reasonable time after early business hours, or if there be no mail sent out on that day, then it must be deposited in time for the next possi- ble post. In the case of Downs v. The Planters' Bank, 1 Sm. & M. 261, and also the case of Chick v. Pillsbury, 24 Me. 458, the doctrine on this subject has been more fully examined than perhaps in any of the older cases ; and the rule adopted is that the notice, in order to charge the indorser living in another BANK OP ALEXANDRIA V. SWANN. 393 place or State, mnst be dei)osIt('d in the post-olFicc in time to be sent by tlic mail of the (lay succeeding the day of the disiionor, providin;^ the mail of that day be not closed at an unreasonably early hour, or before early and convenient business hours. And this rule is well sustained by authority. Fullerton et al. v. The Bank of the United States, 1 Peters, 605, 618 ; Eagle Bank v. Chapin, 3 Pick. 180, 183; Talbot v. Clark, 8 Pick. .01 ; Carter v. Burley, 9 N. Ilamp. 559, 570; Farmers' Bank of Maryland v. Duvall, 7 Gill & Johnson, 79 ; Freemans' Bank V. Perkins, 18 Me. 292 ; Mead v. Engs, 5 Cowen, 303 ; Sewall v. Russell, 3 Wend. 276 ; Brown v. Ferguson, 4 Leigh, 37 ; Dodge v. Bank of Kentucky, 2 Marshall, 610; Hickman v. Ryan, 5 Littell, 24; Hartford Bank v. Steedman, 3 Conn. 489 ; Brenzer v. Wightraan, 7 Watts & S. 264 ; Townsley v. Sprin- ger, 1 La. 122; Bank of Natchez v. King, 3 Robinson, 243; Brown v. Turner, 1 Ala. 752; Lockwood v. Crawford, 18 Conn. 361, 363; Bayley, Bills, 262; Story, Promissory Notes, § 325 ; and Hyles, Bills, 160. Some obscurity and uncertainty have been created on this subject, by the expression used in some of the cases, and by some of the elementary writers, that the holder or person giving the notice, has " one day" or " an entire day" in which to give the notice after the day of the dishonor. The term one day or an entire day, seems not to have been used always in the same sense ; and the confusion appears to have in part arisen from the fact, that where the parties reside in the same place, notice at any time before the e.xpiration of the day after the day of the default, will be sufficient, while where the parties reside in different places, the notice must frequently be mailed early in the day, to be in time for the mail of that day. The defendant in error relies upon the doctrine laid down in the elementary works of Chancellor Kent and ]\Ir. Justice Story, as fully sustaining the charge of the Court below. Inasmuch as precision and certainty, in the settlement of this rule, are of very great importance, a careful examination of the subject seems to be required. Chancellor Kent, whose accuracy in his Commentaries on American Law, is never to be questioned without graye consideration, in the late editions of his works, 3 Kent's Com. 106, states the rule as follows : — "According to the modern doctrine, the notice must be given by the first direct and regular conveyance. This means the first mail that goes after the day next to the third day of grace so that, if the third day of grace be on Thursday, and the drawer or indorser reside out of town, the notice may indeed be sent on Thursday, but must be put into the post-office, or mailed on Friday, so as to be forwarded as soon as possible thereafter." And in a note by the learned author explanatory of the text, it is said, that, — "The principle that ordinary reasonable diligence is suflicient, and that the law does not regard the fractious of the day in sending notice, will sustain the rule as it is now generally and best understood in England and in the commercial part of the United States, that notice put into the post-office on the next day at any time of the day, so as to be ready for the first mail that goes thereafter, is due notice, though it may not I)e mailed in season to go by the mail of the day next after the day of the default." Several cases are cited by the U-arned author, but they do not sustain his position. The case of Jackson v. Richards, 2 Caines Cases, 343, referred to, is 394 PROCEEDINGS ON NON-PAYMENT. not in point; Haynes v. Birks, 3 Bos. & Pul. r)99, decides that when the note fell due on Saturday, the notice sent by the post on Monday, was sufficient. Sunday being excluded and not taken into the account, the notice was sent by the post of the next legal day. In the cases of Bray v. Hadwen, 5 Maule & Sel. 08, and Wright v. Sliawcross, 2 Barn. & Aid. 501, it was decided that the notice having arrived on Sunday, was to be considered as having been received on Monday, and then the party had till Tuesday, the next post day for giving the notice. In Geill v. Jeremy, 1 M. & M. 61, where no mail went out on the day next after the day of the default, it was held that the rule being an impossible one on that day, a notice sent by the next succeeding mail da:y would be in season. The case of Firth v. Thrush, 8 Barn. & C. 387, turned upon the question whether the attorney employed to ascertain the residence of the de- fendant, should be allowed a day to consult his client after information of the defendant's residence. And Lord Tenterden said, "if the letter (giving informa- tion of the defendant's residence) had been sent to the principal, he would have been bound to give notice on the next day." The only other case referred to, is that of Hawkes v. Salter, 4 Bing. 715 ; and this is the only one which even tends to sustain the position of the learned author. In that case the bill was dishonored on Saturday, and the mail left at half-past nine o'clock on Monday morning ; and an unsuccessful attempt was made to prove that the notice was put into the post-office on Tuesday morning. Best, C. J., expressed himself clearly of opinion, " that it would have been sufficient if the letter had been put into the post-office before the mail started on the Tuesday morning, but that there was no sufficient evidence that it had been put in even on Tuesday morn- ing.''' The opinion in this case was, therefore, a mere dictum, which determined nothing, the case being decided upon a different ground. But the position of Chancellor Kent, above referred to, is in direct conflict with the rule as laid down by himself in the first edition of his work. In the edition of 1828, 3 Kent's Com. 73, the rule is stated in these words : — " According to the modern doctrine the notice must be given by the first direct regular conveyance. This means the first convenient and practicable mail that goes on the day next to the third day of grace ; so that if the third day of grace be on Thursday, and the drawer or indorser reside out of town, the notice may indeed be sent on Thursday, but must be sent by the mail that goes on Friday." In the last edition of this work, published in 1851, the editor, Mr. William Kent, admits the weight of authority to be in favor of the rule as laid down in Chick V. Pillsbury and Downs v. Planters' Bank above referred to ; and he says, that, — "The opinion of C. J. Best, in 4 Bing. 715, is the only one that sustains the rule suggested, and that the observations of Mr. Justice Story were too latitu- dinarian in allowing the entire whole day next after the dishonor." It is true, that Mr. Justice Story in his work on Bills of Exchange, § 291, says that an indorser need not give notice to his antecedent indorser, till twenty- four hours have elapsed after the receipt of his own notice of the dishonor. And in his note to § 290, of the same work, the author says, that, — " The rule does not appear to be so strict as it is laid down by Mr. Chitty, and that it would be more correct to saj', that the holder is entitled to one whole day to prepare his notice, and that, therefore, it will be sufficient, if he sends BANK OF ALEXANDRIA V. SWANN. 395 it liy the next post that goes after twenty-four liours from the time of the dis- ' honor," «fec. And he adds, — " I have seen no late case wliich imports a different doctrine ; on the contrarj-, they appear to me to sustain it ; but as I do not know of any direct authority which positively so decides, this remark is merely propounded for the considera- tion of the learned reader." It is not necessary here to inquire wlieth^ the ])Osition taken by the learned author is in c'onHiet with the decisions made by himself in 1 Mason, 180, and 2 Story, 416, above referred to. In his same work on Bills of Exchan<(e, he has stated the rule with great precision and accuracy in the following language, in § 382 : — "In all cases where notice is required to be given, it is sufficient, if the notice is personal, that it is given on the day succeeding the day of the dishonor, early enough for the party to receive it on tiiat day. If sent by the mail, it is sufficient if it is sent by the mail of the next day, or the next practicable mail." And in § 288: " If the post or mail leaves the next day after the dishonor, tlic notice should be sent by that post or mail, if the time of its closing or de- parture, is not at too early an hour to disable the holder from a reasonable per- fdrmance of tlie duty. So that the rule may be fairly stated in more general terms to be, that the notice is in all cases to be sent by the next practical post or mail after the day of tiie dishonor, having a due reference to all the circum- stances of the case." The same learned author has laid down the rule very fully to the same effect in his work on Promissory Notes, § 32-1. The statement of the rule in the last extract, is consistent with the doctrine estal)lished by the Supreme Court of the United States, and fully sustained by authority. The discrepancies which have arisen on this subject appear to have grown out of an inaccurate use in some of the books and decisions of the terms " his day," "an entire day," and "a whole day," &c., these phrases being at one time understood or taken literally, and at another time to mean a space of time equal to a full day. If these phrases are to be taken to mean the duration of a full day instead of tiie day itself, in their general application, the effect would be to change and break down numerous well-settled and useful rules. The law as a general thing does not have regard to the fractions of a day, and thus compel parties to resort to nice questions of the sufficiency of a certain number of hours or minutes, and to the taking of the parts of two different days to make up what may be considered in one sense a day, because equal in duration to one entire day. If this Avere the case the indorscr, after having been notified, would often be unable to determine whether he had been notified in season or not, until he had learned the hour of the day when the default occurred; and the holder would have it in his power at times of affecting injuriously the right of the indorser to an early notice, by delaying the presentment until a late hour in the day. Noth- ing more could have been intemled by the use of these phrases than that each party should have a specified day upon which the act enjoined upon him should be performed. This is the sense in which Lord EUenboroufih used it in the case of Smith V. MuUett, 2 Camp. 208, when he said : " Ka party has an entire day, 396 PROCEEDINGS ON NON-PAYMENT. he must send ofF his letter conveying the notice -within post time of that day." And it is said by a learned elementary author, " if a party has an entire day, he must send off his letter conveying the notice of the dishonor of the bill •within post time of that day." Byles, Bills, 101. The rule laid down in Smith's Mercantile Law, to which the defendant in error has referred, will not, as I apprehend, be found on close examination to be at variance with the doctrine here adopted. Smith's Mercantile Law, 310. It is claimed on behalf of the plaintiffs in error in this case, that the notice of the dishonor of the bill should have been sent immediately to them, instead of being sent, as it was in the first place, to the Bank of Salem. The holder is not bound to give notice of the dishonor to any more than his immediate indorser ; and each party to a bill has the same time after notice to himself for giving notice to other parties beyond him, that was allowed to the holder after the default. Sheldon v. Benham, 4 Hill, N. Y. 129 ; Eagle Bank v. Hathaway, 5 Met. 213. And when a bill is sent to an agent for collection, the agent is required simply to give notice of the dishonor in due time to his prin- cipal ; and the principal then has the same time for giving notice to the indors- ers after such notice from his agent, as if he had been himself an indorser receiving notice from a holder. Bank of the United States v. Davis, 2 Hill, N. Y. 452; Church v. Barlow, 9 Pick. 547. The party in this case, therefore, was not at fault by sending the notice directly to the Bank of Salem, leaving that bank to send the notice to the plaintiffs in error. Applying the rule, therefore, which we have adopted as the correct one, to this case, it was incumbent on the plaintiff below, in order to be entitled to a re- covery, to show that the notice of the dishonor of the bill was deposited in the post-office in Pittsburgh, in time to be sent by the mail of the twenty-eighth day of July. Ten minutes past nine o'clock in the morning was not an unreasona- bly early hour, or before a reasonable and convenient time after the commence- ment of early business hours of the day. The neglect, therefore, to send the notice by the mail of the next day after the day of the default, operated to dis- charge the plaintiffs in error as indorsers, unless from some other cause no- tice had been dispensed with or rendered unnecessary. And for the charge of the Court of Common Pleas to the jury to the contrary, the judgment is reversed, and the cause remanded for further proceedings." See Stephenson v. Dickson, 24 Penn. State, 148 ; Prideaux v. Criddle, Law Rep. 4 Q. B. 455 ; also Simpson v. Turney, ante, p. 386. If notice is sent by private conveyance, the holder's responsibility continues until delivery ; and this must not be later than the day on which it would have arrived if sent by mail. Van Vechten v. Pruyn, 13 N. Y, (3 Kern.) 549, 555. See post, p, 410. WALKER V. STETSON. 397 Frederick W. Walker v. Charles Stetson. (l-l Ohio State, 89. Supreme Court, December, 1862.) Domicile. Where notice should be sent. — Tlie fact that a drawer or indorser gws from the place of his actual residence to another place to dispose of property, which occupies him for several weeks of time, does not make such town his place of business within the moaning of the rule upon the subject of notice, in the absence of all explanation as to the mode of doing the business, or of his relations to the post-office there. The case is stated in the opinion of tlie Court. Ranney, J. The bills of exchange upon which this action was brought, were drawn and indorsed by the plaintiff in error. His liability upon them was conditional, and his obligation to pay them depended upon their being duly dishonored, and legal notice of such dishonor ; unless, indeed, he had waived such diligence on the part of the holder. The bills were legally dishonored and properly protested, and notices for all the parties conditionally liable were in due time forwarded to the defendant in error, a subsequent indorser of the bills. The right to recover was placed upon two grounds : 1. That the defendant in error had, on the day he received these notices, forwarded by mail, those directed to the plaintiff in error, to his place of business at Chicago ; and, 2. That a few days thereafter, in a personal interview with the defendant in error, he had recognized his liability as still existing, and had expressly promised to pay the bills. The verdict of the Jury may have been founded upon the ground last stated, but, as there was a conflict in the evidence upon it, there is nothing in the record to show that it was ; and we are, consequently, compelled to examine the facts applicable to the first ground, and the instructions of the Court based upon that state of facts. Stating these facts as broadly as any thing in the evidence will warrant, they amounted to this : The plaintiff" in error was a resi- dent of Morristown, New Jersey, and had no fixed residence in the State of Ohio, or at Chicago ; but during most of the season of 1856 had been engaged in the lumber business, staying at Cleveland, and in Ottowa county, where he owned a saw-mill. That 398 PROCEEDINGS ON NON-PAYMENT. about the first of November he left Cleveland, and, before doing so, informed the defendant in error that he was going to Chicago to disjiose of a quantity of lumber which he w-as about shipping to that place, and should return from there to Cleveland ; and had not returned when the notices were mailed to him at Chicago on the 22d of that month, — that being the very day upon which they were received by the defendant in error from the notary in New York. In point of fact, the plaintiff in error was in Chicago when the notices were mailed to him, but probably left there before they arrived, and shortly after was in Cleveland, where he was met by the defendant in error, and fully informed of all that had transpired. Upon this state of the facts, counsel for the plaintiff in error requested the Court to charge the jury, " That if the defendant's residence was not in Chicago, or he was not engaged in any per- manent business there, but was there temporarily, and for a tem- porary purpose only, the sending to him, at Chicago, notices of the protest of said bills of exchange would not be, unless the defendant actually received them, due diligence, and sufficient to charge the defendant with the payment of said bills." To which the Court responded as follows : " That if the defend- ant did not reside in Chicago, and was not engaged in any perma- nent business there, but was there for a purpose merely temporary, sending notices of protest to him at Chicago would not, as a propo- sition of law, constitute due diligence sufficient to charge the defendant. But if the defendant had gone to Chicago on business which would detain him an indefinite period of time, and might occupy him there during the remainder of the season of navigation on the lakes, that might be the proper place to send the notices to him ; and it was a question of fact for the jury to find, referring to all the testimony on tliat question, whether the business of the defendant at Chicago was of that character, or whether the plaintiff had sufficient reason from his information derived from the defend- ant, or from his own knowledge of the defendant's business, to believe the defendant was at Chicago at the time the notices were sent by him, such notices would be due diligence on the part of the plain- tiff, and sufficient to charge the defendant." If we were permitted to treat the matter as a question of injury to the plaintiff in error, there would be no difficulty whatever in saying that he lost nothing by the course pursued by the defendant WALKER V. STETSON. 399 in error, and probably was actually informed of the dishonor of the bills sooner than he could have been, if the notices had been sent to his residence in New Jersey. But we are not at liberty to take so wide a view of the suliject. The law has very definitely settled what shall constitute due diligence in such cases, and when the facts are ascertained, it is the duty of the Court to determine, as a question of law, whether reasonable diligence has been used ; and it cannot be submitted to the jury as a question of fact. Bank of Columl)ia r. Lawrence, 1 Peters, 578 ; ^ Bank of Utica v. Bender, 21 Wend. 643 ;''^ Carroll v. Upton, 3 Com. 272 ; Wheeler v. Field, . 6 Met. 290 ; Belden v. Lamb, 17 Conn. 442 ; Lorain Bank of Elyria V. Townsend, 2 Ohio .State, 343. The object has been to attain the greatest possible certainty in a matter so vital to the interests of the mercantile community, and the equities of particular cases have not been allowed to interfere with the attainment of this object. In this State, these rules have been fully adopted and constantly enforced, and if we saw reason now to doubt their justice or policy, we should find ourselves unable to change them, without a corresponding change should take place in States and countries with which our commercial relations are so extensive and important. The parties in this case not residing in the same place, there is no doubt that it was a proper case for sending the notices by mail, and in such cases it is well settled, that putting into the post-office seasonably a notice properly directed is, in itself, due diligence, or constructive notice, and will be sufficient, although it never reaches the party to whom it is directed. Woodcock v. Ilouldsworth, 16 Mees. & W. 124 ; Dickens v. Beal, 10 Peters, 570 ; Jones v. Lewis, 8 Watts & S. 14. As to the itlace to which the notice should be directed, it is equally well settled, that it should be sent to the drawer or indorscr's residence or place of business, if either is known to the holder, or, upon diligent inquiry, can be ascertained ; and if neither are known nor can be found, the law dispenses with any notice whatever. Bank of the United States v. Carneal, 2 Peters, 543 ; Chitty, Bills, 486 ; Bayley, Bills, 280. But while this is the general principle, the spirit of the rule certainly is, that the notice should^ be sent to such place that it will be most likely promptly to reach the person for whom it is intended; and hence, in its appli- cation to particular cases, it has often been held that a notice is .' Post, -404. .» Post, 410. 400 PROCEEDINGS ON NON-PAYMENT. sufficient if sent to the post-oAicc where the party usually receives his letters, although not that of his residence, as well as to that where he resides ; and in all cases the notice may be sent to the place pointed out by the drawer or indorscr, and in general will be sufficient, both in reference to himself and parties who stand behind him on the bill. Reid v. Payne, 16 Johns. 218 ; Bank of Geneva v. Howlett, 4 Wend. 328 ; Bank of United States v. Lane, 3 Hawks, 453 ; Shelton v. Braithwaite, 8 Mees. & W. 252. Indeed, it is suggested in the present case that the statement made by the plaintiff to tlie defendant in error, sufficiently indicated Chicago as the place to which the notices might be sent. Whatever of weight this suggestion may properly have, it can only be considered by us when the case in the Court below appears to have been decided upon that ground. As yet this consideration has not been passed upon in that Court. How then, in view of the foregoing principles, stands the case before us ? Was Chicago, in the sense of the legal rule, so far the residence or place of business of the party as to make the notices sent there constructive notice of the dishonor of the bills ? A very careful examination of all the evidence now contained in the record has fully satisfied us that it was not. Upon this point there is no conflict in the evidence. The plaintiff below says the defendant informed him he was going to Chicago " to dispose of a quantity of lumber, which he was about shipping to that place, and should return from there to Cleveland ; " that he knew the defendant had been to Chicago, but did not know that he was there when the notices were mailed, and had reason to believe he did not receive them there, as he was soon afterward back to Cleveland. Tlie defendant says he went to Chicago, and was there from the first to the twenty-fourth of November, " disposing of a quantity of lum- ber," and in the afternoon of the day last named, he left Chicago, and arrived at Cleveland on the morning of the 26th ; that he had no permanent business at Chicago, and was there for a temporary purpose only, and never received the notices sent. The question is then reduced to this: Does going to a city to dispose of property, wliicli occupies the party for three weeks of time, without one word of explanation as to the mode of dqing the business, or his relations to the post-office, make such city his place of business within the meaning of the commercial rule ? If we were to affirm that it did, the principle must have a "very wide, WALKER V. STETSON. 401 and as we think a very disastrous, application to a large class of business men, dealing more largely than any other in commercial paper. Tlie stock and j)roduce of the West are taken to the east- ern cities, by persons engaged in that business, to be sold ; and most western merchants, once or twice in each year, spend from a few days to a few weeks at the same places, replenishing their stocks oi goods. Did anybody ever suppose that these persons were bound to watch the post-oflRces in those cities for notices of the protest of their j)aper ? We think not ; and yet if these notices are sufficient, we see no distinction to lie taken between this case and theirs. It is very certain tliat no decided case has given any countenance to the sujtposition that such a notice, not received by the party, would be sulhcient. The cases of Tunstall v. Walker, 2 Sm. & M. »);]8, and Chou- teau r. Wel)ster, G Met. 1, have, perhaps, gone to the verge of the law, but they are very far from reaching this case. In each of those cases the defendant was, at the time the notice was forwarded to him at Washington, a senator in Congress, and in actual attend- ance on that body. The first of these cases had been before decided by the High Court of Errors and Appeals, and is. reported in 1 How. Miss. 259. Upon the then state of the evidence, the Court held that a notice sent to Washington city, when the senator had a resi- dence in tiie .State which he represented, would not l)e sufficient to charge him as an indorser ; and the reason assigned is, that " his absence was but temj)orary, and the duration of that absence un- certain. In case of such absence from home, the law presumes that some member of the family is still at the residence, and that communications will l>e forwarded to the proper address." But, upon a further trial of the case, it was proved that the defendant had no actual residence in Mississippi, and had left no agent at his last place of abode to receive or forward his letters ; that from the fourth of February, when the notice was forwarded, to the fourth of March ensuing, he was in the actual discharge of his official duties at Washington, and in the daily hal)it of receiving his letters at the post-office in that city ; and, upon this state of facts, the Court held the notice sent to that city sufficient. In the case of Cliouteau V. Webster, the defendant had left an agent in Boston in charge of his business, but this was unknown to the holder of the paper ; and upon an agreed statement of the facts showing that the notice was, in due time, deposited in the post-office directed to the de- 26 402 PROCEEDINGS ON NON-PAYMENT. fendant at Washington, where he was then, and for some time afterward, in attendance upon a session of Congress ; and that all letters addressed to members were regularly and immediately taken from the post-office by officers of the Senate, and delivered to such members, the Court held the notice sufficient. C. J. Shaw, after premising the caution that the " decision is founded on the circumstances of the particular case, and may be varied tby other facts," proceeds to place it upon the ground that, while the de- fendant's domicile was at Boston, his " actual residence " was at Washington, " to which, for the time being, he was fixed by his public duty." We have no doubt of the correctness of these decisions ; and no comment can be necessary to distinguish them from a case where the party simply visits a place for a purpose clearly temporary and special, with no proof to show that he has identified himself with its business, or establish any relations with its post-office. Regarding that as this case, we are clearly of the opinion that the plaintiff in error was entitled to the instruction he asked, and that the learned judge erred in the qualifications he annexed to the instruction given. If we were entirely satisfied of the correctness of this qualifica- tion in the abstract, we should still be compelled to reverse the judgment, for the reason that there was no evidence to give any wider scope to the inquiry than that contemplated in the instruction asked for. Tliat this was an error lias been settled by this Court, and the value of jury trial will very much depend upon the observ- ance of the principle. In Bain v. Wilson, 10 Ohio State, 16, the instruction asked and given, as well as the qualification annexed by the Court, were all held to be a correct exposition of the law ; and yet, as " there was no evidence before the jury which required or even authorized the qualification annexed by the Court," the judgment was reversed. The Court say : " The judge must con- fine himself in his remarks to the law and evidence of the case. So far from being under any obligation to call the attention of the jury to a conjectural state of facts, it would be highly improper for him to do so." And the reason for this is very pertinently stated in one of the cases referred to : " Jurors are constantly inclined to look to the opinion of the judge for instruction as to what is and what is not evidence. When he tells them to determine a given problem from the evidence before them, they can hardly do otherwise than infer that, in his judgment, there is evidence upon WALKER V. STETSON. 403 wliich their verdict, when given, may rest." Fa/ v. Oriuasteed, 10 Barb. ;521. J3ut we are very far from being satisfied that the qualification annexed in this case does contain a correct statement of the law. After stating that if the plaintifl" in error was in Chicago for a pur- pose merely temporary, the notices would not be sufficient, the Court proceed_to say, that if his business there was sucli as would detain him an indefinite time, and " might occupy him there during the remainder of the season of navigation on the lakes," it might be proper to send the notices to that place. If he went there for the special purpose stated in the evidence, we do not think it would make any difference that he could not tell precisely when he would be able to sell his property ; and when it is remembered that this was in the month of November, we do not think that a delay in effecting his object until the navigation should close, would ^e in any way decisive. At most, it would be liut a cir- cumstance, entitled to its just weight with others in determining tlie question whether Chicago was his place of business, or whether he was a mere sojourner there for a special and limited purpose. In the one case, he might be charged by a notice sent to that post- office, because he is presumed to have established relations with it ; in the other, no such presumption arises, and he can be charged only upon the actual receipt of the notice. Indeed, when the whole instruction is taken together, it amounts to little less than a request to the jury to go beyond the uncontradicted and legally insufficient facts in evidence, and inquire into the motives of the plaintifT below ; and concluding with the positive instruction that, if he had sufficient reason " to believe the defendant was at Chicago at the time the notices were sent," they would be sufficient to charge him. Without perhaps intending to do so, it seems to us that the Court has incautiously surrendered its rightful province to judge of the sufficiency of the facts to constitute due diligence, and has devolved that duty upon the jury. To approve of that, would be to abandon all that has been gained in the way of certainty, in the determination of questions of this character. While it is true that the rules necessary to be observed in charg- ing parties conditionally liable upon negotiable paper are strict, and require much care and promptitude on the part of the holder ; yet they are such as long experience has demonstrated to be neces- 404 PROCEEDINGS ON NON-PAYMENT. sarj, and a substantial compliance with them lies at the very foun- dation of the contract into which the drawer or indorser enters. His contract is conditional, and to make it absolute, without a fair performance of the conditions, would be to make a contract for him, instead of enforcing the one he has made for himself. The judgment must be reversed, and the cause remanded to the District Court of Cuyahoga county for further proceedings. At the time a promissory note was made, the maker and indorser both re- sided in Rochester, at which place the note was dated, and it was discounted at the plaintiffs' bank, wliich was also located there, and where the plaintiffs re- sided. It was held that the plaintiffs had the right, when the note matured, to assume that the indorser still resided in Rochester, and to act accordingly in taking the requisite steps to charge him as such, unless they knew that in the mean time he had changed his residence. Ward v. Perrin, 54 Barb. 89. See further upon this subject. Bliss i\ Nichols, 12 Allen, 443 ; Berridge v. Fitzger- ald, Law Rep. 4 Q. B. 639; Bank of Columbia v. Lawrence, infra, and note. The Bank of Columbia, Use of the Bank of tfie United States, v. John Lawrence. (1 Peters, 578. Supreme Court of the United States, January, 1828.) Where notice should be sent. — Actual notice to an indorser is not required ; due dili- gence only is necessary. Therefore, in the case of an indorser who lived in the country, two or three miles distant from the place (G.) at which the note in ques- tion was payable, where he usually received his mail ; held, that notice left in the post-office at G:, directed to him at that place, was sufficient to charge him. The case is stated in the opinion of the Court. Thompson, J. This case comes before the Court upon a writ of error to the Circuit Court of the District of Columbia. The defendant was sued as indorser of a promissory note for '$5000, made by Joseph Mulligan, bearing date the fifteenth of July, 1819, and payable sixty days after date, at the Bank of Co- lumbia. The making and indorsing the note, and the demand of payment, were duly proved ; and the only question upon the trial was touching the manner in which notice of non-payment was BANK OF COLUMBIA V. LAWRENCE. 405 given to the indorser ; no objection being made to tbe suflficiency of the notice in point of time. The material facts before the Court npon tliis part of the case, as shown by the l»ill of exceptions, were : Tliat the banking-liouse of tlie plaintiffs was in Georgetown, at which place the note ap- pears to be dated. Tliat some time before tlie note fell due the defendant had lived in the city* of Washington, and carried on the business of a morocco leather-dresser, keeinng a shop and liv- ing in a house of his own in the said city. That about the year 1818, he sold his shop and stock in trade and relinquished his business, and removed with his family to a farm, in Alexandria county, within the District of Columbia, and about two or three miles from Georgetown. That the Georgetown i)Ost-office was the nearest post-office to his place of reeidence, and the one at which he usually received his letters. The notice of non-payment was put into the post-office at George- town, addressed to the defendant at that place. It was proved on the part of the defendant, that at the time of his removal into the country, and from that time until after the note in question fell due, he continued to be the owner of the house in Washington, where he formerly lived, and which was occupied by his sister-in- law, Mrs. Harbaugh. That he came frequently and regularly every week, and as often as two or three times a week, to this house ; where he was employed in winding up his former business and settling his accounts, and where he kept his books of account, and where his bank notices, such as were usually served by the runner of the bank on parties who were to pay notes, were sometimes left, and sometimes at a shop opposite to his house ; and where also his newspapers and foreign letters were left. That his coming to town and so employing himself was generally known to persons having business with him. That his residence in the country was known to the cashier of the bank. Tiiat there was a regular daily mail from Georgetown to the city of Washington, and that the defendant's house was situated in Washington less than a quarter of a mile from Georgetown. There was also some evidence given on the part of the plaintiffs tending to show that the usage of the bank in serving notices in similar cases, was conformably to the one here pursued, and that the defendant was apprised of such usage. But that the testi- mony may be laid out of view, as this Court does not found its 406 PROCEEDINGS ON NON-piYMENT. opinion in any measure upon that part of the case. Upon this evidence the plaintiffs prayed the Court to instruct the, jury, that it was not incumbent on them to have left the notice of the non- payment of the note at the house occupied by Mrs. Harbaugh, as stated in the evidence ; but that it was sufficient, under the cir- cumstances stated, to leave the notice at the post office in George- town ; which instructions the Court refused to give, but instructed the jury that their verdict must be governed according to their opinion and finding on the subject of usage which had been given in evidence. The jury found a verdict for the defendant. From this statement of the case it appears that the note was made at Georgetown, payable at the Bank of Columbia in that town. That the defendant, when he indorsed the note, lived in the county of Alexandria, within the District of Columbia, and having what is alleged to have been a place of business in the city of Wash- ington ; and the notice of non-payment was put into the George- town post-office, addressed to the defendant at that place, by which it is understood that the notice was either inclosed in a letter, or the notice itself sealed and superscribed with the name of the de- fendant, with the direction " Georgetown " upon it ; and whether this notice is sufficient is the question to be decided. If it should be admitted that the defendant had what is usually called a place of business in the city of Washington, and that no- tice served there would have been good, it by no means follows that service at his place of residence in a different place, would not be equally good. Parties may be and frequently are so situ- ated that notice may well be given at either of several places. But the evidence does not show that the defendant had a place of business in the city of Washington, according to the usual com- mercial understanding of a place of business. There was no pub- lic notoriety of any description given to it as such. No open or public business of any kind carried on, but merely occasional em- ployment there two or three times a week in a house occupied by another person ; and the defendant only engaged in settling up his old business. In this view of the case, the inquiry is narrowed down to the single point, whether notice through the post-office at Georgetown was good ; the defendant residing in the country two or three miles distant from that place in the county of Alexan- dria. BANK OF COLUMBIA V. LAWRENCE. 407 The general rule is, that the party whose duty it is to give notice in such cases is bound to use due diligence in communicat- ing such notice. But it is not required of him to see that the notice is brought home to the party. He may employ the usual and ordinary mode of conveyance, and, whether the notice roaches the party or not, the holder has done all that the law requires of him. It seems at this day to be well settled, that when the facts are ascertained and undisj)Utcd, what shall constitute due diligence is a question of law. This is certainly best calculated to have fixed on uniform rules on the subject, and is highly important for the safety of holders of commercial paper. And these rules ought to be reasonable and founded in general convenience, and with a view to clog as little as possible, consist- ently with the safety of parties, the circulation of paper of this description ; and the rules which have been settled on this sultject have had in view these objects. Thus, when a party entitled to notice, has in the same city or town a dwelling-house and counting- house or place of business within the compact part of such city or town, a notice delivered at either place is sufficient; and if his dwelling and place of business be within the district of a letter- carrier, a letter containing such notice, addressed to the party and left at the post-office would also be sufficient. All these are usual and ordinary modes of communication, and such as affijrd reason- able ground for presuming that tlie notice will be brought home to the party without unreasonable delay. So when the holder and indorser live in diffijrent post-towns, notice sent by the mail is sufficient, whether it reaches tlie indorser or not. And this for the same reason, that the mail being a usual channel of communica- tion, notice sent by it is evidence of due diligence. And for the sake of general convenience it has been found necessary to enlarge this rule. And it is accordingly held, that when the party to be affected by the notice resides in a diffi3rent place from the holder, the notice may be sent by the mail to the post-office nearest to the party entitled to such notice. It has not been thought advisable, nor is it believed that it would comport with practical convenience, to fix any precise distance from the post-office within Avhich the party must reside, in order to make this a good service of the notice. Nor would we be understood as laying it down as a uni- versal rule, that the notice must be sent to the post-office nearest to the residence of the party to whom it is addressed. If he was 408 PROCEEDINGS ON NON-PAYMENT. * in the liabit of receiving his letters through a more distant post- office, and that circumstance was known to the holder or party giving the notice, that might be the more proper channel of com- munication, because he would be most likely to receive it in that way ; and it would be the ordinary mode of communicating in- formation to him, and therefore evidence of due diligence. In cases of this description, where notice is sent by mail to a party living in the country, it is distance alone, or the usual course of receiving letters, which must determine sufficiency of the notice. The residence of the defendant, therefore, being in the county of Alexandria, cannot affiact the question. It was in proof that the post-office in Georgetown was the one nearest his residence, and only two or three miles distant, and through which he usually re- ceived his letters. The letter containing the notice, it is true, was directed to him at Georgetown. But there is nothing showing that this occasioned any mistake or misapprehension with respect to the person intended, or any delay in receiving the notice. And as the letter was there to be delivered to the defendant, and not to be forwarded to any other post-of3fice, the address was unimpor- tant, and could mislead no one. No cases have fallen under the notice of the Court which have sug- gested any limits to the distance from the post-office within which a party must reside in order to make the service of the notice in this manner good. Cases, however, have occurred, where the dis- tance was much greater than in the one now before the Court, and the notice held sufficient. 16 Johns. 218. In cases where the party entitled to notice resides in the country, unless notice sent by mail is sufficient, a special messenger must be employed for the pur- pose of serving it. And we think that the present case is clearly one which does not imposfe upon the plaintiffs such duty. We do not mean to say no such cases can arise, but they will seldom if ever occur, and, at all events, such a course ought not to be re- quired of a holder, except under very special circumstances. Some countenance has lately been given to this practice in Eng- land in extraordinary cases, by allowing the holder to recover of the indorser the expense of serving notice by a special messenger. The case of Pearson v. Crallan, 2 Smith, 404 ; Chitty, 222, n., is one of this description. But in that case, the Court did not say that it was necessary to send a special messenger ; and it was left to the jury to decide whether it was done wantonly or not. The B-ANK OF OOLUMBIA r, LAWRENCE. 409 holder is not bound to use the mail for the purpose of sending no- tice. He may employ a special mess(3ngcr if he pleases, hut no case has l)ccn i'ouiid where the English courts have directly de- cid(Ml that he must. To compel the holder to incur such exjicnse ^vould be unreasonable, and the policy of adopting a rule that will throw such an increased charge upon commercial paper on the party bound to pay, is at least very questionable. We are accordingly of opinion that the notice of non-payment was duly served upon the defendant, and that the Court erred in refusing so to instruct the jury. Judgment reversed, and venire facias de novo awarded. Alany of tlu; riiU-s relating to tliis subject are common to the sul)ject of pre- sentment, to wliich the reader is referred. There is one material distinction, however, \vhi( h is worthy of note ; that is, that, though presentment should be made only at the residence or place of business of the maker or acceptor, per- sonal notice to a drawer or indorser, in due time, is good wherever given. Hj-sloj) r. Jones, 3 McLean, 9G. If there are two post-offices in the same town, notice in a letter directed to the indorser generally at the town or to either of the offices, will be good, uidt'ss the party sending notice knew, or might by inquiry have learned, wliicii was the proper office. Upon this subject Shaw, C. J., in Morton v. Westccjtt, 8 ("ush. •125, said : "It seems well settled that where there are two post-offices in a town, notice by letter to an indonser addressed to him at the town generally is sufficient, unless the party addressed has been generally accus- tomed to receive his letters at one of the offices in particular, and to have his li-ttirs addressed to him there by his correspondents. Such being the rule, the plainiiff proves his case j)rima J'acie by proving notice by letters addressed to the defendant at the town generally. If then the defendant would rebut this presumption of fact, and bring himself within the exception, it lies on him to l)rovc that he did usually receive his letters at one office only, and that this miL;ht have been known by reasonable incjuiry at the place where the letter was mailed. Without this proof it may be true that the defendant received his let- ters habitually as well at one post-otlice as the other, and then the plaintiff's jir'uiKi I'dcic proof remains uurebutted, and he must prevail." See Downer v. Ivcmcr, L'l Wend. 10, to the same effect. See also Shaylor r. Mix, 4 Allen, 351, cited at length, ;k>.9<, 413; Woods v. Neeld, 44 Penn. State, 86. If the party to be notified lives in a town in which there is no post-office, it seems that notice by letter sent to the nearest postroffice will be sufficient. Shed V. Hntt, 1 Pi.k. 401, 411 ; Ireland r. Kip. 11 Johns. 232; Union Bank i'. Sto- ker, 1 La. An. 269. And it is held th.it where the nearest post-office is unknown, if diligent inquiry is made to ascertain the fact, and notice is sent accordingly, that is sufficient. Marsh v. Barr, Meigs, 68; s. c, 9 Yerg. 253. See Moore v. Ilardcastle, 11 Md. 4S6 ; Davis v. Beckham, 4 Humph. 53; Davis v. Williams, :^eck, 191 ; Bank of United States i\ Carneal, 2 Peters, 543, 551. ^ee also Woods V. Neeld, 44 Penn. State, 86. 410 PROCEEDINGS ON NON-PAYMENT. Where the drawer or iiulorscr receives his mail at either one of several post- ofTices, notice may he sent to either. Bank of United States v. Carneal, 2 Peters, 543; Bank of Louisiana v. Tournillon, 12 La. An. 132. See also Bank of Gen- eva V. Hewlett, 4 Wend. 328 ; Chouteau v. Webster, 6 Met. 1 ; Bank of Colum- bia V. Magruder, 6 Harris & J. 172 ; Seneca Co. Bank v. Neass, 5 Denio, 329, 338 ; Ransom v. Mack, 2 Hill, 587 ; Mercer v. Lancaster, 5 Penn. State, 160. As to the employment of messengers discussed in the principal case, the fol- lowing points are settled : If the holder elect to send notice by private convey- ance instead of by mail, his responsibility continues until delivery of the notice, either personally to the party to be charged, or at his place of business or res- idence. Van Vechten v. Pruyn, 13 N. Y. (3 Kern.) 549, 555. In this case if it reach its destination on the same day, within business hours, on which it would have arrived by mail, it is in time ; but if it does not reach the place until the next day, it is too late. Bancroft v. Hall, Holt, N. P. 476 ; Beeching v. Gower, id. 315, note; Darbishire v. Parker, 6 East, 3. See Jarvis v. St. Croix Manuf. Co., 23 Maine, 287. Bank of Utica v. Bender. (21 Wendell, 643. Supreme Court of New York, October, 1839.) r Diligence. Law and fact. — When the facts are all found, what is reasonable diligence is a question of law. Reasonable diligence, not excessive, reqidred. — The holder of a bill inquired of the drawer, upon discounting the same, where the defendant, an accommodation indorser of the drawer, resided. Notice was sent according to the answer given. Held, that this was reasonable diligence, nothing having occurred to lead the holder to dis- trust the information received, though the indorser actually lived in a different place from that named, and received his mail in a third. The case is sufficiently stated iu the head-note and in the opin- ion of the Court. Bronson, J. When the facts are all ascertained, what is reason- able diligence is a question of law. " This results," said Spencer^ J., in Bryden v. Bryden, 11 Johns. 187, "from the necessity of having some fixed legal standard, by which men may not only know the law, but be protected by it." Bayley, Bills, 142, 144, and notes. The judge was not requested to submit the question of due diligence to the jury ; but had it been otherwise, he was right in treating it as a question of law, there being no dispute about the facts. BANK OF UTICA V. BENDER. 411 Was there reasonal)lc dilifronce in endeavoring to ascertain the place to which the notice should he directed ? Not knowing where the defendant lived, the plaintiffs inquired of the drawer, for whose accommodation the hill was discounted, and relying upon the infor- mation given hy him, they sent the notice to Chittenango, when it should have been sent to Manlius or Ilartsville. This is not like the case of the Catskill Bank v. Stall, 15 Wend. 304, affirmed in error, 18 id. 406 ; for there the person whottook the note to the bank, and gave the information on which the notice was misdi- rected, was the agent of the indorsers, and they had no right to complain that credit had been given to what was, in effect, their own representation. But 1 am unable to distinguish this from the case of the Bank of Utica V. Davidson, 5 Wend. 587. That was an action against the indorser of a note which had been discounted for the accommoda- tion of the maker, and the notice of protest was sent to Bainbridge, when it should have been sent to Masonville, where the indorser lived. The person who took the note to the bank, and gave the information on which the plaintiffs acted, was the agent of the maker, and it was held that there had been due diligence, and judgment was rendered for the plaintiffs. Sutherland^ J., men- tions the fact that the note was dated at Bainbridge, where the notice was sent, and that the indorser had but recently removed from that place ; but the case was put mainly on the ground, that the plaintiffs had a right to rely on the information given by the agent of the maker when the note was discounted. In the case at bar, notice was directed to the place where the bill purports to have been drawn ; and the only diflference between this and the case of the Bank of Utica v. Davidson, consists in the single fact, that the indorser of this bill had never lived at Chittenango. That does not, I think, furnish sufficient ground for a solid distinction between the two cases. How does the question stand upon principle ? It is not absolutely necessary that notice should be brought home to the indorser, nor even that it should be directed to the place of his residence. It is enough that the holder of a bill make diligent inquiry for the in- dorser, and acts upon the best information he is able to procure. If after doing so, the notice fail to reach the indorser, the misfor- tune falls on him, not on the holder. There must be ordinary or reasonable diligence, — such as men of business usually exercise 412 PROCEEDINGS ON NON-PAYMENT. when their interest depends upon obtaining correct information. The holder must act in good faith, and not give credit to doubtful intelligence when better could have been obtained. Now, what was done in this case ? The plaintiffs inquired of Cobb, the drawer of the bill, who would of course be likely to know where his accommodation indorser lived. Tiiey saw that the de- fendant, by lending his name, had evinced his confidence in the integrity of the drawer; and so far as appears, nothing had then occurred which should have led the plaintiffs, or any prudent man, to distrust the accuracy of Cobb's statements concerning any matter of fact within his knowledge. He professed to be able to give the desired information, and his answer was unequivocal. If Cobb was worthy of being believed, there was no reason for doubt that the indorser resided at Chittenango. The plaintiffs confided in this information, and acted upon it. But it is said that Cobb had an interest in giving false informa- tion for the purpose of protecting his accommodation indorser, and consequently that the plaintiffs should not have trusted to his statement. He certainly had no legal interest in the question. If the bill was not accepted and paid by the drawee, Cobb, as the drawer, was bound to pay and take it up from the holder ; and if the indorser was charged, Cobb was bound to see him indemnified. In a legal point of view, it was wholly a matter of indifference to him whether notice of the dishonor of the bill should be brought home to the indorser or not. Before any thing can be made out of the objection, we must say that the plaintiffs were bound to sus- pect that Cobb, when he presented the bill, intended to commit a fraud ; that he was obtaining a discount upon a draft which he knew would not be paid, either by the drawee or by himself; that the money was to be lost to some one, and that he preferred the loss should fall on the holder rather than the indorser ; and conse- quently, that he would give false information concerning the proper place for directing notice. It is quite evident that the plaintiffs entertained no such suspicion ; for if they had, they would neither have confided in the statements of Cobb, nor would they have loaned him the money. I think they were not bound to believe that a fraud was intended. There was nothing in the circum- stances of the case calculated to induce such a belief in the mind of any man of ordinary prudence and foresight. This was an every- day business transaction, where men must of necessity repose a BANK OF UTICA V. BENDER. 413 reasonable degree of confidonce in each other, and no one can be charj^cablc with a want of diligence for trusting to information which would usually l)e deemed satisfactory among business men. If there was any ground whatever for suspecting fraud on the part of Cobb, it was, to say tlie least, very slight, and was fully counter- balanced by the fact that the defendant had testified his confidence in Cobb by lending his name as indorser. The plaintiffs have, I think, lost nothing by trusting to informat^n derived from the drawer of tlic bill, instead of seeking it from some other individual. The case then comes to this. The plaintiffs applied for infor- mation to a man worthy of belief, and who was likely to know where the indorser lived. They received such an answer as left no reasonable ground for doubt that Chittenango was the place to which the notice sliould be sent. I think they were not bound to push the inquiry further. Men of business usually act upon such information. They buy and sell, and do other things affecting their interest, upon the credit which they give to the declarations of a single individual concerning a particular fact of this kind within his knowledge. This is matter of common experience. Ordinary diligence in a case like this can mean no more than that the inquiry shall be pursued until it is satisfactorily answered. This is the only practical rule. If the holder of a bill is required to go further, it is impossible to say where he can safely stop. Would it be enough to inquire of two, three, or four individuals, or must he seek intelligence from every man in the place likely to know any thing about the matter ? It would be difficult, if not impossible, to answer this question. Neio (rial denied. So where the holder of a bill inquired of a person trading at a particular place if he knew where an indorser resided, and lie rei)lied that lie resided at the place where he traded, and it did not appear that the holder had any better means of knowledge, it was held that he had used due diligence to learn the resi- dence of the indorser, and that notice put into the post-office directed to him there was sufficient. Lambert r. Ghiselin, 9 How. 552. It was further held in this case that after due diligence had been used and no- tice sent accordingly, the holder is not obliged to give any further notice, though he afterwards discover that the notice was directed to the wrong j)lace. But Beale i\ Parrish, 20 N. Y. (6 Smith) 407, holds a contrary view; without no- ticing Lambert v. Ghiselin, however. And the doctrine of Heale v. Parrish is not stated with perfect confidence. See latter portion of the Opinion by Mr. Justice Grover. That due diligence is a question of law when the facts are ascertained, is well settled. See Walker v. Stetson, ante, pp. ,'397, 399, and cases cited. 414 EXCUSES OP PRESENTMENT AND NOTICE. EXCUSES OF PRESENTMENT AND NOTICE. 4 The Windham Bank v. Norton, Converse, & Co. (22 Connecticut, 213. Supreme Court, July, 1852.) Unavoidable accident. — Presentment of commercial paper must be made on the day on which it becomes due, unless it is out of the power of the holder, hy the use of reasonable diligence to present it. Failure of such presentment is excused by any * inevitable or unavoidable accident, not attributable to the fault of the holder, pro- vided he make presentment as soon thereafter as he is able. This was an action of assumpsit, brought by the Windham Bank, as holders of a bill of exchange, against the defendants, as indorsers. The bill of exchange referred to was drawn by George Hobart, of Norwich, in this State, upon Mansfield, Hall, and Stone, of Phila- delphia, and by them accepted, for 8417.26; dated January 31, 1849, and payable four months after date, to the order of the de- fendants. The declaration was in the common form, and contained the usual averments of a due presentment of the bill in question, and notice of its non-payment. The defendants pleaded the general issue, and the cause came on for trial at Brooklyn, October term, 1851. The facts were found by the Court, by agreement of the parties, as follows. Said bill of exchange, was, on the day of its date, accepted by said Mansfield, Hall, and Stone, " payable at the Farmers' and Mechanics' Bank," in the city of Philadelphia. On the day of February, 1849, the defendants procured said draft to be discounted by the plaintiffs, and then indorsed and delivered it to them. During the same month of February, the plaintiffs forwarded said draft, by the United States mail, to the Ohio Life and Trust Co., a banking corporation in the city of New York, for collection, and indorsed the same to Iheir cashier, as follows: " Pay G. S. Coe, Esq., cashier, or order; " signed, " Samuel Bing- WINDHAM BANK V. NORTON. 415 ham, cashier." The bill, so indorsed, was, in a day or two there- after, and in due cour.sc of mail, received by said Ojjio Life and Trust Co. The third day of grace, June 3d, being Sunday, the draft was actually due and payable on .Saturday, June 2d. During the year 1849, there were two mails per day, each way, between New York and Philadclpliia, — those for the latter place, leaving New York, one at nine a.m., the other at four and a half p.m., and both due at Philadelphia in five hours from i,hcir departure. The Farmers' and Mechanics' Bank were tiic Philadelphia correspondents of the Ohio Life and Trust Co., and communication? by mail passed between them daily. On the morning of June 1st, the cashier of the Ohio Life and Trust Co. inclosed this draft with others, ad- dressed in the proper and usual mode, to the Farmers' and Mechan- ics' Bank, and deposited said letter in the United States' post-office, at the city of New York, in season for the afternoon mail of that day for Philadclpina. That letter was duly deposited in said mail, and said mail left New York, and arrived at Philadelphia in due and usual time ; but the mail-bags, containing the letters for Phil- adelphia, were, by the post-office clerks in the office at New York, marked to be forwarded to Washington, and were, therefore, not delivered at Philadelphia, but carried to Washington. At Washington, the mistake was discovered, and said mail-bags for- warded to Philadelphia, which place they reached in the course of Sunday, June 3d. On the morning of the next day said letter, with the draft inclosed, was delivered from the post-office at Phila- delphia, to said Farmers' and Mechanics' Bank, who, by their cashier, refused payment of the same, and between the hours of nine and ten a.m. of the day placed said draft in the hands of a notary public, for protest. Said notary, between the hours of nine A.M. and three p.m. of said day presented said draft at the counter of said bank for payment, and received for answer from said cashier that he was ordered by the acceptors not to pay it, and that, had he presented it on Saturday, June 2d, he should have given him the same answer. Said notary thereupon, on said 4th day of June, in due and proper form, protested said draft, and made out written notices to the drawer and the several indorsers, of the non-payment of said draft, and inclosed said notices, with the notice of protest, in a letter, and on the same day deposited the same in the post- office in said Philadelphia, duly addressed to George S. Coe, cash- ier of Ohio Life and 'Trust Co., New York, who had indorsed said 416 EXCUSES OF PRESENTMENT AND NOTICE. draft to tlie Farmers' and Mechanics' Bank, and by whom said letter was, in due course of mail, received. Said Coe,on the same day in which lie received tliem, inclosed said letter of protest and said notices, except the one to himself, in a letter duly addressed to the plaintiffs, and deposited tlie same in. the city of New York in season for the next mail. The same was, in due course of mail, received by the plaintiffs, who, on the day of the receipt thereof, inclosed said notices to the defendants, as indorsers, and said notice to said drawer (his residence being unknown), in a letter duly addressed to the defendants, and deposited it in the post-office at Windham, in season for the next mail, and the same was, in due course of mail, received by the defendants. Mansfield, Hall, and Stone became insolvent, and suspended payment on the twelfth day of April, 1849, and on the next day, sent to the Farmers' and Me- chanics' Bank the following notice in writing: — " E. N. Lewis, Esq., Cash. " You will please pay no more notes or drafts drawn by us, and payable at your bank, until further notice, as they will not be provided for. " Very respectfully yours, " Mansfield, Hall, and Stone." No further notice was sent, and said bank, from that time for- ward, acted upon this order, and refused payment of all notes or drafts, payable at the bank, by said firm. The business hours of the Philadelphia banks, were, in 1849, from nine a.m. to three p.m. Owing to the miscarriage of the United States mail, as above stated, said draft was not presented for payment on Saturday, June 2d, when it became due, and was never presented for pay- ment at any other time than on said fourth day of June. It has been the usage of the banks and merchants of this country, for the last forty years, to make use of the United States mail in forwarding negotiable notes and bills of exchange, for collection or acceptance. It is the custom of the Windham Bank, and the four Norwich banks, to forward all paper in their hands, payable abroad, within five or eight days after it comes into their hands, without reference to the length of time it has to run. The questions of law arising upon these facts, and on such further facts as the jury might rightfully infer, were reserved for the advice of this Court. WINDHAM BANK V. NORTON. 417 Storrs, J. The defendants first insist, that the averments in this declaration, of a due presentment of the draft in question and notice of its non-payment, must be strictly proved, and that they are not sustained by proof of tlie facts set up by the plaintiff's, l)y way of excuse. Whatever may be the cojirse of authorities else- where, it is well settled here, that those alle^jjations are supported by evidence of matter of excuse, or a waiver of demand and notice. Norton v. Lewis, 2 Conn. 47'^, and Camp v. Bates, 11 id. 487, are decisive on this point. The otlicr and more important question in tills case is, whether the plaintiffs are excused for the non-presentment of this draft for payment, on the day when it became due. The last day of grace being Sunday, it was payable on the preceding Saturday, which was the second day of June, 1849. This question depends on whether the plaintiffs arc chargeable with negligence, in not pre- senting it on that day. If the agent of the plaintiffs, to whom they sent it, to be for- warded for presentment and collection, and who transacted this business for them, was guilty of sucii negligence, it is, of course, imputable to the plaintiffs. And it is not important to this ques- tion, either that the defendants in fact sustained no damage, by the draft not having been presented for payment when it lell due, or that it would not have been paid by the acceptor, if it had then been presented. The indorser, on a question of due presentment for payment, is not aifected by either of these circumstances. Nor indeed do the plaintifts claim to recover on either of these grounds. The question of negligence here presented depends on the in- quiry, whether, under the circumstances of this case, the delay of the plaintilfs' agent, in not forwarding this draft to Piiiladelphia, until the last mail left New York for that place, on the day next preceding that on which the draft fell due, constituted a want of reasonable or due diligence in regard to its presentment. We say, under the circumstances, because there is no positive or abso- lute rule of law wliich determines within what precise time the holder of a bill of exchange must, in all cases whatever, or at all events avail himself of the authorized mode of transmission adopted in this instance, to forward such paper for presentment. The general principle, established by all the adjudged cases, as well as the approved elementary writers is, that reasonable dili- 27 418 EXCUSES OF PRESENTMENT AND NOTICE. gence in the presentment of a bill for payment, is required of the holder, and that, therefore^ if there has been no want of such dili- gence lie is excused. Story, Bills, c. 10 ; Chitty, Bills, c. 9, 10 ; Story, Prom. Notes, c. 7, § 3G8 ; Patience v. Townley, 2 Smith, 223, 224. In applying this principle, the general rule is, that it must be presented for payment on the very day on which, by law, it becomes due, and that, unless the presentment be so made, it is a fatal ob- jection to any right of recovery against the indorser. But, although this is the general rule, it is not an universal one, and prevails only under the qualification, which is really a part of the rule itself, that there is no negligence or want of reasonable diligence in not making such presentment. The whole rule, therefore, more prop- erly stated is, that the presentment must be on the day on which the bill becomes due, unless it is not in the power of the holder, by the use of reasonable diligence, so to present it. By the very statement of this rule, as thus fully expressed, it is plain that, on the question whether the holder is excused on this ground for not thus presenting it, or, in other words, whether there was negligence on his part, or a want of reasonable diligence, no absolute or posi- tive rule can, from the nature of the case, be laid down which shall apply under all circumstances. We have no evidence of any general custom of merchants in regard to the precise time within which mercantile paper is usually forwarded, in order to be pre- sentedfor payment, so that the law merchant furnishes us no guide on this point. And it is clear that the strict rule of the common law, by which an inability to perform the terms or condition of a contract, by reason of inevitable accident or casualty, constitutes generally no excuse for their non-performance, is not applicable to mercantile instruments of this description. Therefore, the excuse for non-presentment in this case presents the ordinary question of negligence.' That question may, and often does, depend on such a variety of circumstances, or those of such a peculiar character, that it is very difficult, if not impossible, to reduce them to any fixed or invariable rule. But, in regard to such a question, as applicable to the non-presentment of a bill or note when it is due, it is considered a well-settled rule that such want of presentment is excused by any inevitable or unavoidable accident not attributa- ble to the fault of the holder, provided there is a presentment by him as soon afterward as he is able ; by which is intended that WINDHAM BANK V. NORTON, 419 class of accidents, casualties, or circumstances which render it morally or physically impossible to make such presentment. Judge Story, in speaking of this ground of excuse, says : " It has been truly observed, by a learned author," referring to Mr. Chitty, " that there is no positive authority in our law which establishes any such inevitable accident to be a sufficient excuse for the want of a due presentment. But it seems justly and naturally to flow from the general principle, which regulates all matters of present- ment and notice, in cases of negotial)le paper. Tlie object, in all such cases is, to require reasonable diligence on the part of the holder; and that diligence must be measured by the general con- venience of the commercial world, and the practicability of accom- plishing the end required, by ordinary skill, caution, and effort." And he cites the remark of Lord EUcnborovgh in Patience v. Townley, 2 Smith, 223, 224, that due presentment must be interpreted to mean, presented according to the custom of mer- chants, which necessarily implies an exception in favor of those unavoidable accidents which must prevent the party from doing it within regular time. Story, Bills, § 25S. Applying these principles to this case, we are of opinion that the plaintiffs are not chargeable with a want of reasonable diligence. No fault or impropriety is imputable to them, by reason of their having selected the public mail as the mode of forwarding the draft in question, to the bank in Philadelphia, where it was pay- able. It is properly conceded by the defendants that such mode of transmission was in accordance with the general commercial usage and law, in the case of paper of this description. Indeed, it is recommended in the books, as the most proper mode of trans- mission, as being the least hazardous, and therefore preferable to a special or private conveyance. But, although the public mail was a legal and proper mode by which to forward this paper, it was their duty to use it in such a manner that they should not be chargeable with negligence or unreasonable delay. If, therefore, they put the draft into the post-office at ^o late a period that, by the ordinary course of the mail, it could not, or there was reason- able ground to believe that it would not, reach the place of its destination in season for its presentment when due, we have no doubt that there would be on their part, a want of reasonable dili- gence, which would exonerate the indorser. On the other hand, to throw the risk of every possible accident, in that mode of for- 420 EXCUSES OF PRESENTMENT AND NOTICE. warding the draft upon the holder, where there has been no such delay, would clearly be most inconvenient, unreasonable, and un- just, as well as contrary to the expectation and understanding of the indorser, who is presunaed to be aware of the general usage and law in regard to the transmission, by mail, of this kind of paper, and must therefore be suj)posed to require only reasonable diligence in this respect on the part of the holder ; and would, indeed, be inconsistent with the rule itself, which sanctions its transmission in that manner. It has been suggested that the principle should be adopted, that when the holder resorts to the public mail, he should be required to forward the presentment at so early a period, that if by any accident it should not reach the place of its presentment in the regular course of the mail there should be time to recall it, and have it presented when and where it falls due ; or that, at least, it should be forwarded in season to ascertain whether it reached there by that time, and to make such a demand or presentment for payment as is required in the case of lost bills. We find no authority whatever for any such rule, nor would it, in our opinion, comport with the principle now well established, requiring only reasonable diligence on the part of the holder, or with the policy which prevails in regard to such commer- cial instruments. It would, in the first place, be the means of restraming the transfer of such paper within such a limited time as to impair, if not to destroy, its usefulness and value, arising out of its negotiable quality ; and, in the next place, it would in many cases be wholly impracticable. The casualties incident to this mode of transmission are most various in their character, and can not, of course, be foreseen ; and they might, in the case of for- warding mercantile paper, be such as to render it impossible to ascertain its miscarriage, or to recall it in season to remedy the difficulty. In the case of the draft now before us, for example, if it had been placed by the plaintiffs in the post-office at Windham, where they were located, and transacted their business, for trans- mission, direct from thence to Philadelphia, on the very day when they became the holders of it, which was between three and four months before it became due, and, by an accident or mistake of the postmaster in the former place, similar to that which occurred in this case at New York, it had been mailed to one of the most distant parts of our country, or to a foreign country (which would not have been more singular than that it should have been mis- WINDHAM BANK V. NORTON. 421 takingly mailed, as in the present case, for Washington), it might not have been practical)lc for the plaintiffs to learn the accident, or obviate its effect before the paper fell due. In shoi't. such a rule as that suggested, wiMild l)e merely artificial in its character, \n'0- ductive of great inconvenience and injustice in particular cases, without any corresponding general benefits, and cliange the whole course of business in regard to a most extensive and important class of mercantile transactions. Nor has any other arbitrary or positive rule been suggested which is not equally oljuoxious to the same or similar objections. The only remaining inquiry is, whether the plaintiffs are charge- able with negligence for not forwarding the draft in question by an earlier mail from New York to Philadelphia. It was sent by the usual, legal, and proper mode. It was deposited in the post- office in season to reach the place where it was payable, before it fell due, by the regular course of the next mail ; and there was no reason to believe that it would not Ije there duly delivered. It was actually sent by that mail, and, but for the mistake of the postmaster where it was mailed in misdirecting the packnge con- taining it, would have reached its proper destination, and been received there in season for its presentment when due. It in fact reached that place when it should have done ; but was carried beyond it in consequence of that mistake. As that mistake could not be foreseen or apprehended by the plaintiffs, it is not reason- able to require them to take any steps to guard against it. Indeed, they could not have done so, as they had no control or supervision over the postmaster. They had a right to presume that the latter had done his duty. Tbey could not know that he had misdirected the package until it was too late to remedy the consequences. The occurrence of the draft being sent beyond its place of desti- nation was, therefore, so far as the plaintiffs were concerned, an unavoidable accident. It happened, not in consequence of any delay of the plaintiffs in putting the draft into the post-office at so late a period that it could not, or probably would not, reach its destination in due season, but merely in consequence of the act of the official to whom it was properly confided, done after it was properly in his charge, by the plaintiffs, for transmission. The accident, moreover, was of a very peculiar and extraordinary char- acter, and quite different from those which are ordinarily incident to that mode of transmission, and against which it would l)e ex- 422 EXCUSES OF PRESENTMENT AND NOTICE. tremcly difficult, if not impossible, to guard. It would have been equally liable to occur at any time when the draft should have been placed in the post-office. It was not owing in any sense to the fault of the plaintiffs, but solely to tliat of the postmaster. Under these circumstances, we do not feel authorized to impute any blame or negligence to the plaintiffs. We are, therefore, of opinion that judgment should be rendered for the plaintiffs. In this opinion the other judges concurred. Judgment for the plaintiffs. Schofield V. Bayard, 3 Wend. 488, may at a cursory glance seem at variance with the above important case ; but a closer scrutiny of the case will show that there is no conflict. In Schofield v. Bayard, the plaintiffs were holders of a bill payable in London. By a mistake of their men the bill was sent to Liverpool for presentment. The agent of the holders at the latter place mailed it back in time, indeed, if it had reached the holders when it should have reached them, to be duly sent to London ; but, by a mistake at the post-office, it failed to reach the holders soon enough to be presented at the proper time. The Court held that the fault lay with the holders in sending the bill to Liverpool ; and that therefore the fail- ure to make due presentment could not be excused. In delivering the opinion of the Court, Savage, C. J., said: " This presents no impossibility, if due dili- gence had been used. The plaintiffs should not have sent the bill to Liverpool at all. It is true that, after the letter containing it had been left at Liverpool, it could not have reached London in season ; but it was the fault of the plaintiffs to have parted with the bill in the manner they did. Instead of sending it to Liv- erpool they should have sent it to London, and then it would have been in sea- son, and probably would have been paid. I am of opinion that, by the law mer- merchant, payment should have been demanded in London on the twelfth of November, and that not having been done, and there being no impossibility to prevent it but what is attributable to the want of due diligence on the part of the holder, the defendants are legally discharged, and are entitled to judgment." JUNIATA BANK V. HALE. 423 The Juniata Bank v. Hale et al. (16 Sergeant & Rawle, 157. Supreme Court of Pennsylvania, June, 1827.) Death of maker. I ndorser appointed administrator. — The death of the maker of a note before it becomes due, and the taking out letters of administration upon his estate by the indorsers and others, before the note arrived at maturity, do not dis- pense with the necessity of notice to the indorsers of non payment by tlie maker. The case is stated in the opinion of the Court. Duncan, J. This was an action against the defendants, on a negotiable note, dated the tenth of Xovember, 181(3, for six hun- dred dollars, in which Starrett was the drawer, E. W. Hale the payee, Hale the first indorser, and Chriswell the second. It was a note for the accommodation of the drawer, and Hale declares, in the memorandum subjoined to it, that it was for the use of the drawer. It was payable in six months, and was discounted by the Juniata Bank. The drawer died before the day of payment ; and, on the second of December, 1816, letters of administration issued on his effects to Rebecca, his widow, Robert, his brother, and Hale and Chriswell. On the fourteenth of May, 1817, the note was protested, but no notice of demand or non-payment was given to the indorsers, or either of them. Tlie Juniata Bank contended that notice of non-payment was unnecessary, inasmuch as the indorsers were two uf the adminis- trators, who, in their character of administrators, must have had knowledge of the non-payment of the note, and had all the estate of the drawer in their hands to secure themselves. The indorsers insist, that if knowledge was proved on them of the fact of non-payment, still they were entitled to notice from the Juniata Bank, the holder of the note, of the intention of the bank to call on them. And Chriswell who is joined in the action under the act of assembly, insists further, that he should have had notice ; for although the note migiit not have been paid by the drawer, wiio died before it became due, still it might have been paid by tlie first indorser, and the notice of the non-payment was an important mat- ter to him. It is further insisted by the defendants, that so far 424 EXCUSES OF PRESENTMENT AND NOTICE. from the bank giving notice of an intention to look to them for payment, in 1818 they obtained a judgment by confession from the administrators, a special judgment de bonis intestati, and not other- wise ; and that they delayed to proceed on this judgment, and did not call on tlic indorsers until this action was brouglit, which was lacking a few days of six years, when the statute of limitations would have barred the recovery. On the trial of the cause before the Chief Justice at the late Circuit Court, for the purpose of having the question settled in this Court, which is admitted to be new in species, he instructed the jury that neither the demand of payment nor notice of non-payment was necessary, and it is from this decision the defendants appealed ; and on this opinion it is now only necessary for this Court to de- cide. From the view they have taken of this subject, if the Court did not decide on the general doctrine of the necessity of notice of non-payment from the holders of the note, the circumstances of the situation in which Chriswell, tlie second indorser, stood, and the judgment against the administrators, and the long delay in bring- ' ing tlie action, were matters worthy of serious consi^leration ; but they have judged it most advisable to decide upon the general principle. What is tlie nature of the engagement of the indorser ? It is founded on the law merchant, and is governed by its principles ; his undertaking is only to pay in case the maker does not pay. The indorser takes it on the condition that he will first apply to the maker ; and, in an action by the indorsee against the indorser, the declaration must aver that on the note becoming due, the demand was made of the drawer, and that he refused to pay, of which the defendant had notice. It is an essential part of the plaintiff's case, and even a verdict would not cure the omission. This was decided in the Court of Errors and Appeals, and the judgment of the Supreme Court reversed. Miles v. O'Hara.^ And though the declaration alleged that the drawer of the bill became liable by the custom of merchants, this is not sufficient, because the law mer- chant is not a matter of fact, but of law, and the want of notice is the very gist of the action ; for it is that which raises the implied promise. M'Kinney v. Crawford, 8 Serg. & Rawle, 351, 353. That knowledge of Jion-payment is not notice, is very clear ; for the notice must come from the holder himself, or some one who is a party ; for the notice must assert that the holder intends to stand 1 1 Serg. & R. 32. JUNIATA BANK V. HALE. 425 Oil his legal rights, and to resort to the iiidorser for payment ; and therefore, where the drawer had notice before the bill was due that tiie ■acceptor had failed, and gave another person money to pay the bill, and the holder neglected to give notice of its dishonor, it was held that the drawer was discharged. Nicholson v. Gouthit, 2 H. Bl. (il2 ; AVhitfield v. Savage, 2 Bos. & Pul. 277 ; Esdaile v. 8ow- erby, 11 East, 114, 117. And where a few days before the l)ill became due, the acceptor informed the drawer that he must take it up, and gave him part of the money to assist him in so doing, and the latter promised to take up the bill accordingly, it was held the latter might nevertheless set up, as a defence, that the bill was not duly presented for payment, and that he had not regular notice of the dishonor. Baker v. Birch, 3 Camp. 107. The notice must come from one who cati give the drawer or indorser his immediate remedy on the bill, and not from a stranger ; otherwise it is merely an historical fact ; it nuist be legal notice, otherwise the j)arty is discharged from the liability he contracted by indorsing it. 2 Cowp. 177 ; Ciiitty, Bills, 292. The reason given in Ex parte Baizley, 7 Ves. Jr. 597,.is very satisfactory ; for the ground of discharging the drawee is, that the drawer gave credit to some other person lial)le, as between him and the drawer. Notice from any other person than the holder that the note is not paid, is not notice that the holder does not give credit to a third person. This is very strongly put by Ashhurst and Bullcr, JJ., in Tindal v. Brown, 1 T. R. 1G7. According to Ashhurst, " notice means something more than knowledge, because it is competent to the holder to give credit to the maker. It is not enough to say that the maker does not intend to pay, but that the holder does not intend to give credit to such maker; the party ought to know whether the holder in- tends to give credit to the maker, or to resort to him." And, by Buller, J., it was said, " The notice ought to purport that the holder looks to the party for payment, and a notice from another party cannot be sufficient ; it must come from the holder." And tliis doctrine of Buller has been acted upon in many cases there, as Lord Eldon observed in Baizely's Case. Now, here these in- dorsers ought to have had notice from the Juniata Bank ; for that would be notice that they did not mean to resort to the estate on which, with others, they had administered, but to them in the char- acter of indorscrs ; whereas, by not giving notice, they had a right to conclude the bank intended to look to the drawer. And, accord- 426 EXCUSES OF PRESENTMENT AND NOTICE. ing to AsJihursVs opinion, they had a right to know from the liolder, the Juniata Bank, that they intended not to give credit to tlie estate of John Starrett, but to look to them personally as indorsers.^ Tlic argument that the indorsers received no injury from the want of notice does not now liold. Whatever vacillation prevailed in courts for a time, it is now settled that the insolvency of the drawer of a note does not dispense with the necessity of demand and notice of non-payment. Between the parties to the notice the rule is inflexible, and it is not open to the inquiry whether notice could hajre availed the indorser. The holder has no right to spec- ulate and judge what may be the interest of the parties ; his duty is a plain one, — to give notice ; and, if that rule is dispensed with, it opens a door for endless litigation and perplexing inquiries. Death, bankruptcy, notorious insolvency, or the drawer's being in prison, constitute no excuse either in law or equity. Gibbs v. Gannon, 9 Serg. & Rawle, 201. Notice to one of several partners who are joint indorsers, is notice to all ; and, if one of tlie drawers of the bill be also an acceptor, and there is no fraud in the trans- action, no notice, in fact, is necessary to the others. Neither is notice necessary to a party who by his conduct dispensed with it, as, by engaging to call on the holder, and ascertain whether the acceptor has not paid the bill. Ciiitty, Bills (Carey & Lea's ed.), 297. So, if the drawer of a bill promises to pay, this is a waiver of the objection of the want of notice, where the party knew all the facts and the legal consequences. But it has been recently held, that though the drawer of a bill may impliedly waive his right of defence, founded on the laches of the holder, yet an indorser can only do so by an express waiver. Borradale v. Lowe, 4 Taunt. 93, 96, 97 ; Brown v. M'Dermot, 5 Esp. 265. And there is, in all those cases of want of notice, a material and essential difference between the drawer of a bill and the indorser ; for, if the drawer of a bill had no effects in the hands of the drawee or acceptor, and the bill is drawn for the accommodation of such drawer, he is prima facie not entitled to notice of the dislionor of the bill, nor can he object in such case.^ He, being the real debtor, acquires no right of action against the acceptor by paying the bill, and suffers no injury from want of notice of non-acceptance or non-payment (12 East, 171), and therefore, the laches of the holder affords him no 1 See Chanoine t-. Fowler, ante, 383, and note. 2 See Hopkirk v. Page, post, 430. JUNIATA BANK V. HALE. 427 defeiT^e. 4 Taunt. 733. But it is no excuse for not giving notice to the indorser of a bill, that the acceptor had no eflfects. Pcakc, 202. " That circumstance," said Lord Kenyan^ " will not avail the plaintiff. The rule extends only to actions brought against the drawer ; the indorser is, in all cases, entitled to notice." See Chitty, 259, 295. It has been attempted to bring this within the principle of Bond V. Farnham, 5 Mass. 170, and Barton v. Baker, 1 Serg. <fe Rawle, 334 ; ^ but those cases were decided on very different grounds. In the first, Chief Justice Parsons says : " The opinion was*founded on this, that if the indorser, representing himself liable for the payment of particular indorsements, receives a security to meet them he shall not afterwards insist on a fruitless demand upon the maker, or a useless notice to himself, to avoid payment of demands, which on receiving security he has undertaken to pay." In the latter, the late Chief Justice put it on the ground that it was not unreasonable to suppose that the defendant took upon himself the payment of the indorsed notes, and on no other ground could it be held that the notice of non-payment was not necessary. But here the indorsers had no security beyond any other simple contract condition of John Starrett ; they obtained no advantage beyond strangers to the administration ; for, by the death of the intestate, his goods and lands were seized by act of law, by a kind of statute execution in the hands of his administrator, just as in the case of a commission of bankruptcy, and to be discharged in a prescribed order ; in which the administrator cannot prefer himself or retain his own debt, as he could by the laws of England. The lands, the fund here for tiie payment of debts, do not come into the possession of the administrator ; he has no right of entry, and can bring no ejectment ; the possession descends to the heir. The executor or administrator, have, by virtue of their office, in no case a right to the possession of the deceased's lands. As 1 do not find the case of an indorser becoming an administrator to the di'awcr, in any decision among the books of authority, to form an exception to the necessity of giving notice to the drawer, and as there is no reason why it should, I am not for relaxing one jot further than it has been done, this wholesome and convenient rule. Indeed wo find judges regretting that it had ever been departed from in any case. 1 Post, 458. 428 EXCUSES OF PRESENTMENT AND NOTICE. Tlie Chief Justice, who decided the case in this Court, for the purpose of bringing this new question before the Court, joins in the opinion of the other members of the Court, that the indorsers not having received notice of non-payment, are not liable on the in- dorsement, and that the appeal be sustained. Tiie rule of demand and notice is one of universal obligation. I would not extend the exceptions further than to the cases which have been expressly decided. Policy and the convenience of the public require a rigid adherence to the rule ; for, otherwise, excep- tion would creep in after exception, and leave the law, which ought to be certain, open to speculation and to doubt. Judgment reversed. The Supreme Court of the United States, in 1830, declared the same rule in the case of Magruder v. Union Bank of Georgetown, 3 Peters, 87, and re-af- firmed it in the same case, 7 Peters, 287. The decision in Caunt v. Thompson, 7 Com. B. 400, has perhaps been somewhat misunderstood. That case does not decide that where the party sought to be charged has become executor of the payor, notice is dispensed with, but that the circumstances in that particular case constituted notice. It was proved at the trial that the bill in the case was duly presented at the house of the acceptor ; and that the defendant (the drawer) , to whom it was there shown, said that the acceptor was dead, and that he was his executor ; adding a request that it might be allowed to stand over for a few days and he would see it paid ; and it was held that this was sufJicient notice of dis- honor. It will be seen that the drawers knowledge of the dishonor, which was held to constitute notice, came from the holder and proper party. It was not a mere " historical fact," which the drawer may have derived from a stranger, but it was legal notice within the rule laid down in the principal case. It was imma- terial, as the Court held, that the notice was not given with all the formalities which are usual, so long as it was given by the holder. The very impoi'tant dis- tinction drawn in the principal case between knowledge and notice is also main- tained in Caunt v. Thompson. Cresswell, J., quotes with approval the following language of Alder son, B., in Miers v. Brown, 11 Mees. & W. 372 : "Knowledge of the dishonor obtained from a communication by the holder of the bill amounts to notice." Also the following language of Ashhurst, J., in Tindal v. Brown, 1 T. R. 167 : " Notice means something more than knowledge ; because it is com- petent to the holder to give credit to the maker." Mr. Justice Cressivell proceeds to say: "In substance these cases seem to establish that, in order to make a prior holder responsible, he must derive_/ro?rt some jierson entitled to call for pay- ment information that the bill has been dishonored, and that the party is in a condition to sue him, from which he may infer that he will be held responsible." See Chanoine v. Fowler, ante, 383, and note; also Gower v. Moore, 25 Me. 16. We do not see then that there is any conflict between Caunt v. Thompson and the principal case ; though it must be admitted that the former goes to the verge of the law.' But there may be an exception to the rule in those States in which the personal JUNIATA BANK V. HALE. 429 representative is allowed l)y statirtf a certain period for settling the estate of the payor, during which time he cannot be sued. And it has been held that, if the maker of a note die and an administrator be appointed before the note fall due, demand upon the latter is not necessary to charge an indorser, unless the paper fall due after the period during which the administrator is exempt from suit. Hale V. Burr, 12 Mass. 8G. But this was not the case of an indorser appointed administrator. Shejiley, J., in Gower r. Moore, 25 Me. IG, cites this case as an exception, and states that the doctrine of it is questionable ; but it has been followed in Massachusetts in Oriental Bank r. Blake, 22 Pick. 200, and m Louisiana in Lan- dry V. Stansbury, 10 La. 4.'S-t. But in Gower v. Moore it is held that if the maker of a note die before its maturity, the indorsee sliouhl make inquiry for his personal representative if there be one, and present the note to him at maturity for payment. It would seem advisable, if not necessary, to present the paper at maturity, even where the personal representative is exempt from suit for a certain time, — which is believed to be generally the case throughout the United States, — and give notice to the indorser or drawer of the payor''s death and of the matter of administration, so that he may take the proper measures to secure himself in case the paper is not finally paid. There is a strong reason for this where the indorser is not aware of the payor's death ; for in that case if notice were not given he would be led to suppose that the paper had been duly paid, and thus be thrown off his guard, and perhaps lose altogether an opportunity to secure himself in the event of non-payment from the estate of the payor. And the modern inclination of the courts is to adhere more strictly than formerly to the rule requiring presentment and notice. See Pierce v. Gate, 12 Cush. 190. Putnam, J., in Oriental Bank v. Blake, 22 Pick. 206, after stating the rule laid down in Hale v. Burr, supra, states an important non sequitur, involving the point in issue in the case before him. He says : " But it does not follow that because to charge an indorser, no demand is necessary to be made on the admin- istrator of the maker of a note, or the acceptor of a bill of exchange falling due within the year after the appointment, notice of the dishonor of the bill is not necessary to be given to the administrator of the indorser in a reasonable time. He stands in the place of the indorser ; and a want of notice of the dishonor of the bill may be prejudicial to all persons interested in the estate of his intestate. He, for example, may have paid to the party liable to him upon the bill, money which he might have retained, or have otherwise omitted to obtain, security against the undertaking of his intestate. To the same effect is Merchants' Bank r. Birch, 17 Johns. 25. In Ilaslett j". Kunhardt, Rice (S. Car.), 189, the maker of a note payable May 25th, was drowned, with his whole family, two or tiiree days before the ma- turity of the paper. Notice was given to the indorser on the 2.jth. The maker had left no will, and, up to the time of notice, no administration had been or could have been taken out. It was held that demand was excused ; Rich- ardson, J., dissenting. Sec also Price i'. Young, 1 McCord, 331); s. c, 1 Nott & M. 438. 430 EXCUSES OP PRESENTMENT AND NOTICE. James Hopkirk, surviving partner of Spiers, Bowman, & Co., n. William Byrd Page, Executor ofWiLLiAM Byrd. (2 Brockenbrough, 20. Circuit Court of the United States for Virginia, May, 1822.) Drawinci without funds. — If the drawer have no funds in the hands of the drawee at the time of drawing, and no right to draw, and has the strongest reasons to beheve that his draft will not be paid, he is not entitled to notice of dishonor. Effect of war. — The effect of war is to suspend all commercial intercourse between the countries engaged in it ; and therefore presentment and notice will be excused during the continuance of hostilities. But these steps should be taken within a reasonable time after the cessation of the war. The case is stated in the opinion of the Court. Marshall, C. J. This suit is brought to obtain payment of two bills of exchange drawn by the late William Byrd, of Virginia, on Robert Gary & Co., merchants of London, the one in the year 1774, and the other in 1775. These bills were regularly pro- tested ; but the defendant makes several objections to paying them. The first to be considered is, that no notice of their non-payment and protest was given either to William Byrd in his lifetime, or to his representatives, since his death. The i^laintiff contends that this notice was uimecessary, because the drawer had no funds in the hands of the drawee. Although this application, in consequence of the state of the fund to which the plaintiff must resort, it consisting of equitable assets, is made *to a court of equity, it is admitted to be a law case depending entirely on legal principles. It requires an atten- tive consideration of the question, how far the want of funds of the drawer in the hands «f the drawee discharges the holder of a bill of exchange from the necessity of giving notice to the drawer of its dishonor. The rule requiring this notice was for a long time supposed to be general, and Mr. Justice Blackstone in his Commentaries lays it down without any exception. The first case in which an ex- ception was admitted, is Bikerdike v. Bollman, decided in Novem- HOPKIRK V. PAGE. 431 bcr, 1786, and reported in 1 Durn. «t East, 40o ; in that case the Court stated, that if it be proved hy the holder that " from the time the bill was drawn till the time it became due, the drawee never liad any etfects of the drawer in his hands," notice to the drawer is not necessary. The reason given is, that he had no right to draw, and could not be injured by not receiving notice. An additional observation made by one of the judges is, that to draw in such a case " is a fraud in itself." It does not appear from tlic report of this case, nor is there any reason to believe, that there were any running accounts between the parties ; the whole complexion of the case ; and the reasons assigned by the judges for their opinions, negative the idea ; it is simply the case of a debtor drawing a bill on his creditor, without a prospect of its being paid. In such a case, notice is declared by the Court to be unnecessary. It is remarkable that in this case, although the principle is ex- pressly asserted by both the judges, each declares that the case would be decided in the same way on a different principle. In Goodall and others v. Dolley, decided in ITHT, 1 Durn. <fe East, 712, the judgment was against the holder of the bill, for want of notice ; but in giving his opinion, Mr. Justice Buller rec- ognizes the principle established in Bikerdike v. BoUman. In Rogers v. Stevens, 2 T. R. 713, decided in 1788, the law is said to be settled, that no effects of the drawer in the hands of the drawee, excuses the holder from the necessity of giving notice, yet, it is remarkable that in this case, all three of the judges rely very much on a subsequent assumpsit made by the drawer. In Gale v. Walsh, 5 T. R. 239, decided in 1793, the principle appears to be recognized ; but a rule to show cause why a new trial should not be granted for this cause, was discharged, because the fact did not exist in the case. These are the earliest cases on this point : it has occurred very frequently in subsequent cases, and the principle seems to be firmly established ; but as the q\icstion has come forward in differ- ent forms, and been viewed under different aspects, the principle has been greatly modified, and is no longer laid down in the gen- eral terms which were carelessly used on its introduction. It has been found necessary to define its extent with more precision, and to state the rule with more accuracy. It was perceived, that in the course of commercial dealing, it would frequently occur that a 432 EXCUSES OP PRESENTMENT AND NOTICE, person might draw a bill with the best reasons for believing that it would be honored, although, in fact, he might have, at the time, no funds in the hands of the drawee ; and that all the reasons for requiring notice, would apply in such a case, with the same force as if the bill had been drawn on actual funds. In Legge v. Thorpe, 12 East, 171, Le Blanc and Bayley, JJ., stated the principle laid down in Bikerdike v. Bollman, and afterwards adhered to, in these terms : They said, " that the Court in that case, looking to the reason for which notice was required to be given, laid down the rule, not generally, that where the drawer had no effects in the hands of the drawee at the time (which perhaps might turn out to be the case upon a future settlement of accounts between them) no notice of dishonor should be given : but that it need not be given where the drawer mud have hioum at the time that he had no effects to an- swer the bill, and could have no reason to expect tiiat his bill would be honored." In Blackhan v. Doren, 2 Camp. 503, Lord Ellenhorovgh said: " If a man draw upon a house with whom he has no account, he knows that the bill will not be accepted, he can suffer no injury from want of notice of its dishonor, and, therefore, he is not en- titled to such notice. But the case is quite otherwise where the drawer has a fluctuating balance in the hands of the drawee." In Walwyn v. St. Quintin, 1 Bos. & Pul. 652, one of the strongest cases in the books in favor of dispensing with notice, Eyre, C. J., said: " But it may be proper to caution bill-holders not to rely on it as a general rule, that if the drawer has no effects in the acceptor's hands, notice is not necessary. The cases of acceptances on the faith of consignments from the drawer, ijot come to hands, and the case of acceptances on the ground of fair mercantile agreements, may be stated as exceptions, and there may possibly be many others." In Brown et al. v. Maffey, 15 East, 216, Lord Ellenhorough said : " The doctrines of dispensing with notice of the dishonor of a bill has grown almost entirely out of the case of Bikerdike v. Bollman. That decision dispensed with the notice to the drawer, where he knew beforehand that he had no effects in the hands of the drawee, and had no reason to expect that the bill would be paid when it became due." '' But that exception must be taken with some restrictions. HOPKIRK V. PAGE. 433 which, since I sat hero, 1 have often had occasion to put on it, as where the drawer, thouuh he migiit not have cnbcts ut the time of tlic drawing of tlie hill in the drawee's hands, has a running ac- count with him, and there is a flliictuating balance between them, and the drawer has rcasonai)le ground to expect that he shall have effects in the drawee's hands when the bill becomes due. In such cases, I have always held the drawer to be entitled to notfce, he- cause he draws the l)ill upon a reasonable presumption that it will be honored." In Rucker et al. v. Hiller, 16 East, 43, Lord Ellenhorongh said : " Where the drawer draws his bill in the bona fide expectation of assets in the hands of the drawee to answer it, it would be carry- ing the case of Bikerdike v. Bollman farther than has ever been done, if he were not at all events entitled to notice of the dis- honor. And I know the opinion of my lord chancellor to be, that the doctrine of that case ought not to be pushed farther.'' " The case is very different where the party knows tiiat he has no right to draw the bill. There are many occasions where a drawee may be justified in refusing from motives of prudence to accept a bill, on which notice ought nevertheless to be given to the drawer ; and if we were to extend the exception farther, it would come at last to a general dispensation with notice of the dishonor, in all cases where the drawee had not assets in hand at the very time of pre- senting the bill, and thus get rid of the general rule requiring notice, than which nothing is more convenient in the commercial world. A bona fide reasonable expectation of assets in the hands of the drawer has been several times held to be sufficient to en title the drawer to notice of the dishonor, though such exj)ectation may ultimately fail to be realized." And in the same case, Bayley^ J., said : " The general rule re- quires notice of the dishonor to be given in due time to the drawer, and it lay upon the plaintiff to show that he could not possibly be injured by the want of it. It would be somewhat hard to call upon the drawer towards the end of six years after the bill given ; and when he objected that he had no notice of the dis- honor, to tell him that he had no effects in the drawee's hands at the time when the bill was presented, though they might haye come to his hands the very day after, *and the drawee might have settled his accounts with the drawer on the presumi)tion that the bill was paid." 28 434 EXCUSES OF PRESENTMENT AND NOTICE. The subject was considered by the Supreme Court of the United States, in the case of French v. The Bank of Columbia, reported in the fourth volume of Cranch. 4 Cranch, 141, 2 Cond. 58. In that case, it was said, " to be the fair construction of the Eng- lish cases, that>-a person having a riglvt to draw in consequence of engagements between himself and the drawee, or in consequence of consignments made to the drawee, or from any other cause, ought to be considered as di^wing u})on funds in the hands of the drawee, and, therefore, as not coming within the exception to the general rule." When the drawer is continually*making consign- ments to the drawee, and continually drawing on those consign- ments, his conduct may be essentially affected by knowing that any of his bills have been protested. He may stop in transitu, or may suspend further consignments. It may be as material to his interest to place no more funds in the hands of the drawee in such a case, as to withdraw the funds previously placed in his hands. Notice may be as important to him in the one case as in the other, and there seems to be the same reason for requiring it, supposing the rule to be, that every person having a right to draw, or having reason to believe that his bill will be honored, is entitled to notice. I will proceed to apply the principle to the facts of this case ; and, in doing it, I shall consider the two bills separately. On the nineteenth of July, 1774, William Byrd drew on Robert Cary <)e Co., in favor of Edward Brisbane, for the sum of £353 6s. This bill was indorsed by Edward Brisbane to Alexander Spiers, and by him to the company. On the seventeenth of November, 1774, it was protested for non-payment. The first information that appears to have been given of this protest to Colonel Byrd, or his repre- sentatives, was the institution of this suit in 1819. The executor of Byrd resists its payment for want of notice, and the plaintiff alleged that notice was unnecessary, because the drawer had no effects at the time in the hands of the drawee. To support this allegation, he relies on several letters written by Rob- ert Cary & Co. to William Byrd, which have been exhibited by the executor on his requisition. The defendant objects to this testimony, that the letters are the mere allegations of Robert Cary & Co., and do not contain a full statement of the correspondence between the parties, or of their ac- counts ; that Colonel Byrd may not have acquiesced in the accounts transmitted with these letters, or in the statements they contain, ^ HOPKIHK V. PAGE. 436 although, from tlic loss of papers, the death of parties, and tlie great lapse of time, the papers cannot now be produced. The general ruh." is, that a long ac(iuiescence in letters contain- ing accounts, is prima facie evidence of an acquiescence in their contents ; and there is less reason for excepting thJfe case from the rule, because the letters of Robert Gary & Co., from November, 1773 to October, 1775, do not notice any objection on the part of William Byrd to any of the accounts which, one of those letters says, were annually transmitted to him. The letter from Robert Gary & Go. to AVilliam Byrd, dated the tenth of November, 1773, incloses an account current, showing a balance due Robert Gary & Go. of £616 9«. Id, Tiiis letter gives notice of the completion of a contract for the sale of Byrd's Eng- lish estate ; says the money is to be paid the fifth of April ; that they shall immediately afterwards take up the whole of his bills ; and says that they have referred Farrell and Jones to him, to deter- mine whether they shall pay a debt of about <£800, claimed by Farrell and Jones. Tiie next letter is dated the thii'teenth of May, 17 74. It states the receipt of £5000 on account of the estate which had been sold, and the expectation of receiving the farther sum of .£11,500 on the same account. It states the payment of debts to the amount of X5544 Is. 4:d. and gives a list of other debts due from Byrd, to the amount of £11,577. The letter concludes with saying, that by Greenland's estimate, the produce of the estate will not exceed £15,500, out of which great charges are to be deducted. From this sketch the letter proceeds : '* You will be able to judge how the account may stand, and what bills must be returned." It is observable, that among the debts paid, are several bills of exchange, which had been long protested, one of them as early as February, 1708. This fact shows an understanding by which bills were held up after a protest, in the expectation that they would be paid by tke drawee, notwithstanding the protest. In such a case, if no notice be given, the law seems to be, that the holder looks to the drawee, not to the drawer for payment. The next letter, of the fifth of August, 1774, states that there are many bills which must be returned, after paying all the money received on account of the English estate. This letter speaks of a further sum for a half year's rent, accruing before the purchaser took possession, to be received after Michaelmas. This would be 436 EXCUSES OF PRESENTMENT AND NOTICE. £371 is. Qd. There is, too, a subsequent letter, of the foiirteenth of March, 1775, which mentions a farther receipt of .£448 12s. 1^., on account of the English estate. Colonel Byrd appears to have drawn to the full amount of his English estate, *o far as Robert Gary & Co. had stated the money to have been received ; and if the transactions between the par- ties had gone no farther, these letters would furnish strong reasons for the opinion that, in July, 1774, he acted at least incautiously in drawing the bill under consideration. But there were transac- tions between the parties. Colonel Byrd held a large estate in Virginia, and the usage of the considerable planters to ship their tobacco to London mercliants, and to draw on their consignments, is of general notoriety. In their letter of the seventeenth of November, 1774, Robert Cary & Co. say : " "We shall, in the disposal of your tobacco, hope to render you a safe and pleasing tale." In a letter of the tenth of February, 1775, is an account of sales of fifteen hogsheads of tobacco, shipped in a vessel commanded by Captain Powers ; and there is also notice taken of a mortgage on the estate sold to Mrs. Otway, for which no claimant had appeared, but for which Mrs. Otway had retained a considerable sum in her hands. The letter says : " We were compelled to settle the con- veyance in the manner we did, yet at the same time, it no ways precluded you from receiving your part of this other mortgage, if no claimants." The letter shows that Colonel Byrd had written on this subject, and had manifested the expectation of receiving a further sum on this account. The letter mentions the payment of some small orders given by Byrd. It may be considered as probable, from these letters, that Colonel Byrd was not perfectly satisfied with the sums retained on account of charges on the estate, and expected more money from it. A letter of the twentieth of June, 1775, states the payment of a draft drawn by Colonel Byrd, in favor of Hornsby, for <£75, and their payment for his honor of another draft on Farrell and Jones for the same sum. The last letter is dated second of October, 1775. It mentions the payment of several little drafts, as desired b}' Colonel Byrd, " which are mentioned in an account current inclosed," but th^ account itself does not appear. It shows a balance, as the letter says, of 16s. lid. in favor of Colonel Byrd. From this review of the letters in the cause, it is obvious that HOPKIRK V. PAGE. 437 Colonel Byrd was much pressed for money ; that he was sanguine in his calculations of the sums to l)e yielded by his estate in Eng- land ; that he drew upon that fund by anticij)ation, and to an amount greater perhaps than was strictly justifiable. It is also apparent that a considerable part of the money fgi* which the es- tate sold was retained for incumbrances, some of which were questionable, and there is reason to believe that he questioned them. It is also apj)aront that there were running transactions between the parties, and tbat the holders of his l)ills were in the habit of retaining them, and of receiving payment long after protest. That he made sliipments of tobacco in the time, is un- questionable ; but the amount of his shipments is uncertain ; his letters are not produced ; they would throw much light on this transaction. The letters giving notice of this particular draft, might, and probably would, show the idea on which it was drawn, and the calculations of the drawee ; it might be drawn on actual consignment of tobacco, or it might be drawn on a calculation that something farther miglit be yielded by those items of the English estate, which the letters sliow had not finally been adjusted. These calculations may have been erroneous ; but if they were made, the bill was not drawn with a knowledge that it would not be hon- ored, and therefore notice of its dishonor was unnecessary. The Court will not presume that these calculations were made ; the Court will not presume that the letter of advice which usually accompanies a bill of exchange, did show that the drawer cal- culated on his bills being honored ; but the Court cannot presume the contrary ; and it is to be recollected that when a pro- tested bill is held up for a great length of time without notice, the whole onus prohandi is thrown on the holder ; he must prove every thing, and nothing is required from the drawer. The case furnishes strong reason for the opinion, that this bill was not returned to A^irginia, but was held up by Spiers, Bowman, k Co. in the expectation of its being paid by Robert Cary «fe Co. It was drawn on the nineteenth of July, 1774, and protested for non-payment on the twenty-sixth day of November of the same year. Another bill for £218 los. drawn on the fourth of July, 1774, in favor of Spiers, Bowman, & Co., and protested on the ninth of November, 1774, was returned to Colonel Byrd, and was taken up ; these bills drawn l)y the same persons, and held by the same house, at the same time, would probably have been returned 438 EXCUSES OF PRESENTMENT AND NOTICE. by the same vessel had they been both returned. The circum- stance that one was drawn in favor of Brisbane, an agent of the company, and indorsed by him to a member of the company, and by that member to the company, would not account for the appear- ance of one bili without the other, if both were returned. They were both the property of the same company, both due by the same person, both in possession of the company at the same time, and would probably have been both returned, if they ivere both returned by tlie same vessel. The bill, said not originally to have been drawn in favor of Spiers, Bowman, & Co., would probably have been transmitted to the same agent to whom the other bill was transmitted. The appearance of the one bill without the other is, then, a strong circumstance in favor of the opinion that the bill retained was held up in England in the expectation of its being paid by the drawee. In estimating the probabilities of the circumstances and prospects under which the bill was drawn, this fact is entitled to some consideration. We have no regular accounts, no statements of the consign- ments made by Byrd to Robert Gary & Co. We know that their connection was of long standing ; that there was a considerable degree of mutual kindness and confidence ; that Byrd was in the habit of shipping tobacco to Robert Cary & Co., that there may have been a shipment at the very time this bill was drawn ; that money was paid for Byrd by Robert Cary & Co., after this bill was protested ; that a bill of <£75 was taken up for his honor ; and that in October, 1775, the balance of ,£616 9s. ocZ., which stood against him in November, 1773, was converted into a bal- ance of 16s. lie?, in his favor. We have not all the intermediate accounts, and we do not know how this balance may have fluct- uated ; add to this, that the bill is not said to have been protested foj want of effects. Under all these circumstances, I cannot say that the bill was drawn with a knowledge that it would be protested ; and that no- tice of the protest could not be necessary. I cannot say that it was a fraud upon the payee, by giving him a bill which the drawer knew would not be paid. If the onus probandl lay on the drawer of the bill, the case would be clearly against him ; but as it lies entirely on the holder, whose laches are without a precedent in a court of law or equity, I think he has not made out a case of complete justification, on which he can entitle himself to a decree for the bill drawn on the nineteenth of July, 1774. m)PKIRK V. PAGE. 439 The second bill was drawn on the twenty-sixth day of Novem- ber, 1775, for <£24<i '4h. Id., and was protested on tlie twenty-sixth day of June, 1770.* It was drawn after the coaimencement of liostilities in Virginia ; and before it was protested all intercourse between the two counties was interdicted. Under these circum- stances, notice is not to be expected and ought not to be required. I at first doubted whether a bill, which, f(jr a length of time, is held under circumstances which dispense with notice, does not lose its commercial character, and become an ordinary debt. But on reflection, I am satisfied that this idea cannot be sustained : and that to charge the drawer, notice of the dishonor of his bill ought to be given within a reasonable time after the removal of the impediment. The question, therefore, on this bill, also i#, were the circumstances under which it was drawn such as to dis- pense with notice ? Was it drawn without reasonable ground for an expectation that it would be paid ? It may reasonal)ly be sup- posed tiiat, on the twenty-sixth of November, 1775, the letter of the second of October, 1775, which came by the last packet to New York, was received. In attempting to show that notice of the dishonor of this bill was unnecessary, because the drawer had no effects in the hands of the drawee, the holder is met in limine, by the fact that this letter shows a balance in his favor of 16«. l\d. and the exception under which the plaintiff withdraws himself from the general rule is, that tlve drawer had at the time no effects in the hands of the drawee. If we may depart from the letter of the exception, there is no point at which to stop ; and if notice may be dispensed with when a small sum is in the hands of the drawer, it may also be dispensed with when a large sum is in his hands, provided that sum be one cent less than . the bill i^ drawn for. I am aware of this argument, but think it more perplexing than convincing. There arc many {piostions in which no precise line can be marked, which must depend on sound legal discretion, and where the case itself mtist Ite decided by a jury or by the Court, acting on the princii)les which ought to regulate a jury. The sound sense and justice of the exception .is, that where a drawer knows he has no right to draw, and has the strongest reason to be- lieve his bill will not be paid, the motives for requiring notice of • its dishonor do not exist, and his case comes within reason of the exception. Where all transactions between partieff have ceased, 440 EXCUSES OF PRESENTMENT JiliD NOTICE. and there is nothing to justify a draft but a balance of one penny, it would l)e sporting with our understanding to tell us, that a creditor for this balance, who should draw fora thousand pounds, would be in a situation substantially different from what he would be in, were he the debtor in the same sura. The true inquiry appears to me to be, whether the connection between William Byrd and Robert Gary & Co. remained such as to justify a hope that his bill would be honored, and to afford any shadow of justification for drawing it. I think it as demonstrable as any proposition of this sort can be, 'that he knew that this bill would not be paid. He had no funds in the hands of the drawee except 16s. lid., a^id no prospect of having any. He had made no shipment of tobacco by the last vessel, and Robert Gary & Go. speak of the fact with some resentment. In their letter of June, 1775, they had mentioned sendiwg a vessel to Virginia chartered at a high price, in which they expected consignments of tobacco from their friends, and, among others, from Golonel Byrd. In their letter of the second of October, they say : " When Power came in, we were \\i hopes you would have offered him some assistance, but we ob- serve the high price in the country was the cause of the disappoint- ment, and no compliment to our charter. However, if we are no losers, we are not beholden to our friends for it." With respect to the mortgage for whicli it had been supposed that the mortgagee was dead without a representative, he says, " it is feared the representative is found ; but be this as it may," he adds, " the estate will be always liable, and therefore, without a proper indemnity, little can be expected. What indemnity you may offer we know not, but we shall not engage for our own parts." After mentioning the payment of some bills, they add, " but for paying a^iy more, or raising money on the uncertainty of the mortgage, we'shall not attempt." With this letter before him, Colonel Byrd must have drawn, I think, with a moral certainty that his bill would be dishonored : and if in any case a holder can be excused for not giving notice, this is that case. There was an end of all consignments, of all intercourse between the parties ; there were no funds to withdraw, and no remittances to stop. The want of notice would be no in- jury to him. This case seems to me to come within the exception- of Bikerdike ♦. Bollman, as modified in the subsequent cases. HOPKIRK V. PAGE. 441 Dorset/, J., in Cathell v. (ioodwin, 1 Harris & G. 468. 471, tlius states what is . meant 1))' reasonable ground to expect that the drawer's bill will be honored : '* The ' reasonable grounds ' required by law, are not such as would excite an idle hope, a wild expectation, or a remote probability, that the bill mipht be hon- ored ; l)ut such as create a full expectation, a strong probability of its payment; sudi in(lec<l as would induce a merchant of common prudence and ordinary re- gard for liis commercial credit, to draw a like bill." The above language is quoted with approval in Orear v. McDonald, 9 Gill, 350, 357, and Martin, J., adds: "Tlie right to demand and notice does not de- pend upon the fact that the drawers had, at the maturity of the draft, funds in the hands of the drawees, as ascertained by ulterior events, adequate to its pay- ment. There is to be found in the adjudications on this subject, no such stringent rule. On the contrary, we consider the principle as now established to be that if the drawers, at the time when the bill should have been presented, had the right to expect, reasoning upon the state of facts connected with the transac- tions as they then existed between the drawees and themselves, that their bill would be honored, they were entitled to demand and notice."' See also, to the same elfect, Clopper v. Union Bank, 7 Harris & J. 92, H»2 ; Kupfer v. Bank of Galena. 34 III. 328, 351 ; Wood r. Price, 46 III. 435; Walker v. Rogers, 40 111. 278; Valk r. Simmons, 4 ^Nlason, 113; Adams r. Darby, 28 Mo. 162; Kingsley V. Robinson, 21 Pick. 328, SJiaic, C. J.; Rhett r. Foe, 2 How. 457; Dickens V. Beal, 10 Peters, 577 ; Williams v. Brashear, 19 La. 370 ; Youngue v. Ruff, 3 Strob. 311 ; Wollenweber v. Ketterlinus, 17 Penn. State, 389; Oliver v. Bank of Tennessee, 11 Humph. 74 ; Farmers' Bank v. Van Meter, 4 Rand. 553 ; Miser V. Trovinger, 7 Ohio State, 281; Cook v. Martin, 5 Sm. & M. 379; Spear r. Atkinson, 1 Ired. 262; Claridge v. Dalton, 4 Maule & S. 230; Blackham v. Doren, 2 Camp. 503. These and many other cases hold that the presence or absence of funds in the hands of the drawee is not the criterion by which to de- termine whether the drawer is entitled to notice or not ; but that the true test is whether or no he has reasonable ground to expect his bill to be honored. The weight of authority is almost altogether this way ; though the doctrine has been denied in Alabama. See Shirley v. Fellows, 9 Port. 3(»0; Foard r. Womack, 2 Ala. 368. An opposite opinion had been entertained in the earlier case of Hill V. Norris, 2 S. & P. 114. But Foard r. Womack is approved in Tarver v. Nance, 5 Ala. 712. See also v. Stanton, 1 Hay. 271. Two New York cases (Hoff- man V. Smith, 1 Caines, 157, 160, and Commercial Bank of Albany r. Hughes, 17 Wend. 94) were cited in Foard r. Womack, as authority for the decision in that case, but the doctrine of the principal case does not afipear to have been raised in either case. Jetvett, J., in Dollfus r. Frosch, 1 Denio, 367, also states that the absence of funds is sufficient excuse for failure to notify the drawer, but he im- mediately quotes as authority the language of Story, J., in Valk v. Simmons, 4* Mason, 113, that " no notice was necessary when the acceptor had not in fact or in the ea-pectanei/ of the drawer, any funds in his hands at the time of payment, nor had entered into anv arrangement with the drawer at all events to pay the bill.'' And again : " He was then, to say the least of it, in the predicament of a party drawing without funds, awl having :io ritjht to expect the bill to be paid.^^ But the point was directly decided in Robinson v. Ames, 20 Johns. 146 ; and the same rule adopted as that laid down in the principal case. SpenCer, C J. , said : 442 EXCUSES OF PRESENTMENT OF NOTICE. " I am entirely satisfied that there is no foundation for sayino; the defendants are precluded from setting up laches, because they had no right to draw the bill.. The case of Bikerdike v. BoUman, 1 T. R. 405, is considered the first case de- ciding that notice to the drawer of the dishonor of the bill was unnecessary ; and in that case the drawer had no funds, and knew he had none, in the hands of the drawee. The drawing the bill was considered a fraud, and it was held that he was not entitled to notice, and could not be injured by the want of it. It has, however, since that case, repeatedly been decided that, where there are any funds in the hands of the drawee, so that the drawer has a right to expect the bill will be paid, or where there are not any funds, yet if the bill was drawn under such circumstances as induced the drawer to entertain a reasonable expectation that the bill would be accepted and paid, the person so drawing it is entitled to no- tice ; and a fortiori, he is entitled to have the bill duly presented. The rule is correctly laid down in Claridge v. Dalton, 4 Maule & S. 229, by Lord Ellenbor- ouijh. The principle which has been stated is very ably supported by Chief 'Justice Marahall, in French v. The Bank of Columbia, 4 Cranch, 153, where the principal authorities are reviewed. There is nothing more important than that, in questions of a general mercantile nature, there should be a uniformity of de- cision ; and, although the justice and equity of this rule may not in some cases be perceived, where the payee has purchased a bill, and it is drawn in good faith, and no conceivable loss has happened by the want of notice, yet, as there may be cases where, though there were no funds in the hands of the drawee, the drawer may be injured by the want of notice, it is better that the rule on the subject should be general and uniform throughout the mercantile world." In Benoist v. Creditors, 18 La. 522, it was held that where the drawers de- pended on the issue of a lawsuit, they could not be regarded as having drawn on funds, so as to be entitled to notice. But this was probably on the ground that the drawer had no right under such circumstances to expect his bill to be hon- ored ; for in Williams v. Brashear, 19 La. 370, the doctrine of the principal case is held ; and such was declared to be the law of Louisiana in Bloodgood v. Haw- thorn, 9 La. 124. See also Whaley v. Houston, 12 La. An. 585 ; LaCoste v. Harper, 3 La. An. 385. iThe fact of the indebtedness of the acceptor to the drawer will warrant the drawing, though the acceptor have no funds of the drawer in his hands. Walker V. Rogers, 40 111. 278 ; Thackray v. Blackett, 3 Camp. 164. The authorities are not uniform upon the point which was befoi'e the Court in the principal case, and which Chief Justice Marshall forcibly said (p. 439), was " more perplexing than Convincing; " viz., in regard to the amount of funds in the hands of the drawee which will justify the drawing. In the Matter of Brown, 2 Story, 502, the same doctrine is maintained by Story, J. as that held in the r principal case. See also v. Stanton, 1 Hay. 271; Blackenship v. Rogers, 10 Ind. 333; Smith v. Thatcher, 4 Barn. & Aid. 200; Wollenweber v. Ketter- linus, 17 Penn. State, 389, 399; Hill «. Norris, 2 Stew. & P. 114; Sutcliflfe V. McDowell, 2 Nott & M. 251 ; LaCoste v. Harper, 3 La. An. 385. The difficulty of laying down any inflexible rule in dollars and cents to meet this particular phase of the case is apparent ; and it results only in confusion to attempt it. It should suffice that the cases of this character may be decided upon the broad and just principle determined by Chief Justice Marshall, that the mat- HOPKIRK V. PAGE. 443 ter of notice sliould depend upon the question whether the drawer had reasona- •ble ground to expect his bill to be lionored. The question of amount may funiisb a prima facie presumption ; but it can never be conclusive of the drawer's right to draw. There may have been a private agreement or understanding upon the subject; or then; may have been other circumstances which justified the draw- ing, though the drawer had no funds at all in the hands of the drawee. It has been held not to afi'eet the (juestion of the necessity of notice in this class of cases, that the bill had been accepted. Notwitlistanding the fact of acceptance, the drawer is not entitled to notice of non-payment, if he had no right to draw. Hoffman v. Smith, 1 Caines, IGO; Hill v. Norris, 2 S. & P. 114; Foard i\ Womack, 2 Ala. 368, 371; Gillespie ». Cammack, 3 La. An. 248; Kinsley p. Robinson, 21 Pick. 327; Mobley v. Clark, 28 liarb. 390; Valk v. Simmons, 4 Mason, 113; Allen r. King, 4 McLean, 128; Rhett v. Poe, 2 How. 457. And see Sargent v. Appleton, (3 Mass. ^b. But a contrary view ha3 been entertained. See Pons v. Kelly, 2 Hay. 45, 47; Richie v. McCoy, 13 Sm. & M. 541. See also Campbell r. Pettingill, 7 Greenl. 126; English v. Wall, 12 Rob. La. 132; Orear v. McDonald. 9 Gill, 350, 358. The cases also show that, thoiigii the drawer may have had funds in the hands of the drawee, and therefore ground to draw, still, if he withdraw the funds be- fore the bill matures, or having funds on the way intercept them so that they do not reach the drawee, -notice of non-payment is excused. Valk r. Simmons, 4 Mason, 113 ; Rhett v. Poe, 2 How. 457 ; Adams v. Darby, 28 Mo. 162 ; Eiche- berger v. Finley, 7 Harris & J. 381, 385; Spangler v. McDaniel, 3 Ind. 275; Hammond v. Dufrene, 3 Camp. 145. But see Orr v. INIaginnis, 7 East, 359. But none of the circumstances above mentioned will excuse notice to an in- dorser. He has no concern with the state of accounts between the drawer and drawee, and should be notified of the dishonor. Wilkes v. Jacks, Peake, 202, per Lord Kemjon ; Byles, Bills, 293, 10th Lond. ed. See Carter u. Flower, 16 Mees. & W. 743, 751. As to what particular circumstances come within the rule respecting reasonable ground, see the numerous cases collected in 1 Parsons, Notes and Bills, 532, et seq. In the case of paper payable at bank it is sufficient presentment, demand, and refusal of payment that it was in the banking-house on the day it fell due, and that there were no funds of the^payor there, and no provision for payment. Ilollowell V. Curry, 41 Penn. State, 322; Bailey r. Porter, 14 Mees. & W. 44; United States Bank v. Smith, 11 Wheat. 171 ; Fullerton v. Bank of the United States, 1 Peters, 604, 017 ; Bank of the United States v. Carneal, 2 Peters, 604. But notice must still be given. Phipps v. Chase, 6 Met. 492, and cases just cited. Respecting the effect of war upon the obligation of the holder to make pre- sentment and give notice, the recent case of House r. Adams, 48 Penn. State, 2G1, growing out of the late war, is interesting and important. The facts will suiheiently appear in the opinion by Rkad, J. Presentment for acceptance is not necessary in the ease of a Itill of ex- change, payable at a certain period after date, and in Pennsylvania the drawer is not discharged for want of notice of non-acceptance, provided he receives notice of 444 EXCUSES OF PRESENTMENT AND NOTICE. non-payment. Read v. Adams, 6 Serg. & Rawle, 356. The question therefore in the present case narrows itself down to whether due notice was ^iven of the non-payment of the two bills of exchange which are the subject of this suit. The first bill was for $112, and was protested at New (!)rleans for non-pay- ment on the 11th June, 1861. The second bill for $351 25, was protested at the same place for non-payment, orf the 29th July, 1861. Notice of non- payment was not received by the holders of these bills at Pittsburgh until 14th July, 1862, when the protests and drafts were received by them by mail, and proper notice of their dishonor was given to the indorser and drawers. According to strict commercial law in ordinary cases this notice came too late, but the state of the country is alleged as an excuse, and it therefore becomes necessary to determine the rule in such cases, and its applicability to the history of the times, and the facts disclosed on the trial. Judge Story, in his Commentaries on the Law of Promissory Notes, § 257, has enumerated, among the sufficient excuses for non-presentment and demand at the time and place when and where the promissory note is due and payable, the following: " (3.) The presence of political circumstances amounting to a virtual interruption and obstruction of the ordinary negotiations of trade, called the vis major. (4.) The breaking out of war between the country of the maker and that of the holder. (5.) The occupation of the country where the parties live, or where the note is payable by a public enemy, which suspends commercial in- tercourse. (6.) Public and positive interdictions and prohibitions of the State which obstruct or suspend commerce and intercourse." And in § 356 of the same work, the learned commentator enumerates them also as constituting suf- ficient excuses for the omission of due and regular notice of the dishonor. Upon this subject there are two leading cases : one in England, and one in America. In Patience v. Townley, 2 Smith, 224 (1805), which was an action on a bill of exchange by the holder against one of the antecedent parties, the bill was drawn the 1st June, 1800, at three months' usance on Leghorn, and was due on the 10th September, 1800, but was not presented either for acceptance or payment until the 31st October, 1800. The protest stated that it was not paid because not presented in due time. At the trial, before Lord Ellen- Jforough, C. J., this was relied upon as a defence to the action, but the plaintiff proved that, from the particular situation of the country, Leghorn being then occupied by the enemy, or in some such critical situation, though the bill was sent out by the plaintiff for the purpose of being presented, it was impossible to present it in due time, and it was presented as early as could be afterwards, and there was a verdict for the plaintiff. This was affirmed by the Court of King's Bench, on a motion for a new trial by Mr. Erskine, on a technical ground not disputing the ruling at nisi prius, where Lord EUenborough said: "It was left to the jury to say whether, from the situation of the country, it was possible for the plaintiff to present it in due time." In Hopkirk v. Page, 2 Brock. 20 [the principal case], a case growing out of our revolutionary war. Chief Justice Marshall, p. 34, uses this language: '"The second bill was drawn on the twenty-sixth day of November, 1775, for £246 35. Id., and was protested on the twenty-sixth day of June, 1776. It was drawn after the commencement of hostilities in Virginia, and before it was protested all intercourse between the two countries was interdicted. Under these circumstances HOPKIRK V. PAGE. 445 notice is not to be expectinl, and ouf^lit not to be required. I at first doubted wlu'tliLT a bill which, for a length of time is held under circumstances which dis- pense with notice, does not lose its commercial iliaracter, and become an ordi- nary debt. But on rellection I am satisfied that this idea cannot be sustained, and that to charge the drawer, notice of the dishonor of his bill ought to be given within a reasonable time after the removal of the impediment." To apply these principles to the present case, it is necessary briefly to refer to the history of the times. On the 2Uth December, 1860, South Carolina passed a secession ordinance, which example was followed by Mississippi, Alabama, Flor- ida, Georgia, and on the 'JMi Jainiary, 180 1, by Louisiana, Avhose State authori- ties inunediately seized the United States branch mint and the custom-house at New Orleans, with the Government funds amounting to more than .$500,000, and the United States revenue cutter Robert ^IcClelland was traitorously surren- dered by Captain Breshwood to the State of Louisiana. On the 1st February., Texas seceded, and on the ninth of the same month the rebel Congress at Mont- gomery elected .lellcrson Davis President of the Confederate States of America, and on the 11th March the Constitution of the Confederate States was unanimous- ly adopted. On the 12th April, Fort Sumter was bombarded, and on the 14th capitulated, and on the 21st May the rebel Congress adjourned to meet at Rich- mond on the 2<ith July, where their meetings have since b(;en held. On the 19tt> April, the President issued his proclamation establishing a block- ade of the ports of the seceded States above stated, which, on the 27th of the same month was extended to tiie ports of the States of Virginia and North Caro- lina. On the 3d May a proclamation was issued, calling for three years' volun- teers, and increasing the regular army and navy, and on the 10th May martial law was declared on certain islands on the coast of Florida. On the 2Gth Au- gust, the President, in pursuance of the Act of Congress of ll3th July, 1861, de- clared the inhabitants of these States in a state of insurrection against the United States, and that all commercial intercourse between the same and the inhabitants thereof and the citizens of other States and other parts of the United States is unlawful, and will remain unlawful until such insurrection shall cease or have been suppressed. On the 12th May, 1861, the President by his proclj^niation de- clared that the blockade of the ports o( Heaufort, Port Royal, and New Orh-ans should so far cease and determine from and after the first day of June next, that commercial intercourse with these ports, except as to persons, things, and informa- tion contraband of war, may from that time be carried on, subject to the laws of the United States, and to the limitations and in pursuance of the regulations pre- scribed by the Secretary of the Treasury, in his order appended to the proclama- tion. On the 1st July, 1862, in pursuance of the second section of an Act of Congress of 7th June, 1862, the President by his proclamation declared that cer- tain States, including Louisiana, were then in insurrection and rebellion, and the civil authority of the United States so obstructed that the provisions of the Act of 6th August, 1861, could not be peaceably executed; that the taxes upon real estate under the Act aforesaid, within said States, with a penalty of fifty per centum of said taxes, should be a lien upon the same till paid. Flag-oifucr Farragut having run past Forts Jackson and St. Philip. New Or- leans was surrendered 'on the 28111 April, 1862, and the American Mag was hoisted on the custom-house, post-olUce, mint, and city hall, and the forts were also 446 EXCUSES OP PRESENTMENT AND NOTICE. surrendered that evening. In the report of the postmaster-general of the 2d December, 1801 (Message and Documents 1861-2, part 3, p. 558), he says : " In conscqueiiee of the defection of the insurrectionary States, and the termination of the mail service in those States, on the 31st May last, under the; Act of Con- gress approved Feb. 28, 18G1 (with the exception of service in Western Vir- ginia), it becomes necessary to present the transportation statistics in two divisions ; these are shown in Tables A and B attached to the report." Table B, at page (502, is headed "Table of Mail Service in the following States" (in- cluding Louisiana), " as it stood on the 31st May, 1861, discontinued under Act of Congress, approved Feb. 28, 1861." By the evidence it appears that the Farmers' Deposit Banking Company, with whom these drafts were left by the plaintiff for collection about 1st May, 1861, returned them, declining to collect them on account of the irregularity of the mails. They were then immediately transmitted by the plaintiffs to Burbridge & Co., their agents at New Orleans. It also appeared by the evidence of the postmaster at Pittsburgh, that all postal service in Louisiana and other named places was suspended on and after 31st May, 1861. On the 26th May, 1862, the first mail went out to New Orleans carrying ten thousand letters, including the letters which had accumulated in the dead-letter office. This mail was carried by the steamer Blackstone ; since then the regular rohte to New Orleans has been by New York. This cause was tried on the 9th December, 1862, and the testimony, of course, is to be taken as de- livered at that time. " The first mail from New Orleans was an enormous one. We received ours from it about the 1st July, 1862," says the postmaster at Pittsburgh. "There were considerable intervals between the reception of the first mails after re- sumption." The omission of due and regular notice of the dishonor of these bills is there- fore satisfactorily accounted for by the entire cessation of all mails and commer- cial Intercourse with New Orleans, a blockaded port, and the only question is, whether such notice was given within a reasonable time after the removal of the impediment. It will be recollected that the only communication between Pitts- burgh and New Orleans was by sea through the port of New York, and that the very first mail received was about the 1st July. Under these circumstances particularly, as connected with the unsettled state of affairs at New Orleans, although in our possession, we cannot say the notice received at Pittsburgh on the 14th July, was not within a reasonable time after the removal of the impedi- ment. The judgment of the Court must therefore be reversed, and judgment entered on the verdict in favor of the plaintiffs. See also Apperson v. Union Bank, 4 Cold. 445 ; Polk i\ Spinks, 5 Cold. 431. M'GRUDER v. THK bank of WASHINGTON. 447 George McGruder, Plaintiff in Error, v. The President, Directors, &c., of the Bank of Washington, Defend- ants in Error. (9 AVheaton, 5'JS. Suprcine Court of the United States, February, 1824.) Removal into another Jurixdirliou. — Tlie removal of the maker of a note, before its matu- rity, into aiiotlier jurisdJL'tion from tliat in which tlie note was executed, will excuse the IFolder from makintr a juTsonal presentment and demand. The case is stated in the opinion of the Court. Johnson, J. This case comes up from the Circuit Court of the District of Columbia, in which a suit was instituted against the plaintiff here, as indorser of one Patrick M'Gruder. The facts are exhibited in a stated case, upon which, l)y consent, an alternative judgment is to be entered. The judgment below was for tlie plaintiffs in the action, and the defendant brings tliis writ of error to have that judgment reversed, and a judgment entered in his favor. Tlie leading facts in the cause are so much identified with those in the case of Renner v. The Bank of Columbia, 9 Wheat. 581 ,i decided at the present term, on the question relative to the days of grace, that the decision in that cause disposes of the principal question raised in this. But there is another jioiiit presented in the present cause. There was no actual demand made on the drawer of this note, and the question intended to be presented was, whether the facts stated will excuse it. At the time of drawing the note, and until within ten days of its falling due, the maker was a house-keeper in the District of Colum- bia. But he then removed to the State of Maryland, to a place within about nine miles of the district. The case admits that neither the holder of the note, nor the notary, knew of his removal or place of residence ; but the circumstances of his removal had nothing in them to sanction its being construed into an act of ab- sconding. The words of the admission to this point are, that he " went to the house where the said Patrick had last resided, and 1 AnU, 297. A 448 EXCUSES OF PRESENTMENT AND NOTICE. from which he had removed as aforesaid, in order there to present the said note, and demand payment of the same ; and not finding him there, and being ignorant of his place of residence, returned the said note under protest." The alternative in which the judgment of the Court is to be rendered is not very appropriately stated; but since the absurdity cannot have entered into the minds of the parties, that, not know- ing of the removal or present abode of the .drawer, the holder was still bound to follow him into Maryland, we will construe the sub- mission with reference to the facts admitted; and then the question raised is, — Whether the holder had done all that he was bound to do, to excuse a personal demand upon the maker. On this subject the law is clear ; a demand on the maker is, in general, indispensable ; and that demand must be made at his place of abode or place of business. That it should be strictly personal, in the language of the submission, is not required ; it is enough if it is at his place of abode, or generally, at the place where he ought to be found. But his actual removal is here a fact in the casp, and in this, as well as every other case, it is incumbent upon the in- dorsee, to show due diligence. Now, that the notary should not have found the maker at his late residence was tlie necessary con- sequence of his removal, and is entirely consistent with the suppo- sition of his not having made any one of those inquiries which would have led to a development of the cause why he did not find him- there. Non constat^ but he may have removed to the next door, and the first question would, most probably, have extracted information that would have put him on further inquiry. Had the house been sliut up, he might, with equal correctness, have re- turned " that he had not found him," and yet that clearly would not have excused the demand, unless followed by reasonable in- quiries. The party must, then, be considered as lying under the same obligations as if, having made inquiry, he had ascertained that the maker had removed to a distance of nine miles, and into another jurisdiction. This is the utmost his inquiries could have extracted, and marks, of course, the outlines of his legal duties. Mere distance is, in itself, no excuse from demand ; but, in gen- eral, the indorser takes upon himself the inconvenience resulting from that cause. Nor is the benefit of the post-office allowed him, as in the case of notice to the indorser. m'gruder v. the bank of Washington. 449 • But tlie question on the recent removal into another jurisdiction, is a new one, and one of some nicety. In case of original resi- dence in a State dill'crent from that of the indorser, at the time of taking the paper, there can l)c no question ; hut how far, in case * of suhsequcnt and recent removal to anoth(3r State, the holder shall he recjuired to pnrsne the maker, is a question not withtjut its difficulties. We think that reason and convenience are in favor of sustaining the doctrine, that such a removal is an excuse from tactual demand. Precision and certainty are often of more importance to the rules of law, than their abstract justice. On this point there is no other rule that can be laid down, which will not leave too much latitude as to place and distance. IJesides which, it is consistent with analogy to other cases, that the indorser should stand committed, in this respect, by the conduct of the maker. For his absconding or removal out of the kingdom, the indcfl-ser is held, in England, to stand committed ; and, although from the contiguity, and, in some instances, reduced size of the States, and their union under the general government, the analogy is not perfect, yet it is obvious that a removal from the seaboard to the frontier States, or vice versa, would be attended witii all the hardships to a holder, espe- cially one of the same State with the maker, that could result from crossing the British Channel. With this view of the subject, we are of opinion that the judg- ment below, although rendered on a different ground, nuist be sustained. Judgment (ij/irnird. The doctrine of the above case is well settled. See Taylor v. Snvder, ante, p. 327, and note ; Adams r. Leland, 30 N. Y. 309 ; Foster v. Julien, 24 N. Y. 28. But the question whether, in case of removal into anotiier jurisdiction, present- ment should be made at the payor's last abode, has given rise to some conflict. It will 1)0 observed that that point is not directly decided in the principal case ; it is only held that such a presentment is sufficient. If no such presentiiunt iiad been made, the question of the necessity of it might have arisen. In Massachusetts it is held that in case of removal from the State, the present- ment should 1)0 made at the payor's last place of residence. Wheeler r. Field, 6 Met. 2UU. See also Fierce v. Cate, 12 Cush. l')0, eited at length in note to Lehman v. tloiies, post, 451. In New York and Ohio the contrary rule otitains. Foster r. Julien, 2-i N. Y. (10 Smith) 2t>, Mdson, .]., dissenting; tiist r. Lybrand, 3 Ohio, 308. The same may possibly be inlened in Pennsylvania from Keid r. Morrison, 2 Watts & S. 401, where it is said that the rule which applies in the case of an absconding debtor applies equally in the case of the removal of the payor into 2U 450 EXCUSES OF PRESENTMENT AND NOTICE. • anotluT State. This may mean, however, only that a personal demand is in such case dispensed with ; for it is very obvious that so far as the necessity of making presentment at the payor's last abode is concerned, there is a very material dif- (ierence between an al)sconding and an honest removal from the State. In the latter case it is not unusual lor the maker or acceptor to leave funds behind him to meet his obligations ; but a circum.stance of that kind in the former case would be remarkable indeed. And this seems to be a Strong reason for main- taining the rule held in Massachusetts. Chancellor Kent (3 Com. 96), and Bcarddey, J., in Taylor v. Snyder, aiite, p. 327, carefully state that presentment at the payor's last abode is sufficient; but say nothing of the necessity of- such presentment. See Taylor v. Snyder, ante, p. 327, and latter part of note ; also Lehman v. Jones, infra. Lehman v. Jones. (1 Watts & Sergeant, 126.- Supreme Court of Pennsylvania, May, 1841.) Absconding of the payor. — If the maker of a promissory note absconds before the maturity of the note, this will excuse the holder from making presentment at his last place of residence. Assumpsit against Lehman and Stroh, as indorsers of a promis- sory note. It was proved that Robinson, the maker of the note in suit, had absconded to parts unknown and had not returned. The objection was that no demand was made upon Robinson, and that the notice was informal. The Court below thus instructed the jury : — Parsons, President. — The Court instruct the jury, as a matter of law, if they believe that Robinson absconded in December, 1835, as testified to by his mother, and did not return before the note became due, nor since, it was not requisite that the holders of the note should go to Jonestown, and attempt to make a de- mand upon him in order to charge the indorsers ; provided the indorsers were cognizant of the fact that the drawers had left the State, of which there would seem to be no doubt, if the testimony of Mrs. Robinson is believed. Per Curiam} — The rule in Lambert v. Oakes (1 Ld. Raym. 443), is, that the holder must have demanded, or done his en- 1 Gibson, C. J., Rogers, Huston, Kennedy, Sergeant, JJ. LEHMAN V. JONKS. 451 deavor to demand the money. But the law is not so uureasouahle as to retjiiire an iinpossiljility ; and therefore it is said HI). Anon. 743), that where the drawee of a bill has abseonded before the day of payment, notice of tlMJ fact is equivalent to notice of demand and di.shoiior. In Duncan v. McCullough, 4 Herg. & Rawle, 480, the principle was fecogni/.ed as Ijeing applicaljle to a promissory note; and it has l)cen established l)y direct decision in some of our neighboring Stales. It would have been idle for the i)hiiiitifT to demand jniymont at tiie late residence of Robinson, tlie drawer, after he had absconded. Where, indeed, the drawer of a note or the drawee of a bill has merely removed from the place of his residence, indicated by the bill, it is the business of the holder to inquire for liim and ascertain where he has gone, in order that he may follow him ; but when he has secretly fled, an application at the place would lead to no information in respect to him ; and the law requires notliing which is nugatory. The other errors are either resolvable by this precedent, or are plainly unfounded. Judgynent affirmed. This case is followed by lleid v. ^lorrison, 2 Watts & S. 401 ; ami the same doctrine is stated to be the law in New York. See Taylor v. Snyder, ante, p. 327 ; Spies V. Gilniore, 1 Coinst. 321. See also Wolfe v. Jewett, 10 La. 383, stating the same rule ; Bruce v. Lytle, 13 Barb. 163 ; Gillespie v. Hannalian, 4 McCord, o03, in which Johnson, J., says : " Now I take it that there is nothing in the prin- ciples of justice which would require the indorsee to make a demand, when, as in the case of Putnam v. Sullivan, 4 Mass. »3, it had become impracticable, the maker having absconded. Nor can I perceive in what way it would promote commerce. But on the contrary, that rule which enjoined the performance of impossibilities, would deter the most hardy and adventurous from placing themselves within its operation. And it seems to be generally agreed that the absconding of the maker of a note, or the acceptor of a bill of exchange, will excuse the holder from making a demand." This was the doctrine in Massachusetts until the case of Pierce v. Gate, 12 Gush. I'JO, decided in 1853, when a more stringent rule was declared. See Graf- ton Bank v. Cox, 13 Gray, 503. See as to the former rule, Hale v. Burr,*12 Mass. v85 ; Shaw v. Keed, 12 Pick. 132. But in Pierce r. Gate, supra, it was hold that if the payor absconds, leaving no visible property subject to. attachment, a want of demand or inquiry for him will not thereby be excused, though the indorser knew of tlie absconding. .SV/a/r, G. J., said : " We are aware xhat in some of the earlier cases in Massachusetts, it was held that proof that the maker had absconded, or failed, and become insolvent, so that a demand would bo unavailing, would be an excuse lor want of presentment. Putnam r. Sullivan, 4 Mass. 45. But it has been decided, on consideration, and upon principle, that the obligation of an indorser is conditional ; that is, that he will be answeral)le if, 452 EXCUSES OF PRESENTMENT AND NOTICE. at the maturity of the note, the holder will present it to the maker for payment ; and if thereupon the maker shall neglect or refuse to pay it, and the holder will give seasonable notice to the indorser, he will pay it himself. ^Sandford v. Dilla- way, 10 Mass. 52 ; Farnum v. Fowle, 12 Mass. 89. These are the conditions of his liability. The holder, therefore, to charge the indorser, must show a com- pliance with these conditions, or that proper means have been taken to effect a compliance with them, unless, indeed, he can prove a waiver of them by the indorser. And this, we think, is the rule as now settled. Granite Bank v. Ayres, IG Pick. ;592 ; Lee Bank v. Spencer, 6 Met. 308. If the maker has left the State, the holder must demand payment at his actual or last place of abode, or of business, within the State. Wheeler v. Field, 6 Met. 290." But, after giving the same extract from this case in 1 Parsons, Notes and Bills, 450, it is there said, in the note : " It is a fact personally known to us, that this point was not argued, nor indeed raised, by counsel in this case. The defence was based upon other grounds, because it was supposed that the decisions overruled by this case, and the practice under them, had established the law." Under these circumstances, it would not be strange that the old rule, as stated in the principal case should, on the next raising of the question, be re-established. But though demand upon the maker or acceptor is excused in the case of an absconding, still notice should be given that the party has absconded. Anony- mous, 1 Ld. Raym. 743 ; Foster v. Julien, 24 N. Y. (10 Smith) 28, 37 ; Ex parte Rohde, Mont. & M. 430 ; Michand v. Lagarde, 4 Minn. 43 ; 1 Parsons, Notes and Bills, 449, 528. MicAJAH T. Williams, Plaintiff in Error, v. The Bank of THE United States, Defendant in Error. (2 Peters, 96. Supreme Court of the United States, January, 1829.) Absence of payor. — In an action against an indorser, it appeared that the notary called at his dwelling-house to serve notice of dishonor, and found the house shut up, the doors locked, and the family out of town (as he learned on inquiry of the next neighbor), upon a visit of unknown duration. Held, that he had used due dili- gence, and that the indorser was liable. « The case is stated in the opinion of the Court. Washington, J. This was an action of assumpsit, brought in the Circuit Court of Ohio by the president, directors, and company of the Bank of the United States, against J. Embree, the maker, and D. Embree and M. T. Williams, the indorsers of two several promissory notes. The only count in the declaration is for money lent and advanced by the plaintiffs to the defendants. WILLIAMS V. BANK OF THE UNITED STATES. 453 Upon the plea of the general issue, the case at the trial was, by consenfof the parties, submitted to the Court ; aiul the above notes were given in (Evidence by the plaintiffs, in support of the action. The Court gave judgment against the defendants, and ordered it to be certified in pursuance to the statute of Oliio, that it appeared to the satisfaction of the Court that J. Embree had signed the notes on which the suit was brought as principal, and D. Embree and M. T. Williams, as sureties. At the trial of the cause tiius submitted to the Court, the plain- tiffs, having proved the demand and the handwriting of the in- dorsers of the notes, offered the following evidence of the notice to the defendant, Williams, namely, " that the notary public, after the protest of the notes and the expiration of the usual days of grace, called at the house of the defendant Williams, who resided in the city of Cincinnati, wiiich lie found shut up, and the door locked, and on inquiry of the nearest resident, he was informed that tlie said Williams and family had left town on a visit, whether for a day, week, or month, he did not know, nor did he inquire. He made use of no further diligence to ascertain where Mr. Wil- liams had gone, or whether he had left any person in town to attend to his business. The witness left a notice at the house of a person adjoining, with a request to hand it to the defendant when he should return." The Court being of opinion that this evidence was conclusive of legal notice to charge Williams, his counsel took a bill of exceptions, and the cause is now for judgment before this Court upon a writ of error. The only question which this bill of exception presents is, whether due diligence was used l)y the defendants in error to give notice to the indorser of the non-payment of these notes by the maker of them ? The general rule of law applicable to the subject has long been settled, that to enable the holder of a bill of exchange or promissory note to charge the indorser, it is incumbent on him to prove that timely notice of the dishonor of the bill or of the non-payment of the note was given to the indorser, or, if this could not be done, he must excuse the omission by showing that due diligence had been used to give such notice. If the parties reside in the same city or town, the indorser must be personally noticed of the dishonor of the •bill or note, either 454 EXCUSES OP PRESENTMENT AND NOTICE. verbally or in writing ; or a written notice mnst be left at his dwelling-house or place of business. Either mode is sufficient, but one or the other must be observed unless it is prevented by the act of the party entitled to the notice. In the case now under consideration, the banking-house of the defendants in error and the dwelling-house of the plaintiff were located in the same city. The notary called at the plaintiff's house, which he found shut up, and the door locked. Upon inquiry of the nearest resident, he was informed that the defendant, with his family, had left town on a visit, but for how long a period was unknown to tbis person ; no further attempt was made to ascer- tain where the plaintiff in error was gone, or whether he had left any person in town to attend to his business. The question to be decided is, whether, under these circumstances, the defendants are excused for not having given the notice which tlie law re- quires ? In the case of Goldsmith and Bland, Bayley, Bills, 224, note, it was decided that it was sufficient to send a verbal notice to the defendant's counting-house, and if no person be there in the ordi- nary hours of business to receive it, it is not necessary to leave or send a written one. The principle of this decision is, that the counting-house of tbe defendant is the place in which the holder was entitled, during the regular hours of business, to look for the person for whom the notice was intended, or for some person authorized by him to receive it, and that the omission to give it was occasioned, not by the want of due diligence in the holder, but by the fault of the party who claimed a right to receive it. The principle here stated is not peculiar to this class of con- tracts. If a party to a contract who is entitled to the benefit of a condition, upon the performance of which his responsibility is to arise, dispense with, or by any act of his own prevent the perform- ance, the opposite party is excused from proving a strict compliance with the condition. Thus, if the precedent act is to be performed at a certain time or place, and a strict performance of it is prevented by the absence of the party who has a right to claim it, the law will not permit him to set up the non-performance of the condition as a bar to the responsibility which his part of the contract had imposed upon him. The application of this general principle of law to tlie subject WILLIAMS V BANK OF THK UNITED STATES. 455 before us, may be ilhisti-atcd l)y otber cases than the one inime- diatcly under consideration. The hohler of a bill or promissory note, in order to entitle himself to call upon the drawer or indorser, must give notice of its dishonor to 'the party whom he means to charge. But if, when the notice should be given, the party entitled to it be absent from the State, and has left no known agent to receive it ; if he abscond, or has no place of residence which rea- sonable diligence used by the holder can enable him to discover, the law dispenses with the necessity of giving regular notice. So where the parties, as in this case, reside in the same city or town, the notice should be given at the dwelling-house or place of business of the party entitled to claim it, and the duty of the holder does not require of him to give the notice at any otiier j)lace. If the giving of the notice at either of these places l)e prevented by the act of the party entitled to receive it, the performance of the condition is excused. In this case, the notary called at the dwelling-house of the in- dorser, at the regular time and at a seasonable hour, for aught that appears, to serve the notice, and found the house shut up, the doors locked, and the family absent from town upon a visit of unknown duration to the agent of the bank or to his informer. What was he to do ? He was not bound to call a second time, nor was he under any obligation to leave a written notice, even if he could have found an entrance into the house. But it is insisted that the defendants in error were bound, under the circumstances of this case, to give notice to the plaintiff through the channel of the post-ofTice : and the case of Ogden v. Cowley, 2 Johns. 274, is relied uj)on in support of this j)osition. In that case, tiio notary called at the houses of the indorser. and of his deceased partner, for the jmrpose of giving them notice of the non-payment of the note, but found their house locked up, and on inquiring at the next door was told they were gone out of town. On the same day, the notary put a letter into the post-office in the city of New York, addressed to the defendant and his partner, informing them of the non-payment of the note, and that they were looked to for payment. It appeared that at that time the yellow fever. j)revailed in the city. The Court decided that all proper steps were taken to communicate the requisite notice to the indorser, and that the notice was, of course, sufficient. It may be remarked upon this case, that the absence of the 456 EXCUSES OF PRESENTMENT AND NOTICE. indorsers from their houses was probably the consequence of a temporary removal from the city, on account of the prevailing sickness, and that the case does not inform us whether the place to which they had removed was known to the notary. We arc not prepared to say that in such a case the parties entitled to notice were bound to be at their dwclling»house8, or to have any person there at the time the notary called to receive notice, and conse- quently that their absence, and the closing of their houses, ought to have excused the holder from taking other steps to communicate notice to them. But laying these circumstances out of the case, the Court decided no more than that the steps taken to give notice were sufficient, in point of law, for that purpose ; and it is not to be doubted but tliat they were so. They do not decide that, in a case freed from the circumstances before noticed, it was necessary that notice to the indorsers should have been given through the' post-office. In the case of Crosse v. Smith, 1 Maule & Sel. 545, the cashier called at the counting-house of the drawer, for the purpose of giving him notice of the dishonor of the bill. He found the out- ward door open, but the inner locked. The cashier knocked, and made noise enough to have been heard, if anybody had been within. After waiting a few minutes and no person appearing, he left the house, and took no further legal step to give the notice. It was insisted, in opposition to the sufficiency of the notice, that a notice in writing, left at the counting-house, or put into the post-office, was necessary. Tiie answer given by the Court was, that the law did not require either mode to be pursued. " Putting a letter in the post," says Lord Ullenborough, " is only one mode of giving notice ; but where both parties are residing in the same post-town, sending a clerk is a more regular and less exceptionable mode." The decision in this case, as to the suffioiency of the notice, was the same as that given in the case of Goldsmith v. Bland, before referred to. The case of Ireland v. Kip, 10 Johns. 490, and 11 Johns. 231, was much pressed upon the Court in the argument of the present cause by tlie counsel for the plaintiff in error. We have examined that case with great attention and respect, but have not been able to view it in the same light as it seemed to have struck the learned counsel. The place of residence of the defendant, the indorser, was three and a half miles from the post-office, within the limits WILLIAMS V. BANK OF THE UNITED STATES. 457 of tlie city of New york, l)ut without tlic compact part of the city, and without the district of any letter-carrier. Tiie case does not State that the indorser had any counting-house, or place of husiness in the city, at which the notice could have heen left. The only notice given to the defendant was a written one, put into the post- office in the city of New York, directed to the defendant, and stating that the note had not heen paid. The place of the defend- ant's residence was known to the clerk of the notary, wflo put the written notice to the defendant into the post-ofiice. Tlie only question decided hy the Court was, that, under the circumstances of that case, the holder of the note was bound to give personal notice to the defendant, or to see that the notice reached his dwelling-house ; and that merely putting the notice into the post- office was not sufficient. * Upon a second trial of the cause it appeared in evidence, that the defendant had given directions to the letter-carriers of the post- office to leave all letters that came to the post-office for him at a house in Frankfort Street, in the city of New York ; that the letter- carriers called at the post-office tliree or four times every day, and took out and delivered all letters left there ; and that the defendant usually called or sent every day for his letters to the house in Frankfort Street. The learned judge who delivered the opinion of the Court stated, that, admitting a service of the notice at the house in Frankfort Street would have been good and equivalent to a service at tlie defendant's dwelling or counting-house ; still, the delivery of the notice at the ))Ost-office, \inaccompanicd with proof that it was actu- ally delivered at the house, was not notice, lie adds, that '' the invariable rule with us is, that when the parties reside in the same city or place, notice of the dishonor of bills or notes must be personal, or something tantamount; such as leaving it at the dwelling-house or place of business of the party, if absent." Now it is apparent, that the question which arises in the case under consideration was not and could not be decided in the case just referred to. The objection to the notice in the latter case was, that it ought to have been given at the dwelling-house of the de- fendant, and could not be given through the post-office, unless it also appeared that the notice so given reached the dwelling-house or the house in Frankfort Street. No attempt was made to give the notice in the former mode, as was done in this case ; and the 458 EXCUSES OF PRESENTMENT AND NOTICE. latter mode, SO far from being considered as. tantamount to the former, or as being necessary in order to excuse the want of personal notice, is declared throughout to be insufficient without further proof. The opinion of this Court is that the defendants in error were, under tlie circumstances of this case, excused from taking any other steps than they did, to give notice to the plaintiff of the non- payment ^f these notes ; and that the judgment of the Court below ought to be affirmed, witli costs. The text-writers state the rule as declared in this case. See Story, Promis- sory Notes, § 238; Story, Bills of Exchange, § 352; Chitty, Bills, 279, 280; Bayley, Bills, 216, 6th Lond. ed. But if the payor's place of business or residence is closed, the holder as in the principal case, must make inquiry for him. Collins v. Butler, 2 Strange, 1087 ; Bateman v. Joseph, 12 East, 433; Beveridge v. Burgis, 3 Camp. 262; Brown- ing V. Kinnear, 1 Gow, 81 ; Hine v. AUely, 4 Barn. & Adol. 624; Granite Bank V. Ayres, 16 Pick. 392; Lanusse v. Massicot, 3 Mart. La. 261, 265 ; Franklin v. Verbois, 6 La. 727. Howe v. Bowes, 16 East, 112; s. c, in error, 5 Taunt. 30; Baumgardner v. Reeves, 35 Penn. State, 250; Shedd v. Brett, 1 Pick. 413. In the last-named case, Parsons, C. J., seemed to think the inquiry unnecessary, though there was proof of diligent search for the maker in the case. Barton v. Baker. (1 Sergeant & Rawle, 334. Supreme Court of Pennsylvania, April, 1815.) Insolvenaj. Assignment to indorser. — Though the maker of a note was insolventwhen the note was made and indorsed, and also when it fell due, and this fact was known to the indorser, this will not excuse due notice of non-payment. But if the in- dorser has received from the maker a general assignment of his estate and effects, notice is not necessary. The case is sufficiently stated in the opinion of the Court. TiLGHMAN, C. J. The objection to the verdict in this case is, that due notice of non-payment by the maker of the note on which the action is founded, was not given to the defendant who was the indorser. It is confessed that due notice was not given ; but the plaintiff contends, that under the circumstances of the case, notice was not necessary. The circumstance principally relied on at the BARTON V. BAKER. 459 trial, and on which the plaiiitilT had the charj^e of the Court in his favor, is, that at the time when tlie note was made and indorsed, and also at the time when it fell due, it was known to the defendant that James Brown <fe Co. were insolvent. If the case rested solely on this objection, I should be for <rrantin<j a new trial, because the cases cited by tlio plaintitf, of De Berdi v. Atkin- son, 2 II. Bl. ^)3G, and Corney v. Da Costa, 1 Esp. 302, have been overruled in Niciiolson v. Gouthit, 2 H. Bl. t509, and Esdaile v. Sowcrby, 11 East, 114. The case of Jackson v. Rich- ards, 2 Caines, 343, agrees with the law as settled by the last English cases. But I do not rest my opinion solely upon the authority of these cases. Tiie reason of the thing demonstrates that the insolvency of the maker of a note, though known to the indorser, ought not to discharge the holder from giving notice. There are various degrees of insolvency, and it rarely happens that a man is totally insolvent. So that there is a chance of getting something by an application to the debtor. Besides, if a man has nothing of his own he may have friends, who, to relieve him from j)rcssure, will do something for him. The indorser, therefore, has a chance of securing himself at least in part. The only reason that can be assigned for insolvency taking away the necessity of notice, is, that notice could be of no use to the indors- er. But it is almost impossible to prove that it miglit not have been of use. Therefore it is necessary. Tliere is another circum- stance in this case, however, operating powerfully in favor of the plaintiff. The house of James Brown & Co. consisted of James Brown and Armat Brown. When the note fell due, James Brown was in Europe, and Armat Brown in this city. A few months before it was due the defendant received from Armat Brown an assignment o^ his whole estate, for the purpose, among other things, of indemnifying him against his indorsements on account of James Brown & Co. Now, by the taking of this assignment, it is not unreasonable to presume, tliat the defendant took upon himself the payment of the indorsed notes, especially as wIumi he did receive notice (ten days after the note fell due), although he knew and remarked, that it was out of time, he did not deny his respon- sibility, but said that his ability to pay would depend on the arrival of a vessel, I agree, therefore, with Bond v. Farnham, 5 Mass. 170, where it was held, tliat in such a case the indorser dispenses with notice. Inasmuch then as it appears upon the whole of 460 EXCUSES OP PRESENTMENT AND NOTICE. this case, that notice of non-payment was not necessary, no injus- tice has been done by tlie verdict, and therefore, a new trial ought not to be granted. Yeates, J. I have no hesitation in admitting, tliat my charge to the jury in the particular of notice to the defendant of the non- payment of the note by the drawers, does not accord with the most modern authorities. I considered the cases De Berdt v. Atkinson, in 1794, ^ H. Bl. 336, and of Corney v. Da Costa in 1795, 1 Esp. 302, under circumstances very similar to those disclosed in evidence on the trial, as decisive of the question of notice ; and that, according to the expressions of BuUer, J., in the first case, the general rule as to notice was only applicable to fair transac- tions, where the note had been given for value, in the ordinary course of trade. The justice of the case in favor of the plaintiff struck my mind forcibly, and I thought Nicholson v. Gouthit, in 1796, 2 H. Bl. 610, and Jackson v. Hitter, in 1805, 2 Caines, 343, might be admitted to be law, without overthrowing the two former decisions. In the first of them, 2 H. Bl. 610, it is stated, that if the note had been presented when it became due, it would have been paid, as Burton, a prior indorser, had lodged a sufficient sum of money in the defendant's hands for that purpose, but which he paid away, when he found the note did not come to him as he expected. It appeared to me very singular, that al- though Eijre, Chief Justice, and Heath and Rooke, Justices, sat in the Common Pleas, and decided both cases, the decision in De Berdt v. Atkinson was not cited nor adverted to in Nicholson v. Gouthit, if it established a different principle, either by the Court or counsel, although nineteen months only had intervened. I was led to remark on the trial that Chitty (who is generally deemed a very correct compiler, in his treatise on Bills and Notes, p. 87, I Lond. ed.) lays down the broad proposition that the payee of a note, indorsing it to give it currency, and knowing the insolvency of the maker at the time, cannot insist on the want of notice as a defence ; and yet, though he cites Nicholson v. Gouthit, in the fol- lowing page he does not consider it as effecting any change in tlie commercial law before asserted. In the New York case, 2 Caines, 343, notice was given to the indorser of non-payment by the drawer, prior to any demand upon the drawer, and consequently the notice was null, as the drawer was not in default when he received notice. I placed too much reliance on the circumstances BARTON V. BAKER. 461 detailed in the cases of 1794 and 1795, without sufTicicnfly attend- ing to the reasoning of the Court therein, wliich is contradicted in the later cases, Esdailc v. Sowerby, in 1809, 11 East, 117, was not cited on the trial, but it is held therein by the whole court that Nicholson v. Gouthit is so decisive an authority on this suliject, that the Court could not again enter into the discussion of the doctrine. It seems now settled, that notwithstanding it sounds harsh that a known bankruptcy should not be equivalent to a de- mand or notice, the rule as to both is too strong to be dispensed with. At the same time, 1 cannot see how the defendant can get over the late case of Bond cf ul. v. Farnham, in 1809, 5 ^lass. 170. In this instance, James Brown, one of the partners in the firm, when the note fell due on the fifth of June, 1812, was in Europe, and had been there some time before; Armat Brown, the only resident partner in America,- had assigned all his real and personal estate to the defendant to indemnify him for his advances and indorsements. Against neither could any en'octive measures be pursued within the period of imputed delay. In the language of Chief Justice Parsons, "any demand by the defendant would be fruitless, as he had secured all the property the drawer on the spot had, for the express purpose of keeping him harmless." The reason of the rule as to notice, must wholly fail under such cir- cumstances. On this last ground, I am of opinion, that judgment be rendered for the plaintiff on the verdict. Neiv trial refused. Thoui^li there is some conflict among the early cases, as shown by the cases referred to in the opinion supra, re.«pcctin<j the necessity of notice in the case of the insolvency of the payor, known to tlie drawer or indorser, the later authori- ties, and the text- writers state the rule as declared in tlie principal case. Mr. Justice' Story (Promissory Notes, § 2S()) says that " it is by our law, as well as. by the French law, no excuse that the maker is a bankrupt, or is insolvent, at the time wlien the note becomes due ; and this (as is asserted) for two reasons : first, that it is part of the implied obligations or conditions of tlie contract of the indorscr, that due presentment ^li;ill be made in order to bind him to pay upon the dislionor; and sccoiully, that it is not certain, that if due presentment liad been made, the note, notwithstanding tlie failure, might not have been paid, cither by the maker or by some friend for him. Eacii of these reasons has been pro- mulgated, nut only in the common-law authorities, but by foreign jurists of liigh repute, such as Pothier and Savary."' Upon this subject, Chitty (Bills, Wdo) says: "The death, bankruptcy, or hnown insohnici/, of the drawee, or his being in prison, constitute no excuses, either at law or in cc^uity, for the neglect to give due notice of non-acceptance or 462 EXCUSES OF PRESENTMENT AND NOTICE. non-payment ; because many means may remain of obtaining payment by the assistance of friends or otherwise; of which it is reasonable that the drawer and indorsers should have the opportunity of availing themselves, and it is not com- petent to the holders to show that the delay in giving notice has not in fact been prejudicial." The same writer again uses this language, in substance, on p. 450; with the additional statement that an offer of composition by the acceptor, not acceded to, with a declaration in the presence of the drawer and holder that he (the acceptor) had not and should not provide for the bill, will not dispense with notice of dishonor. See Ex ixirte Bignold, 2 Mont. & A. 633. See also Chitty, Bills, 493; Story, Bills of E.xchange, § 375. The early cases which support a different doctrine are Bogy v. Keil, 1 Mo. 743; Stothart v. Parker, 1 Tenn. 260; Clark v. Minton, 2 Brev. 185. See Kid- dell v. Ford, 3 Brev. 178; Ex parte Solarte, 2 Deac. & C. 261, as explained in Ex parte Johnston, 1 Mont. & A. 622, 626, per Erskine, C. J. In the early case of Jackson v. Richards, 2 Caines, 343, Kent, C. J., said that the rule in Nicholson v. Gouthit, requiring notice, was " best, and ought to be followed." The cases to the contrary have long since been disregarded; and the rule stated in the principal case is now considered as well settled. See Allwood V. Haseldon, 2 Bailey, 457 ; Mechanics' Bank v. Griswold, 7 Wend. 165, 169 ; Buck i-. Cotton, 2 Conn. 126 ; Sandford v. Dillaway, 10 Mass. 52 ; Barker V. Parker, 6 Pick. 80; Shaw v. Pteed, 12 Pick. 132; Granite Bank v. Ayres, 16 Pick. 392 ; Hunt v. Wadleigh, 26 Me., 271 ; Lawrence v. Langley, 14 N. Hamp. 70; Bank of America v. Petit, 4 Dall. 127; Benedict v. Caffe, 5 Duer, 225; Watkins v. Crouch, cited at length, infra ; Boultbee v. Stubbs, 18 Ves. 21, per Lord Eldon; Sta{)les v. Okines, 1 Esp. 332 ; Esdaile v. Sowerby, 11 East, 117, Upon the other point made in the principal case, that notice may be dispensed with in case of an assignment of all the assets of the payor to the drawer or indorser, the law is pretty well settled that way, especially if the fund is sufficient to protect him. See Mechanics' Bank v. Griswold, 7 Wend. 165; Spencer v. Harvey, 17 Wend. 489; Coddington v. Davis, 3 Denio, 16; s. c, 1 Comst. 186 ; Bank of South Carolina v. Myers, 1 Bailey, 412 ; Kramer v. Sandford, 4 Watts & S. 328 ; Stephenson v. Primrose, 8 Port. Ala. 155 ; Perry v. Green, 4 Harrison, 61; Andrews v. Boyd, 3 Met. 434; Prentiss v. Danielson, 5 Conn. 175 ; Duvall v. Farmers' Bank, 9 Gill & J. 31, 47 ; Lewis v. Kramer, 3 Md. 265 ; Marshall v. Mitchell, 34 Me. 227; Denny v. Palmer, 5 Ired. 610; Martel v. •Tureauds, 18 Martin, 118; Watkins v. Crouch, 5 Leigh, 522, cited at length, infra. But if the payor make an assignment in trust for the benefit of his creditors, and among them of the indorser, this will not excuse demand and notice ; for such a trust is a mere indemnity against his legal liabilities, which being con- ditional would become absolute only by due demand and notice. Creamer v. Perrv, 17 Pick. 332. In this case Shaw, C. J., said: "On the first ground we think that the most which could be made of the evidence, is that after this note was made, but several months before it became due, the promisor made an assignment to trustees, upon trust, among other thing>, to secure the defendant for all debts due to him from the promisor, and to indemnify him against all his liabilities. AVithout stopping to consider whether, after his property was sur- rendered by the trustees, the defendant could have availed himself of it, we BARTON V. BAKKR. 4G3 think the effect of tliis assif^nment was to secure and indemiiify tlie defendant against his h-gal liabilities; and as his liability as an indorser on this note was conditional, and depended upon the contingency of his having seasonable notice of its dishonor, his claims upon the property depended upon the like contin- gency." See Haskell v. Boardman, 8 Allen, .'38; Moses v. Ela, 43 N. Hanip. 557 ; Wilson v. Senier, U Wis. 380. And the same is true where the indorser has received from the payor a chose in action as collateral security to indemnify him for his indorsement. He is still entitled to notice. Kramer r. Sandford, 3 Watts ct S. 328; Seacord r. Miller, 3 Kern. i")."> ; Otsego County Bank r. AVarren, 18 Barb. 2'JO, in which the decision was based in part on the ground that the security was given after the maturity of the note. The case may also require notice, if the fund assigned is insufficient to save the drawer or indorser harmless ; and the burden of proof seems to be on the plaintiff suing without notice, to show that the fund was sufficient to protect the defendant. In the absence of proof the latter will have judgment. AVat- kins V. Crouch, 5 Leigh, 522 ; lirooke, J., dissenting. See also Denny v. Palmer, 5 Ired. GIO. In Watkins v. Crouch, the Court said: — Cakr, J. This case turns upon the correctness of the opinions expressed by the Court in instructions to the jury. These instructions were, in effect, that the indorser having taken a transfer to trustees for his indemnity, of all the effects of the maker, was thereby placed in the shoes of the maker; and as a demand of payment at the place apjiointed in the note, is not necessary to charge the maker, so no such demand was necessary under such circumstances, to fix the liability of the indorser. The deed is made an exhibit in the bill of exceptions, and I think may fairly be considered a conveyance of all the grantor's property. It is given for the security of several enumerated debts ; and among others, of oiie- J'aurth of the note on which the suit was brought. What was the value of the property, or what proportion it bore to the debts intended to be secured by it, does not appear ; that it was not sufficient to secure the whole, we are obliged to conclude. The question is, was this opinion of the Court correct? Whether, where the spit is against the maker of a promissory note, payable at a particular place, it is necessary to prove a demand of payment at such place, is a question that need not be discussed, until we are satisfied that the indorser in the case before us stands in the shoes of the maker. But we may lay it down as imquestioned law, that as a general proposition, the indorser stands in a situation very different from the maker. He is not the real debtor, but a surety only ; his undertaking is collateral, that if upon due diligence having been used against the maker, the money is not paid, he will become liable ibr it. This due diligence is a condition precedent to a right of recovery against him. Therefore, when a note is maile payalile at a particular place, proof of a demand at the place, is indispensable, in a suit against the indorser. Did the deed place the indorser completely in the shoes of the maker? I should agree that it did, if it appeared, that the property conveyed was sufficient for full indemnity against the note, and was by the deed appropriated to such indemnity ; but the sufficiency of the property makes no part of the case ; and it appears by the deed, that the trustees are not authorized to appropriate any part of it to indem- nity against more than a fourth of the note. It was said, however, that the 464 EXCUSES OF PRESENTMENT AND NOTICE. property, whether adequate or not, was all the maker had ; and that havinj^ thus become utterly insolvent, there could be no hope of his provi(lin<f funds at the bank to discharge the note, and therefore no necessity of presenting it. But we see, from many cases, that the most perfect knowledge of the insolvency or even bankruptcy of the maker, does not dispense with a due presentment and notice of dishonor. He may have friends or credit ; or the sagacity and vigilance of the indorser may discover other sources of indemnity. It is his own affair, and he ought to be the judge. It is in this aspect of the case, tliat Lord Eldon in BouUbee v. Stubbs, 18 Ves. 21, says, that "if the acceptor of a bill becomes bankrupt, the holder must give notice to the drawer ; as another perton has no right to judge what are his remedies." But it was said, that here the insolvency is produced by the indorser himself; that he has appropriated to his own use the funds which might have gone to discharge the note ; and that we cannot suppose such a conveyance would be made, without an agreement between the parties, that the indorser should attend to the note, take the maker's place, and release him from all further care about it. I cannot perceive the correctness of this reasoning. Why should the indorser take the maker's place ? Was it not better that he should continue to hold his station of collateral surety ? better both for himself and the maker? He was bound conditionally for the debt; and he might well say to the maker, "My friendship for you has led me into this engagement ; it is but fair, that you secure me, so far as you can ; your property may not pay a fourth of the debt, yet it will be something ; in the mean time, we •will continue to hold our relations of principal and surety : before the note comes to maturity, new prospects may open upon you, new friends may arise, new accessions of fortune may fall in ; and the holder of the note will have to proceed with due diligence before he can come upon me." Is not this the more natural course ? And does it invade any right of the holder, or impose any hardship on him ? No ; he has only to attend to his own interest, and pursue the beaten track of due diligence. I cannot think then that by the execution of the deed, the indorser lost his character of surety, and became a principal debtor; and I am of opinion, that in order to charge him, it was incumbent on the holder of the note to prove, at least, a presentment.at the place of payment, if not due notice of such presentment. It will be observed, that I have cited no cases in support of this opinion ; not that I have not read, and considered, and puzzled myself with, the multitude that were commented on in the argument ; but because, finding them like the Swiss troops, fighting on both sides, I have laid them aside, and gone upon what seems to me the true spirit of the law. I think the judgment should be reversed. Cabell, J. As to the indoi-ser, he does not become a debtor by his indorse- ment. He is a surety for the debt of another, and becomes bound to pay, only on the condition that the debt shall not be paid by the maker, after due diligence shall have been used, and notice given of non-payment. Where a note is pay- able at a particular time and place, due diligence requires that it shall be pre- sented at that time and place. Such bemg the terms of the undertaking of an indorser, it is incumbent on the holder of a note, to show a compliance with them, on his part, by suitable averments in his declaration, and by proper proofs at the trial, or to show, in like manner, a proper excuse for their omission. These terms not having been complied with in this case, we have only to examine into the sufficiency of the excuse offered by the plaintiffs. BARTON V. BAKER. . 465 It is perfectly settled that the insolvency or bankruptcy of the acceptor of a bill of txchange, or the maker of a promissory note, and knowledge, on tlie part of the indorser, of that insolvency or bankruptcy, and that the note cannot and will not be paid- l)y the acceptor or maker, will not exempt the holder from the obli;ration of due presentment and notice of dishonor. Nicholson v. Gou- thit, 2 II. Bl. 610; Staples v. Okines, 1 Esp. 332; Esdaile r. Sowerby, 11 East, 147. Many other cases to the same effect might be cited from the courts of England and of our own country ; but it cannot be necessary. In Staples v. Okines, the drawer of a bill of exchange, having effects in the hands of the drawee, was told by the drawee, before it became due, that he, the drawee, could not pay it ; and it was then nmlcrslood between them that the drawer would have to provide for it ; yet even this knowledge on the part of the drawer, and this understanding between him and the drawee, did not excuse the want of notice- In fact, if the indorser remains passive, if he does nothing, and the holder fails either to make due demand of payment, or to give notice of the dishonor of the note, the indorser can rarely, if ever, be made liable. There are, however, some acts of the indorser, antecedent to the time of payment of the note, that will excuse the want of notice. But an examination of the cases will show that they are such acts of the indorser as would make it fraudulent or improper in him, towards the holder or maker, to insist on notice. Thus, where the drawer of a bill, a few days before it became due, stated to the holder that he had no regular residence, and that he would call and see if the bill had been paid by the acceptor, it was held that he was not entitled to notice from the holder, " he having taken upon himself the duty of inijuiring if the bill ■was paid." Phipson v. Kneller, 4 Camp. 285. So also where the drawer of a bill, upon being applied to by the holder, before it became due, to know whether it would be paid, said it would not be paid, it was held that notice of non-pay- ment was not necessary. Brett v. Levett, 13 East, 213. This case, seemingly inconsistent with previous decisions, may be reconciled to them on this ground, and on this ground only ; namely, that it would be a fraud in the drawer towards the holder to avail himself of the omission to give notice of the non-payment of the bill, after he himself had declared to the holder that it would not be paid; a declaration which probably produced the very omission of which he sought to avail hiin.self.' In Cornay r. Da Costa, 1 Esp. 303, it was decided, that where the indorser of a note had taken from the maker, before the note became due, eflects to the amount of the note, for the ])urpose of paying it, he was not entitled to notice. Bayley, in his treatise on Bills of Exchange, p. 202, referring to this case, says: " If the payee of a note lends his name, and takes effects of the drawer to answer it, he is not entitled to notice, because he is the proper person to pay it, and would be entitled to no remedy over on making payment.'' And in Brown t'. Malfey, lo East, 217, 222, lie farther explains the ground of the deci- sion, by saying, that "it would have been a fraud in the indorser to call upon the maker of the note, because, before it became due, the maker had deposited effects in his hands to answer the amount of his indorsement." Let us now see if the case before us comes within the ])rinciples of any of 1 See post, p. 475. 80 4 466 EXCUSES OF PRESENTMENT AND NOTICE. these cases. In our case, there was no communication between the indorscr and holder; nothing was said or done, calculated to mislead the holder, and seduce him into the neglect of a duty which he might otherwise have performed. As to his consent that the note should be negotiated at the Bank of the United States, it was of no kind of consequence ; the holder had a right, without his consent, to negotiate it where he pleased. The face of the note told the holder that it has to be paid at the Farmers' Bank. It is, therefore, unlike the cases of Phip- son V. Kneller, and of Brett v. Levett, already commented on. It is equally unlike the case Cornay v. Da Costa; in that case, there was an assignment to the indorscr, of effects to ihe amount of the indorsement. Here, there is an assignment of all the property of the maker ; but it does not appear that it was equal to the amount of the indorsement. We are not at liberty to say that it was so ; for it is neither averred nor proved. And we must not forget that the burden of proving every matter of excuse is upon the holder. It was not incumbent on the indorser to prove any thing. We must take it, then, in this case, that the property was not sufficient ; and, not being sufficient to discharge the whole amount of the indorsement, " the indorser was not the proper person to pay the note ; " that part of it at least to which the assigned eflfects were insufficient. It cannot be said of him, as was said of the drawer in Cornay v. Da Costa, that "he had no remedy over on making payment," or, that "it would have been a fraud in the indorser to call on the maker." As to the part of the note, to the payment of which the assigned property was insufficient, he had an unquestionable right to call on the maker ; and as to this he stood on his original undertaking as indorser, under no more obligation to pay it than he would have been to pay the whole note if no property at all had been assigned, and, consequently, all the original obligations of the holder still subsisted. The indorser, in taking an assignment of property sufficient to pay only part of the note, did not undertake to pay the residue. It may be confidently asserted that there is not, in the terms of the assignment, any express contract to that effect ; nor can I see a single circumstance in the whole transaction from which such a contract can be implied. The assignment of property sufficient only for the partial indemnity of the indorser was a matter between him and the maker of the note. There was no motive in either of the parties to that arrangement, which could induce a wish that the indorser should waive the con- dition of his liability. How, then, can we imply such waiver, in favor of a per- son who was no party to the arrangement? In the case of Staples v. Okines, where the acceptor of a bill of exchange told the drawer that he, the acceptor, could not pay it, and where it was even understood between the drawer and acceptor that the drawer would have to provide for it, no waiver of notice was implied, in favor of the holder. How then can we imply it from the mere fact of a partial indemnity ? Suppose the maker of this note had had no other prop- erty but money (not equal however to the amount of the note), and had put that money, all he had, into the hands of the indorser, to be applied by him to the payment of the note. Would this have exempted the holder from the obliga- tion of presenting the note, and giving notice of its dishonor? Certainly not; and I am unable to see any difference between the deposrt of money and the assignment of property so far as regai'ds the point under consideration. Nor is there any resemblance between an indorser of a note, partly indem- BARTON V. BAKER. 467 nified, and the drawer of a hill of exchange, who withdraws his cfTccts from the hands of the acceptor, before the day of payment. In the latter case, the drawer has no right to expect that the acceptor will pay ; and therefore he is not entitled to notice. But the indorser's right to notice from the holder, de- pends on another principle ; namely, his remedy over against the maker. And tbis principle ajjplies as forcibly to a case where a part only of a note remains unpaid or unprovideil for by the maker, as where the whole of it remains so uniiaid or unprovided for Again, the assignment in this case was made about a month before the note was to fall due. It is impossible for us to say, that no accession was made, in that interval, to the maker's means of payment; and, of course, we cannot say, that notice to the indorser would have been unavailing. Although I have not adverted, by name, to the cases which have been decided on this subject, in our sister'States, I have not been inattentive to them. I have not, however, bi-en convinced by them ; and I have, in the course of the preced- ing remarks, controverted every reason on which they were founded ; whether successfully or not, is left for others to determine. Upon the whole, I am of opinion, that the holders of the note before us, were bound to proceed strictly with it, as respects the indorser, both as to demand of payment, and as to notice ; and, consecjuently, that the judgment must be reversed, on account of the erroneous instruction given at the trial. Judgment reversed. However the rule may be in case the fund assigned is not sufficient to cover the paper, though embracing all the effects of the payor, the authorities are agreed that if the fund is placed directly in the hands of the indorser or drawer, and is sufficient to protect liim, notice may be dispensed with. Farther than this it seems difficult to go, without impairing one of the most salutary and reason- able rules of the law. It is impossible to predict what may be the circumstances or situation of the insolvent to-morrow. It is not infrequent for fortune and friends to favor such a one in his adversity, and place him in a situation to meet his obligations. At any rate it is a slight matter for the holder to present his paper and give notice of dishonor; he expected and assumed that duty in taking it ; and he would be either careless or imprudent to fail in performing it. From this the law should not e.xcuse him. 468 EXCUSES OP PRESENTMENT AND • NOTICE. The President. Directors, &c., of the Berkshire Bank V. Isaac Jones. (6 Massachusetts, 524. Supreme Court, September, 1810.) Waiver of notice. Payable at bank. — Waiving notice by an indorser does not excuse the indorsee from making demand of payment ; but if the paper was payable at a designated place, and tlie indorsee was ready to receive payment at tlie time and place, no further demand is necessary. The plaintiffs declare on a promissory note made by one Amasa Glesen, on the twenty-first of October, 1807, by which he promised the defendant to pay him or his order $125, at the Berkshire Bank, in sixty-one days ; and on an indorsement by the defendant, he waiving all right to the notice, to which, by law or custom, he was entitled as indorser. The plaintiffs also allege a request and re- fusal by Glesen, the maker, and also notice to the defendant. The action was tried before iSedgwick,J., who directed a nonsuit, subject to the opinion of the Court, whether it was necessary to the support of this action, that, previous to the commencement thereof, the contents of the note declared on should have been demanded of the promisor. Parsons, C. J. The defendant has argued that, although he waived notice of a refusal of payment by the maker, yet he did not thereby dispense with a demand upon him ; for he might waive the notice from a confidence that the maker would pay the note on demand. This construction of the waiver we think correct ; and the ob- jection would be conclusive, if the indorsement had not been made to the plaintiffs, at whose office the note was to be demanded and paid. The note was payable on a day and at a place certain ; and the place is the Berkshire Bank. A demand of payment need not be made at any other place ; and if the holder of the note is at the bank on the prescribed day, ready to receive the money, if the maker be there, it is enough for him. And if the maker does not come to the bank, or direct the payment there, he has broken his promise ; and no other notice to him is necessary. BERKSHIRE BANK V. JONES. 4G9 In the case at bar, as the plaintiffs lield this ^ote, we must pre- sume it was in their bank, and there it was made payable. They were not to look up Glesen, or to "demand payment of him at any other place. The defendant, by his indorsement, guaranteed that on the day of payment the maker would be at the bank, and pay the note ; and if he did not pay it there, he agreed that he would be answerable in a suit at law, without previous notice of the de- fault of the jjromisor. Although we arc satisfied that the judge was correct in his con- struction of the terms of the defendant's waiver of notice, consid- ered in a general view, yet we are of opinion that, from the special tenor of the note decjarcd on, the nonsuit ought to be set aside ; and if, on the trial, the plaintiffs can show that on the day of pay- ment the note was in the bank, and that the servants or officers of the plaintiffs were there during the usual bank hours, to receive payment and give up the note, they will be entitled to recover, as, by the terms of the note, they were not holden to demand payment but at the bank, which was impracticable tlirough the default of the maker ; and by the defendant's waiver he cannot claim notice. # The doctrine that waiver of notice does not embrace waiver of demand may be regarded as well settled. See Buchanan v. Marshall, 22 Vt. 561 ; Low v. Howard, 11 Cush. 268, 270; Drinkwater v. Tebbetts, 17 Me. (5 Shepl.) 16; Burnbam v. Webster, ib. 50; Lane v. Steward, 20 Me. (2 Appl.) 98; Backus V. Shii)herd, 11 Weiid. 629. But the contrary was held in ]\Iatthey c. Gaily, -4 Cal. (i2. The indorsement, "eventually accountable, E. A. E.," is held to waive both demand and notice. McDonald v. Bailey, 14 Me. (2 Shepl.) 101. So of the following: "William Arnold, Holden, Aug. 11th, 1836." Bean v. Arnold, 16 Me. (1 Shepl.) 251. Whether waiver of protest will excuse both demand and notice has. been the subject of conflict. The (jue.stion is discu^iscd in Union Bank v. Hyde, 6 Wheat. 572, and arose from the following writing, signed by the defendant, an indorser : " I do request that hereafter any notes that may fall due in the Union Bank, on which I am or may be indorser, shall not be protested, as I will consider myself bound in the same manner as if tlie said notes had been or should be legally pro- tested." The Court held that this constituted a waiver of demand and notice, in connection with the fact that both ])arties had had a course of dealing founded on that con.'-truction. Mr. Justice Johnson, in delivering the opinion of the Court, said : " The case presents the right of the plaintilTs under two a.^^pects : 1. Upon the just construction of the written instrument. 2. The practical exposition of it by the defendant himself; and it might also have presented a third : the spe- cific waiver ol demand and notice on the note in suit. By some assumed an.alogy, or mistaken notions of law, this practice of protesting inland bills has now 470 EXCUSES OP PRESENTMENT AND NOTICE. become very jijenerally prevalent ; and since the inundation of the country with bank transactions, and the general resort to this mode of exposing the breaclies of punctuality which occur upon notes, a solemnity, cogency, and legal effect have been given to such protests in public opinion, -which certainly has no foundation in the law merchant. The nullity of a protest on the legal obligations of the parties to an inland bill, is tested by the consideration that, independently of statutory provision (if any exists anywhere) or conventional understanding, the protest on an inland bill is no evidence in a court of justice of either of the inci- dents which convert the conditional undertaking of an indorser into an absolute assumption. "The protest belongs altogether to foreign mercantile transactions, upon which, on the contrary, it is an indispensable incident to making a drawer of a bill, or indorser of a note, liable. On foreign bills, it is the evidence of demand, and an indispensable step towards the legal notice of non-payment, in conse- quence of which the undertaking of the drawer or indorser becomes absolute. Hence, as to foreign transactions, it is justly predicated of a protest, that it has a legal or binding effect. " But the writing under consideration has reference exclusively to inland bills, and as to them the protest has no legal or binding effect. The indorser became liable only on demand and notice, and of these facts the protest is no evidence. How, then, shall the waiver of the protest be adjudged a waiver of demand and notice, or in effect convert his conditional into an absolute undertaking? "Had the defendant omitted one word from his undertaking, it would have been difficult to maintain an affirmative answer to this proposition. But what are we to understand him to intend, when he says : ' I will consider myself bound in the same manner as if said notes had been or should be legally pro- tested ? ' Except as to foreign bills, a protest has no legal binding effect, and as to them it is evidence of demand, and incident to legal notice. It either then had this meaning or it had none. " This reasoning, it may be said, goes no further than to a waiver of the de- mand ; but what effect is to be given to the word bound ? It must be to pay the debt, or it means nothing. But to cast on the indorser of a foreign bill an obli- gation to take it up, protest alone is not sufficient ; he is still entitled to a rea- sonable notice in addition to the technical notice communicated by the protest. To bind him to pay the debt, all these incidents were indispensable, and may, therefore, be well supposed to have been in contemplation of the parties, when entering into this contract. "It is not unworthy of remark, that the writing under consideration asks a boon of the plaintiff, for which it tenders a consideration. It requests to be exempted from an expense, exposure, or mortificati6n, on the one hand ; and on the other, what is tendered in return ? The ihtcnded object and conceived effect of the protest, on the one hand, is to convert his undertaking into an uncondi- tional assumption, and the natural return is to make his undertaking at once absolute, as the effectual means of obtaining the benefit solicited. " If this course of reasoning should not be held conclusive, it would at least be sufficient to prove the language of the undertaking equivocal ; and that the sense in which the parties used the words in which they express themselves, may fairly be sought in the practical exposition furnished by their own conduct, or the BERKSHIRE BANK V. JONES. 471 conventional use of language establisheil by their own customs or received opinions. " On this point the evidi'nce proves that, by the understanding of both j)artic'8, this writing <lid dispense with demand and refusal ; that the company, on tlie one hand, discontinued their practice of putting the notes indorsed by defendant in the usual course for rendering his assumption absolute, and the defendant, on the other, continued up to the last moment to accjuiesce in this practice, by renewing his indorsements, without ever reijuiring demand or notice. This was an une- quivocal acquiescence in the sense given by the com[)any to his undertaking, and he cannot be permitted to lie by, and lull the company into a state of secu- rity, of which he might at any moment avail himself, after making the most of the credit thus acquired. " Judgment reversed, and venire facias de novo awarded." See Duvall r. Farmers' Bank, 7 Gill & J. 44 ; 9 id. 31. The same (juestion arose in ("oddington i'. Davis, 1 Comst. 1^6. Gardner, 3 ., in delivering the opinion of the Court, said: " The plaintifFin error, the defendr ant below, was the indorser of a note made by Thomas Coddington for 810,000. Th/amas Coddington failed, and on the twenty-third of January, 1840, made an assignment to Davis, one of the firm of Davis, Brooks, & Co., the indorsees and holders of the note and the plaintiffs below. On the twenty-eighth of Jan- uary, and prior to the maturity of the note, the defendant, with full knowledge of the above facts, wrote the following letter : — " 'Mf.ssrs. Davis, Brooks, & Co. Gents, — Please not protest T. B. Cod- dington's note due second of February, for ten thousand dolhrs, and 1 will waive the necessity of the protest thereof; and oblige respect'ly, &c. 'Samuel Coddixgtox.' " The construction of this letter is the first important question presented in the cause. " The term protest in a strict technical sense is not applicable to promissory notes. The word, however, as I apprehend, has by general usage, acquired a more extensive signification, and in a case like the present includes all those acts which by law are necessary to charge an indorser. When among men of busi- ness a note is said to be protested, something more is understood than an official declaration of a notary. The expression would be used indifferently to indicate a series of acts necessary to convert a conditional into an alisolute liability, whether those acts were performed by a mere ilerk or a public officer. It is obvious that the word was used in its popular acceptation by the defendant bilow. He requests the indorsees ' not to protest the note, and tiiat he would waive the necessity of the protest thereof.' "The protest to which the indorser alluded was something ' necessary" to be done, something also for the benefit of the indorser, for he assumed to waive it. It could not therefore be a memorandum, or a declaration matle by a notary, because neither of them were rcipiired. Nor could he have intended to waive that which whether performed or omitted, his right would in no maimer be affected. The only things necessary on the part of the indorsees was a demand of payment of the maker, and notice to the indorser. By waiving the necessity of protest the defendant dispensed with both, or his communication is destitute of all meaning. 472 EXCUSES OF PRESENTMENT AND NOTICE. " It was arjuied indeed that the defendant mifjht have referred to the notarial « . ? . certificate authorized by statute. But this certificate is made prima Jacie evi- dence of a demand and notice in favor of the indorsees. It is for their benefit. The defendant in making such reference must have supposed that the certificate ■was necessary evidence, because he waives the necessity of a protest, which, according to the argument is equivalent to dispensing with the necessity of a notarial certificate. Now to every fair mind, waiver of proof necessary to estab- lish a particular fiict, is equivalent to an agreement to admit it. Whether, there- fore, the defendant by waiving the necessity of a protest, intended to dispense •with demand and notice, or with the evidence of them, the result would be the same, and in either case he is concluded by his own stipulation from raising the objection taken upon the trial. I agree with the learned judge who delivered the opinion of the Supreme Court, that the circumstances attending the written stipulation of the defendant confirm this view ; but I prefer to rest my opinion upon the letter alone, as furnishing prima facie evidence of an intent by the jndorser to waive demand of payment and notice to which be was otherwise entitled." But it is held in Buckley v. Bentley, 42 Barb. 646, that waiver of notice of protest does not waive presentment and demand. The expression " I waive de- mand of protest" was held in Porter v. Kemball, 53 Barb. 467, to include pre- sentment and notice. It was also held in that case that if the expression was ambiguous, pai'ol evidence was admissible to explain its meaning. See 1 Par- sons, Notes and Bills, 584, 585. The strict construction has been adopted in Louisiana, upon the authority of Union Bank v. Hyde, supra. In that State it is held that waiver of protest does not dispense with notice. Bird v. LeBlanc, 6 La. An. 470; Wall v. Bry, 1 La. An. 312. In Bird v. Le Blanc, the case of Coddington v. Davis, siqjra, was before the Court. See also Scott v. Greer, 10 Penn. State, 103. K one write a guaranty over his name, on the back of a bill or note, the bet- ter opinion is that his liability is that of guarantor, and not of an indorser ; so that demand and notice are not required as to him. See Hall v. Newcomb, 7 Hill, 416, aiite, p. 131. 8IGERS0N V. MATilKWS. 473 John Sigerson, Plaintiff in Error, v. Edward Matiit.ws. (20 Howard, 496. Supreme Court of the United States, December, 18.j7.) Promise to jxiy, when a imirer. — If, before tlie maturity of a note, tlie indorscr dis- pensed with a presentation of the note and demand of payment, and promised to pay it or to provide for its payment at maturity, lie cannot set up sis a defence to a suit upon the note, tiiat it was not presented for payment, and demand made there- for, when it was due, and tliat no notice of its dislionor was j^iven. Or if, atler the maturity of the note, tlie indorser promised the holder or his agent to pay the same, having? at the time of making said promise knowledge of the fact that the note had not been presented for pajment, and that no demand had been made therefor, or notice of non-payment given, the indorser cannot now set uj) as a de- fence to the note, a want of such demand and notice. The case is stated in the opinion of the Court. McLean, J. This is a writ of error to the Circuit Court for the district of Missouri. An action was brought by Mathews against John Sigerson, as indorser on a note of James Sigerson, now deceased, dated the tentli of March, 1852, for the payment of the sum of two tliousand dol- lars, two years after date, at the Bank of the State of Missouri, with interest from the date. It was proved on the trial that in 1851 Mathews advanced largely to John Sigerson on some transactions in pork, whereby Sigerson became indebted to him in the sum of two tliousand dol- lars ; that Sigerson wanted two years' time, on which Mathews required a mortgage on real estate as security ; but Sigerson offered to give the note of his brother James, indorsed by himself, instead of the mortgage ; and he represented that his brother James was the owner of a vahiable real estate near St. Louis ; which otler was accepted, and the note was given. Some time in the fall of 1852, Joseph E. Elder, a witness, re- ceived the note from Matiiews for collection, soon after the death of James Sigerson, and before the note became due. Witness called on John Sigerson, and asked him if he should have the note protested against* the estate of James Sigerson. lie replied, that the witness need not do so, and that the note should be paid at maturity. The witness then placed tlic note in his portfolio, where it remained until after due. After it was due, witness 474 EXCUSES OP PRESENTMENT AND NOTICE. called on John Sigerson, and informed him that he had neglected to put the note in bank for collection, and asked him what lie was going to do ; he said he would see witness in a few days, and arrange it. Afterwards Sigerson said to the witness that he did not consider himself liable as indorser, as the note had not been protested. In February, 1852, John Sigerson sold his interest in the farm near St. Louis, which was one-half of it, and which contained about one thousand acres, to James Sigerson, who was to pay off the incumbrances on the land, which amounted to about sixteen thou- sand dollars. James executed twenty notes for two thousand dollars each, payable in six, twelve, and eighteen months ; and John Siger- son made him a deed. In July, 1852, James reconveyed the land to John, and the bargain was rescinded. This was done because James had not fulfilled his contract. Nineteen of the notes were given up, but the note now in suit was not surrendered, and for which the account of James was credited on tlie books of John. James, on his decease, left no property. On the above facts, the Court charged the jury, " if they believe from the evidence, that, before the maturity of the note, in conver- sation with the agent of the plaintiff, the defendant dispensed with a presentation of the note and demand of payment, and promised to pay it or provide for its payment at maturity, he cannot now set up as a defence to this suit, that the note was not presented for payment, and demand made therefor, when it was due, and that no notice of its dishonor was given." Tliat, " if, after the maturity of the note, the defendant promised the plaintiff or his agent to pay the same, having at the time of making said promise knowledge of the fact that the note had not been presented for payment, and that no demand had been made therefor, or notice of non-payment given, the defendant cannot now set up, as a defence to said note, a want of such demand or notice." " If the defendant dispensed neither with the presentation of the note and notice, nor promised to pay the same, having knowledge as above stated, the plaintiff cannot recover." Exception was taken to these instructions. • Certain instructions were asked by the defendant, which were refused ; but it is unnecessary to state them, as they are substan- tially embraced in those given by the Court. RIGERSON V. MATHEWS. 476 As there was no formal demand of {)ayment, nor protest for non- payment and notice, those requisites must have been waived by the defendant, to make liini responsible as indorscr ' and to this effect were the instructions of the Court ; and we think the testimony not only authorized the instructions given, but also the verdict rendered l)y the jury. IJefore the note was due, the defendant said to Elder, the agent of Mathews, and who held the note, that he need not take steps to collect it from the estate of his brother James, as it should l)c paid at maturity. This was an assurance which could not be mistaken, and it was relied on by the agent. He placed the note in his portfolio, where It remained until after it became due. After tliis, the agent called on tiie defendant, and informed him that he had neglected to take measures for the col- lection of the note, and asked him what he was going to do ; he answered, that in a few days he would see the witness, and arrange it. This was an unconditional promise to pay the note, which no one could misunderstand, and which he could not repudiate at any subsequent period. A promise by an indorser to pay a note or l)ill, dispenses with the necessity of proving a demand on the maker or drawer, or notice to himself. Pierson v. Hooker, 3 Johns. 68 ; Hopkins v. Liswell, 12 Mass. o2.^ Where the drawer of a protested bill, on being applied to for payment on behalf of the holder, acknowledged the debt to be due, and promised to pay it, saying nothing about notice, it was held that the holder was not bound to prove notice on the trial. Walker v. Laverty, 6 Munf. 487. An unconditional promise by the indorser of a bill to pay it, or an acknowledgment of his lial)ility, and knowledge of his discharge by the laches of the holder, will amount to an implied waiver of due notice of a demand of the drawee, acceptor, or maker. Thornton *. Wynn, 12 Wheat. 183 ; Bank of Georgetown v. Magruder, 7 Peters, 287. We think the instructions of the Court were correct, and that consequently the judgment must be affirmed, with costs. But the promise to pay niusit be dear and distinct. Creamer v. Perry, 17 Pick. 332. In delivering the opinion of the Court in this case, Chief Justice Shaw said : " If an indorser, knowing that there has been no demand and no- tice, and conversant witli all the circumstances, will promise to pay the note, this is to be deemed a waiver. But these rules in regard to notice and waiver are to 1 Sec aute, p. 465. 476 EXCUSES OF PRESENTMENT AND NOTICE. be held with some strictness, in order to insure uniformity of practice and regu- larity in their ap[)lic;ition. . . . In the present case we are of opinion that the evidence falls short of proving a promii<e by the defendant, either to pay the note or see it paid. The agent of the plaintiff applied to the defendant, some days after the note had become due, obviously for the purpose of obtaining from him a renewed promise. The strong- est expression used by the defendant in the course of a long conversation was, * the note will be paid.'' This is quite as consistent with tlie hypotiiesis that it was a mere assertion of his expectation that it would be paid by the promisor, as of a promise on his part to pay it ; and from the general tenor of the conver- sation, we think it cannot be inferred that it was his intention, knowing of his discharge, to waive his defence and promise to pay the note, or see it paid at all events." In Rogers v. Stephens, 2 T. R. 713, however, it was held that the reply of the drawer of a bill upon its dishonor that " it must be paid," amounted to a promise to pay, and removed the necessity of notice. See also Borradaile v. LoAve, 4 Taunt. 93 ; Richter v. Selin, 8 Serg. & Rawle, 425, 438 ; Griffin v. Goff, 12 Johns. 423 ; Martin v. IngersoU, 8 Pick. 1 ; Harrison v. Bailey, 99 Mass. 620; Low V. Howard, 11 Gush. 268 ; Kelley v. Brown, 5 Gray, 108 ; Arnold v. Dres- ser, 8 Allen, 435. In the last case Bigelow, C. J., said in reference to waiver of demand : " No such waiver is made where an Indorser promises to pay the note in ignorance of the fict that he has been discharged by the laches of the holder, in not making due demand of the promisor, or where such promise is made under a misapprehension or mistake of facts concerning the due presentment and de- mand of the note." See to the same effect, Walker v. Rogers, 40 111. 278 ; Morgan v. Peet, 32 111. 281, 288 ; Tobey v. Berly, 26 111. 426 ; Farrington v. Brown, 7 N. Hamp. 271 ; Woods v. Dean, 3 Best'& S. 101. In Gove v. Vining, 7 Met. 212, Shmv, C. J., said : " The Court are of opinion that when the indorser, at or shortly before the time when the note becomes due, says to the holder that an arrangement for its payment is about being made, and in direct terms or by reasonable implication requests the holder to wait or give time, it amounts to an assurance that the note will be paid, — that the promisor or in- dorser will pay it, — and is a waiver of demand and notice. It tends to put the holder off his guard, and induces him to forego making a demand at the proper time and place ; and it would be contrary to good faith to set up such want of demand and notice — caused perhaps by such forbearance — as a ground of de- fence. Leffingwell v. White, 1 .lohns. Cas. 99 ; Mechanics' Bank v. Griswold, 7 Wend. 165 ; Leonard v. Gary, 10 Wend. 504 ; Taunton Bank v. Richardson, 5 Pick. 436 ; Thornton v. Wynn, 12 Wheat. 183 ; Wood v. Brown, 1 Stark. 217." See also Union Bank v. Magruder, 7 Peters, 287; Spencer t\ Harvey, 17 Wend. 489; Creamery. Perry, 17 Pick. 332; Hoadley v. Bliss, 9 Ga. 303; Marshall v. Mitchell, 35 Me. 221 ; Phipson v. Kneller, 1 Stark. 116 ; Sheldon v. Horton, 53 Barb. 23 ; Amoskeag Bank v. Moore, 37 N. Hamp. 539 ; Baa-clay v. Weaver, 19 Penn. State, 396 ; Ridgway v. Day, 13 id. 208 ; Kent v. Warner, 12 Allen, 561 ; Wood v. Price, 46 111. 435. PEARCE V. AUSTIN. 477 ACTIONS. Pearce v. Austin. (4 Wharton, 489. Supreme Court of Pennsylvania, March, 1839.) Who may sue. — One to whom negotiable paper is indorsed as agent for another, may bring an actior^upon the same in iiis own name ; unless such agent's possession is shown to be malajide. The case is stated in tlie opinion of tlie Court. Rogers, J, The suit was brought to recover the amount due on a promissory note, drawn by John Pearce, tlie defendant, pay- able sixty days after date, to the order of John Houghtin. It was indorsed in blank to Charles B. Austin, agent of the Union Glass Works, transferred by him to T. W. Dyott, and the suit is brought in the name of Charles B. Austin, agent of the Union Glass Works, who is the holder of the bill. The question is, can an agent bring a suit on a promissory note in his own name ? This is a question whicli depends altogether on authority. A holder of negotiable paper can maintain an action on it in his own name, witliout show- ing title to it. The Court will not inquire into his right to the paper, or his right to maintain a suit upon it, unless circumstances appear showing his possession to be mala fide. Dean i\ Hewit, 5 Wend. 257 ; Talman r. Gibson, 1 Hall, 808 ; Livingston v. Clinton [cited], 3 Johns. Cas. 2()4. In Ogilby v. Wallace, 2 Hall, 553, the right to sue even by a fic- titious |)erson, when the name of tlie real party was disclosed, unless some question arose as to the mala fide possession, was asserted. The Court nonsuited the plaintiff, on the ground that he was a fictitious person ; but on an a))peal tlic nonsuit was set aside, that the question of fact, connected with the possession and presentation of the note, should be submitted to a jury. This principle applies to a note payable to bearer or indorsed in blank ; 478 ACTIONS. for ill either case an action can be maintained in the name of any person, without the plaintiff being required to sliow that he has any interest in it, unless he came into the possession of the note under suspicious circumstances. Here there is no allcgatiort of mala fide^ so that the case stands clear of that objection. Tlie suit is brought by Austin, who is a trustee or agent for the company. He has the legal title to the bill, and the suit is brought in the name of the legal owner. Stating that he is the agent of the Union Glass Works is equivalent to saying that the suit is for their use. This brings it within the principle of the cases cited. But Mauran V. Lamb, 7 Cow. 174, is still nearer the point. It is there held that one holding a check or note payable to bearer, as a mere agent, may sue on it in his own name, and that it does not lie with the opposite party to assert the plaintiff's want of interest. It can certainly make no difference whether the note is payable to bearer, or indorsed in blank and in the possession of a bona fide holder. Judgment affirmed. The doctrine in a word is this : Possession of negotiable paper indorsed in blank IS prima facie evidence of title ; to defeat this presumptive title and right to sue, the defendant must prove that the plaintiff's possession is mala fide. This will shift the burden of proof upon the plaintiff. See Goodman v. Simonds, ante, p. 242, and note; Pettee v. Prout, ante, p. 217 ; Way v. Richardson, ante, p. 220. In the case, however, of unnegotiable paper, or negotiable paper payable to order, the rule requires some qualification ; for if A sues as payee of a bill or note payable to the firm of A, B, & Co., he must show that he alone constitutes that firm. 2 Greenl. Ev. §§ 163, 478; Ferguson v. King, 5 La. An. G42 ; Robb V. Bailey, 13 La. An. 457 ; Fletcher v. Dana, 4 Blackf. 377 ; Desha v. Stewart, 6 Ala. 852. If the paper be payable to order and not indorsed, the rule is qualified to this extent, that the holder under the payee cannot sue in his own name, but must bring his action in the name of the payee. Farwell v. Tyler, 5 Iowa, 535; Allen V. Newbury, 8 Iowa, 65. So if it is payable to A for the use of B, A is the proper party to bring the action. Cramlington v. Evans, 2 Ven. 307 ; Barry County v. McGiothlin, 19 Mo. 307. But in Vermont the person bene- ficially interested may sue upon the paper in his own name. Arlington v. Hinds, 1 D. Chip. 431 ; Rutland & B. R. Co. v. Cole, 24 Vt. 33; Johnson v. Catlin, 27 Vt. 87. In the case of a note or bill given by a firm to one of its members, the prom- isee cannot sue, as that would be to bring an action in part against himself; but if he indorse the paper, the indorsee may sue. Thayer v. Buffum, 11 Met. 398 ; Pitcher v. Barrows, 17 Pick. 361 ; Smith v. Lusher, 5 Cow. 688 ; Davis v. Briggs, 39 Me. 304. But a different doctrine has been declared in Kentucky. Morrison v. Stock- well, 9 Dana, 172; AUin v. Shadburne, 1 Dana, 68. It is there held that where PEARCE V. AUSTIN. 47'J the name of a firm is sif^ned by one of two partners to a note payable to tin- other, it is, in cfleft, merely the note of the former to the latter; the payee may sue the other [lartner upon tlie note and recover the whole amount. It is held in Kii^^land that where the maker or aceiptor has become executor of the payee, the debt is discharged, so that an indorsee cannot sue upon the paper. Freakley v. Fox, 9 Barn. & C. 130. Lord Tenterden explains that " it is considered to have been paid by the executor to himself, and becomes assets in his hands." But see Kent v. Somervell, 7 Cill & J. -JO.^, 271; Mitchell v. Rice, 6 J. J. Marsh. G23. G28. One wiio has inilorsed pa{)cr for collection may sue uj)on it in his own name, notwithstanding his indorsement. I)u{,'an v. United States, 3 Wheat. 172. Mr. Justice Livingston, on p. 182, went a step further and said: "If any person who indorses a bill of exchange to another, whether for value or for the purpose of collection, shall come to the possession thereof again, he shall be regarded, unless the contrary appear in evidence, as the honajide holder and i)roprietor of such bill, and shall be entitled to recover, notwithstanding there be on it one or more indorsements in full, subsequent to the one to him, without producing any receipt or indorsement back from either of such indorsees, whose names he may strike from the bill or not, as he may think proper." Welch v. Lindo, 7 Cranch, 159, is overruled by this case ; and Dugan v. United States is now the settled law. See Bank of the United States r. United States, 2 How. 711 ; Dollfus v. Frosch, 1 Denio, 367 ; Watervliet Bank v. AVhite, 1 Denio, 608 ; Bowie v. Du- vall, 1 Gill & J. 175; Wood v. Tyson, 13 La. An. 104. Possession is not necessary to the plaintiff's right of action where the paper has been indorsed to another as agent or trustee for the plaintiff, if it be shown that such agent or trustee is ready to give up possession of the paper to the plaintiff for the purposes of the suit. Stones v. Butt, 2 Cromp. & Mees. 416. See Iladwen v. Mendizabel, 10 J. B. Moore, 477; Marsh r. Newell, 1 Taunt. 109 ; Fisher v. Bradford, 7 (Jreenl. 28. Though a person who holds commercial paper as agent or trustee can sue upon it in his own name, a mere depositary must sue in the name of his principal. Sherwood v. Roys, 14 Pick. 172. " The maker of a note payable to bearer, cannot defeat an action thereon brought in the name of one who had possession of the note at the coinmenceniont of the suit, and has contmued to hold it ever since, by showing that a third par- ty was the real owner of the note, when it ap[)ears that such third parly has never objected to the possession of the plaintid'and the suit brought by him, but has expressly consented to and ratified such possession, and the prosecution of the action." Per Foster, J., in Wheeler v. Johnson, 97 Mass. 39; citing Beek- man v. Wilson, 9 Met. 436. 480 ACTIONS. James N. Staples et al. v. President, Directors, &c., of THE Franklin Bank. (1 Metcalf, 43. Supreme Court of Massachusetts, March, 1840.) When aclion may be brought. — The maker of a promissory note is bound to pay it upon demand made at any seasonable hour of the last day of grace, and may be sued on that day, if lie fail to pay on such demand. Post-notes, issued by a bank, are payable on demand made at any time on the last day of grace, after the known and usual hour of opening the bank for business, and may be -put in suit on that day, if payment is refused. The case is stated in the opinion of the Court. Shaw, C. J. The present question comes before the Court upon the petition of a subsequent attaching creditor, to set aside and dissolve the attachment in the present suit. The Rev. Sts. c. 90, §§ 83-94, authorize an after attaching creditor to come in and ob- tain a dissolution of the prior attachment, by showing, if he can, either that the sum demanded in the first suit was not justly due, or that it was not payable when the action was commenced. The peti- tioner insists that his case is within the last provision of the stat- ute ; that the sum demanded in this writ was not payable when the action was commenced ; and this is the question for our con- sideration. The action is brought upon a bank post-note issued by the de- fendants, dated November 8, 1836, demanded at the bank, July 11, 1837, in the forenoon, after the commencement of banking hours. Payment was then refused, and an action was commenced, after the demand, the same forenoon. No tender, or offer of the amount, was made to the plaintiffs, either on the same day, or at any time afterwards. In a recent case, it was held that the statute, giving days of grace on all promissory notes payable at a future day certain, in which there is not an express stipulation to the contrary, Rev. Sts. c. 33, § 5, applies to bank post-notes, and is not controlled or affected by the usages of banks. Perkins v. Franklin Bank, 21 Pick. 483. This note being entitled to grace by the statute, the eleventh of July was the last day of grace ; and then the question STAPLES V. FRANKLIN BANK. 481 is, whether upon a demand and refusal of payment, within banking hours on the last day of grace, a right of action immediately accrue8»to the holder, so that he may then commence his action ; or whether he is bound to wait till the next succeeding day. It certainly struck me with some surprise that such a question should now be made, thinking, as I did, that it was well settled, by the law and practice of this Commonwealth, that a promissory note was due at any time within reasonable hours, on the last day of grace, and that upon presentment to the promisor, and a demand of payment, and on a neglect or refusal to pay, the note was dis- honored, and a right of action immediately accrued to the holder against the maker ; and after due notice, actual or constructive, to the indorser, a like right of action, on the same day, accrued to the holder against the indorser. But as it appeared upon the argu- ment that there is respectable authority for the contrary opinion, it becomes necessary to examine the subject with attention. Noth- ing is more important to a commercial community, than to have all questions relative to the rights and duties of holders, and all other parties to negotiable bills and notes, definitely settled. And it is greatly desirable, that throughout all the States of the Union, which, to many purposes, constitute one extended commercial community, the rules upon this subject should be uniform. We will first consider the Massachusetts authorities on this sub- ject, and then see how far they are supported or opposed by those of England or the other States. The only question now is, whether a note is payable on demand on the last day of grace, when a note is entitled to grace. A dif- ferent construction may perhaps apply, when a note is payable without grace. As grace was originally matter of indulgence and courtesy, and not of contract, it perhaps may be contended, that although a debtor has the whole of the last day of the credit stip- ulated for by contract to make payment, yet a different rule may apply to grace, which is not part of the contract. So when the third day of grace falls on Sunday, as the riglit of one or the other of the parties must yield, it shall be that of the one who claims jndulgence, and not of him who claims of right ; whereas if a bond were to be payable on Sunday, the debtor would have till the close of Monday, to pay it. Some of the cases appear to turn on this distinction. Formerly it was held, in Massachusetts, that unless a promissory 81 • 482 ACTIONS. note expressed grace, it was payable without grace ; now it is otherwise by statute. Whether a note, expressed to be payable in thirty days, without grace, is considered due on demand* on the thirtieth day after the day of the date, it is not now necessary to decide ; tliough we are inclined to think that such was the rule formerly, when notes were not entitled to grace. The first case of which a report is published, and which is directly in point, is a nisi prius decision of Chief Justice Parsons, and is reported in an American edition of Chitty on Bills, p. 225, note 1/, published in 1809, and edited by Mr. Story, now Mr. Jus- tice Story, of the Supreme Court of the United States, that of Park V, Page, Suffolk, November term, 1808. He says, " the note is due on the last day of grace, and if payment is refused, the maker may be sued on that day." I have examined the record of that case, and find that it was a suit by the indorsee against the indorser of a promissory note, dated 7 July, 1807, payable at sixty days with customary grace. The last day of grace was therefore the eighth of September. The writ is dated on the eighth of September, and was served by an attachment of real estate, at eleven o'clock on that day. To this opinion at nisi prius, no excep- tion appears to have been taken, and parties and counsel acquiesced. The only difference between the case thus appearing, and the note cited is, that the action was against the indorser and not against the maker. But if an action wovild lie against the indorser, who is only provisionally liable on the default of the maker, rt/oriiori, as it seems, would it lie against the maker, who is the principal debtor. This edition of Chitty, by Mr. Justice Story, was extensively in use in this Commonwealth, for many years, amongst lawyers and merchants, and was regarded as high authority on the law of negotiable bills and notes. The case of Henry v. Jones, 8 Mass. 453, decided in 1812, ap- pears to me to have a strong application to the point in question. It was a suit against an indorser, on a note dated March 4, 1809, payable in sixty days ; and, as the law then stood, was not en- titled to grace. The question was, whether the day of the date should be excluded from the computation of the sixty day^ ; if it should be, the note was at maturity on the third of May ; if in- cluded, it was on the second. The note was presented to the maker on the second, and payment refused, and notice was given to the indorser at a very early hour on the morning of the third. STAPLES V. FRANKLIN BANK. 483 and payment not being made, a suit was then commenced. The Court held that the day of the date should be excluded, and from there l^ing no grace, the third of May was the last day of the sixty days' credit stipulated for by the contract. The Court, in concluding their judgment say : " No auction lies against tiie in- dorscr, until after demand made on the day of the maturity of the note. In this case the demand was made on the day preceding, and not on the day fixed by the parties for the payment." Here, it will be perceived, the rule was prescribed, as well when the note was payable witliout grace, as when it is with grace; and it is payable on demand, on the last of the days specified in the note. Otherwise, the note in question would not have been demandable till the fourth. Tliis case is recognized and confirmed, as to a demand on the day of maturity, in Farnum v. Fowle, 12 Mass. 89. But the case in which the point was directly decided, and a case which received great consideration, is that of Shed v. Brett, 1 Pick. 401. Several other questions were considered, and the case underwent great discussion. The action was commenced against tiie indorser, on the last day of grace, after a demand on the promisor, and notice put in the post-office for the indorser, who lived in another town, and held well to lie. The point, that all parties are in default, and liable to an action on the last day of grace, after demand and refusal to pay, seems rather to have been taken as a well-settled rule, than an open question. The Court, in giving judgment, say that the right of action accrues against the indorser of a note, when the maker refuses to pay. The case of N. E. Bank v. Lewis, 2 Pick. 125, goes on the same ground. The action was against the indorser, and commenced on the last day of grace, and it was conceded that if the notice had been given to the indorser before the service of the writ, which might have been done in a few minutes, the action might have been sustained. The case was decided on a distinction between the case where the parties live in the same and in diflerent towns. In the latter case, putting a letter in the post-office is held sufficient constructive notice, although it cannot by possibility have reached the indorser by the course of the mail. And the point in this case was, that if the notice precedes the suit ever so short a time, as if the officer go with the notice in one hand, and the writ in the other, it will be sufficient. This is an express declaration, that an action will lie after a default on the last day of grace. 484 ACTIONS. The case of City Bank v. Cutter, 3 Pick. 414, is quite decisive of the same point. In that case, wliich was against an indorser, the defendants pleaded a tender on the day after the las#day of grace. If the promisor and indorser had to the last hour of the last day of grace to make payment, there was no default till the day after ; and as there can be no fraction of a day in such case, a tender on that day would be a complete performance of the contract, and a good bar to the action. Tiie Court, in overruling the plea, say : '• Our doctrine, as established in the case of Shed v. Brett, and indeed always practically recognized is, that the suit may be brought on the very day the note becomes due, after de- mand and notice, for there is then a breach of the promise. If the note is not paid during the business |jours of the day, if the money is to be paid into a bank, a right of action has accrued." The same doctrine is recognized and declared in Boston Bank V. Hodges, 9 Pick. 420. The Court, on dealing with an argument of the plaintiff, that the note being due on the ninth of May, the last day of grace, a demand and refusal to pay on any part of that day, with immediate notice to the indorser, will give a right of action against the latter, say : '• This is true, when there is an actual demand upon the maker according to the general rule of law." But the case was decided against the plaintiffs, on the ground that they had neither conformed to the general rule of law, nor to the substituted course established by their own usage. The principle I am stating was again recognized in Church v. Clark, 21 Pick. 310, The note was made payable at a bank, and the suit was commenced against the maker at one minute after twelve o'clock at night, being the morning of the last day of grace. Held, that it would not lie. The Court again repeat the general rule, that a note is payable at any time on demand on the last day of grace, or day it becomes due. But such a rule may be mod- ified by the terms of the note ; and making a note payable at a bank, is making it payable within usual banking hours. From this view of the cases decided in Massachusetts, it seems to have been uniformly held, that on demand and refusal of pay- ment by the maker, at any reasonable time on the last day of grace, the note is due and payable ; that if not then paid an action may be immediately commenced against the maker, and after actual or constructive notice to the indorser, against him. And as stated by Chief Justice Parker, in 3 Pick. 418, this rule seems to have been always practically recognized. STAPLES V. FRANKLIN BANK. 485 This j)oiiit has lieen decided in the same way in Maine. It is there hel<l, that l)ills and notes are payable on demand, at any reasonable hour, on the day they fall due, and if n(jt then paid, the acceptor or maker may be sued, and also the drawer and iu- dorser, after notice. Greeley v. Thurston, 4 Greenl. 479 ; Flint V. Rogers, 3 Shepl. G7. It is a little remdrkable, as mentioned by Mr. Justice Weston, that there is no direct English authority upon this point.^ There appears to be no case in which it has been decided, either that an action may or cannot be commenced on the last day of grace, or day the note becomes due. The general rule in regard to payment of debts, for rent, on bond, for goods sold on credit or otherwise, is, that the debtor has till the last hour of the day in which to make payment : Webb v. Fairmaner, 3 Mees. & W. 473 ; but the case of negotiable bills and notes is uniformly treated as an exception. All the authorities hold, that a foreign h\\\ must be demanded on the last day of grace, and, if not paid, must be noted for protest ; and the authorities are equally uniform, that if not thus paid on demand* on the last day, by the acceptor or maker, they may be treated as dishonored, and notice may be immediately given to the drawer and indorsers, and they will be held liable. Leftley v. Mills, 4 T. R. 170. In this case, Mr. Justice Buller lays down the rule very explicitly, and it seems to have been subsequently followed. He states the rule to be, that if not paid on demand, on tiie last day, the bill is dishonored, the parties are in default, and the bill may be, and, in case of a foreign bill must be, protested on that day, although notice will be seasonable if given the following day. Burbridge V. Manners, 3 Camp. 193 ; £x parte Moline, 1 Rose, Bankr. Cas. 303 ; s. c, 19 Ves. 216. It was there held, that demand on the acceptor at eleven o'clock, and notice of non-payment to the drawer the same morning, was good, and warranted the proof of a debt against the drawer, who had become bankrupt. The rule is uniformly laid down by the text-writers, that the bill must be presented for payment on the last day of grace. Bayley, Bills, 12G ; Chitty, Bills, 365. The latter writer seems to consider the rule established, that the contract of the maker of a note or acceptor of a bill, is to pay on demand on the ap- pointed day, and if payment be not made on such demand, the contract is broken, and the holder may treat the bill as dis- honored. 1 See Castrique i'. Bernabo, 6 Q. B. 498, note, post, 492. 486 ACTIONS. In a late work, Byles on Bills, it is stated, p. 131, that the ac- ceptor of a bill, whether inland or foreign, or the maker of a note, should pay it on a demand made, at any time within business hoiirs, on the day it falls due, and if it be not paid on such demand, the holder may instantly treat it as dislionored. But the acceptor has the whole of that day within which to make payment ; and though he should, in the course of that day, refuse payment, which entitles the holder to give notice of dishonor, yet if lie sub- sequently, on the same day, makes payment, the payment is good, and the notice of dishonor becomes of no avail. This writer cites Hartley v. Case, 1 Car. & P. 556, 676 ; s. c, 4 Barn. & C. 339, 341. The point was made in that case, that no- tice coiild not be given on the day the note becomes due ; but the case went off on another ground, and no opinion was given on this question. The passage cited appears contradictory to itself, inasmuch as it declares that the note is due and payable on demand on the last day of gracS, and is dishonored if not then paid, and yet that the maker and acceptor have the whole day to pay it in. It would seem that there could be no dishonor, unless the maker had failed to comply with his contract : and if he has failed to comply with his contract, then, by a general rule of law, the holder has his remedy by action. Perhaps the state of the law upon this point may be accounted for by a remark made in Chitty on Bills, 36, who, after saying that notice of dishonor may be given on the same day, adds, it is not usual or necessary to give notice of non-payment before the fol- lowing morning, and therefore there can be no objection to the allowance of the whole day on which the bill becomes due, to pay it in. It is probable, therefore, that though the holder may have a strict right to proceed in all respects as upon a dishonored bill on the last day, after demand, refusal, and notice, yet it is so far the general practice to postpone notice and other proceedings till the day following, that it is regarded amongst merchants as a right. That it seems so to have been understood by men of business, appears by a remark of Mr. Justice Buller, in Colkett v. Freeman, 2 T. R. 59, 61, and also by an obiter dictum of Bolland, B. in Webb V. Fairmaner, 3 Mees. & W. 473, 4'74. But the case of negotiable bills and notes was not then under consideration. No doubt there is a prevailing understanding in England, that STAPLES V. FRANKLIN BANK. 487 the maker or acceptor has, by right or by courtesy, the whole of tlie last day to make payment in, and if it is so in fact paid or tendered, there would be little occasion for the holder to insist on his right of action, and decline receiving payment; and so no case has arisen in which it has become necessary to decide that precise question. Possibly it may be considered, that the holder has a right to treat the bill as dishonored, after demand and refusal, and even to commence an action, sulyect to be defeated and barred in case the maker should pay the amount due, at any time on the last day of grace ; though it is difficult to per- ceive how the holder can have a perfect right to treat the note as dishonored by breach of the contract, and, at the same time, that tiie acceptor can have a perfect right, by payment of the bill, to perform his contract and save himself from the consequences of such breach. In Hartley v. Case, 1 Car. & P. 556, already cited, Abbott, C. J., on a motion to show cause, says: "I think the notice of dishonor, given on the day on which the bill is pay- able, will be good or bad, as the acceptor, may, or may not, after- wards pay the bill. If he does not afterwards pay it, the notice is good ; and if he does, it of course comes to nothing." This certainly implies that after non-payment on demand, on any part of the last day, there is a breach of the contract of the maker, and no further demand is necessary to complete the holder's right against the maker, acceptor, and indorsers. But whether, after such breach and before the close of the day, an action might be commenced against either, does not appear by this case, nor, as we believe, by any case decided in England. The only decided case opposed to the opinion which we have adopted, and one entitled to great respect, is that of Osborn v. Moncure, 3 Wend. 170.^ In this case, which was an action by the payee against the maker of a note, demand was made on the last day of grace, and, payment being refused, a suit was commenced at three o'clock on the same day. The Court were of opinion that a demand on the maker should be made on the third day of grace, and, on refusal, the holder might treat the bill as dis- honored, so far as immediately to give notice to the indorser ; yet that the maker has the whole day to pay it in, if he thinks proper to seek the holder. They rely upon the general rule appli- cable to the case of other debts, that the debtor has to tiie last 1 Post, p. 493. 488 ACTIONS. instant of the day to make payment, and they consider that in this respect there is no disthiction in case of negotiable bills and notes. It had been frequently held in the courts of New York, that demand must be made on the last day of grace, as well on inland bills and promissory notes as on foreign bills ; and if not then paid, the holder might treat them as dishonored and notify the drawer and indorsers. Jackson v. Richards, 2 Caines, 344 ; Corp V. M'Comb, 1 Johns. Cas. 328. Indeed the rule seems to be settled l>y all the authorities, Eng- lish and American, that a demand must be made on the maker or acceptor, within reasonable hours, on the day of maturity, and when the bill or note is in a bank, which has certain fixed and known hours for being open for business, those will be construed to be reasonable hours ; that if the bill or note is not paid on de- mand, it is dishonored, and notice may be immediately given to the drawer and indorsers, and, without further demand or notice, they will be legally bound to make payment. Tindal v. Brown, 1 T. R. 1(37, affirmed in Ex. Ch. 2 T. R. 186, note ; Bussard v. Levering, G Wheat. 102. But what shall be the legal consequence of such dislionor, does not appear to have been decided in Eng- land. In the case cited, 1 Car. & P. 676, it was argued by coun- sel, Scarlett, Holt, and Chitty, and not controverted by the Court, because the decision of the case did not require it, that a pay- ment of a bill on the day of maturity, but after actual dishonor, is no better than paying at any time before action brouglit. And it had long before been decided in Hume v. Peploe, 8 East, 168, that a plea of tender after the day of payment, though of all the money due on the bill, was not a good plea in bar, because it did not show a performance of the contract. If then there is a breach of contract, by a non-payment on demand, and the tender after a breach is no bar, it would seem to follow as a necessary legal con- sequence that an action would then lie. But upon this point, the courts of different States have come to different conclusions. In New York it has been decided, as in the case cited, that an action will not lie till after the day. In Maine, as we have already seen, it has been decided that an action will lie, against all the parties, on the day of maturity, after an actual dishonor. In New Hampshire, Dennie v. Walker, 7 N. Hamp. 201, the Court say, it may now be considered as settled, that notice may STAPLES V. FRANKLIN BANK. 489 be given and suit brought against the indorscr on the last day of grace, after demand and notice. * In Maryland, in the case of Farmers' Bank v. Duvall, 7 Gill <fe Johns. 89, the Court say, it is now settled, that demand may be made on the last day of grace, and if payment be not made, the holder may at once treat the note as dishonored, and give notice accordingly. It is not however stated, in terms, that an action may be at once brought. In South Carolina, in Wilson v. Williman, 1 Nott & M'Cord, 440, it was decided on great consideration, by a majority of the Court, that the maker may be sued on the third day of grace after demand. On the whole, we think the weight of authority is in favor of the conclusion to which we have come ; and if it were a new question, it seems to follow, on legal principles, as a fair and legiti- mate conclusion from the established fact that the contract of the acceptor or maker is broken by a neglect or refusal to i)ay on demand, within reasonable time, on the last day of grace, that the holder may then have his remedy by action. But in this Commonwealth it is not a new question ; it has been settled, we believe, by a uniform series of decisions, and by a long and un- broken course of practice. It may be proper to make a remark on the point, that some of the cases in Massachusetts "manifestly go upon the ground that when a third person has accepted a bill or made a note payable at a bank, or when, from circumstances, it may be inferred that the parties intended tliat the note should be paid at a bank, the maker has the whole of the usual time of banking hours to pay it. This proceeds upon the ground that the parties have entered into an express or implied agreement, that the note shall be so paid and treated. But when the bank itself has undertaken to pay a sum on any given day, they are bound, like any other promisor, to pay on demand, on that day ; and the only difference, in this respect, between a bank and an individual is this, that what would be reasonable time for a demand, in case of individuals, is fixed, in case of a bank, by their known usual hours of being open for business. This is the case in regard to common bank-notes, and it would be most jjernicious, in regard to them, to establish a dif- ferent rule, or raise a doubt respecting it. And a post-note, when, by the lapse of time and the force of the contract, it has become 490 . ACTIONS. payable on demand, stands in this respect on tlie same footing with a- bank-note, which is payable on demand in its terms. The Court are therefore of opinion, that the post-note in ques- tion was due and payable when the action was commenced ; that the attachment of the plaintiffs was well made, and that the peti- tion must be dismissed. The rule in Pennsylvania, California, Illinois, Mississippi, and perhaps in England, is different from that laid down above. See Smith v. Bank of Wash- ington, infra, and note, p. 492. Shaw, C. J., again says in Pierce v. Gate, 12 Cush. 190, 193 : " The rule in re- gard to notes like the one in question is, that the note is payable at any time on act- ual demand, on the last day of grace ; and if such actual presentment and demand are so made and paj'ment is not made, the maker is in default, and notice of dis- honor may forthwith be given to the indorser. But if no presentment or demand is made by the holder upon the maker, the latter is not in default till the end of the business day." See also the following cases which sustain the above doctrine : Ammi- down V. Woodman, 31 Me. 580; Veazie Bank v. Wynn, 40 Me. 62; Butler «. •Kimball, 5 Met. 94; Coleman v. Ewing, 4 Humph. 241; McKenzie v. Durant, 9 Rich. 61 ; Crenshaw v. McKiernan, Minor, 295. See Radolph v. Cook, 2 Porter (Ala.), 286; Poole v. Tumbrldge, 2 Mees. & W. 223; Ex jmrte Moline, 19 Ves. 216. Smith v. The Bank of Washington. (5 Sergeant & Rawle, 318. Supreme Court of Pennsylvania, 1819.) When action may be brom/fd. — Notice to an indorser of non-payment of a promissory note was put into the post-office on the 13th, and by the course of the mail could not reach him before the 19th. Suit was brought on the 16th. Held, that it was premature. The case is stated in the opinion of the Court. Gibson, J. The note which the defendant indorsed to the plain- tiff was protested at Washington for non-payment, on the 13th May, and on the morning of that, or the next day, a regular notice of the protest and non-payment was sent by the mail in a letter addressed to the defendant at Burgettstown, near which he lived. According to the course of the mail, which left Washington but SMITH V. THE BANK OF WASHINGTON. 491 once a week, the notice could not have reached the defendant before the nineteenth, and the present suit was commenced on the sixteenth of the same month. The Court instructed the jury that, the object of tlie notice being to enable the indorser to arrange his relations with the drawer, it was necessary that notice should be given only in a reasonable time, and that it was not an essential ground of the plaintiff's action ; in so far that, if it were received from the post-office by the usual and regular operations of the mail at a period subsequent to the issuing of the writ, the suit might, never- theless, be sustained. In support of this it has been argued that the only use of notice being to warn the indorser that it is neces- sary for him to look to the drawer, and secure himself if he can, it is a measure re([uisite only to ])revent the previous responsibil- ity of the indorser from being discharged ; but that it was not an ingredient in the right of action, which arose immediately on fail- ure to pay by the drawer. But I think it clear that, whether notice be necessary only to enable the indorser to look to his con- cerns with the drawer, or whether it be to apprise him that he has , encountered an immediate instead of a secondary responsibility, it is nevertheless a substantive part of the plaintiff's title to bring the action. This was expressly decided in Rushton i'. Aspinall, 2 Doug. 679, on great consideration, and, as Lord Mansfield tells us, against the wishes of the Court ; by whom it was held, in a case exactly like the present, that the want of an allegation of notice of non-payment was fatal, even after verdict ; and this on the ground that the title of the plaintiff was not merely set out defectively, but that he had set out no title. Now as the plaintiff's title must be complete before suit is brought, it follows the indorser must have notice before the impetration of the writ ; or, at least, that some fact be averred and proved, that will excuse the giving of notice altogether ; such, for instance, as that the indorser had ac- cepted of a general assignment of the drawer's effects and estate. But the question is, what shall be considered notice. It is not ne- cessary that actual notice be given in every case ; but it will be sufficient, and considered constructive notice, if it be left at the house of the indorser or sent by the mail, even though the letter should miscarry. To affect a party with constructive notice is always a harsh measure, and sometimes attended with absolute injustice, though general convenience requires that, in particular cases, it should be resorted tO. Still, however, neither policy nor convenience requires that the party should be affected, unless there 492 . ACTIONS. was at least a possibility of his having had actual notice. From certain facts the law raises a conclusive presumption of actual notice ; but it is not so absurd as to raise it from facts which nega- tive all possibility .that the presumption accords with the truth of the case. The putting a letter into the post-office shall be consid- ered as notice whether it be received or not, provided it might have reached the person to be affected in the regular course of the mail, but it shall be so only from the time at which it ought to have been received. Here there is no question about the reasonableness of the notice ; the material point is the time when it shall be con- sidered as having been received ; for before that time the plaintiff had no right to commence an action. It may be said that if the plaintiff wait until the actual receipt of notice, the indorser may abscond before a writ can be served on him ; but the same reason might be urged in every other case where a plaintiff sues before his cause of action is complete. The notice being for the benefit of the indorser, cannot be dispensed with ; and it would be ex- tremely absurd to suppose that any benefit could flow from it before there was a possibility of its having been received. The judgment must therefore be reversed, and a venire facias de novo awarded. See Bevan v. Eldridge, 2 Miles, 353 (1840). In this case, Stroud, J., said: "The practice of including interest in this way [to the end of the third day of grace], is generally, if not universally, adopted by the banks in Pennsylvania. If, then, interest can be charged to the end of the last day of grace, there can be no propriety in treating any party to a note as in default in respect to pay- ment, until that day has expired." Castrique v. Bernabo, 6 Q. B. 498 (1844), holds the same rule, that the hold- er cannot sue the indorser until time has elapsed for notice to reach him. Lord Denman, C. J., said: " The rule of law is that, when there is a doubt which of* two occurrences took place first, the party who is to act upon the assumption that they took place in a particular order is to make the inquiry. That is found- ed on reason. An opposite rule would justify a party in suing where he had not ascertained his right. It follows that the plaintiff in this case has taken upon himself to show that a right of action existed before he commenced his suit ; and, not having done this, he must fail." So in Mississippi: Wiggle v. Thomason, 11 Sm. & M. 452; and in Cali- fornia : McFarland v. Pico, 8 Cal. 626 ; and in Illinois : Walter v. Kirk, 14 111. 555. 08B0RN V. MONCURE. 493 OSBORN V. MoNCURE AND RoBINSON. (3 "Wendell, 170*. Supreme Court of New York, August, 182'J.) When action may he brour/ht. — An action brought against the maker of a promissory note on tlie thinl day of grace is premature. This was an action of assumpsit, tried at the New York circuit, in June, 1828, before the Hon. Ogden Edwards one of the cir- cuit judges. The suit was by the plaintiff, as payee against the defendants, as makers of a promissory note. On tlic tliird day of grace, pay- ment was demanded at the counting house of the defendants, of a clerk therein (the defendants not being present), who said the note would not be paid. The defendants had stopped payment a few days before. The defendant had a capias issued, upon which the defendants were arrested previous to three o'clock p.m. of the third day of grace. The note having been proved, and these facts appearing, the defendant's counsel moved for a nonsuit, on the ground that the action was prematurely brought. The judge re- fused to grant the motion, and a verdict was rendered for the plaintiff. The defendants excepted to the opinion of the judge, and now moved to set aside the verdict. SuTHKRLAND, J. The Only question in this case is, whether the case was prematurely commenced. It is admitted that the writ was served before three o'clock p.m. of the third day of grace, payment having previously l)een regularly demanded and refused ; the defendants having failed some days before. It is not denied that the maker is entitled to the days of grace. 2 Cowen, 7GG ; 8 Cowen, 205, and the cases there cited. Chitty, Bills, 420, 421. Notice to the indorser vn the third day of grace, after a demand upon the maker and his default of payment, is good, although it need not be given until the following day. It being earlier than is required, cannot form any objection on the part of the indorser. 1 Johns. Cas. 328 ; Ciiitty, Bills, 3(i2 ; 3 Camp. 193. The demand upon the maker should be made on third day of grace, and within a reasonable time before the expiration of the day, 2 Caiiies. 244 ; 494 ACTIONS. 12 Johns. 424 ; and if he then refuses payment, the holder has done all that is incumbent upon him to do, and may treat it as a dishonored bill, so far as immediately to give notice to the in- dorser ; but' still I apprehend the maker has the whole of the day to pay in, if he thinks proper to seek the holder. It is undoubt- edly true in relation to other contracts, that the party has until the last instant of the day to make payment ; and I perceive no reason for making negotiable paper an exception to the general rule. 3 Bos. & Pul. 602 ; 4 T. R. 170 ; Chitty, Bills, 365, note. Mr. Chitty seems to think the rule is differently settled. The cases of Crygier v. Long, 1 Johns. Cas. 393, and Lawrence V. Bowne, 2 Johns. Cas. 225, seem to decide, that after appear- ance and pleading in chief, a defendant cannot object, the suit being upon a note, that it was commenced before the note was due ; and it is there said that he should apply to the Court to be discharged from the arrest. But, upon general principles, I do not see how a defendant can be deprived of the benefit of such a defence upon the trial. The plaintiff, under the plea of non-as- sumpsit, is bound to show a good cause of action at the thne of the commencement of the suit, and the defendant may give in evidence any thing which shows that the plaintiff had not such cause of action at that time. 1 Phil. Ev. 131. It is well settled that the issuing of the capias is the commencement of the suit, and the plaintiffs' cause of action must exist at that time. 3 Johns. Cas. 149 ; 1 Caines, 69, 72 ; 3 id. 133 ; 2 Johns 346 ; 3 id.' 42 ; 10 id. 119, and 8 Cowen, 205, where the cases are collected. Mr. Chitty, 1 Chitty, Plead. 443, says, that where a suit is prematurely brought, it is ground of demurrer or nonsuit. This appears to me to be the true rule. I am, therefore, of opinion that the judge ought to have nonsuited the plaintiff. Wew trial granted. The foregoing cases will be sufficient to show the different views that have been entertained by courts of high authority upon a very important branch of the law. The doctrine of Osborn v. Moncure is reaffirmed in Smith v. Aylesworth, 40 Barb. 104. Mr. Justice Johnson, who delivered the opinion of the Court in this case, said : " The action is brought by the payee, against the maker of the note in question. Of course no demand was necessary in order to charge the defendant. The only question in the case is whether the action, having been commenced after banking hours at the bank where the note was payable, on the last day of grace, is not prematurely brought. This precise question was decided in Osborn OSBORN V. MONCURE. 495 V. Moncure, 3 Wend. 170, upon full argument and mature deliberation. That case, like this, was an action between payee and makers, and the action was brouglit before three o'clock in the aftqpnoon of the last day of grace, but after demand of payment and refusal. The Court unanimously held that the makers had the whole of the third day of grace in which to make payment, and that an action commenced upon the third day, though after demand, was brought prema- turely, and could not be maintained. Sutherland, J., who delivered the opinion of the Court, says : ' It is undoubtedly true in relation to other contracts, that the party has until the last instant of the day to make payment ; and I perceive no reason for making negotiable paper an exception to the general rule.' It would be difficult to assign any valid reason for any distinction. Negotiable paper, by law, becomes due on the third day of grace, precisely as other con- tracts do on the day when the term of credit expires according to their date, and not otherwise in any respect, that I am able to perceive. That is the law in regard to such paper, and it is part and parcel of the obligation, precisely as much as though it were written in the note. The only dillerence between the two cases is, that in this case the note was payable at a bank, while in that case it was payable generally, at no particular place. But in that case demand was actually made before action brought, and no question raised that the demand was insuHicient, or in any respect improper, There is no essential difference, therefore, in the two cases. I am aware that the rule is laid down differently in Chitty on Bills, which the Court notice in the case referred to. " Parsons, in his recent work on Notes and Bills, also lays down the rule as follows : ' We are however of opinion that after demand and refusal on that day an action may be at once maintained.' He also says : ' But without such prior demand and refusal, an action commenced on the day of maturity is premature, unless the note is payable at a bank, when it seems that a suit may be commenced after bank or business hours.' 2 Parsons, Notes and Bills, 461, 4G2. Several cases are cited, decided in other States, to sustain the rule as laid down in the text, though the author admits that the rule may not be positively determined by authority. If it be true, as our Supreme Court has decided, that the maker has up to the last instant of the last day of grace in which to make ])aymciit, as part of his contract, I do not see how a demand before that time, or the expiration of the business hours at a bank where the note is payable, can alter the time of the note becoming due and payable. Generally the law does not notice the fractions of a day, and it is difficult to see how the act of a payee or holder, in making demand of payment at any particular hour in the day, or the custom of a bank in closing its doors ?it a particular hour, is to work a severance of time, so that a note payable on a particular day, and not at any specified hour of such day, shall be both due, and not due, on the same day. Certainly there is nothing in the contract, nor, so far as I am advised, in the mercantile custom, by which a payee by his own voluntary act can shorten the day or the hour of payment. It seems to me our rule is the only safe and consistent one, and that it ought to be fol- lowed, especially by this Court. All that is decided in the Bank of Syracuse v. Ilollister, 17 N. Y. 46, is that a presentment of a note and demand of payment by a notary, of himself, at the bank door after banking hours, and after the bank was closed, was a sufficient presentment to charge an indorser. This only relates to the rtde between holder and indorser, and is to the effect that a holder 496 ACTIONS. is not confined to banking hours in making his demand, but may make it at any time in the day, afterwards, provided he can find a proper person at t]ie place, to answer. If this decision has any bearmg upon the present case, it is rather against the plaintiff than in his favor. It necessarily holds that the demand was made before the time for the payment of the note had expired. Otherwise the demand could not have been held sufficient to charge the indorser. " On the whole I am of the opinion that the action was prematurely brought, and that the nonsuit should have been granted. "The judgment must therefore be reversed, and a new trial ordered, with costs to abide the event." Whether the above is or is not sound as to paper payable at bank, — and our opinion is that it is not, — it is certainly the true doctrine, as it seems to us, in the case of paper payable generally. The maker or acceptor by analogy to all other branches of contract, and, as we think, by the weight of authority upon this point, and by reason, should have in this case until the close of the third day of grace within which to make payment. There can then be no breach during that day ; and an action before the fourth day would be premature. The circumstance of refusal is considered in some of the cases as sufficient to warrant suit before business hours have expired, in the first case above stated, and before the close of the third day, in the second ; but this is not satisfactory. The maker or acceptor, notwithstanding his refusal, may change his mind, and tender the money within the time allowed him ; and shall the holder by excessive zeal, perhaps by malice, throw upon him the burden of costs by suing within that time ? Such a rule would be unreasonable and productive of no good. If the above is sound doctrine respecting the party primarily liable, a fortiori ■will it apply to the case of an indorser. But we apprehend that the Pennsylvania rule has gone too far in this direction, in requiring the holder to wait until the indorser shall have had'time to receive notice. He should not sue until after a breach of the contract, it is true, — and we have indicated when that occurs, as we understand it, — but as soon as the contract is broken and notice is sent, his title has accrued against the indorser. Chief Justice Parsons forcibly states this view in Shed v. Brett, 1 Pick. 401, 411. He says: "The argument is, that notice of the non-payment is essential to the plain tiflf's right of action ; that it is necessary to aver it in the declaration as a fact existing ; and that as the case shows this could not be true, the plaintiff has failed in an essential point. But this argument proceeds upon the ground that there must be an actual reception of notice before the plaintiff can sue ; and this is certainly fallacious. If the putting the letter into the post-office is notice in itself, which we have shown, then it was given before the commencement of the suit. And it would be mischievous to decide otherwise; for every plaintiff's right of action would commence at different times according to the distance of the party sued ; and the time of suing must be conjectured, as it cannot be known when the notice will be actually received. Besides if the object of waiting be to give the party opportunity to take up the note, there must be a sort of double usance ; for the holder must wait till his letter is received, and for a reasonable time afterwards for the party receiving it to come and pay the money. Who would take a bill or note remitted from New Orleans, if this doctrine be correct? And if the parties liable be beyond sea, such instruments would be mere waste paper. If the bill could not OSBORN V. MONCURE. 497 be accepted, or the indorsed note not paid, the unfortunate holder, witli prop- erty belonging to the drawer or indcjrser before his eyes, must remain an idle spectator of the scramble of other creditors for it, or suffer it to be withdrawn by the debtor himself without the power of arresting it. This cannot be sound doctrine ; an averment of notice will be sufficiently proved, by showing that the ' steps necessary to give the notice have been taken ; if subsequently received, it will relate to the time when it was sent; if never received, the fact of having put it in the proper train is enough." It will be observed that the doctrine combated above is a step in advance of the position taken in Pennsylvania; the doctrine of that State requiring the holder only to wait until sufficient time has elapsed for notice to reach the in- dorser, and not until an actual reception of the notice. But the reasoning of Chief Justice Parso7is overturns this position also. In every case under the rule in Pennsylvania, the time must be uncertain when the holder can sue the indorser or drawer, and the probability of satisfying his claim by execution will grow more and more remote in proportion as the distance increases over which the notice must travel; at least in all cases where the debtor has vigilant creditors, and especially if he himself possesses a disposition to take advantage of the holder by removing or secreting bis property. 32 498 EVIDENCE. EVIDENCE. Wells v» Whitehead. (15 Wendell, 527. Supreme Court of New York, July, 1836.) Production. Bill drawn in sets. — In a suit against the indorser of a bill of exchange drawn in sets, the defendant may require the production of the identical one of the set dishonored. Assumpsit against the indorser of a bill of exchange drawn in sets. The plaintiff declared on the first of the set, but without producing or accounting for the non-production of the third, which was the one actually dishonored. Nelson, J. Two objections were taken in this case to the plain- tiff's right to recover, which were overruled by the circuit judge : 1. Tliat the suit being against an indorser, on a protest for non- acceptance of a bill of exchange drawn in parts, it was incumbent upon the plaintiff to produce at the trial the identical bill, or num- ber of the set that was protested, or account for its absence ; and 2. That sufficient evidence was not given to establish the fact that the defendant had been duly notified of the non-acceptance, or that due diligence had been used for that purpose. The law on this point is correctly laid down by Chancellor Kent in his Commentaries. He says : " If several parts, as is usual, of a bill of exchange be drawn, they all contain a condition to be paid, provided the others remain unpaid, and they collectively amount to one bill, and a payment to the holders of either is good, and a pay- ment of one of a set is payment of the whole. The drawer or in- dorser, to be charged on non-acceptance or non-payment, is entitled to call for the protest, and the identical bill or number of the set protested, before he is bound to pay ; and it would be sufficient to produce it at the trial, or account for its absence. His rights at- tach to the bill dishonored, and he is entitled to call for it. He WELLS V. WUITEHKAD. 499 may want it for his own indemnity, and without it he might he ex- posed to chiinis for some bona fide holder, or person who liad pai<l supra protest for his honor." 3 Kent, Com. 109. As to the right of the drawer or indorser to call for the i)rotest, the chancellor must be considered as referring to a foreif/n bili, no |)rotest l)eing necessary in respect to a domestic or inland bill. Where the bill has been protested for non-acceptance, any per- son may accept it mpra protect for the honor of the bill, the draw- er, or any particular indorser. This usage promotes the negotiation of it when the drawers credit is suspected, and may save the character and prevent the prosecution of some of the parties, in case the drawee cannot be found, is not capable of accepting, or refuses. Chitty, Bills, 241 ; 3 Kent, Com. 87. The person accept- ing supra protest subjects himself to the same obligations as if the bill had been directed to him ; and if he accepts for the honor of the drawer or indorser, though without his knowledge, he has a remedy against such persons and all others liable to them, for his responsibilities assumed, the same as if he acted under their direc- tion. Chitty, 243 ; 3 Kent, Com. 87 ; 1 Esp. N. V. 113 ; 1 Ld. Raym. 57;'). If he takes up the bill for the honor of the in- dorser, he stands in the light of an indorsee paying full value for it, and has the same remedies to which he would be entitled against all prior parties. From this doctrine it seems to me clearly to fol- low, that if the hill presented to the payees in this case had been accepted by a friend of the defendant for his honor, after the re- fusal by the payees to accept, the defendant would be bound to indemnify him, notwithstanding a recovery, on the number of the set produced at the trial. It is true, as a general rule, payment of one of the set is payment of the whole ; l)ut if the drawer or in- dorser is entitled to call for the identical bill dishonored before he is obliged to pay it, the omission to do so would subject him to the charge of negligence, and make him, notwithstanding, accounta- ble to the persons who had accepted it for his honor. Indeed, if he stands in the light of an indorsee for the value of a bill trans- ferred before due, there is no escape from this liability. His se- curity, therefore, requires that he should be allowed to call for the bill protested before a recovery is permitted to be had against him. The view of the law as taken by Chancellor Kent is supported by several approved authorities. Chitty, Bills, 387 ; 2 Stark. Evid. 500 EVIDENCE. 142 ; 1 Saund. PI. & Ev. 275, 318 ; 4 Petersdorff, Abr. 536. Ac- cordinp: to these autliorities, all the sets should be produced iu case of aforctf/ii bill. In tlie case of Keuworthy v. Hopkins, 1 Johns. Cas. 107, to which Chancellor Kent refers to sustain his qualifica- tion of this rule, the second of the set was declared on, which was the one accepted and the only one produced at the trial. It was there objected tliat notice of protest for non-payment was insuffi- cient, on tlie ground that tlie identical bill protested had not accom- panied it. It was accompanied by one of the set that had not been accepted or protested, and payment was refused on that ground. The Court decided that the holder had a right to retain the bill accepted, as he might want it to proceed against other parties, and intimated that the production or presentation of it was essential only when payment was demanded. The margiiial note of that case does not correctly state the point decided ; nor did the facts call for an examination or decision of the question as there stated. The note would sustain tlie ruling of the judge in this case : it is there laid down that, where one of a set of three bills of exchange on London was protested for non-payment, it was held an action miglit be maintained here against the indorsers on one of the set not protested, with the protest of the other. In truth the point particularly examined in that case is no longer of any importance, because the better opinion now is that a copy of the bill and protest need not accompany the notice in the case of a foreign bill. No- tice of the fact of non-acceptance or non-payment is sufficient. Chitty, Bills, 217, and cases there cited ; 3 Kent, Com. 93, 109 ; 3 Camp. 334 ; 2 Esp. N. P. 511 ; 10 Mass. 5, and note ; 1 Selw. 273 ; 4 Esp. N. P. 48. Production of the protest at the trial is all that is necessary. Whether the bill in this case be considered a foreign or inland bill can make no difference, so far as the material question involved is concerned. The rule of evidence should be the same in both cases as to the production on the trial of the identical bill presented. Either may be accepted supra protest, and the reasons for the pro- duction or accounting for the absence of the protested bill on the trial, are alike applicable in both cases. In Buckner v. Finley and Van Lear, 2 Peters, 58(3, bills of exchange drawn in one State on persons residing in another, were held to partake of the character of foreign bills. It had been before held, in Townsley v. Sumrall, ib. 170, that such bills were to be deemed foreign in respect to the WELLS V. WHITEHEAD. 501 protest and proof of the dishonor. A dift'erent opinion liad hoLMi expressed hy Mr. Justice ( a/t Ness, in Miller r. Hiickhn*, "> Johns. 375. It was not, however, the point in the case, and should not, perhaps, 1x3 considered as conclusive upon the Ccnirt. When the question arises directly for consideration, it may be proper to re- view. it. The convenience of trade and commerce preponderates strongly in favor of viewing such bills as foreign, so far, at least, as respects the protest and proof, as then the certificate of the no- tary, under the seal of office, is evidence of the protest in the for- eign State without any auxiliary support, and is so received in all courts, according to the usage and custom of merchants. New trial granted, costs to abide the event. On the second point, respecting diligence, the decision was in favor of the plaintiir. That subject has already been considered, under Pkk.sentmext and Demand for Pay.ment. Upon the question of production it has been held in the Supreme Court of the United States that in an action by the holder on the particular one of the set which was dishonored, the defendant cannot require the plaintiff to produce the other numbers of the set, or account for their non-production. Downes v. Church, 13 Peters, 205. The principal case was before the Court. Mr. Justice Story, who delivered the opinion in Downes r. Church, said : " This is the case of a certificate of division of the judges of the Circuit Court for the district of Mis- sissippi. The action was assumpsit, founded on the second part of a foreign bill of exchange, by the indorsee against the indorser for non-acceptance. The plaintiffs declared upon the second of the set of exchange, which second of the set was protested for non-acceptance, and the same, with the protest attached thereto, was read to the jury. Whereupon a question arose, whether the plain- tiffs could recover upon the said second of exchange without j)roducing the first of the same set, or accounting for its non-production ; upon which question the judges were opposed in opinion. And the same has l)een accordingly certified to this Court under the Act of Congress. " We are of opinion that the plaintiffs are entitled to recover upon the second of the set without produiing the first, or accounting for its non-production. No authority has been referred to which is exactly in point, nor are we aware that the question has ever been judicially decided. Mr. Starkie, in his work on Evidence, part 4, p. 228, 1st ed., has said : ' In the case of a foreign bill drawn in sets, both the sets should be produced.' But for this proposition he has cited no authority. The question must, then, be decided upon principle. The object of drawing a foreign bill in sets is for the convenience of the payee, or other holder, to enable him to forward the same for acceptance by diflerrnt convey- ances, and thus to guard against any loss, by acciilent or otherwise, which might occur if there were but a single bill. Btit from the very frauu- of the set, if one is paid or discharged by the acceptor, or other party liable on it, he is ordinarily discharged from the others, since each part contaijis a condition that it shall be 502 EVIDENCE. payable only when the others remain unpaid. Now, when one of the set is pro- tested for non-acceptance, and due noti<'e is given to an indorser, and on the trial of an action brought against him by the indorsee, the same bill of the set on whieh the protest is made is produced, that is prijna facie proof of his being responsible thereon. J^ither of the set may be presented for acceptance, and, if not accepted, a right of action presently arises upon due notice against all the antecedent parties to the bill, without any others of the set being presented ; for it is by no ineans necessary that ail the parts should be presented for acceptance before a right of action accrues to the holder. Under such circumstances, it is properly a matter of defence on the other side, to show either that some other bill of the set has been presented and accepted, or paid ; or that it has been presented at an earlier time and dishonored, and due notice has not been given ; or that another ])crson is the proper holder, and has given notice of big title to the party sued ; or that some other ground of defence exists, which displaces the prima facie title made out by the plaintiff. The law will not presume that the otlier bills of the set have been negotiated to other persons, merely because they are not produced. And the indorser is not put to any hazard or peril by the non-production of them ; since, like the acceptor, if he once pay the bill, without notice of any superior adverse claim, by a negotiation of another of the set to another party, he will be completely exonerated. On the other hand, great inconveniences might arise from compelling the plaintiff to produce the other parts of the set, or to account for their non-production, as he might not be able satisfactorily to prove that they had not been negotiated, or that they had been lost. In short, if the plaintiff, before he could recover, were required to produce or to account for all the parts of the set, he would be obliged, in every case where the bills had been transmitted by different conveyances abroad, to arm himself with proofs of every stage of their route and progress, until they should come back again into his hands, as preliminaries to his right to recover upon their being dishonored. Such a requirement would create most serious embarrassments in all commercial transactions of this sort ; and instead of bills drawn in sets being a public convenience, they would be greatly obstructed in their negotiability, since the rights and the remedies of the holder might be materially impaired thereby. We are therefore of opinion that the question upon which the judges of the Circuit Court were opposed, ought to be answered in the affirmative, and we shall send a certificate to the Court accordingly." It may be worthy of note that no counsel appeared for the defendant in this case. Upon the general subject of production, see Chitty, Bills, 625. It is a general rule that the paper sued upon must be produced, or its absence accounted for ; and this rule is not changed by a statute which dispenses with pi'oof of signatures unless their genuineness be denied on oath. Sebree v. Dorr, 9 Wheat. 558 ; Matossy v. Frosh, 9 Texas, 610. See also Shearm v. Burnard, 10 Adol. & Ellis, 593; Read v. Gamble, ib. 597, note; s. c. 5 Nev. & M. 433; Cunliffe V. Whitehead, 3 Dowl. 634. BANK OP THE PNITED STATES V. DUNN. 503 Bank of the United States, Plaintiffs in Error, v. John O. Dunn, Defendant in Error. (6 Peters, 51. Supreme Coiiit of tlie United States, January, 18I52.) Evidence to vary liahililij of indorser. — The indorser of commercial paper will not be permitted to show tliat his indorsement was intended to be merely formal ; and that he was informed by the payor that he would incur no responsibility by in- dorsing the paper, as its payment had been secured by a pledge of stock. The case is stated in the opinion of the Court. McLean, J. In the Circuit Court for the District of Columbia, from wliich this cause is brought by writ of error, the plaintiffs com- menced their action on the case against the defendant, as indorser of a promissory note. The general issue was pleaded, and at the trial the plaintiffs read in evidence the following note : — " $1000. Sixty days after date, I promise to pay John 0. Dunn, or order, one thousand dollars, for value received, negotiable and payable at the United States Branch Bank in Washington. "John Scott." On the back of which was indorsed, " Overton Carr, " J. 0. Dunn." The signatures of the parties were admitted, and proof was given of demand at the bank, and notice to the indorsers. The defendant then offered as a witness, Overton Carr, an in- dorser of said note, who testified tliat before he indorsed the same, he had a conversation with John Scott, the maker, and was in- formed 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 tlie said note, and that there would be no risk in in- dorsing it. That the witness tlien went into the room of tlie cashier of the plaintiffs' oflice of discount and deposit at Washington, and found there the said cashier, and Thomas Swann, the president of the said oflice, to whom he communicated the conversation with Mr. Scott, and from whom he understood, upon inquiry, that the names of two indorsers residing in Washington were required upon the said note, as matter of form ; and that he would incur no re- 504 EVIDENCE. sponsibility (or no risk) by indorsing the said note. He does 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 indorse the note, by representing to him that he would incur no responsibility or no risk in indorsing it, as the payment was secured by a pledge of stock ; and to whom he repeated the conversation with Mr. Scott, and said president and cashier. That no person was present at the conversation, the tefms of which he does not recollect ; but that the impression he received from this conversa- tion with the aforesaid president and cashier, and with the said Scott, and which impression he conveyed to the defendant was, that the indorsers of said note would not be looked to for payment, until the security pledge had been first resorted to ; but that the said indorsers 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 in- dorsed 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 to the paper for form sake. To which evidence the plaintiffs, by their counsel, objected ; but the Court permitted it to go to the jury. The plaintiffs examined as a witness Richard Smith, the cashier, whose testimony was overruled; and then Thomas Swann, the president of the bank, was offered as a witness and rejected ; it appearing that they were both stockholders in the bank. To this decision of the Court, a bill of exceptions was taken by the plain- tiffs, and exception was also taken to the evidence of Overton Carr. On this last exception the plaintiffs rely for a reversal of the judgment of the Circuit Court. And first, the question as to the competency of this witness is raised. He is not incompetent merely from the fact of his name being indorsed on the bill. To exclude his testimony, on this ground, he must have an interest in the result of the cause. Such interest is not apparent in this case ; and any objection which can arise from his being a party to the bill, goes rather to his credibility than his competency. But it is a well-settled principle, that no man who is a party to a negotiable note shall be permitted, by his own testimony, to in- validate it. Having given it the sanction of his name, and thereby BANK OF THE UNITED STATES V. DUNN. 505 added to the value of the instrument by giving' it currency, lie shall not be permitted to testify that the note was given for a gambling consideration, or under any other circumstances which would de- stroy its validity. This doctrine is clearly laid down in the case of Walton et al. assignees of Sutton v. Shelley, reported in 1 T. R, 296, and is still held to be law, although in 7 T. R. 56, it is decided that in an action for usury, the borrower of the money is a compe- tent" witness to prove the whole case. Several authorities arc cited by the plaintiff's counsel to show that parol evidence is not admissible to vary a written agreement. In the case of Hoare et al. v. Graham et al.., 3 Camp. o7, the Court lay down the principle that, " in an action on a promissory note or bill of exchange, the defendant cannot give in evidence a parol agreement entered into when it was drawn, that it should be renewed and payment should not be demanded when it became due." This Court, in the case of Renner v. The Bank of Columbia, 9 Wheat. 581,1 jj^ answer to the argument that the admission of proof of the custom or usage of the bank would go to alter the written contract of the parties, say : " If this is the light in which it is to be considered, there can be no doubt that it ought to be laid en- tirely out of view ; for there is no rule of law better settled, or more salutary in its application to contracts, than that which pre- cludes the admission of parol evidence to contradict or substantially vary the legal import of a written agreement." Parol evidence may be 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 plaintiffs' action, the defendant may prove that the note was assigned to the plaintiffs, in trust, for the payor. 6 Mass. 482. It is competent to prove by parol that a guarantor signed his name in blank, on the back of a promissory note, and autliorized another to write a sufficient guarantee over it. 7 Mass. 233. To show in what cases parol evidence may be received to explain a written agreement, and where it is not admissible, the following authorities have been referred to : 8 Taunt. 92 ; 1 Chitty, G61 ; Peake's Cases, 40; Gilbert. 154. On the part of the defendant's counsel it is contended, tiiat be- tween parties and privies to an instrument not under seal, a want of consideration, in whole or in part, may be shown. That the 1 Ante, 297. 506 EVIDENCE. indorsement in question was made in blank, and that it is compe- tent for the defendant to prove under what circumstances it was made. That if an assurance were given at the time of the indorse- ment that the names of the defendant and Carr were only required as a matter of form, and that a guarantee had been given for the payment of the note, so as to save the indorsers from responsibil- ity, it may be proved, under the rule which permits the promisor to go into the consideration of a note or bill between the original parties. In support of this position, authorities are read from 5 Serg. & Rawle, 303, and 4 Wash. C. C. 480. In tlie latter case, Mr. Jus- tice WciHlnngton says : " The reasons which forbid the admission of parol evidence to alter or explain written agreements and other instruments, do not apply to those contracts implied by operation of law, such as that which the law implies in respect to the indorser of a note of hand. The evidence of the agreement made between the plaintiffs and defendants, whereby the latter were to be dis- charged on the liappening of a particular event, was therefore properly admitted." The decision in 5 Serg. & Rawle was on a question somewhat analogous to the one under consideration, ex- cept in the present case there is no allegation of fraud, and the decision in that case was made to turn in part, at least, on that ground. 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 rule has been dif- ferently settled in this Court. The note in question was first indorsed by the defendant to Carr, and by him negotiated with the bank. It was discounted on the credit of the names indorsed upon the note. This is the legal pre- sumption that arises from the transaction ; and if the first indorser were permitted to prove that there was a secret understanding be- tween himself and his assignees that he should not be held respon- sible for the payment of the note, would it not seriously affect the credit of this description of paper ? Might it not, in many cases, operate as a fraud upon subsequent indorsers ? 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 TOWNSEND V. BUSH. 507 convenience of commercial transactions, and cannot now be de- parted from. The facts stated by the witness Carr are in direct contradiction to tbc obligations implied from the indorsement of the defendant. By bis indorsement, be promised to pay the note at maturity, if the drawer should fail to pay it. The only condition on which this promise was made was, that a demand should be made of the drawer when the note should become due, and a notice given to the defendant of its dishonor. But the facts stated by the witness would tend to sliow that no such promise was made. Does not this contradict the instrument? and would not the precedent tend to shake, if not destroy, the credit of commercial paper? On this ground alone the exception would be fatal ; but the most decisive objection to the evidence is, that the agreement was not made with those persons who have power to bind the bank in such cases. It is not the duty of the cashier and president to make such con- tracts ; nor have they the power to bind the bank, except in the discharge of their ordinary duties. Upon a full view of the case, the Court are clearly of the opinion, that the evidence of Carr should have been overruled by the Circuit Court ; or they should have instructed the jury that the facts proved were not in law sufficient to release the defendant from liability on his indorsement. The judgment of the Circuit Court must, there- fore, be reversed, and a venire de novo awarded. See the following cases. K. AND E. ToWNSEND V. BuSH. (1 Connecticut, 260. Supreme Court, November, 1814.) Competeucy of parly to commercial paper to prove it invalid. — A party to a negotiable instrument, who is divested of interest, is competent to prove usury in the incep- tion of the paper. This was an action of assumpsit against Bush as acceptor of a bill of exchange drawn by Ebenezer and Atwater Townsend, and payable to the plaintiffs or order. There was also a count for money paid, laid out, and expended for the defendant's use. The cause was tried at New Haven, August term, 1814, before Swift^ 508 EVIDENCE. Brainard and Baldivin, JJ. On the trial, the defendant admitted the drawing and acceptance of the bill, as stated in tlie declara- tion. His defence was usury under the following circumstances. E. and A. Townsend, applied to W. Leffingwell in New York for the loan of a sum of money. Leffingwell agreed to loan them the money at twelve per cent interest, upon their giving him a bill of exchange for the amount, drawn by themselves on the defendant and accepted by him payable to the plaintiffs K. and E. Townsend, and by them indorsed. These terms were complied with ; the defendant at the time of accepting the bill, and the plaintiifs at the time of indorsing it, having no notice of the corrupt agree- ment. Leffingwell indorsed the bill to the Derby Bank, and there procured it to be discounted. When it became payable, the Derby Bank gave due notice to the several parties to the bill ; and after- wards commenced a suit against the plaintiffs on their indorse- ment in the State of New York, and by the judgment of the Supreme Court of that State recovered the amount of the bill with interest and costs, which the plaintiffs accordingly paid. The defendant accepted the bill for tlie honor of the drawers, having no effects of the drawers in his hands. To prove these facts, the defendant offered the individuals composing tlie firm of E. and A. Townsend as witnesses ; offering also, at the same time, to show, that they had no interest in this suit, being discharged from all liability on the bill under an act of insolvency in the State of New York. The plaintiffs objected to the admission of these witnesses, on the ground that having drawn the bill, and thereby given credit to it, they were incompetent to show that it was invalid on account of usury ; and also on the ground that any proof of said corrupt agreement would be irrelevant on this trial. The Court excluded the witnesses, and directed the jury to find a verdict for the plain- tiffs ; which being accordingly done, the defendant moved for a new trial. This motion was reserved for the consideration of all the judges. Tkumbull, J. The principal question in this case is. Whether Ebenezer and Atwater Townsend, the drawers of the bill in ques- tion, are admissible witnesses in an action by the plaintiffs as payees of the bill against the defendant as acceptor, to prove that it was executed on an iisurious contract, and therefore is void in law. The rule that no person can be permitted to give testimony to TOWNSEND V. BUSH. 509 invalidate any instrument to which lie has made himself a party by aflixing iiis signatnre, in cases wherein he has no interest in the event of the suit on trial, was first adopted in the case of Wal- ton V. Shelley, 1 Durn. & East, 29G, by Lord Mansfield, and the other judges of the King's Bench. He states that " the rule is founded in public policy ; that there is a sound reason for it; be- cause every man, who is a party to an instrument gives a credit [to] it ; that it is of consequence to mankind, that no person should hang out false colors to deceive them, by first affixing his signa- ture to a paper, and then afterwards giving testimony to invalidate it; that it is emphatically right in case of notes, because in conse- quence of different statutes, two very hard cases have arisen : first, with respect to a gaming note, which, though in possession of a bona fide purchaser without notice, is void ; and in the case of usury, a note given for an usurious consideration, though in the hands of a fair indorsee, is equally void ; and therefore, whenever a man signs these instruments, he is always understood to say, that to his knowledge there is no legal objection to them what- ever." He then quotes the maxim of the civil law, nemo suam allegans turpitudinem est audiendus, and applies it as conclusive on the present point. The other judges concurred, and established this as a general rule of law. The English courts soon found the principle was laid down on too broad a scale, and narrowed it in its application, to negotiable instruments only. No new or additional reasons were ever ad- duced in its support. It was adhered to on the grounds stated by Lord 3Iansfield, and the authority of the decision in that case. But at length, the rule was exploded in the King's Bench, and such a witness determined to be admissible, unless interested in the event of the suit on trial. See Jordaine v. Lashbrooke, 7 Durn. & East, 601. As the decisions of the highest court and ablest judges at West- minster Hall have been thns directly contradictory, and as their principle (notwithstanding the dicta of several of the judges in Allen V. Holkins, 1 Day's Cases in Error, p. 17, adopting the rule as sound law, and the decision in Webb v. Danforth, p. 301, de- nying its application as to facts subsequent to the execution' of the instrument) has never till now come directly in question before the highest courts in this State, it is our duty to decide it accord- ing to the general rules and principles of law respecting admissi- bility of testimony ; and if the grounds and reasons in Walton v. 510 EVIDENCE. Shelley are found to be fallacious, we cannot consider the case and its authority conclusive. Tiie first ground Lord Mansfield takes, is, that every person who signs an instrument, thereby gives it a credit, and can never be admitted to dispute its validity. Before we adopt this principle of universal exclusion and estoppel, we must inquire what credit each several party, by putting his signature upon a negotiable in- strument, thereby gives to it, and what obligation he thereby incurs ; for each signer stands on a different ground. The drawer of a bill or [indorser of a ?] negotiable note, acknowl- edges himself indebted to the payee to the amount of the sum it contains, and engages to pay the damages, in case the bill shall be dishonored, or the note uncollected, without the fault of the payee, or of those to whom it may be indorsed. The indorser of a bill or note acknowledges his receipt of a valuable consideration, and contracts to pay the sum, in case it cannot be obtained of the drawer.^ The acceptor acknowledges it to be duly drawn ; he is not ad- mitted to deny the handwriting of the drawer ; and lie contracts to pay the sum according to its contents to the legal holder. These are the rules and principles of common law as adopted and sanctioned by the courts in this State. The indorsee or holder of a negotiable security has nothing to do with the transaction between the original parties. See. Jordaine V. Lashbrooke. Nor has the drawer or acceptor any thing more to do with the contracts between subsequent indorsers and indor- sees. Each party is bound only so far as his own obligation ex- tends, and cannot be precluded from denying any fact not acknowl- edged by his signature. All these contracts are separate and independent. No party by his signature warrants the validity of any contract but his own, or gives any farther credit to the security, or is interested in the event of any suit on the several contracts of other parties, whose names may appear on the instru- ment. He warrants nothing farther with respect to the validity of the draft, he hangs out no false colors, and is not estopped by his signature from testifying to any facts respecting the instrument, or any legal objections within his knowledge.^ 1 Tliis word " drawer " is of course used for " maker ; " and the words " or of the acceptor " should have been added. 2 An indorser warrants the genuineness of all prior signatures. See Story, Prom- issory Notes, § 135. TOWNSEND V. BUSH. 511 The only fundamental principle of the common law, applicable to the present question, is this, that no man can be a witness in his own cause ; and this rule hath ever been considered as appli- cable to every case in which lie is a party, or is interested, and to no others. It was formerly '*holden as well in the Engli.sh courts as our own, that an interest in the question was a sufficient ground for excluding a witness. It is now settled law in both, that an interest in the event of the suit is the only ground on which he can be rejected ; and that a mere interest in the question does not affect his competency, but his credit with the jury only. But this distinction was not fully settled at the time the case of Walton v. Shelley was tried. Justice Buller, though he concurred in the principle that no man can invalidate his own security, relied much in his argument on the fact that the witness was interested in the question, because the question put to him was upon the validity of the notes he had indorsed ; although he clearly was not interested in the event of the suit on trial, as it must be uncertain whether he would ever be subjected to a subsequent action on the instru- ment, was already liable on his signature, and could never give the verdict in evidence in his favor. The maxim of the civil law, that no man is to be l\pard who alleges his own turpitude or crime, was never by any court or judge, before Lord Mansfield^ applied to the inadmissibility of a witness, but only to the rights of the parties in a suit or action. No suitor can support a claim in which the ground or considera- tion is an unlawful act of his own ; nor can any defendant be heard on a defence grounded on his own unlawful act. But an accomplice in a crime, a fraud, or any illegal transaction, was al- ways an admissible witness, unless immediately interested in the suit. I may further observe, that the term " turpitude," can with no propriety be applied to an act, not malum in se, but only malum prohibihim, by force of some statute, making it penal in some par- ticular country, or jurisdiction. In Jordaiue v. Lashbrooke, Lord Kent/on says : " The rule con- tended for is this : Whatever fraud may have been committed, if the party to the fraud can get on the instrument the name of the person who may be the only witness to the transaction, he will stand entrenched within the forms of law, and impose silence on that only witness, though he be a person of imimpcachable char- acter, and not interested in the cause." This he denies to be 512 EVIDENCE. law. Grose, Justice, says: "Let the plaintiff in this case resort to his indorser to recover back the consideration he gave for the bill." Indeed, if a man sell and indorse a note executed by an infant, or feme covert, and void at common* law, or void by statute as being usurious, unstamped or a forgery, I see no legal defence he can set up against an action of assumpsit by the indorser, for the money paid on a consideration which has wholly failed. For that is not an action on the bill or note, but rests entirely on the ground that the note is void in law. If such an action can be supported, there is no hardship in the case of an innocent purchaser ; he has his remedy. If in any case he is deprived of every legal remedy, no court can have a right, in compassion to the hard- ship of his situation, to assist him in evading the law by ex- cluding such witnesses, or evidence, as is admissible m all other cases. The hardship upon the innocent indorsee, which seems so strongly to have influenced the mind of Lord Mansfield, is indeed no more than this ; by the statutes to which he refers, all bills or notes, where the consideration is money lent on usury or for gam- ing, are declared void to all intents . and purposes whatever ; and consequently, the indorsee, whenever he brings his suit on the note or bill itself, against the drawer, promisor, or acceptor, must fail of a recovery in that action. But he is not without remedy ; for, if a fair and bona fide purchaser without notice, he may re- cover of the indorser on his indorsement. Bowyer v. Bampton, 2 Stra. 1155. In the case of Lowe and others v. Waller, Doug. 736, in which all the former cases are well considered. Lord Mansfield himself says : " It is better that the law should be as it is with re- spect to bills and notes, than other securities ; because they are generally payable in a short time, so that the indorsee has an early opportunity of recurring to the indorser, if he cannot recover on the bill." I am therefore of opinion that the witnesses offered are ad- missible, notwithstanding they have put their signature upon the bill. Swift, J. The question whether a party to a negotiable instru- ment, who is divested of his interest, is a competent witness to TOWNSEND V. BUSH. 513 show it void in its creation, now comes for the first time before this Court for decision. We arc unshackled by any precedent, and are at liberty to decide it on principle. In the case of Walton v^. Shelley, the rule was laid down, that no party who had signed an instrument should ever lie permitted to give testimony to iiivtilidate it. Though llic Coiirt and counsel speak of it as a well-known rule, yet it can be fouii<l in no prior case. Lord Majisjield^ wiio had borrowed many valual)le j^rinciples from the civil law and incorporated them with the common law, attempts to support his decision by what he says is a maxim of the civil law, nemo allegans suam turpitudinem est audiendus ; but there is no such rule to be found in the civil law as ai)plicable to witnesses, and it is the daily practice in common-law courts to admit witnesses to testify to facts which show they have been par- ties to trespasses, frauds, and crimes. The rule, as laid down in the case of Walton v. Shelley, com- prehends instruments not negotiable as well as those which are, and docs not require tiie action to be brought on the instrument; but if the consideration be antecedent notes given up, yet if the witness indorsed such notes, he is incompetent. If this ])rinci})le should be carried to its full extent, it would furnish an effectual shield for usury, gambling, fraud, and illegal contracts. Let all who are concerned in the transaction, or who have knowledge of it, become parties to the writings made use of, and there will be neither danger nor possibility of detection. So manifest was the mischief of this rule on so broad a basis, that the Court of King's Bench, in the case of Bent v. Baker, in order to avoid it, were obliged to restrict it to negotialtle securities, and in the case of Jordaine v. Lashbrooke, wholly to cx|)lode it. So that the case of Walton V. Shelley has been overruled, and is not now law in that country. But as this rule, as far as it relates to negotiable instruments, has been adopted by higlily respectable judicial tril)unals in our sister States, it may be proper to examine it. In the case of Walton v. Shelley, Lord Mansfichi says that whenever a man signs these instruments he is always undcr.stood to say that to his knowledge there is no legal objection. In the case of Coleman v. Wise and others in the State of New York, the same principle is recognized. But there is not a precedent or 33 514 EVIDENCE. dictum to warrant tliis position. When a man subscribes or in- dorses an instrument, he contracts certain legal liabilities, and he sets his name to it for no other purpose. He enters fnto no engagement that he will never testify that the instrument was ol)tained by fraud or duress ; or was given for a gambling or usurious consideration ; or that he will never make such plea. Every party to ah instrument has a right by his plea to show it was originally void. How then can it be pretended, that by sign- ing it he is understood to say that to his knowledge there is no legal objection to it? If he contracts such obligation, the true principle would be not to permit him to make a plea or defence repugnant to it. To allow him to plead a fact which shows the instrument void in its creation, and then to refuse him the privilege of prov- ing it, at least by one species of testimony, is a palpable absurdity. The iniquity really consists in the defence itself, and not in the mode of proof; for certainly it would be as unjust for the defend- ant to make out his defence by a witness not a party to the instru- ment as by one that is a party. In the case of Churchill v. Suter, 4 Mass. 156, Chief Justice Parsons says : " If the parties to4he usury or the gambling, hav- ing received the fruits of their illegal contract, and having given a circulation to the note, can be admitted by their testimony to de- stroy it, besides the injury to the fair purchaser, the negotiation of paper will be greatly checked, to the no small injury of the pub- lic." This supposes that the indorser combines with the maker of the note to have it transferred to an innocent indorsee, and then by his testimony to avoid it for usury. All will acknowledge such^ conduct to be highly criminal. But suppose there was originally no intent to defraud an innocent indorsee, and while the note is held l)y an indorsee having knowledge of the usury, for a usurious consideration, the indorser, by an act of bankruptcy, becomes dis- charged of his interest, it will be agreed then to be perfectly right for him to testify to the usury to avoid the note. Again, suppose a usurer has taken a most unreasonable advantage of the distress and misfortunes of another, and has compelled him to obtain security by the indorsement of a friend whom he cannot indem- nify ; he then puts the note in suit, and there is an indorser who • has becone disinterested who is knowing to the oppression and usury ; it would clearly be his duty to come forward and testify to the usury for the purpose of destroying the uote. Yet by the TOWNSEND V. BUSH. 515 • rule contended for, tlie indorsor in both these cases would not be permitted to testify. Hei;e then, for the purpose of protecting the possible case of the innocent indorsee, ample protection is furnislicd to the certain case of the usurer and oppressor. Again, it is said, " that persons may be witnesses against their accomplices, because their testimony tends to prevent fraud and injustice, but in this case it tends to encourage it, by enabling parties to enjoy the fruits oT it, and throw the consequence on an innocent indorsee." When accomplices are admitted to testify, the inquiry is not made whether it will or will not tend to encour- age fraud ; for if it should, it was never heard that this would be an objection to their testimony. The object is to punish crimes ; and as in many cases this cannot be done without the testimony of accomplices, the law admits them. But to illustrate the subject : suppose a combination to defraud an innocent indorsee by a usurious note ; the real usurer, to accomplish this plan, does not set his name to the note, and is rendered by releases disinterested ; he would then be a competent witness to prove the usury ; yet his testimony would tend to en- courage fraud and injustice as much as if his name had been set to the note. This clearly shows that no such rule as that above mentioned exists. It is further said, " Xo man shall be admitted to allege his own turpitude, when that allegation will tend to encourage fraud, or illegality. Nor shall the defendant in his defence allege his own wrong." This is no more than laying down the well-known maxim that no man shall take advantage of his own wrong ; but this has always been applied to the parties, and is now for the fust time attem{)tcd to be applied to witnesses. Though this rule be gen- erally true, yet a statute can control its operation. Suppose a fraudulent combination to cheat an innocent indorsee by a usurious note, and a party to the fraud and the note is sued thereon ; he may plead the usury to avoid it. Suppose the plaintiff replies the fraudulent combination, and that an indorsee is the only person who has knowledge of the fact. Unquestionably, the replication would be bad, and the note void. Here, then the party is per- mitted to take advantage of all the turpitude, fraud, and wrong which the above rule intended to exclude. Suppose an issue should be joined on the fraudulent combination ; a }>arty to the 51G EVIDENCE. fraud, if not a party to the note, might, on the principles con- tended for on the otlier side be admitted as a witness : he would then testify to his own fraud and turpitude. The truth is, the real question in all these cases is, whether the note was given for usury ; and this the party by force of statute may always plead, however base and shameful the transaction may be ; and may prove it by competent witnesses, however deeply they may have been concerned in it. It is in vain to talk about the turpitude of witnesses and the wrong of the defendant. Ita lex scripta est. But public policy is the strong argument against the admission of parties to an instrument to invalidate it by their testimony. It is said, the makers and indorsers of negotiable notes may combine to defraud innocent indorsees, which would check and embarrass their negotiation, and prevent their circulation. It is true, such fraudulent combinations can be made, and tlie indorser of the note may testify to the usury on a suit against the maker, and the note may be avoided in the hands of an innocent holder. It is also true, that a similar fraud may be practised without the aid of an indorser or party to the note for a witness. Suppose two men wicked enough to contrive such a plan : they may make use of some friend expressly for the purpose of being a witness to the usury ; they may indorse the note to some person ignorant of it, and divide the spoils ; and on a suit by the indorsee, such friend may be called as a witness, and prove the usury. Here is pre- cisely the same inconvenience and fraud as in the other case, and the same injury to the circulation of negotiable notes, yet it can- not be denied that in this case the note must be set aside ; for there is no legal objection to the witness, he has no interest, his name is not on the paper. When men are unprincipled enough to practise frauds of this description.^ I think it is much more prob- able that it will be done by the intervention of some friend whose name is not on the note than by an indorser. Of course, this rule would furnish very inadequate relief if such a fraudulent scheme should seriously be adopted. But if principles of public policy are to govern, they ought to extend to all cases where the injury is the same ; and the rule ouglit to be, that no defendant should ever be admitted to plead usury, or any other fact, to avoid a negotiable instrument in the hands of an innocent holder. This would do complete and equal justice in all cases. But how unequal is this rule. It will pro- TOWNSEND V. BUSH. 517 tect the innocent holder in one case, but not in another under the same circumstances, and within the same reason ; and where it f»ro- tects the innocent hohler, it furnishes the same protection to the usurer ; for the rule in Walton v. Shelley makes no difference whether the holder knew of the usury or not; and in the case de- cided in Massachusetts the plaintiff on the record was the actual usurer. A rule cannot be right which protects the very usurer the law intended lo ])unisli in one case, and in another subjects the inno- cent holder to a loss whicli it was the object of tiiis rule to prevent. But to decide on the policy of this law it is necessary to con- sider the object of the legislature in making it. It is manifest they intended in the most effectual manner to suppress usury. If they had admitted the principle, that usurious notes sliould be valid in the hands of innocent holders, they would have furnished a mode by which usury could have been practised with safety, -and the law rendered nugatory. To shut the door against all such artifices, the law enacts that usurious securities shall be absolutely void. It must liave been well understood that instances would occur where innocent indorsees might be prejudiced, and that par- ties to instruments, when not otherwise disqualified, might, by the general rules of evidence, be admitted to invalidate, l)y their testi- mony. It is not probable that the legislature contemplated pre- cisely such a fraud as it is suggested may be practised ; it must however have been known that notes might be set aside in the hands of innocent holders, which would operate hardly, if not un- justly, in particular cases ; but as a special provision in such cases would iiave defeated the statute, it must be understood that they intended to declare the notes void in the hands of innocent holders, considering the great object of suppressing usury of more impor- tance than to promote the negotiation and circulation of notes by protecting innocent holders in the few cases where they might be affected. If there is any thing wrong in this business, any thing opposed to public policy, it is in the statute which makes void usurious notes in the hands of innocent holders ; but tills is a wrong which no court of law can remedy. It would l)c strange indeed for tliem to say, that a statute is not founded on jirinciples of public policy, and then, though they cannot declare it void, yet they will refuse legal evidence to carry it into effect. This is an attempt by indirect means to rejieal a statute. The legislature have decided on the policy of the measure ; and it is the duty of courts to give it due operation. 518 EVIDENCE. But it lias been said by Justice Buller : " It would be attended with consequences the most injurious to society if these securities might be cut down by the persons passinj^ them ; it is only for two men to conspire together to cheat all the world." Peake's Cases, 118. Chief Justice Parsons- says : " For any man by contriving with another may take up money of him at usurious interest, and give him a negotiable note for security. The promisee may sell it for a valuable consideration, and when the indorsee attempts to recover the money, the promisor and indorser may (at least by releases) be witnesses for each other, and defeat the purchaser of his remedy, and quietly enjoy the money he has paid for the note." 4 Mass. 162. >. It might be inferred from these observations, that innumerable frauds would be practised, if a party to a negotiable instrument could be a witness to impeach it, and that all confidence in negotiable paper would be destroyed : yet the truth is, no inno- cent holder of a note could ever sustain a loss, unless by the bank- ruptcy of his indorser, or the person from whom he received it ; and he has nothing to do, to guard against a fraud, but to require tlic same ability in his indorser as prudent men ordinarily require when they give credit. It would also seem, from the remarks above quoted, that an opinion was entertained that the parties to a usurious note could transfer it without liability to the vendee. Chief Justice Parsons says, that they may defeat the party of his remedy, and quietly enjoy the money. It is true, in a suit by the indorsee against the maker of the note, the indorser might be a witness, as he would testify against his interest ; but in a suit by the innocent indorsee against the indorser, the testimony of the promisor would be of no avail, unless the indorsement was void on account of the usury contained in the note ; and that the in- dorsement was void must have been the opinion of Ciiief Justice Parsons, otherwise he could not have said that the promisor might be a witness for the indorser, and thereby defeat the remedy of the purchaser. But it is an unquestionable principle, tliat though the note is void on account of the usury so that no action can be sustained upon it, yet if the promisee indorse it to a bona fide pur- chaser ignorant of the usury, he is liable on his indorsement ; for this is a new contract not contaminated with usury, and it is bind- ing on him, though the original note is. void. If it should pass into the hands of an innocent purchaser without indorsement, if TOWNSEND V. BUSH. 619 the seller conceal the usury, an action would lie for the fraud. The consequence then is, that men of property can never conibino to practise a fraud of this description : for one or tljc other would always he responsible in some shape on the sale ; and though they might defeat the purchaser of one remedy, they would be liable in some other mode ; and consequently could not enjoy vovf peace- ably the fruits of their fraud, or very successfully cheat all the world. Tlie apprehension, then, of danger from a fraudulent combination of the parties to a negotiable instrument, is founded on a mistaken view of the operation of the law respecting their liabilities. But what are the frauds that can be practised in such cases ? The only successful mode must be by the instrumentality of in- dorsers, without ability to respond. Let us examine what frauds can be practised by the combination of a poor and a ricii man. The poor man must always be the indorser. A man of property would never give his note to a bankrupt without consideration, on the risk that he will sell it, divide with him the spoils, and swear him clear of the debt. A poor man would hardly loan money or other property to a rich man on a usurious security, for the priv- ilege of selling it, under an obligation to discharge the usurer by his testimony, and with a liability of going to jail himself for another man's debt. A man of property would have little induce- ment, unless he received the full sum, to execute a note and run the risk that the promisee should swear him clear of it. The promisee could not be compelled to testify, as it would be against his interest ; and he might die before the trial. A man of prop- erty runs a further risk ; if he should practise such a fraud and avoid the note, yet he would be liable to an action in favor of the innocent indorsee whom he had cheated ; and it would always be in the power of his coadjutor in the fraud to betray and subject him. So remote is the prospect of deriving any advantage from a fraud of this description, that I very much question whether an attempt ever has been, or ever will be, made to practise it. The calling on an indorser or other party to testify will always be an after calculation, and will probably occur only where there has been some failure or embarrassment. What can be the injury to the circulation of negotiable paper to admit the parties to invalidate it by their testimony ? It might prevent prudent men from taking the indorsements of bankrupts. 520 EVIDENCE. This would not be very injurious to the commercial world. In the case of failure of the parties to the instrument after the indorse- ment, it might in some cases throw the loss upon a different party, but this would in reality, be little more than the common risk of loss by failures, which every man runs in a commercial country where extensive credit is given. I apprehend, then, there is no solidity in the argument drawn from considerations of public policy. But let us consider what will be the effect not to admit a party to negotiable paper to invalidate it by his testimony. It will cer- tainly furnish very ample protection to usurers. Conceal the usury from all who are not parties, and there can be no proof in an action founded on the obligation. The only method, then, must be a public or qui tarn prosecution. The parties affected by the usury will usually be the witnesses, and can get no redress. They can rarely calculate on such advantages from qui tarn prose- cutions as to realize any thing more than a gratification of re- venge ; and if a usurer has nothing more to restrain him than such prosecutions, the statute against usury will be of little con- sequence. In practice it will be found that this rule has much oftener protected the usurer than innocent indorsees. In the case of Walton V. Shelley, Sutton, by whose assignees the action was brought, must have known the usury. The bond was executed in consideration of notes given up. If he had been ignorant of the usury, the bond would have been good. In the case of Churchill V. Suter, the usurer was the plaintiff. In both cases, the usurers were protected. In the case before us, the rule in Walton v. Shelley wquld have screened the party charged with the usury, and would have sub- jected the defendants to pay ; but the rule I contend for would have visited the consequences of the usury upon the usurer. In the suit by Derby Bank against the plaintiffs in New York, if E. and A. Townsend had not been excluded from testifying on the ground that they were parties to tlie bill, then the plaintiffs (ad- mitting the usury existed as conceded by the pleadings) would have made good their defence, and the Derby Bank would have had a complete remedy against their indorser, who is stated to be the usurer. But the application of that rule has effectually pro- tected him. TOWNSEND V. BUSH. 521 In this case, tliere would liave been no difficulty, had it not been for the failure of E. and A. Townsend. As the plaintiffs indorsed and the defendants accepted as sureties for them, though their in- dorsements and acceptance were void as they were made to secure the usury to LeffingwcU ; yet if they had been subjected to pay, they could clearly have recovered of E. and A. Townscrtd for money paid by them as sureties ; for in the implied promise to indemnify there was no usury, as they were unacquainted with the nature of the transaction between Leffingwell and them. But now, by their failure, they have lost their remedy ; the application of different rules by the courts in the State of New York and Con- necticut has subjected the plaintiffs to suffer a loss by the bank- ruptcy of E. and A. Townsend, which the defendant must have sustained, if the bill had not been usurious. This loss, however, is owing to the bankruptcy of E. and A. Townsend, and not to any preconcerted plan to cheat them. As to the question respecting the usury ; it appears from the facts stated, that on a contract between Leffingwell and E. and A. Townsend, they were to draw a bill on Bush, in favor of E. and A. Townsend, to be accepted and indorsed ; and on this security the money was to be loaned at twelve per cent. Here the drawing, accepting, and indorsing were to secure the usury to Leffingwell ; and though the acceptors and indorsers were ignorant of the usury, yet this does not prevent the transaction from being usuri- ous ; for it was manifestly a contrivance to evade the statute, and if allowed of, usury might be practised with impunity. The otlier judges concurred. New trial to be granted. See preceding and following cases. 522 EVIDENCE. Royal Thayer v. William Grossman. (1 Metcalf, 416. Supreme Court of Massachusetts, September, 1840.) WTien indorser competent to prove payment. — In an action by the indorsee against the maker of a note indorsed overdue, the indorser is competent to sliow payment before the note was indorsed. The case is stated in the opinion of the Court. Shaw, C. J. This case comes before the Court by exceptions from the Court of Common Pleas. The action is on a promissory note, by an indorsee against the promisor, tlie note being dated November, 1832, payable on demand to the promisee or his order, and indorsed to the plaintiff. The defendant offered the indorser as a witness, to prove payment of the note before the indorsement ; but the presiding judge at the trial rejected this testimony. The ground of this rejection was, as we understand by the argument, the rule laid down in Churchill v. Suter, 4 Mass. 156, that an indorser shall not be permitted by his testimony to invalidate a security, which he has put in circulation, and given credit to by his indorsement. We do not think it necessary now to consider at large the au- thority of the rule in question, as a rule of law in this State. It was first formally laid down, in the time of Lord Mansfield, in the case of Walton v. Shelley, 1 T. R. 296. It was afterwards over- ruled in the same Court, the Court of King's Bench, in the time of Lord Kenyon, by three judges against one ; Mr. Justice Ash- hurst, who had concurred in the former opinion, dissenting. Jor- daine v. Lashbrooke, 7 T. R. 601. Both these cases were before the Court when the t'ule was sanctioned in this Commonwealth. Warren v. Merry, 3 Mass. 27 ; Churchill i\ Suter, 4 Mass. 156. It continued to be acted on as a settled rule here, and was again considered and confirmed in the case of Packard v. Richardson, 17 Mass. 122. It was adopted in 1802, by a majority of three to two, in the Supreme Court of New York ; Radcliff and Keiit, JJ., dissenting. Winton v. Saidler, 3 Johns. Cas. 185. But it was afterwards overruled, and has ceased to be regarded as a rule of law in that State. Stafford v. Rice, 5 Cow. 23 ; Williams v. Wal- THAYER V. GROSSMAN. 623 bridge, 3 Wend. 415. Ii^ Connecticut, the rule has been rejected by a formal decision in 1818. Townsend v. IJush, 1 Conn. 200.' But supposing the rule settled for this Comraonwealtii, l)y a course of decisions too direct and uniform to be now drawn in question, still it becomes necessary to examine the rule itself, to ascertain its extent, limits, and qualifications, in order to deter- mine whether the present case is within it. The general rule is, that any person, not infamous, or interested in the event of the cause, may be a witness ; and it is manifest that the rule in ques- tion, which excludes a witness on the grounds of public policy, is an excei)tion to the general rule ; and an exception ought not to be extended beyond the limits to which those reasons of policy fairly carry it. In Walton v. Shelley, the rule laid down, as the rule founded on public policy, was, that no party who has signed a paper or deed shall ever be permitted to give testimony to invalidate the instrument. Very shortly after, in the case of Bent v. Baker, 3 T. R. 27, some of the judges in alluding to Walton v. Shelley, take care to confine the rule to the case of negotiable instruments, upon the ground that a man shall not by putting in circulation a negotiable instrument, which any man may take and make himself a holder of, and which passes solely upon the credit of the names of the parties appearing upon it, hold out false colors to the public. And almost the entire argument of Mr. Justice Ash- hurst, in Jordaine v. Lashbrookc, in support of the rule of Walton V. Shelley, was founded upon the policy of giving security to negotiable instruments, put into circulation in the course of business. In Warren v. Merry, 3 Mass. 27, the rule and the reasoning are confined to the case of negotiable securities, and this rule is ex- pressly so limited by a decision in Loker v. Haynes, 11 Mass. 498. In Churchill v. Suter, 4 Mass. 156, after considering the author- ities, and considering them as leaving the point unsettled, the Court proceed to consider the case on principle. They confine the rule to the case of negotiable securities ; and the whole course of the reasoning further limits this rule to securities negotiated in the course of business, and which are not dishonored. Tiie Court recognize tlic general rule, that in order to give security to the circulation of negotiable paper, in an action between indorser and promisor, the consideration cannot be inquired into. An exception 1 Ante, 607. 524 EVIDENCE, to this rule arises from the statutes of usury and gaming, which declare securities, given on a gaming or usurious consideration, absolutely void ; and such defence therefore may be taken advan- tage of by a promisor, in a suit by an indorsee. And therefore the rule of policy is mainly confined to the case of a defence on the ground of a gaming or usurious consideration, which by force of the statutes in question affects these securities with a secret taint, which cannot be known to an indorsee. In the case of Fox v. Whitney, 16 Mass. 118, the rule is still further limited and explained, by the considerations of public policy on which it was founded. The general rule is recognized, but it is held to apply only to a case where a man indorses a nego- tiable security, and by that act gives a currency and credit to it; and it was held that it did not apply to a case between original parties, each of wliom was conusant of all the facts. The suit, in that case, being by the representative of the promisee against the representa- tive of the promisor ; a party to the note, as co-promisor, was held to be a competent witness, to prove the note given on a usurious consideration, and, as the law then stood, void. In the case of Barker v. Prentiss, 6 Mass. 430, Taber, one of the indorsers, was admitted to prove that theindorsement was intended to be limited, and that the indorsee knew it. The reasoning of the Court obviously confines the rule in Churchill v. Suter, so as to prohibit a party to a usurious or gaming negotiable security, which is void in the hands of an innocent purchaser, from impeaching it in the hands of such purchaser. And they held that a party to such security may be a witness to prove subsequent facts, which admit the legality of the instrument in its original form. The authority of this case, on other points, has been often called in question ; but I am aware of no case, in which the point now stated, has been doubted. Taking this case as thus stated, it would seem that a party is restrained from testifying only as to facts which render the security void in its creation, and that consistently with the rule, an in- dorser, if not interested, might be called to prove payment before he indorsed the note, being a fact subsequent to its creation and not rendering it originally void. Tliis is opposed, apparently, to what is implied at least, if not decided,' in Warren v. Merry, 3 Mass. 27. That was an action by an indorsee against theindorser, and the maker was held admissible to prove that he paid the plain- tiff after the indorsement, and before the note was payable. But THAYER V. GROSSMAN. 525 the remarks of the Court seem to imply that a i)ayee would not be admitted to prove payment to himsuli' before his indorsement. It may, however, be remarked, that if a note is paid before it is due, and is afterwards indorsed, before it is due, to one who has no notice of the payment, such payment is no defence to a suit by the indorsee against the promisor. A similar princii)le seems to have been adopted in Parker v. Hanson, 7 Mass. 47U, where an indorser was called to prove that a note had been fraudulently altered in the date. The Court say he is not within the rule ; the note not being objected to as originally void, but as having been fraudulently altered. Perhaps the case of Knights v. Putnam, 3 Pick. 184, may be considered as countenancing the rule, that a note indorsed in .the ordinary course of business cannot be impeached by the testimony of the indorser, for any cause existing at the time of the indorse- ment. This question will therefore deserve consideration, when it shall expressly arise for adjudication. In a review of the cases, that of Butler v. Damon, 15 Mass. 223, deserves consideration. It implies that the principle of Churchill V. Suter would so apply, as to exclude a party who had indorsed a note after it was due,. as well as one who had indorsed it before it was due, from showing facts antecedent to the transfer, to defeat a holder of his recovery. The opinion does not state this ; but it may be implied from the fact, which appears by a comparison of the dates, that in that case the note was overdue, when indorsed. But it is manifest from the very brief report of that case, that the atten- tion of the Court was not drawn to that distinction ; nor does the remark of the judge, who gave the opinion, refer to it. But what is a more material observation upon that case as an authority is this ; that the indorser had not been offered as a witness, but the , defendant had been allowed to give in evidence, not the testimony, but the declarations of the indorser, made, after the indorsement, to the plauitiff. This was obviously inadmissible. It could not be received as an admission, because made after his interest had ceased, and he could not confess away a title he had given by his indorsement ; nor as proof of any fact, because it was iiearsay. The point, whether the indorser could have been received as a wit- ness, having indorsed the note after it was due and dishonored, was not before the Court, and the cause was decided on other grounds. As an authority, therefore, that case has but a slight bearing upon the present. 526 EVIDENCE. • From this view of the authorities, and assuming that the rule, as laid down in Churchill v. Huter, is the true rule of law in this Commonwealth, we think it will appear to be confined to negotiable bills and notes, actually indorsed and put into cii'calation by the witness, with a view to give them currency as negotiable securities. The object, which the law has in view, is to give a secure currency and circulation to negotiable securities, taken in the ordinary course of business by an innocent indorsee, without notice of its dishonor. But it is no object of the law, or of public policy, to give currency to dishonored bills ; and a note overdue carries notice of its own dishonor on its face. An indorsee of such a note is presumed by law to have notice of every defect which may exist, eitlier in the original creation of the note or subsequently ; he takes it, therefore, not upon the credit of the names it bears, but solely upon the faith he may have in the indorser. He takes, in legal contemplation,^ legal title, indeed, that is, a right to sue in his own name ; but he takes a right to recover only as the indorser himself could recover, and of course he takes with full constructive notice of all grounds, legal and equitable, which the defendant might have, if the suit were brought by the promisee, and subject to all the same species of defence. As between the original parties, and to a note not negotiated and put in circulation, we have seen the rule does not apply. Fox v. Whitney, 16 Mass. 118. By the rules of law, an indorsee, taking a note overdue, takes it subject to every defence ; and that case, therefore, is an authority for the ad- mission of an indorser, when the plaintiff can claim only the same rights as if the suit were between the original parties. The author- ities are so numerous and explicit, that the indorsee of a dishonored note takes it subject to all defences, that it is unnecessary to cite them. Sargent i\ Southgate, 5 Pick. 312. In applying these rules to the present case, the Court are of opinion that the case was not within the principle of Churchill v. Suter, because the note was overdue and dishonored, when it was indorsed to the plaintiff. In the first place, it appears that this was a note payable on de- mand, and the evidence is, that it was indorsed nearly two years after its date. What is the shortest time, within which a note on demand will be deemed a dishonored note, has not been explicitly settled. But we have no hesitation in considering such a note as overdue and dishonored in a much shorter time than two years. THAYER V. GROSSMAN. 527 In Spring v. Lovett, 11 Pick. 417, it was considered that an indorser would be a competent witness to prove that the note was indorsed after it was due. But there is no necessity of relying on this point, in the present case, because it appears by other evidence, indcj)endent of the testimony of the indorser. Before coming to the (juestion, therefore, wlicther the indorser in this case was a competent witness, it is proved by unobjectionable evidence, that the plaii) tiff took the note by indorsement, as a dishonored note. In Pennsylvania, where, it is believed, the rule of AValton y. Shelley is still in force as a rule of evidence, it is held that it only applies to a negotiable security, indorsed and put into circulation in the usual course of business, and that it does not apply to a note overdue or otherwise dishonored. Baird v. Cochran, 4 Serg. & Rawle, 397. This appears to us to be a just limitation and modification of the rule relied upon, and supported as well by authorities, as upon the reasons and principles of public policy, on which the rule itself is founded. The Court are tlicreforc of opinion, that Waters, the indorser, ought to have been admitted as a witness, to prove pay- ment of the note before its indorsement ; and because he was not so admitted, the exceptions must be sustained, and a new trial had. Heiu trial to be had at the bar of the Court of Cor)imon Pleas. No branch of the law is in greater confusion in this country than that discussed in the three preceding cases. It is now too late to hope for any uniform doctrine upon the subject in the American courts. We have presented three well-consid- ered cases, the first adopting, the second rejecting, and the third substantially rejecting, the doctrine of Walton v. Shelley, eacli recognized and followed in dif- ferent States of the Union, and each supported by higlily resjiectable authority. We cannot expect to add any thing to the learning that has been displayed upon the subject ; and will merely state that in our opinion tlie doctrine of Town- send V. Bush and of Thayer v. Grossman presents the most just and sound view of tlie law. In cases of usury, and between immediate parties, or, what is the same tiling, as against an indorsee who is not a bona fide holder, in due course of trade, the signer may invalidate the paper, according to those cases ; but this is the extent of the rule ; and this is virtually the present doctrine of the English courts, and has been ever since Walton v. Shelley was overruled. See Chitty, Bills, G69. Our reasons for maintaining this view are substantially those advanced in the above-named cases of Townsend v. Bush and Thayer v. Crossman, and need not be repeated. The rule of exclusion has been aduptcd in the following States. In Maine, Clapp V. Hanson, 15 Me. (3 Shepl.) .Uo ; in Iowa, Strang r. AVilson, 1 Morris, 84 ; in Ohio, Treon v. Brown, 14 Ohio, 482 ; in Mississippi, Drake c. Henly, Walker, 541. 528 EVIDENCE. The rule has been rejected in New York, Stafford i\ Rice, 5 Cow. 23 ; in Kentucky, (iorhani v. Carroll, 3 Litt. 221; in Alabama, Todd v. Stafford, 1 Stewart, 199 ; in Maryland, Ringgold v. Tyson, 3 Harris & J. 172 ; in New Jersey, Freeman v. Brittin, 2 Harr. 192 ; in Virginia, Taylor o. Beck, 3 Rand. 31G ; in Tennessee, Stump v. Napier, 2 Yerg. 35 ; in New Hampshire, Haines V. Dennett, 11 N. Hamp. 180; in "Vermont, Nichols v. Holgate, 2 Aiken, 138; but see Chandler v. Mason, 2 Vt. 193 ; in Missouri, Bank of Missouri v. Hull, 7 Mo. 273. But one Avho signs in the usual manner of an indorser cannot show that it was the intention of the parties that he should merely guarantee the signature of the payee to be genuine. This would be to vary the terms of a written contract by parol. Prescott Bank v. Caverly, 7 Gray, 217. See Riley v. Gerrish, 9 Cash. 10-1 ; Hall V. Newcomb, ante, p. 131 ; Bank of the United States v. Dunn, ante, p. 503. The Commercial Bank of Albany v. George W. Strong. (28 Vermont, 316. Supreme Court, Febi-uary, 185G.) Sufficiency of proof. — A decision of the county Court, as to the suflBciency of certain proof, held, to refer to its character, or quality and competency, and not merely to its quantity or force, in convincing the mind. Where notice should he sent. — A notice of the dishonor of a bill of exchange, or promis- sory note, should be addressed to an indorser at the place of his residence, unless he is shown to have a place of private business elsewliere. The office of a corpora- tion, of which lie is an officer (in this case the i)resident), in a town difierent from that in which lie resides, will not, in the absence of proof be regarded as his private business place ; and a notice addressed to him there will not be sufficient. Number of Witnesses. — That a notice to an indorser was seasonably deposited in the post-office need not be proved by a single witness. If more persons than one par- ticipated in the act, the testimony of all of them should be adduced. Consideration of the probability as to the manner in which the notice in the present case was directed and sent to the defendant ; and of the testimony, in reference to its legal sufficiency, to prove that the notice addressed to the defendant as indorser, was put into the post-office, seasonably to charge him. Assumpsit against the defendant as an indorser of a bill of ex- change, drawn by the Rutland & Washington Railroad Company, by George W. Strong, president, upon, and accepted by the treas- urer of that company, dated at the office of the Rut. & W. R. Co., West Poultney, and made payable to the order of Eastman and Page, at the American Exchange Bank, New York, indorsed by Eastman and Page, John Bradley, George W. Strong, J. W. Baldwin, and M. Clark. Plea, the general issue ; trial by the Court, September term, 1855, — Pierpoint, J., presiding. COJtMERCIAL BANK OF ALBANY V. STRONG. 529 Tlie drawing, acceptance, indorsements, presentment, non-pay- ment, and protest of -the bill were duly proved. The testimony tending to prove notice to the defendant of the non-payment and protest was as follows : — The notary, by whom the bill was protested, deposed that he enclosed to the cashier of the plaintiffs a notice, in due form, to the defendant as indorsor. Attached to his deposition were three notices, produced and exhibited to him by the defendant, which the notary testified were filled up in his handwriting, but he could not testify further as to their identity. One of these notices was addressed, on the inside, to " George W. Strong," and purported to be a notice to him as indorser, and was directed on the outside to " George W. Strong, Esq., West Poultney, Vt. ; " another was addressed, on the inside, to " George W. Strong, Pres't, Rut. & Wash. R. Co.," and purported to be a notice to him as drawer, and had the word "■' Rutland " on the lower right-hand corner, in writing different from that of the notary ; and the other was ad- dressed on the inside to " Geo. W. Strong, Esq., Pres't, <tc., and to Geo. W. Strong," and purported to be a notice to him, both as drawer and indorser, and w^as postmarked with the New York city post-office stamp, and was directed on the outside to " Geo. W. Strong, Esq., Pres't, and Geo. W. Strong, West Poultney, Yt." William D. Case testified that during the month of June, 1854, he was a clerk in the Commercial Bank of Albany ; that it was his special duty to make a record, in a book kept for that purpose, of the notices of protests of the non-payment, (fcc, of notes, bills of exchange, <fec., received at the bank, and to send said notices to the different persons, whose paper had been protested ; tiiat in the forenoon of the twentieth of June, 1854, said bank received by mail, from the city of J^ew York, a notice of the protest for non- payment of the bill of exchange or draft in question, and that enclosed with said notice were four notices in all respects like it, addressed to George W. Strong, Merritt Clark, James W. Baldwin, and John Bradley ; that on the twentieth of June, 1854, in the forenoon, and immediately after the receipt by said bank, of said notice of said protest, he enclosed one of said four notices of pro- test, which was addressed to George W. Strong, in an envelope, which was addressed by him to " George W. Strong, Rutland, Yer- mont," whose place of residence w'as communicated to him by the cashier of said bank, on his inquiry for the residence of said Strong, 34 530 EVIDENCE. at the time of addressing said letter ; that after enclosing said notice in the envelope addressed to said Strong, he laid it on his desk, to be taken and deposited in the post-office in Albany, and afterwards, on that day, the letter was gone from his desk ; that it was the daily and special duty of Edwin W. Belden, the youngest clerk, to take all letters from the bank to the post-office, and in his absence it was the duty of James P. White, the next oldest clerk, and in the absence of both, he, said Case, took the letters ; that it was his daily and uniform practice to place all his letters, including those enclosing notices of protest, on his desk ; that each clerk had his separate desk, and no person, excepting the officers of said bank, could have access to them; that he did not know the residence of said Strong, at the time of enclosing said notice to him, but was informed and directed by the cashier so to direct, and he did so direct U ; that the word " Rutland," at the lower right-hand corner of the notice, addressed to George W. Strong, Pres't of the Rut. & Wash. R. Co., attached to the deposition of the notary, was made by, and in his (the said Case's) handwriting. Edwin W. Belden deposed that on, prior, and subsequent to the twentieth of June, 1854, he was a clerk in the Commercial Bank of Albany, and that if he took a letter from the desk of William D. Case, on the said twentieth of June, 1854, or at any other time, for the purpose of depositing the same in the post-office, at Albany, he did so deposit the same, on the same day on which it was taken for deposit in said office ; that it was his duty to take the letters from the said bank to the post-office, and he usually did so during the month of June, 1854 ; that he generally took the letters from the bank to the post-office, and had frequently taken letters from the desk of Case, and deposited them in the post-office at Albany ; and on his cross-examination he deposed that he had no recollection of ever taking, or putting into the post-office, a letter addressed to the defendant. James P. White deposed to substantially the same, in effect, with Belden, that if he took such a letter from the desk of Case, to deposit in the post-office, he did so deposit it on the same day, &c. The foregoing was all the testimony upon this point, except that it appeared that the residence of the defendant was in Rutland, and that the office of the Rutland & Washington Railroad Company was in West Poultney. The Court found the facts proved as stated in the foregoing COMMERCIAL BANK OF ALBANY V. STRONG. 531 testimony of the witnesses, but upon that evidence they decided that there was not sufficient proof of notice to the defendant, to charge him as indorscr, and rendered judgment in favor of tho defendant. Exceptions by the plaintids. Redfield, C. J. This is an action upon a bill or draft against the defendant, *s indorser. The only question made in the case is in regard to the proof of notice of dishonor to the defendant. The case being tried in the Court below, without the intervention of the jury, some question has been made upon the bill of excep- tions, whether any question of the sufficiency of the evidence of notice is properly before this Court. But as the testimony is detailed very much at length, and the Court say they " found the facts proved, as stated in the testimony of the witnesses," and also that, upon the foregoing evidence, which is certified to be all the evidence given upon this point, they decided that " there was not sufficient proof ol notice to the defendant, to charge him as in- dorscr," we can only conclude that they did refer to the character and competency of the proof, and not to the quantity ; to the quality, rather than the amount and force of the evidence in con- vincing the mind. We must, then, see what was the character of the evidence given. I. We do not think there is any doubt as to the particular notices sent, either from New York, where the bill was made payable, and where it was protested, or from Albany, where the bill seems first to have been negotiated. It is obvious that the notice, having the New York city post-mark upon it, and which is addressed to the defendant in the double capacity of president of the Rutland & Washington Railroad, on whose behalf he drew the bill, and also as indorscr, in his private and personal capacity, was sent by the notary, protesting the bill, direct from New York to West Poultney, where the railroad office seems to have been kept. But as the defendant, at the time, had his residence in Rutland, we do not regard a notice addressed to hito at West Poultney sufficient to charge him as indorser, there being nothing to show that he had any private business place at West Poultney. No case of that character has been shown to us, and the general course of decision is certainly, that notice to an indorser must be sent to the place 632 EVIDENCE. of his residence, unless lie is shown to have his place of hnsiness elsewhere. There may be cases where one l|as different places of business, that notice addressed to either is sufficient. But although the defendant is not shown licre to have any particular place of business in Rutland, distinct from his dwelling, yet, as he had no place of private business out of Rutland, his dwelling was his place of business, to which notice should be addressed to charge him as indorser.^ ♦ II. "We think it is obvious that the notary, having sent this double notice direct from New York, would not have probably sent another addressed to the defendant at the same place, as indorser only. The strong probability is, that he sent two distinct notices to Albany for the defendant, one as drawer, on behalf of the rail- road, and the other as indorser only. These being put into each other, and the outside one addressed, upon the back, West Poult- ney. Case, the teller, doubtless took them to the cashier, in the manner he testifies, and learning the residence of the defendant, marked it upon the inside one, which happens to be the one ad- dressed to the defendant as president, &c. But most undoubtedly both were sent to Rutland by Case in the manner testified, as there is no other reasonable mode of accounting for their being in the possession of the defendant, or, indeed, of their being made by the notary, in addition to the double one already sent. The teller, indeed, calls it one notice, and it was so, in some sense, being to one person, but in two quite different capacities. The teller might not liave recollected precisely the facts, but it must have been so, to account for his own memorandum upon one of these notices, and also his entry of the notice sent to the defendant, as indorser, upon the notice sent to the Commercial Bank, and produced upon the trial, with the memorandum of the notice sent to Strong, as indorser. III. The question is reduced then to the narrow point, whether there was sufficient evidence that the notice to the defendant, as indorser, which Case testifies he enclosed in an envelope, and ad- dressed to the defendant at Rutland, and which the county Court finds to be true, and which there is no reason to question, and which he also says he laid upon his desk, and which was afterwards, on the same day, gone from the desk, was really shown to have been deposited in the post-office at Albany, in season for the mail 1 See Munn v. Baldwin, ante, 376, and note ; Bowling v. Harrison, ante, 378, and note; Bank of Columbia v. Lawrence, ante, 404, and note. COMMERCIAL BANK OF ALBANY V. STRONG. 533 of the next day. As it was gone from the desk the same day, tlie only question would ^eem to be, whether the proof is sullicicnt to show that it went from the desk directly into the post-oftice. For if so, that will char<^c the defendant, although the notice never reached him. After that the conveyance is at his own risk.' And if it did not go direct to the post-office, there is no certainty how long it might have been delayed, or indeed whether it ever reached the de[cndant, except that he had it in possession many months after. The cases are undoubtedly very strict upon this point, as they should lie, in requiring very great certainty of proof of depositing the notice in the post-office. But the cases certainly do not require that tills should be proved by a single witness, who can swear posi- tively that he deposited the notice in the proper place. This, in practice, in large commercial cities, where the vast majority of such cases arise, would seem not generally to be the course of doing such things. The depositing of such letters in the post- office, as of other notices, is perhaps more generally done, in such places, by porters and messengers. But it would scQm to be the rule, that all who had any thing to do about the matter of deposit- ing the notice should be called. Is this shown to have been done in the present case ? It would seem, from the testimony, that this bank had a cashier and three clerks to transact the business. There is nothing to indicate that any other persons had any thing to do with sending notices of dishonor of bills and notes generally, or in this case in particular. From the fact that Case was upon the stand, and that the uncertainty of this notice was made a leading point in the trial, we may fairly presume, perhaps, that if there had l)cen others, having probable connection with the transaction, whoso testimony was not taken by the pluintitl's, which would very much tend to increase the uncertainty, we should have been apprised of that fact. From the testimony of Case it seems that it was the special duty of Case, the first clerk, to make out and deposit in the post-office, or see that it was done, all such notices. The cashier does not seem to have had any connection with this notice, or to have been expected, ordinarily, to have any thing to do with such notices, except probably to give directions when applied to by Case, as in the present case. It was the daily and special duty of Belden, the 1 See Munn v. Baldwin, ante, 376, and note. 534 EVIDENCE. youngest clerk, to take all letters from the bank to the post-office, and in his absence the same duty devolved ypon White, the next older cleric, and in the absence of both, the duty devolved upon Case. None but the officers of the bank had access to Case's desk. The letter was deposited in the proper place for them to take to the post-office, or where they often took them. They both testify that at this date it was their business, in the manner and order stated by Case to carry letters from the bank to the post office, and that they often took letters from Case's desk for that purpose, and that if they took any letter on that day, or any other, they carried it to the post-office the same day. Tiicre is no pretence of any motive in any officer of the baiik to detain the letter, or that they would be liable to do so by mistake, or indeed that any others but those named had access at- the time to the desk of Case, although it is probable the directors must have had. But the probability of their carrying off such a letter, by design or mistake, is quite too' remote to be taken into the account. It is, perhaps, quite as probable that one of the clerks might have lost it upon the way to the post-office, without being aware of the loss, and really suppose he delivered it at the post-office, and that is not a con- tingency which is ever taken into the account of uncertainties in such cases. We may say here, then, safely, that all the persons having any connection with the business of depositing the letters of this bank, at that time, in the post-office, or who would be likely, upon any rational conjecture, either by design or mistake, to take such letter from the desk, have testified explicitly that if they did take it up from the desk, they deposited it in the post-office the same day. In addition to this, the notice is found to have reached the defend- ant at some time. And we have before said, if the letter had been dropped by mistake, or purloined, it would in all rational probability never have reached its destination. Can there be, then, any longer any reasonable doubt of the deposit of this letter in the post-office the same day it was written ? We think not. The evidence rises to a sufficient degree of certainty to answer any demand, even in a criminal court, if it be of the proper quality. The authorities relied upon to show this was not the case, do not seem to us to establish any such proposition. The proposition in Mr. Chitty's Treatise upon Bills, that it is incumbent upon the holder " to prove distinctly and by positive COMMERCIAL BANK OF ALBANY V. STRONG. 535 evidence that due notice was given, and tliat it cannot be left to inference or presumption," seems to be based altogether upon the case of Lawson v. .Sherwood, 1 Stark. 314, a mere nisi prius decision. The language of the author seems to be taken from the case. But the case seems to justify no such rule of proof, as to cases generally of this kind. The witness there testified that he gave notice in eitlier two or three days, three dats not being in time, which is no testimony at all of the fact of legal notice. It leaves the probabilities precisely equal, whether notice was given or not, which is precisely no proof at all. Any one who knew nothing about the case, might safely testify that he either did give notice, or did not, which is this case as reported. And the next proposition of the same author is e(][ually unsup- ported by the cases referred to. It ia that " the party who puts a letter, giving notice of the dishonor of a bill, into the post-office, must be able to swear to a certainty, and not doubtfully, that he put the letter in himself, and not that he was doubtful whether he did not deliver it to another clerk to put it in." The case referred to is Hawkes v. Salter, 4 Bing. 715. The difficulty here was, that the witness could not swear whether he put the letter in the post- office, or another clerk did it, and the testimony of the other clerk was not taken in the case ; so that there was, in fact, no testimony to connect the letter with the office. And the case of Toosey v. Williams, 1 Moody & M. 129, although more in point for the defendant, as it seems to me, than any other cited, is by Lord Tenlerdcti put upon the ground that, after the letter was copied by the clerk, it had to go into the defendant's hands to be sealed, and there was nothing in the case to show that he ever returned it to the clerk whose business it was to convey it to the post-office, and who testified very much as the two younger clerks do here. But here the letter is shown, to a moral certainty, to have been taken by the clerks, and they testify, if they took it, they deposited it in the post-office the same day. The case of the Bank of Yergennes v. Cameron, 7 Barb. 143, a note of which was read to us, seems to be a case where there was no proof of notice, except the notice being in the indorser's hands after the time for giving it had expired. It could not from that be inferred, of course, that it was given in time.^ But, in the present case, it is shown that if the notice was ever deposited in the office, it was done in time, and the notice 1 See Smedes i;. Utica Bank, 20 Johns. 372. 53G EVIDENCE. being in the defendant's hands", is strong confirmation of the notice having reached the office in due time. On the other hand, the reasoning of Lord Ellenborovgh, in Hcthcrington v. Kemp, 4 Camp. 193, wliose opinions are always regarded as good evidence of the law, shows very fully that the evidence in tiie present case ought to be regarded as sufficient. " Had you called the porter," says his lordship, " and he liad said that, altliough he liad no recollection of the letter in question, he invariably carried to the post-office all the letters found upon the table, this might have done." " A letter was then put in from the defendant," acknowledging the receipt of a letter of the proper date from the plaintiff, and Lord Ellenborovgh said he would presume this was the letter written to inform him of the dishonor of the bill, although nothing was said of that in the defendant's letter. The case of Miller v. Hackley, 5 Johns. 375, is a case where far more uncertain evidence than the present was held sufficient. In this last case, the witness, being the notary who protested the bill, only testified that it was his usual course to send notices by mail, deposited on the evening of the same day of protest, and that he believed he did so in the present case, and it was held sufficient. We think there is no question the proof in the present case should have been held competent to prove notice to the defendant of the dishonor. Judgment reversed^ and case remanded. See next case and note. The Commercial Bank of Albany v. Merritt Clark. (28 Vermont, 325. Supreme Court, February, 1856.) Admissions. Notice. — A written admission by the indorser of a bill or note, tliat he received due notice of its dishonor, tliough strong evidence, is not conclusive of the fact against him. He may show tliat the paper was signed under a misappre- hension or mistake as to the bill or note referred to, and that no notice of the dis- honor was, in point of fact, given. Contract. Estoppel. — Sucli a writing, in the present case, held not to operate either as an admission for the purpose of a trial, as a contract, or as an estoppel in pais. Assumpsit upon a bill of exchange against the defendant as indorser. Plea, the general issue ; trial by the Court, September term, 1855, — Pierpoint, J., presiding. COMMERCIAL BANK OF ALBANY V. CLARK. 1)61 The plaiiitUr iiitTodiiccd the l)ilf of exchange counted upon, with the notarial ccrtilicate of protest, together with a writing signed by the defendant, of which the followijig is a copy, viz. : — " Commercial Bank of All)any v. M. Clark. Rutland County Court, Sept. Term. June G, 1855. I, Merritt Clark, defendant in the ahove entitled cause, acknowledge and say that I had legal and due notice by mail of the protest of non-payment of the bill of exchange or draft described in the above-entitled cause, and on which I am an indorser, with other indorsers on same bill." It appeared that the foregoing admission of the defendant was drawn up by the attorney for the plaintiff, and enclosed to the defendant in a letter, of which the following is a copy : — " M. Clark, Esq. Dear Sir, — If the enclosed admission is signed by you, it \\\\\ save cost and trouble of taking testimony in N. Y., to prove notice. If declined, I am going to N. Y. last of next week, and shall issue notice of the time and place, &c., of taking the deposition, to prove notice to you as indorser. . . . " Respectfully yours," and that, in answer to said letter, the admission was returned, signed by the defendant. The defendant offered testimony to show that said writing was signed by him under a misapprehension of the facts, and that at the time he signed it he had in his mind a different draft from that described in the writ, and that no notice of the protest or non- payment was ever sent to or received by him ; and offered to accompany this with proof that, immediately upon discovering his mistake, he informed the plaintiff's attorney thereof, both by letter and verbally, and that he should not abide by the concession or admission, and that he withdrew it. To this testimony the plaintiff objected, on the ground that, whether true or not, the defendant was concluded by his written concession, and could not thereafter show the fact to be differ- ent. This objection was sustained by the Court, and the testi- mony excluded. Judgment for the plaintiffs. Exceptions by the defendant. IsHAM, J. The bill of exchange, on which this action is brought, was duly protested for non-})ayment. The notice to the doiendant, as indorser, of its dishonor, was proved on the trial of the case by his written acknowledgment, in which he admitted that he did 538 EVIDENCE. receive due and legal notice of the protest and non-payment of the bill. That acknowledgment was full and strong proof that such notice was in fact given to the defendant, and it is not competent for him to avoid or weaken the effect of that admission, by notifying the plaintiffs that he should not abide by that statement, and that he withdrew it. It will always be evidence against him whenever the question arises whether he had notice of the dishonor of that bill. The question in the case now arises, whether that admission is conclusive upon the defendant ; or whether it is competent for him, on the trial of the case, to introduce testimony to show that it was made under a misapprehension of facts, and with reference to another bill of a similar character. That testimony, in con- nection with evidence showing that, in fact, no notice whatever was ever given to the defendant of the dishonor of the bill, was offered and rejected by the Court. It is insisted that the testimony offered was inadmissible, as the written admission was made for the purpose of a trial, and that it is for that reason conclusive upon him. On this question, it is sufficient to observe that the cases on that subject have no reference to admissions made out of Court, though they were made with the understanding that they would be used as evidence, on the trial of a particular case. Those' admis- sions only are referred to, which are made by a party, or his attorney, during the progress of a trial, and as a substitute for legal evidence. Admissions of that character, as a general rule, will be conclusive, for that trial at least, as they become a part of the record of the trial. The same rule may apply to admissions made out of Court, when they are entered, as is sometimes prac- tised, upon the calendar or records. 2 Phil. Evid. by Cowen, 200 ; note 192. When the admissions are not of that character, and he is in no way concluded by the records of the case, they are not rendered conclusive upon him, as being admissions made for the purpose of a trial. The acknowledgment, in this instance, is not of that character, and does not fall within that class of cases, as they are recognized in this State. It is very clear, that the testimony offered by the defendant is not objectionable as contradicting or in any way affecting a written contract or writing. If this written acknowledgment contained any provisions placing it in the light of a written contract of the parties, the objection would merit a different consideration. But it is not of that character. It has none of the elements of a COMMERCIAL BANK OF ALBANY V. CLARK. 539 contract, nor was it designed for one. It is merely an admission that notice had been given, the same as a receipt is an acknowledgment of a settlement in full, or of a receipt of money for a particular purpose ; or indorsements upon a note, which are written acknowl- edgments that so much has been paid. In all these cases the autliorities arc uniform, that, if the receipt or the indorsement was made by mistake, and under a misapprehension of facts, though they are evidence against the party, yet they may be t^xj)lained, controlled, and contradicted by parol evidence, and the mistake of the party corrected, and the truth given in evidence. 1 Aik. 311 ; 2 Vt. 138 ; Yt. 41 ; 5 Johns. G8 ; 1 Greenl. Evid. § 305. There is nothing in the case, as it now stands, that renders that testimony inadmissible, on the ground that the written acknowl- edgment operates as an estoppel in pais. That doctrine aj)plies in cases of fraud, where some act has been done, or statements made, with a fraudulent intent, and with a view to induce a line of con- duct which otherwise would not have been taken, and from which advantages have been derived. When the case is destitute of those considerations, there is no ground upon which the application of that doctrine can be made. The doctrine was so held in the case of Wakefield v. Grossman, 25 Vt. 298, 301. It was upon that ground the case of Daviess v. Burton, 4 Car. & P. 166, was decided. The party in that case agreed to admit certain facts on the trial, and for that admission he was not to be held to bail. The admission was held conclusive, as it had induced a line of conduct which would not otherwise have been pursued ; for, upon the strength of it, the right to insist upon bail had been surrendered. It was not a mere acknowledgment, but it assumed the character of an agreement or stipulation of the parties, and therefore the party was concluded by it. There is no pretence that this admission was made with a fraudulent intent, and from which the defendant has received any advantages. It was an admission against his interest, and designed for the accommodation of the plaintiffs. In the case of Heane v. Rogers, Barn. & C. 577, Bnylcij, J., observed, that " there is no doubt but that the express admissions of a party to the suit, or admissions implied from his conduct, are evidence, and strong evidence, against him ; but we think that he is at liberty to prove that such admissions were mistaken or untrue, and that he is not estopped or concluded by them, unless another person has been induced to alter his condition by them." The case of Jones v. 540 EVIDENCE. O'Brien, 2G Eng. Law & Eq. 283, is a direct authority on tin's subject. The question in tliat case was, whetlier notice of a dishonor of a bill had been given, and which was proved by a written promise to pay the bill. The defendant was permitted to introdnce evi- dence showing that no such notice was given. He was not estopped from making that defence by his promise. It may be true that the testimony oitored in this case, as it was in that, may be insufficient to overcome the evidence of the written acknowledgment ; but that relates to the credibility of the testimony, not its competency. It is proper evidence to be taken into consideration and weighed by the jnry. In Byles, Bills, 350, it is said that " after a bill is due, a promise to pay it, or an admission of a liability upon it, by a drawer or indorser, will be evidence not only that due notice of its dishonor was given, but that it was duly presented." The same rule applies, whether the promise to pay the bill, or the liability on it, was by parol or in writing. In either case, it is strong evidence of notice against the party making it ; but the authorities are decisive upon the question, that it is competent for the party to prove that the promise, or admission, was made under a misappre- hension of facts, and that in fact no notice of dishonor was ever given. Story, Bills, § 320, and note ; Chitty, Bills, 535-539. In all these cases the party is not concluded from introducing that evidence, on the ground that it contradicts any written stipulation, nor as a matter of estoppel. The judgment of the County Court must be reversed, and the case remanded. The two preceding cases discuss questions of considerable practical importance in regard to the kind and degree of proof admissible or required in establishing demand of payment on commercial paper and giving notice of dishonor to the parties interested. We are not aware that the rules of evidence here declared have since been essentially modified. I. The first point illustrated by Strong's case is the disposition of the courts not to release the responsibility of the parties to negotiable paper upon the merest trifling irregularity, where the substance of the requirements of the law has been complied with. There was at one time a degree of strictness of con- struction upon questions affecting demand of payment and notice of dishonor of negotiable paper, amounting almost to a denial of justice ; as if indeed there ■was something specially meritorious, in finding some plausible ground upon which to release all parties collaterally holden for the payment of a bill or note. That intense degree of strictness of construction almost requiring cer- tainty to a certain intent in every particular, which was at one time applied to numerous questions aifecting matters not considered the special favorites of the COMMERCIAL BANK OF ALBANY V. CLARK. 541 courts, such as estoppels, orders of removal in settlement cases, the title to land derived under tax sales and some others, as well as that under considera- tion, has certainly been relaxed. The question under consideration is ally and judiciously commented upon hy Mr. Justice Easlman, in Manchester Hank v, Fellowes, S Foster, 302. The cases are here very largely quoted and dis- cussed. The case of Warren v. Oilman, 17 Me. [.5 Shepl.] .%0, bears upon this question, and the pinion of Weston, C. J., contains many valuable sug- gestions. From the cases and the text-writers upon this subject it is apparent tliat all which is now required in regard to giving notice of the dishonor of negotiable p.ipcr is the exercise of that degree of diligence which careful and prudent men put forth in their own business of equal importance. Story, Prom- issory Notes, § 335, et seq., citing Chitty on Bills; Bayley on Bills. But where definite rules have been established by the common consent of commercial men, either as to the time, or place, or manner of giving such notices, or making ilemaud of payment, they must be followed; not so much, necessarily, because they are absolutely the wisest and best which could be supposed, but more because, having been established and acted upon by common consent, they will be presumptively reasonable, and others will naturally depend and act npon them ; and if any one were at liberty to disregard them it would naturally lead to dis- appointment with others, and might lead the latter into conduct different from wiiat they would otherwise take. Hence such rules, when once establi.-hed, must be followed, unless there is some necessity for pursuing a different course in the particular case. As to the degree and kind of proof to be required in such cases, there seems tu be no reasoh why any dilferent rules or constructions should obtain, as to cer- tainty, fiou) those which are regarded as salutary and sufficient in other cases and upon ether subjects. II. Tiie point discussed in Clark's ca«e is also one of considerable practical importance. There have been some few cases holding that where the indorser is once released by want of notice in time, a mere waiver of such notice or acknowledgment of the same, or a promise to pay the bill, will not bind him, unless made upon some new consideration. Bronsot}, J., in Tebbetts r. Dowd, 23 Wend. 379, 412, contends for the soundness of this view, upon principle, although he confesses the weight of authority is against the view. And the con- trary is held in the late case of Xeal v. Wood, 23 Ind. 623. But the law, as laid down by L'oncn, J., in Tebbetts v. Dowd, that a promise to pay the note or bill after the time for demand and notice has passed, is presumptive evidence of such demand and notice having been regularly made, seems clearly estab- lished. But where it appears on trial that the holder was guilty of laches in regard to making such demand and notice, he cannot recover upon a subsequent promise of the indorser, witliout showing that he knew of such laches at the time of making the promise. But ui)on principle it would seem that any admission of liability upon, or promise to pay a bill or note, based upon the belief or represen- tation that it had been dishonored by the acceptor or maker, which must be the natural inference, where such admission is made after the time of p.ayment has elapsed, can only be regarded in the nature of evidence and as such liable to be rebutted or shown to have been made under misapprehension, the same as any other admission which has not led the opposite party into any different course of 542 EVIDENCE. conduct from what he would otherwise have adopted. It being settled that such promise need not be made upon any new consideration, and that it must, in order to be binding, be made with full knowledge of the facts in the case, there can be no reason whatever to exclude proof of any matter which might tend to break the force of such admission, whatever that may be. But it would scarcely be useful to go more into detail upon this question, which when fully analyzed will be found to depend upon very simple and familiar pri#;iples of the law of evidence, and much the same which ajiplies to other cases of admis.-ion or decla- ration by a party against his interest. See Hazelton v. Colburn, 1 Rob. La. 345. The late English cases are all in one direction in regard to the cflTtct of a promise to pay a note or bill by the party entitled to notice of dishonor. If the promise is made before the bill or note falls due, that amounts to waiver of demand and notice of the default of other parties ; and if made after the time of dishonor it amounts to an admission of demand and notice at the proper time and in proper form. Cordery t'. Colvin, 9 Jur. n. s. 1200; s. C, 14 C. B. N. s. 374, opinion by Byles, J; Woods v. Dean, 3 Best & S. 102; Bartholomew v. Hill, 10 W. R. 273. See Sigerson v. Matliews, ante, 473, and note. And it does not seem that the effect of a promise to pay the bill or note after the time of payment has elapsed, is answered or in any way qualified, by the fact appearing that due notice of dishonor was not in fact given. Killby v. Rochussen, 18 Com. B. N. s. 357 ; Rabey v. Gilbert, 6 Hurl. & N. 536 ; s. c, 9 W. R. 386. But unquestionably it may be shown that the admission or promise was made under mistake or misapprehension, and thus its effect be defeated. And where a question arises in regard to the sufficiency of notice of dishonor by reason of its indefinite- ness, it may be submitted to the jury how far the party was thereby deceived. So also it may be submitted to a jury whether the holder of a note or bill exercised a reasonable degree of diligence in finding the parties and giving notice of dis- honor, although not given within the ordinary time. Gladwell v. Turner, Law Rep. 5 Exch. 59. There are no other English cases of recent date bearing directly upon these questions ; ard they all treat the admissions by way of prom- ise or otherwise, of the party entitled to notice of dishonor, or merely in the nature of evidence, to be weighed in connection with all the other evidence in the case, with the ordinary qualification that where such admissions have induced different action in other parties from what would otherwise have been taken, the party making them will be estopped from withdrawing or qualifying them. This subject is more fully considered under Excuses of Presextjiext axd Notice, and particularly in Berkshire Bank v. Jones, ante, 468 and note, and in Sigerson V. Mathews, ante, 473, and note. In the i^merican courts it has been held improper to submit to the jury the question of the reasonableness of the presentment of a bill payable on sight, where the same was not presented for twenty-one days after it might have been in the due course of communication between the residence of the payee and the drawee, and there was no evidence to account for the delay. Phoenix Insurance Co. V. Allen, 11 Mich. 501 ; Same v. Gray, 13 id. 191 ; Walker v. Stetson, ante, p. 189. Bills of exchange between the different American States are held foreign for the purpose of aduiitting the certificate of the notary as prima facie evidence of demand and notice. Orono Bank v. Wood, 49 Me. 26 ; Starr v. Sanford, 45 Penn. St. 193 ; Lee v. Buford, 4 Met. (Ky.) 7. And where a bill is COMMERCIAL BANK OF ALBANY V. CLARK. 5-13 duly protested for non-acceptance, it need not be again presented and protested for non-payment. Plato v. Reynolds, 27 N. Y. o8G. The diligence required in giving notice of the disiionor of a note or bill is such as men of business usually exercise, when their interests depend upon obtaining correct information. Palm- er V. Whitney, 21 Ind. 58. The holder of a draft, as between himself and the drawer is not bound to present it at maturity. But if he do not he incurs the risk of the insolvency of the drawee. Springfield Ins. Co. v. Tincher, 30 111. 399. But a delay of two years is fatal. Bridgeford v. Simonds, 18 La. An. 121. The mere want of effects in the hands of the drawee will not always excuse present- ment and notice. Saul i'. Jones, 1 Ellis & Ellis, 59. See Hopkirk v. Page, ante, p. 430, and note. As to the necessity of the presentation of bills and notes for payment, see Gay V. Haseltine, 18 N. Ilanip. 530; Benton v. Martin, 31 N. Y. 382; Sheldon v. Chapman, 31 N. Y. 644 ; House v. Adams, 48 Penn. St. 261, cited in iull in note to Hopkirk v. Page, ante, p. 443. 544 DISCHARGING INDORSER OR DRAWER. DISCHARGING INDORSER OR DRAWER. [Having considered commercial paper in its regular stages from inception to suit inclu- sive, we now present a number of important miscellaneous cases upon branches of the general subject, of every-d;iy occurrence in the courts, not alread}' fully illustrated. The subject of presentment and notice has already been considered, under Presentment AND Demand foh Payment, Pkoceedings on Non-Payment, and Excuses of Pkesent- MENT AND NoTiCE; and "we here introduce other matters relating to the discharge of the indorser or drawer.] Sterling v. The Marietta and Susquehanna Trading Company. (11 Sergeant & Rawle, 179. Supreme Court of Pennsylvania, May, 1824.) Additional securiti/. — Taking a bond from a third person for the money due upon a note is no discharge of an indorser, unless it be so agreed; nor will proceeding to judgment on the bond alter the case. Ddaijiurj suit. — Neither giving time to the maker, by forbearing to proceed to recovery on the paper by legal process ; nor delay to sue the indorser for several years, within the period of limitation, will operate as a discharge to the indorser; pro- vided no time was given before the indorser's liability was fixed.. The case is stated in the opinion of tlic Court. TiLGHMAN, C. J. Tliis is an action brought by The Marietta and Susquehanna Trading Company against Daniel Sterling, the plain- tiff in error, on a promissory note for |1350, dated June 16, 1814, drawn by Wait S. Skinner, payable to the said Daniel Sterling, or order, at Henry Cassel's banking-house, one hundred and seventeen days after date, and indorsed by the said Sterling and Christian Shirk. This note was regularly protested for non-j)aymciit, of which notice was given to the indorscrs. On the twenty-fifth of February, 1815, Isaac Osterliauk, Charles Otis, and John Bucking- ham, gave their bond to Wait S. Skinner (on which judgment was afterwards confessed in the Court of Common Pleas of Luzerne county), for the use of Ucnry Cassel's bank, at Marietta, for -$1350, with interest to be paid on the first of May, 1815. This bond STERLING V. THE MARIETTA, ETC., TRADING COMPANY, 545 was given expressly as a collateral security for the note on which this suit was brought, and was assigned by the obligee to The Marietta and Susquehanna Trading Company on the fifteenth of July, 1819. Henry Cassel's bank and The Marietta and Susque- hanna Trading Company may l)e considered as one. In the month of June, 1814, Cassel's bank ceased to do business, and the business was from that time carried on in the name of the Marietta and Sus- quehanna Trading Company, of which Cassel was president, until November, 1817. On the trial, in the Court below, the defendant (Sterling) offered in evidence the depositions of Osterhauk, Otis, Buckingham, and Skinner, all of which were excepted to by the plaintifT, and rejected by the Court, and in my opinioa very prop- erly. Osterhauk, Otis, and Buckingham were interested in the event of this suit, having given their bond and judgment as a collateral security ; so that if a verdict and judgment had ])assed for the defendants, they would have been discharged from the judg- ment entered on their bond. Skinner was interested also as drawer of the note. It was an accommodation note, and if the defendant had succeeded in this suit. Skinner would have been altogether discharged ; so that his interest was immediate. The defendant next requested the Court to charge " that if the plaintiff took a bond for the payment of this note from any other person, before this suit was brought, without the knowledge or con- sent of the defendant, and obtained judgment on the said bond, the defendant would be thereby discharged, and the jury should find in his favor." But the Court charged that, in such case, the plaintiff would be entitled to a verdict. The taking of a bond from a third person was no more than a collateral security for the money due on the note, and would be no discharge of the drawer or indorsers, unless so agreed. Why should it ? Wi)y might not the plaintiffs strengthen themselves by additional security, without discharging the original debtors ? Such transactions are very frequent. All depends on the intent of the parties. If they agree that the drawer and indorsers shall be discharged, they will be discharged. But if it be not so agreed, the presumption is that it was not so in- tended, and they will still be held liable. The proceeding to judg- ment on the bond taken as collateral security would not alter the case. The judgment would be of the same nature as the bond ; that is to say, it would be but collateral security for the debt due on the note. 35 546 DISCHARGING INDORSER OR DRAWER. The last question put to the Court by the counsel for the defend- ant was as follows : " If the plaintiffs took a judgment bond, entered up the judgment, issued process upon it, gave time to the drawer of tlie note (Wait S. Skinner), without the defendant's knowledge, and have delayed bringing suit against the defendant (one of the indorsers of the said note) for several years, by such arrangement, proceedings, and delay, the defendant is discharged." On these points also the opinion of the Court below was against the defendant. I have said already that the taking of a bond as a collateral security, and proceeding to judgment on it, is no dis- charge of the original debtor. Neither is the giving of time, in the manner it was here given (that is to say, by forbearing to proceed to the recovery of the money by legal process), a dis- charge, provided no time was given till after the note was protested. If the original time of payment had been enlarged without the consent of the indorsers, they would have been discharged. But the money having been demanded, the note protested, and notice given to the indorsers, they are fixed, and the holder of the note may afterwards delay his suit as long as he pleases, without injur- ing his security. By the notice to the indorsers, they are given to und'erstand that they are held liable, and nothing but payment will discharge them. The holder may sue all or any of them. He may pursue one, and indulge the others, or he may indulge them all, and proceed at any time against any of them, provided he keeps within the act of limitations. The charge of the Court, therefore, was in all respects correct. But, for the error in rejecting the receipt of Henry Cassel, offered in evidence by the defendant, the judgment must be reversed, and a venire de novo awarded. There is considerable conflict as to the first proposition in this case, respecting taking security payable at a future day ; and although the principal case is sup- ported by several cases emanating from high authority, the weight of decision seems opposed to it, if the security taken had the effect to suspend the holder's right of action. Okie v. Spencer, infra, 547. See also McLemore v. Powell, post, 551 ; Michigan State Bank v. Leavenworth, 28 Vt. 209. Cases which favor the rule above declared are Pring v. Clarkson, 1 Barn. & C. 14 ; Ripley v. Greenleaf, 2 Vt. 129. See also Story, Promissory Notes, § 416, and cases cited. The second point is well settled, that so long as the holder remains passive, after having fixed the liability of the drawer or indorser, he does not lose any rights. McLemore r. Powell, post, 551 ; Couch v. Waring, post, 563. OKIE V. SPENCER.* 547 Okie -y. Spencer. (2 Wharton, 253. Supreme Court of Pennsylvania, December, 1836.) Additional security. Extension of lime. — If the liolder of a promissory note take a check upon a bank from tlie maker, dated six days after the maturity of the note, the check to be in full satisfaction of the note if paid, this oi)erates as an exten- sion of time to the maker, and discharges an indorser. At the maturity of the note in question, the holder took from the maker a draft on other parties, payable six days afterwards, to be in full satisfaction of the note if duly paid. Kennedy, J. The defendant here having indorsed the note in question, for the accommodation of the drawer, and therefore being regarded as a surety merely, it is admitted that if further time was given, when it fell due, by the holder to the drawer, for the pay- ment thereof, the defendant is thereby discharged. And the only question to be decided is, whether from the facts set forth by the defendant in his special plea, to which the plaintiff has demurred, the law will imply an agreement made on the third of May, the day the note became payable, by the holder of it, to give further time until the sixth of the same month, to the drawer for the pay- ment thereof. Had the defendant pleaded the general issue only, and under it, as he certainly might, given evidence of the facts set forth in his special plea, and the truth of them had been clearly established by the evidence or the admission of the plaintilT, witiioiit more having been shown to the jury, it would undoubtedly have been the duty of the Court to have instructed the jury that the facts thus established, implied an agreement on the part of the holder of the note, for an adequate consideration received by him, to give time to the drawer for the payment of it, without having the con- sent of the defendant ; and that the latter was thereby discharged from his liability as indorser. In the absence of all proof to the contrary, it cannot be supposed here, that the drawer, when the note had become payable, could have had any otlier motive for giving the check of himself and his partner, securing the payment of it at the expiration of six days, than that of procuring indul- gence for that space of time upon his note from the holder of it. 548 DISCHARt3ING INDORSEE OR DRAWER. That such, too, must have been the understanding of them both at the time, seems to be the necessary inference ' from the facts stated, if our judgments are to be guided in this respect by what we know to be the common and ordinary motives which generally influence and produce such arrangements. Marshall, the partner of the drawer of the note, does not appear to have been bound for the payment of it in any way before it fell due, which tends gen- erally to strengthen, and in truth to make the inference that the check was given to procure further time for the payment of the note, irresistible. And although the check cannot be considered as having been taken in satisfaction of the note, nor as having extinguished it, yet the right of the holder to proceed against the drawer to enforce the payment of it, by suit, was thereby sus- pended until after the expiration of the six days. It was in effect changing, without the consent of the defendant, the terms upon which he had agreed as indorser to become liable for the payment of the note, and depriving him of the right to pay the note at maturity, if the drawer failed to do so, and then to sue him imme- diately for it, and therefore amounted to a release of him from his liability. He had guaranteed by his indorsement, the payment of the note on the third of May, 1833 ; and it was not competent for the liolder and the drawer without his concurrence, to extend his guaranty to the ninth of that month, which would clearly have been the effect of their agreement and the giving of the check, if the defendant were still to be held liable for the payment of the note. Tiiat the holder, by accepting the check, put it out of his power to proceed on the note, by suit against the drawer, until after the six days, cannot, as it appears to me, be controverted upon any ground that would seem to be consistent with the nature of the transaction, and what must have been the intent of the parties. Had the drawer given his own check merely, for the payment of the note at the expiration of the six days, there might have been some color for saying that he had not thereby precluded himself from bringing suit on it during that period ; because it might then have been argued with great plausibility, if not cor- rectly, that he had obtained by it no additional security, and consequently no adequate consideration to make a promise of indulgence binding ; that by the check he acquired nothing except the personal responsibility of the drawer, which he had before by virtue of the note ; and therefore had he even made an express promise of indulgence for the six days, it might have been alleged OKIE V. SPENCER. 549 tliat lie would not have been bound by it for want of a sufficient consideration ; i)ut as the case is presented by the special plea and demurrer, no such argument can be advanced or pretended ; for by the check, the holder of the note received the additional respon- sibility of Marshall, as a security for the payment of it ; and it would therefore seem almost impossible to imagine any other rea- son for giving such additional security, than that of procuring an extension of payment for the six days. It is true, that it may seem to have been but a short indulgence ; but being a suspension of the right of the holder of the note ta sue the drawer upon it during that period, it operated as effectually to discharge the de- fendant from his liability, as if it had been six years; for in either case, to hold the defendant to be still bound by his indorsement, would be making him liable upon terms, and in short, for the ful- filment of a contract, dilTerent from what he had agreed to. The time of payment mentioned in a note, is always a very material part of it ; and if it may be enlarged without the consent of the indorser, and he notwithstanding, be held liable upon his indorse- ment, there is no reason why the amount may not also be enlarged ; but it is obvious, that nothing of the kind can be done, without operating great injustice towards him ; and therefore it is, if it be done, it shall release him from his liability. Every man, as long as he is a free agent, must be permitted to declare the terms upon which he is willing to incur an obligation ; and having done so, it cannot be altered in any material point whatever, without his con- sent ; nor yet any thing be done which may affect his rights in relation thereto. The counsel for the plaintiff has cited in opposition to this, the case of Pring v. Clarkson, 1 Barn. & C. 14 ; 8. c, 8 Eng. Com. Law, 10, where a bill of exchange having been dishonored, the acceptor transmitted a new bill for a larger amount to the payee, without having had any communication with him respecting the first: the payee discounted the second bill with the holder of the first, which he received back as part of the amount, and afterwards for a valuable consideration, indorsed it to the plaintiff. It was held that the second bill was merely a collateral security, and that the receipt of it by the payee, did not amount to giving time to the acceptor of the first bill, so as to exonerate the drawer. Mr. Chief Justice Abbott, in pronouncing the opinion of the Court, says : " In no case has it been said, that taking a collateral security from the 550 DISCHARGING INDORSER OR DRAWER. acceptor, shall have that effect ; " that is, of discharging the other parties to the bill : and concludes by saying, " lltere the second bill was nothing niore than a collateral security." Now it is not easy to perceive why a collateral security should not have such an effect ; for surely there is nothing in the nature of it which renders the giving or the taking of it inconsistent with the holder's agree- ing to give time to the acceptor of a bill or the drawer of a note. On the contrary, such indulgence may be, and doubtless is in most cases, the very consideration upon which the collateral security is given and obtained ; and as I have endeavored to show, makes the case, in the absence of proof of an express agreement to give time, still stronger in favor of an implied agreement to that effect, than where there is nothing more given than a bare renewal of the promise by the acceptor of the original bill, or the drawer of the former note, to pay the amount at a future date. But Chief Justice Abbott was mistaken, when he said, " in no case had it been said, that taking a collateral security from the acceptor shall have that effect ; " for in Gould v. Robson, 8 East, 576, decided some fifteen years before, it was not only said, but the case itself turned upon the very point. There the holder of the bill of exchange, who when it fell due, after taking part-payment of the acceptor, agreed to take a new acceptance from him for the remainder, payable at a future day, but in the mean time, the holder to keep the original bill in his hands as security ; and it was held that it amounted to a giving of time, and a new credit to the acceptor, and therefore discharged the indorser. Besides, the authority of Pring and Clarkson has been doubted by the profession. Mr. Chitty in his Treatise on Bills, 442 (8th Eng. ed.), after repeating the principle laid down in it, adds, " but it is submitted that the mere receiving further security, payable at a future day, would in general imply an engagement to wait till it becomes due." See also Bayley, Bills (5th ed.), 345, note 31 : and Chitty, Jr., Bills (ed. of 1834), 100 w. a. note 1 ; and in Kendrick v. Lomax, 2 C. & J. 405, it would seem to be overruled ; for it was decided there, that the holder', by taking a renewed bill, impliedly agrees to give time until it becomes due, and cannot sue in the interim, on the original bill. ' Judgment affirmed. See to the same effect Bangs v. Mosher, 23 Barb. 478 ; but see Sterling v. Marietta, &c., Trading Co., ante, 544, and note. M'LEMORE v. POWELL. 561 McLemore, PlaintifF in Error, v. Powell and OpiERs, Defendants in Error. (12 Wheaton, 554. Supreme Court of the United States, January, 1827.) Ai/reemf-nt /or delay. — Mere agreement by the holder witli tlie drawer of a bill of exchange for delay, made without consideration, and not communicated to the indorser, does not discharge the indorser. The case is stated in the opinion of the Court. Story, J. This is a writ of error to the Circuit Court of the United States for the District of West Tennessee. The original action was assumpsit, brought by Powell, Fosters, & Co., as holders of a bill of exchange, drawn by one Thomas Fletcher, in May, 1819, at Nasliville, upon Messrs. McNeil, Fisk, and Rutherford, at New Orleans, payable to Thomas Read, or order, for two thousand dollars, in sixty days after date, and by him indorsed to the defendant, John C. McLemore, and by him to the plaintiffs. The bill, upon presentment for acceptance, was dishonored, and due notice of the dishonor was given to the de- fendant. At the trial, upon the general issue, Thomas Fletcher, the drawer, was, under a release from the defendant, McLemore, ex- amined as a witness, and among other things, testified that, in the month of October following the dishonor of the bill, '' one of the plaintiffs applied to him at Nasliville for the money on the bill, and threatened to sue immediately if an arrangement was not made to pay the bill. The witness then proposed to the plaintiff, if he would indulge him four or five weeks, he would himself, to a cer- tainty, pay the bill. To this the plaintiff agreed, and told the witness he was going to Louisville, Kentucky, and would return by Nashville, about the exj)iration of that time, and would receive said payment. Since said time the witness has never seen said plaintiff." The witness farther testified, that the defendant was an accommodation indorser for him on the bill ; that the plaintiff told him that the bill would be left with a Mr. Washington, at Nashville ; that lie expected he would himself be at that place at the time agreed on, but that, if he did not come, he would give 552 DISCHARGING INDORSER OR DRAWER. the instructions to Mr. Washington, by letter, what to do if the witness did not pay at the expiration of the time agreed on. It did not •ppear that any consideration was paid or stipulated for this delay ; and no suit was commenced until after this period had elapsed. The district judge instructed the jury, that if they be- lieved the conversation above stated amounted to no more than an agreement that a suit should not be brought for four or five weeks, and that no premium or consideration was given or paid, or to be paid by Fletcher, the indorsers were not discharged, that an agree- ment for giving day must be an obligatory contract for a consider- ation which ties up the hands of the creditor, and disables him from suing, thereby affecting the interests and rights of the in- dorser ; that the indorser has a right to require and demand of the creditor to bring a suit against the drawer, and if he has dis- abled himself from bringing a suit by a contract for a considera- tion, he has thereby released the indorser ; and that if the jury were satisfied from the testimony that time was given for a valu- able consideration paid or to be paid, or that a new security was taken by the holder, that the' indorser was discharged and absolved from all the obligations of the indorsement. Under this instruction, the jury found a verdict for the plain- tiffs, upon which there was judgment given in their favor. A bill of exceptions was taken to the charge of the Court ; and the present writ of error is brought for the purpose of ascertaining its legal correctness. It is unnecessary to give any opinion upon that part of the charge which respects the right of an indorser to require the holder to commence a suit against the drawer. In general, the in- dorser, by paying the bill, has a complete power to reinstate himself in the possession and ownership of the bill, and thus to entitle himself to a personal remedy on the instrument against all antecedent parties. The same reason, therefore, does not exist, as may in common cases of suretyship, to compel the creditor to active diligence by suit against the principle. Without expressing any opinion on this point, it is sufficient to say, that the error, if any, was favorable to the defendant, and, therefore, it can form no subject of complaint on his part. The case then resolves itself into this question, whether a mere agreement with the drawers for delay, without any consideration for it, and without any communication with or assent of, the in- M'LEMORE v. POWELL. 553 dorser, is a discharge of the latter, after he lias been fixed in his responsibility by tiie refusal of the drawee, and due notice to him- self. And we are all of opinion that it does not. We admit the doctrine, that although the indorser has received due notice of tiie dishonor of the bill, yet if the holder afterwards enters into any new agreement with the drawer for delay, in any manner changing the nature of the original contract, or afTecting the rights of the indorser, or to the prejudice of the latter, it will discharge him. But, in order to produce such a result, the agreement must be one binding in law upon the parties, and have a sufficient consideration to support it. An agreement without consideration is utterly void, and does not suspend for a moment the rights of any of the parties. In the present case, the jury have found that there was no consideration for the promise to delay a suit, and, consequently, the plaintiffs were at liberty immediately to have enforced their remedies against all the parties. It was correctly said by Lord Eldon, in English v. Darley, 2 Bos. <fe Pul. Gl, that "as long as the holder is passive, all his remedies remain ; " and, we add, that he is not bound to active diligence. But if the holder enters into a valid contract for delay, he thereby suspends his own remedy on the bill for the stipulated period ; and if the indorser were to pay the bill, he could only be subrogated to the rights of the holder, and the drawer could or might have the same equities against him as against the holder himself. If, therefore, such a contract be entered into without his assent, it is to his prejudice, and dis- charges him. The cases proceed upon the distinction here pointed out, and conclusively settle the present action. In Xatwyn v. St. Quintin, 1 Bos. & Pul. 652, where the action was by indorsees against the drawer of a bill, it appeared, that, after the bill had become due, and been protested for non-payment, though no notice had been given to the drawer, he having no effects in the hands of the ac- ceptor, the plaintiffs received part of the money on account from the indorser ; and to an application from the acceptor, stating, that it was probable he should be able to pay at a future period, they returned for answer, that they would not press him. The Court held it no discharge ; and Lord Chief Justice Ei/re^ in deliv- ering the opinion of the Court, said, that if this forbearance to sue the acceptor had taken place before noticing and protesting for non-payment, so that the bill had not been demanded when due, it 554 DISCHARGING INDORSEE OR DRAWER. ' was clear the drawer would have been discharged, for it would be giving a new credit to the acceptor. But that, after protest for non-payment, and notice to the drawer, or an equivalent to notice, a right to sue the drawer had attached, and the holder was not bound to sue the acceptor. He might forbear to sue him. The same doctrine was held in Arundel Bank v. Goble, reported in a note to Chitty on Bills. Chitty, 379, note c. ed. 1821. There the acceptor applied for time, and the holders assented to it, but said they should expect interest. It was contended, that this was a discharge of the drawer ; but the Court held otherwise, because the agreement of the plaintiffs to wait was without consideration, and the acceptor might, notwithstanding the agreement, have been sued the next instant ; and that the understanding that interest should be paid by the acceptor made no difference. So, in Bad- nail V. Samuel, 3 Price's Exch. 521, in a suit by the holder against a prior indorser of a bill of exchange, it was held, that a treaty for delay between the holder and acceptor, upon terms which were not finally accepted, did not discharge the defendant, although an actual delay had taken place during the negotiation, because there was no binding contract which precluded the plaintiffs from suing the acceptor at any time. Upon authority, therefore, we are of opinion, that this writ of error cannot be sustained, and that the judgment below was right. Upon principle, we should entertain the same opinion, as we think the whole reasoning upon which the delay of the holder to enforce his rights against the drawer is held to discharge the indorser after notice, is founded upon the notion that the stipulation for delay suspends the present rights and remedies of the holder. The judgment of the Court below is, therefore, affirmed with costs. Payne v. Commercial Bank of Natchez, 6 Sm. & M. 24, is an important case upon this branch of the subject. The facts will appear in the opinion of the Court. Sharkey, C. J. The plaintiffs in error were sued as indorsers of a promissory note, and after verdict against them moved for a new trial, which motion was overruled. The defence set up was, that the holder of the note had discharged the indorsers by giving time to the maker. The question depends mainly on the evidence introduced on the trial, which is to the effect following : The maker of the note testified that, about tlie 28th March, 18-10, he executed a note to the plaintiffs below for $31,593, payable three days after date, the consideration of which was sundry notes then held by m'lemorb»v. powkll. 555 the bank, on which he was liable either as maker or indorser, his object being to concentrate all his indehtedness in one note. On bt-ing asked where the note given then was, he stated that it was in judgment in Louisiana, and that >f2'J*)<) had been paid on the judgment by a sale of bank-stock, and that the judgment was also a lien on certain i)romissory notes given by 11. C. Ballard to the witness for property sold to liallard, which notes were secured by mortgage. He also stated that these notes were liable to be sold under execution. A transcript of the judgment in Louisiana was also introduced. To rebut this proof the plaintiff lielow introduced Thomas Henderson, the cashier of the bank, who explained the transaction with Lillard, the maker of the note, in the following manner : Lillard called on him and expressed a wish to take up all his liabilities to the bank, and proposed to confess judgment for the full amount due, and to bind thereby all of his property. On consultation with one or two of the directors, the witness agreed with Lillard that when such a judgment should be confessed so as to bind all his property, and evidence thereof produced to the bank, the pajjcr of Lillard should be given up, — Lillard em- ploying his own attorney, and paying all the expenses incident to the consumma- tion of this arrangement. In order to effect the arrangement, Lillard called on the witness for a statement of the amount of his indebtedness, which was fur- nished. The agreement was entirely conditional, intended, and so understood, to depend upon the confession of a judgment which should bind all of Lillard's property in Louisiana ; and on the further condition that this should be done at Lillard's expense, and the bank notified. After this understanding took place, and before any confession of judgment, Lillard sold all of his property in Louisi- ana, consisting of land and negroes, to R. C. Ballard, which was the property intended to have been bound by the judgment. Some time before this under- standing took place, Lillard delivered to witness two hundred shares of stock of the Commercial Bank of Manchester, to be held for him as collateral security for all of his debts due to the bank. After the sale of the property to Ballard, the witness was informed that Lillard did confess judgment, and that an execution had issued, under which the bank-stock was sold by the sheriff of Concordia for $2200, but the bank had never received any of the money. On the order of the sheriff of Concordia the bank-stock was delivered to Ballard. The witness never gave, nor did he agree to give, any time whatever to Lillard, The memo- randum was given at his request to enable him to carry out his own arrange- ment. The witness had no authority, by resolution of the board of directors or otherwise, to make this arrangement, but was in the habit of making such arrangements on consultation with some of the directors. The deposit of the bank-stock as collateral security occurred after the maturity of all of Lillard's lia- bilities, and the bank never relinquished the right ta sue on the notes at any time. At the request of the counsel for the bank, the Court charged the jury that the agent or cashier had no authority to bind the bank by any contract that would release parties from their notes. 2. To release an indorser, the engagement must be upon a good consideration and binding, and one that will suspend the remedy. 3. That unless the judgment in Louisiana bound all of Lillard's property, and the contract was ratitied by the plaintilfs, the law is for them. The kind of contract with the principal which will discharge the surety, is well 556 DISCHARGING INDORBER OR DRAWER. defined and settled. The efTect of giving time to the principal in a forthcoming bond was considered by this Court in the case of Newell and Pierce v. Hamer, 4 IIow. [Miss.] 684. It was decided that a mere voluntary engagement to indulge the principal debtor would not discharge the surety. There must be a positive and binding agreement, based upon some new and valuable consideration, which is sufilcient to tie up the creditor, and prevent him from asserting any remedy dur- ing the time for which the indulgence has been given. The same rule was holden to apply to indorsers of promissory notes. Wade v. Buckner, Stanton, & Co., 5 How. [Miss.] Gil. In this last case a bill of exchange had been taken, payable at twelve months, and a receipt given expressing that the note was to be credited with the proceeds of the bill; and this was decided to be insufficient to discharge the indorser. Was there any such contract in this case ? The evidence seems to fl^ll far short of establishing any contract whatever that was binding on the plaintiffs be- low for one moment, even assuming that Henderson was authorized to do all that he did do. Lillard states that he executed a note, but he does not state that he did so by request, or with the knowledge of the bank, or that it was ever deliv- ered. His testimony is unsatisfactory. He omits to state any thing of the trans- action which led to the making of the note. He merely says that he made such a note, and that it was then in judgment in Louisiana. Henderson states the transaction in such a manner as to make it intelligible. It was a mere unexe- cuted promise to contract, on the performance of certain conditions. There was nothing in it binding. Lillard had promised to do certain things, and Hender- son promised if they were done in a particular manner, he would deliver up the notes of Lillard. Lillard defeated the proposed settlement by selling his prop- erty. There was no consideration for this agreement ; nor was there in fact any agreement to give time. Lillard does not state that there was, and Henderson states positively that there was not. Try this by the true test. Was there any period of time at which the bank was not at liberty to sue ? There was not. When the proposed arrangement was spoken of, nothing was said about his giv- ing a new note, and if by so doing his indorsers were discharged, then every in- dorser may be discharged in the same way. Lillard seems to have been the only actor in the matter. Even the money raised by the execution was never re- ceived by the bank. This subject is also discussed in Bank of Utica v. Ives, 17 Wend. oOL The facts will sufficiently appear in the opinion of the Court, delivered by Nelson, C. J. The defence to the action in this case is, that the plaintiffs gave time to the principal debtor, IMorris ; the jury have found in favor of it upon the facts, under correct instructions from the Court. The only question, therefore, presented is, whether the evidence warranted the verdict. Mere in- dulgence at the tcill of the creditor extended to the debtor, in no way impairs the obligation of the surety ; if it did it would be a most inconvenient and op- pressive rule, as then suits must immediatelv follow the maturity of the paper. It is well settled there must be a valid common-law agreement to give time, founded of course upon a good consideration, to have this effect. Was such an agreement proved here ? Morris, the maker, called by the defendant, is the only witness ; and if there was an agreement he was a party to it, and in a situation to place the fact beyond M'LEMORE v. POWELL. 557 controversy. His interest was balanced, and for aught that appears, he is a man of respectable diaracter. The witness was called \>\ the defendant because he held the aflirmatlve, and must establish the af^reement giving time with reason- able certainty in the first instance. I have looked through the case, and do not find that this witness undertakes to prove any such contract, — not even that it was his purpose to procure one in the several interviews with the cashier of the bank ; and if he is not able to assert the fact, so far as he himself was concerned, it cannot be expected that he could prove one on the part of the bank. The ut- most that he testifies to is, that he solicited indtdtjence to arrani/e hin affairs, and try to relieve his indorsers ; and that he was given to understand this would be ex- tended to him. No time, terms, or conditions upon which it would be granted ■were mentioned, asked for, or agreed upon. It is not pretended by the witness that the indulgence was assented to in consideration of the giving of the judg- ment, or the turning out of the notes and ol)ligations. These are the considera- tions urged, and the only ones tliat can be relied on. If it was thus understood and intended by the parties, the witness could not well have forgotten the facts ; at all events they are not to be presumed when one of the parties is not willing to assert them under oath ; it would be presuming against the recollection of a party to the transaction the most deeply interested in it at the time, and therefore the most likely to remember it. To infer a contract under such circumstances would be not only substituting conjecture for, but against evidence ; as the ina- bility of a witness to testify to the existence of a contract to which he is alleged to have been a party, is something more than mere negative testimony. As the charge, however, was correct, assuming the point to be put to the jury, and there is no exception to the instructions in this respect, the new trial should have been granted by the circuit judge on payment of costs. There was an exception to the application of the doctrine giving time to the case, for reasons given by the counsel ; but none respecting the submission of the question of fact to the jury. New trial granted on payment of costs. See also Twopenny i\ Young, 3 Barn. & C. 208 ; Ripley v. Greenleaf, 2 Vt. 129; Oxford Bank v. Lewis, 8 Pick. 458; Michigan State Bank v. Leav- enworth, 28 Vt. 20y. 558 discharging indorser or drawer. Tiernan's Executors v. James Woodruff. (5 McLean, 350. Circuit Court of the United States for Michigan, June, 1852.) Agreement for delay. Bankruptcy. — A bankrupt maker of a promissory note procured from his creditor two months' time, within which the right to sue on the note was suspended. Tlie agreement was upon a valuable consideration. Ueld, no dis- charge to an indorser. Per Curiam.^ This is an action on several promissory notes, given by'Theodore Romeyn to the plaintiff's testator, indorsed by the defendant. The plea sets up in defence that time was given by the plaintiff to Romeyn. To this plea the plaintiff replied, that at and before the alleged time was given, Romeyn was a discharged bankrupt ; that the debt was provable against his estate. Aver- ments were added covering all the exceptions in the statute, under which it is permitted to go behind the certificate. To this replication the defendant demurred. Joinder in demurrer, <fcc. On the part of the defendant it is contended, that under the authorities the defendant is discharged. It appears from one of the pleas that he was an accommodation indorser, and this is not denied by the pleadings. It appears that after the maturity of the note, the plaintiffs en- tered into a sealed agreement with Romeyn, the maker, without the knowledge or consent of the indorser, and for a good consid- eration ; to wit, a proposal for settlement made by Romeyn, and also of five dollars paid to the plaintiffs, the receipt thereof was acknowledged, the plaintiffs would not, for the space of two months from the date, commence any proceeding in law or in equity or otherwise against the said Romeyn, upon all or either of the four promissory notes therein mentioned, nor sue him^upon the same or either of them, <fec. Great care seems to have been taken, in drawing this agreement, to cover the entire ground necessary for the discharge of the in- dorser. It was under seal, for the valuable consideration of five dollars paid, and suspending suit on each of the notes, &c. There is certainly no want of skill shown in drawing this agreement, and no objection can be made to it for want of form or substance. It would serve for a safe precedent in all such cases. For the defendant it is argued that the bankruptcy of the prin- 1 McLean and Wilkins, JJ. TIERNAN V. WOODRUFF. .5o9 cipal cannot afTect the (|Uostion of law. That althou^li tlie dis- charge takes away the legal remedy against the l^ankrupt, yet this exists only where he avails himself of his right. It is a mere personal privilege, which no one can set up but himself; and if not set up, judgment may be rendered against him. Also tiiat the moral obligation on tlie debtor to pay still continues, and the cause of action still remains, so that it is not necessary to declare specially on a new i)romise to pay. That the legal effect of our bankrupt act is the same as the English act. The provisions of both acts are substantially the same, and the English decisions are applicable here. A new promise would be Ijinding under the English act. Chitty, Contracts, 190, 191 ; 13 :Mees. k W. 34, 709 ; 8 Mass. 128 ; 5 Barb. 369 ; 11 id. 17, 369 ; 28 Me. 550 ; 9 B. Mon. 45 ; Cowp. 448. Tlie theory of law is, that the surety cannot be prejudiced by such an agreement ; he may be benefited, and yet if time be given to the principal the surety is discharged. The case don't turn upon the fact of inconvenience or injury, but giving time for a valuable consideration is presumed to prejudice the surety. Giving time for a day discharges the surety. 5 Peters, Com. 728 ; 3 Wash. 70, 76 ; Paine, 305 ; 7 Hill, 250. On the other side it is urged, in the language of the Supreme Court of the United States, 6 How. 283 : " The principle on which sureties are released is not a mere shadow without substance. It is founded upon a restriction of the rights of the sureties, by which they are supposed to be injured." The contract for delay to effect the discharge of the indorser must atTect the rights of the indorser, or prejudice him. McLemore V. Powell, 12 Wheat. 554.i In King v. Baldwin, 2 Johns. Ch. 559, Chancellor Kent says : " On paying the debt, he (the surety) is entitled to the creditor's place by substitution, and if the creditor, by agreement with the principal debtor, without the surety's consent, has disabled himself from suing when he would otherwise be entitled to sue, under the original contract, or has deprived the surety, on his paying the debt, from having immediate recourse to his principal, the contract is varied to his prejudice, and he is consequently discharged." Bank of United States v. Hatch, 6 Peters, 250 ; 1 McLean, 93. Our bankrupt law is different from the bankrupt law of England. Ante, p. 651. 560 DISCHARGING INDORSEE OR DRAWER. The latter operates by way of persojial exemption from debts provable. 2 Bl. Com. 473 ; 2 Maule & S. 23 ; 2 Com. Dig. 157 ; 1 Steph. N. P. 689 ; 1 Barn. & Adol. 54 ; Stat. 37 Eliz. 7 ; 4 & 5 Anne, 17 ; 6 Geo. 4, c. 16. But our bankrupt law extinguishes the debt of the bankrupt even against bis indorser. In Mace v. "Wells, 7 How. 275, the Supreme Court say : " The fourth section of the bankrupt law provides that a discharge and certificate, when duly granted, shall, in all courts of justice, be deemed a full and complete discharge of all debts," &c. And under the fifth section, " All creditors, whose debts are not due and payable until a future day, indorsers, &c., shall be permitted to come in and prove such debts or claims under this act," <fec. And a person who neglects so to prove a liability, cannot afterward recover the amount from the bankrupt. So the Court held in the above case. In the case before us, Romeyn, the bankrupt, procured from the plaintiffs a suspension of their right to sue for two months. This agreement, being founded on a valuable consideration, was a valid contract. The indorser within that period could not pay the debt, and sue Romeyn. This, in law, prejudiced the rights of the in- dorser. But Romeyn was a bankrupt ; what remedy was there for the indorser against the bankrupt ? There was no remedy but to present his demand against the estate of the bankrupt, before it was due, under the fifth section of the bankrupt law. He has no recourse, at any time, against the bankrupt, if the proceedings were regular under which he was discharged, as alleged in the pleading, and not contradicted. The time given to Romeyn, under these circumstances, by no possible means could have operated to the prejudice of the defendant. The settled rule of law, therefore, as to the effect of giving time to the principal debtor, does not and cannot apply in tins case. After the extension complained of, as well as before it, the indorser could have proved the extent of his liability against the bankrupt's estate, and that was the only rem- edy which, under the circumstances, the law gave him. The demurrer to the replication is overruled, and judgment for the plaintiff. So though the agreement to give time be upon a valuable consideration, if it was made with a stranger, it will not have the effect to discharge the drawer or indorser. ' Frazer v. Jordan, 8 El. & Bl. 303. In this case the opinion of the Court was pronounced by Coleridge, J. This was an action by the indorsee against tlie drawer of a bill of exchange ; and the defendant pleaded that the plaintiff, without the de- TIERNAN V. WOODRUFF. 5G1 fendant's consent, had entered into an af^reenient with Messrs. Kerin that they would <^ive time to the acceptor, in consideration of Messrs. Kerin promising that they wouhl see the bill paid. The first (juestion for our consideration on the special case stated for our de- cision, was whether the plea was proved. This was a question of fact ; and we intimated our opinion during the argument, that that plea was proved by the facts stated. The remaining question on which we took time to consider was, whether a binding agreement for a good consideration with a person who is no party to a bill of exchange, to give time to the acceptor without the consent of the drawer, discharges the drawer. It was said, in support of the plea, that the plaintiff had placed himself in such a situation as that he could not sue the acceptor without rendering himself liable to an action for damages. And it was said that the case fell within the doctrine laid down by the Court of Exchequer in the case of Moss v. Ilall, ."> Exch. 46, 50, where Parke, B., says: " Whenever a party's hands are effectually tied up so that he cannot break such an engagement without being made liable for a breach of it, the surety is discharged ; the rule being that there must be either a new security given to extend the time, or a binding agreement upon a sufhcient consideration to suspend the remedy." It was said that the case of Ford v. Beech, 11 Q. B. 852 [E. C. L. R. vol. 63], had established that a contract of this nature with the acceptor to suspend proceeding does not constitute a defence to an action, but only gives a cross-action for breach of the agreement to give time, and therefore that the exoneration of the surety in such case does not de- pend on the action against the principal debtor being barred by the agreement ; and that the real reason of the discharge is that the party has subjected himself to an action for suing in breach of the agreement ; and that this extends to the case of a contract with a stranger as well as to one with the principal debtor, as the being liable to an action if he sues the debtor, will render the creditor less likely to sue the debtor in proper time. There certainly were authorities from which it has been often supposed that the reason of the discharge of the surety, by an agreement with the princi- pal debtor to give time to him, arose from the right of action against the accept- or being suspended or gone. The doctrine so well established, that a parol agreement on good consideration to give time to a bond debtor does not discharge the bond surety at law, because a parol contract cannot afl'ect a contract under seal, seems founded on this notion ; as does also the doctrine of its being neces- sary that there should be a consideration for the promise to make it binding in point of law, though such consideration would be requisite as well to found an action for damages on the promise, as to raise a defence to the action on the orig- inal cause of action. Since the case of Ford v. Beech, however, we must take it for granted that agreements of this nature operate only to give a cross-action, and do not prevent an action on the original cause of action. However the doctrine arose, we must consider it quite settled that an agree- ment for good consideration with the principal debtor, so far ties up tli^ hands of the creditor who has entered into such an agreement, as that the surety is dis- charged ; and we (luite agree with the doctrine of Lord Weiislcydalc, in Moss r. Hall, 5 Exch. 46, that this remains law, notwithstanding the argument which 36 562 DISCHARGING INDORSEE OR DRAWER. appears to have been raised in that case, founded on Ford v. Beech. The surety has a right at any time to go to the creditor and say : " I suspect the principal debtor to be insolvent; I will pay you, and I wish you to sue him." See the observations of Williams, J., in Strong v. Foster, 17 Com. B. 201, 219 [E. C. L. R. vol.84]. If, by a binding agreement with the principal debtor, the creditor has agreed not to sue him for a limited time, it would be a breach of faith of which the principal debtor would have a right to complain, if an action were brouglit against him within the period. And this is held to discharge the surety, although it seems from Ford v. Beech that he could still do so at tlie risk of an action by the principal debtor, on the contract to suspend suing. It is, however, a very different question whether this doctrine is to be extended for the first time to a case of a contract with a stranger, of which the debtor is ignorant, to which he is not privy, and in which the damages to the stranger for breach of contract may be merely nominal. The doctrine contended for would go the length of establishing that, whenever the creditor has placed himself in a position in which it is against his interest to sue the debtor, he has discharged the surety. We think that the doctrine ought not to be extended to the case of a contract with a stranger. The principal debtor having given no consideration for the promise, has no ground to complain of the breach of it, and cannot say that faith has been broken with him. There is no privity of contract with him ; and we see nothing on which any right, either at law or in equity (see Lord Ahinga'''s observations in Lyon v. Holt, 5 Mees. & W. 250, 253, 254), for him to insist on such a contract can be founded. The stranger may have some private reason of his own to wish for some indulgence to be shown ; and if he has given a good consideration, may be entitled to damages, nominal, or large or small, according to any legal interest he may have ; but surely he is the only person to take ad- vantage of his contract. No such doctrine as that there can be a discharge in such case arising from a contract with a stranger has ever yet been established. In all the text-books which were cited, the rule is laid down as to a binding contract xcith the acceptor or jyrincipal debtor. The case of Moss v. Hall, 5 Exch. 46, on which the princi- pal reliance was placed by the defendant, was the case of a contract with the acceptor ; and it was to such a case that the observations of Lord Wensleydale were addressed ; and the only case in which it has been suggested that a contract with a stranger would be sufficient, is a strong authority against such a doctrine. That was the case of Lyon v. Holt, 5 Mees. & W. 250, which was an action by the indorsee of a bill of exchange, alleged in the declaration to have been drawn by Hobson on Hynes, and indorsed by the drawer to the defendant, and by him to Messrs. Woosters, and by them to the plaintiffs. The defendant pleaded that the indorsement by the defendant was not directly to Woosters, but was an in- dorsement by the defendant to John Holt & Co. (persons other than the de- fendant), and by John Holt & Co. to Woosters, and that there had been an agreement between the plaintiffs and John Holt & Co. to give time to all the parties on the bills in question amongst others, and a giving of time in con- sequence. At the trial, the agreement between the plaintiff and John Holt & Co. to give time to all the parties on the bill, and the giving the time, was proved ; but it was not proved that John Holt & Co. were parties to the bill. A verdict having passed for the defendants, and a rule having been obtained to en- COUCH V. WARING. 503 ter a verdict for the plaintiflTs, the question arose whether it was a mati-rial alle- gation that John Holt & Co., the [)ersons witli wlioin the agrieinent was made, were parlies to the liill ; and it was snggested that it was suflicient to show a contract to give time to the acceptor, and that there was nothing in the aiitliori- ties to show that the contract must be U'ith him. Tiie Court, after taking time to consider, held that the plea was not proved, and ordered the verdict to be entered for the plaintiffs. This was a decision that the allegation that the person with ■whom the agreement to give time to prior parties on the bill is made is a party to tlie bill, is a material part of the plea. If, as contended in the present case, a contract with a stranger was suflicient, the plea would have been proved by proof of the contract witii Holt & Co., though they were strangers to the bills. This ia a distinct authority in favor of the plaintiffs ; there is no case or doc- trine the other way ; and the text-writers all treat the agreement which is to dis- charge the surety as one made with the principal debtor. We are not inclined to extend the rule for the first time to a contract with a stranger; but, for the reasons already stated we think that the plea is bad, and therefore that judgment should Ite entered for the defendant. Judgment for the defendant. See also, as to agreements for delay. Bank of the United States v. Hatch, 6 Peters, 2o0 ; Lenox r. Prout, 3 Wheat. 520 ; Lee v. Levi, 1 Car. & P. 553 ; Price r. Edmunds, 10 Barn. & C. 578; Kennard v. Knott, 4 Man. & G. 474; Bray v. Manson, 8 Mees. & W. 668. The last-named case holds that, where time was given to a prior indorser after judgment had been signed in an action upon the same bill of exchange against a subsequent indorser, the Court will not interfere to set aside the judgment on that ground, as the judgment could not be affected by such indulgence given after it was signed. See also Baker v. Flower, 5 Jur. 635. Couch v. Waring. (9 Connecticut, 261. Supreme Court, June, 1832.) Judqment and execution wjainst maker. Indorser sued for balance. — The holder of a prom- issory note sued the maker thereof, and obtained judgment, which was satisfied on execution. He tlien brouglit an action against an indorser to recover a balance of interest due on tiie note, not included in tlie judgment and execution. Held, that tlie ctlect of the former proceedings was to discliarge the maker from further liability, and to preclude the holder from resorting to the indorser. The case is sufficiently stated in the head-note. BissKLL, J. It has been strongly insisted upon, in the argu- ment of this case, that the judgment and execution otTered in the 564 DISCHARGING INDORSER OR DRAWER. Court below, being res inter alios acta;, were admissible only to prove a payment ;vro tanto. To this it may be answered, that the records offered, are evidence of the facts therein contained ; and of the legal consequences which result from those facts. If, therefore, the legal effects of the facts disclosed upon these records be to discharge Waterbury, the maker of the note, it is idle to contend, that the evidence is not available for this purpose, as well as to prove payment. What, then, is the legal effect of the facts, appearing upon this record ? This is the qviestion now presented for decision. Some principles, regarding bills of exchange and promissory notes, and having a bearing on this case, are too well settled to admit of dispute or doubt. There is, for instance, no principle better established, than that a judgment against the maker, discharges none of the subsequent parties to a promissory note. Nor does a mere technical satisfac- tion constitute, for them, any defence ; as where the acceptor of a bill of exchange was charged in execution, and discharged under the lords' act. And where the maker of a promissory note, being taken in execution, was discharged under an insolvent debtor's act, it was holden, that the subsequent parties still remained lia- ble. Chitty . Bills, 161, 362 ; Macdonald v. Bovington, 4 T. R. 825 ; Nadin v. Battle & al., 5 East, 147. So also, if the maker become a bankrupt, and the holder prove his debt under the commission, and receive a dividend, this will not prevent him from resorting to the subsequent parties to the note. Nor will he be thus precluded, although he receive part- payment from the maker, or levy a part under a Ji. fa. against him ; for this is for the benefit of all parties. Gould v. Robson & al., 8 East, 576 , 580 ; Walwyn v. St. Quintin, 1 Bos. & Pul. 652 ; Ux parte Wilson, 11 Ves. 411 ; Kenworthy v. Hopkins, 1 Johns. Cas. 107. On the other hand it is equally well settled, that if the holder give time to the maker, or take from him any new security pay- able at a future day, without the assent of the other parties to the note, they are thereby discharged from their liability. So also, if the holder enter into a composition with the maker, or discharge him, or do any act, the effect of which is to dis- charge him, (as by letting him out of custody upon a ca. sa.^ the subsequent parties to the note are also discharged. Claxtori v. COUCH V. WARING. 5G5 Swift, 3 Mod. 87 ; English v. Darley, 2 Bos. & Piil. 61 ; s. c, 3 Esp. 49 ; Clark & al v. Devlin, 3 Bos. k Pul. 303 ; Gould v. Rol)- 8on, 8 East, 576, 580 ; James v. Badger, 1 Johns. Cas. 131. The principles involved in these decisions, are oi)viously these : — 1. That the holder of a promissory note is entitled to actual payment of it. This right the mere act of the law never takes from him, and so long as he remains passive, or does not act to imi)air this right, he may enforce such payment from any or all the parties liable. But 2. As the maker of a note is previously liable ; and the indors- ers are in the nature of sureties, for the performance of his act, and have a right to look to him for indemnity ; if the holder do any act, the effect of which is to suspend, or to impair, or to de- stroy that right, he cannot afterwards resort to them. Within which of these principles does the case before us fall ? It seems to me to fall clearly within the latter ; and that the maker of this note is for ever discharged, 1)y the acts of the plain- tiff, lie had the entire dominion of the note, upon wliicli he caused the action to be brought. He stated his own demand, prayed out execution, and procured that execution to be satisfied out of the goods and estate of the maker. In this the plaintiff has acted voluntarily. No part of the proceedings were, as to him, in invitum. He was not bound to take judgment for a less sum than was due on the note ; nor was he obliged to enforce that judgment even after it was obtained. He might then have re- sorted to the indorser. He did not choose to do so ; but proceeded to compel the actual payment of his judgment against the maker. What is the effect of these acts of the plaintiff ? Is it not to discharge the maker of the note from all liability? That the plaintiff cannot again resort to him, is clear beyond all doubt. This would be to defy all principle and all analogy. The debt as to him, is extinguished ; and as against him, the maker has the highest discharge known to the law. He can have no relief even by petition for a new trial. Can he, then, by pro- ceeding against the indorser, authorize him to resort to the maker ? Or, in other words, may he do that indirectly, which he has pre- cluded himself from doing directly ? It has been gravely con- tended that he may. It is said, this action is sustainable, because 566 DISCHARGING INDORSER OR DRAWER. the defendant may have his remedy over, against the maker of the note. « If the premises were true, the conclusion would, undoubtedly, follow. But they are denied ; and if found to be false, it is admitted that the conclusion must fail. Now I very well know that tliere are cases, in which the holder of a note is precluded from resorting to the maker, and yet may proceed against the sub- sequent parties ; and they, having paid the note, may resort to the maker for their indemnity. As where he is discharged under the lords' act, or under the insolvent debtor's act, or has become bank- rupt, and obtained his certificate., But in all these cases, an act of the law has intervened, and prevented the holder from resort- ing to the drawer of the note, on the ground, that as between them, there is a technical satisfaction. But these cases do not go one step towards establishing the principle here contended for. Here the holder has, by his own voluntary acts, precluded himself from resorting to the maker. And is there a case to be found, where this has been done, and the subsequent parties to the note have still been held liable ? Can a debt be extinguished, by the act of its owner, and yet the surety for that debt remain unanswerable ? Upon what principle is it, that where time is given to the maker, the subsequent parties to the note are discharged ? Clearly, upon this principle ; that if pay- ment might be enforced against a subsequent party he would have an immediate right of action against the maker ; and the law will not endure, that the holder may do that indirectly, which he has precluded himself from doing directly. It would be a breach of faith. But here the holder has done an act which prevents him from resorting to the maker in all time. He has discharged him. Can he, then, without a violation of all principle, authorize a subse- quent party to the note, to do that which he can never do ? and which he is prevented from doing, not by an act of the law, but by a course of proceedings entirely voluntary on his part ? But it has been urged, that the undertaking of the indorser is, that the maker shall pay the entire sum due on the note ; and as only a part has been paid, the indorser is liable. If the preceding observations are correct, they furnish a decisive answer to this claim. But why was not the whole sum due on the note paid ? The COUCH V. WARING. 507 only reason assigned is, tliat the holder saw fit to take jud^nnont for a less sum. And having enforced payment of the judgment, he now resorts to the indorser to recover the balance. And this, it is contended, he has a legal right to do ; that is, tiie holder of a promissory note may so sever and divide an entire contract, as to 'sue for and recover distinct portions of it, of each of the parties lia])le. If, for instance, he hold a note of 83000 with two indorsements, he may sue for and recover 81000 of the maker, and SIOOO of each of the indorsers ; and they, in their turn, may have their remedies over against the maker for the sums recovered of them respectively ; so that after having satisfied one judgment, the maker is still liable to two further judg- ments on one and the same undertaking. In what book of authority or upon what ))rinci]jle is this doctrine sanctioned ? It has, indeed, been urged, that this is nothing more than what obtains, almost daily, in practice. It is said, that the holder of a note may proceed against all the parties to it, may recover judgment against all, and may obtain a partial satisfaction of one party and the residue of another. All this is true. But he can obtain but one satisfaction and his costs. And I have yet to learn, that where a party has rightfully paid a judgment recovered against him, he may be a second time subjected upon the contract, which was the foundation of that judgment. In Windham v. Wither, 1 Stra. 516, the plaintiff bronglit two actions on a promissory note ; one against the maker and another against the indorser, and recovered in both. And the principal in one judgment and the costs in both having been tendered, it was moved, that no execution might be taken out, which was ordered accordingly ; and the Court said, they would have laid the plain- tiff by the heels if he had taken out execution upon both. I am of opinion that this action cannot be sustained ; and that the rule to show cause must be discharged. Tlie other judges were of the same opinion. New trial not to he granted. See the preceding cases and notes. 568 discharging indorser or drawer. Newcomb v. E-aynor and Others. (21 Wendell, 108. Supreme Court of New York, May, 1839.) Release of first indorser. — If the holder of a promissory note release the first indorser, this discharges the subsequent indorsers. Assumpsit against the maker and second and third indorsers of a promissory. Plea by the indorsers that the holder had given a release under seal to the first indorser. Demurrer to the plea. Nelson, C. J. I am of opinion the plea constitutes a good bar to the action. As between the first and subsequent indorsers, the former must be regarded in the light oi principal ; he stands behind them upon the paper, and is bound to take it up, in case of default of the maker. A discharge of him, therefore, by the holder (regarding the relative position of the parties), on general princi- ples, operates to release them. It is said their rights are not prejudiced, as they may still resort to an action against him if subjected to the payment of the note, as the release leaves the implied contract existing between t\\Q first and subsequent indorsers unimpaired. Conceding this to be so, to permit a recovery against the defendants would but lead to an unnecessary circuity of action. The plea shows a discharge for a presumed good consideration (as it is under seal) of the first indorser, and it cannot be doubted as the case stands, that if the defendants should be obliged to call upon him, the plaintiff would be bound to take his place. The case, therefore, comes within the familiar rule, that a release of the principal operates to discharge the surety. It is further said that Goings may. not have been legally charged as an indorser. If this were so, the plaintiff should have replied the fact, as we will not presume it in the face of the acts of both him and the plaintiff to the contrary. The release would not have been necessary on such a supposition. 'Judgment for defendants on demurrer ; leave to amend on usual terms. PANNELL V. M'MECHEN. 609 Pannell v. M'Mechen. (•i Harris & Johnson, 474. Court of Appeals of Maryland, June, 1810.) Composition ckrd. Jiemidy (ifjctinsi intluisei- resevfed. — A made a negotiable note payalile to 15, wiio indorsed it to C, by wliom it was indorsed to D. A and B made a com- position deed witli tlieir creditors, and conveyed all their estate to trustees, among whom was C, and were discharge<l, with the proviso " that the said release shall not operate in favor of or be construed to release any persons or person wlio may be bound, &c., for A and B, or eitlier of them, or who may have indorsed any note or notes drawn or indorsed by the said A and B, or either of them." Held, that C, who had received due notice of dishonor, was liable to D. Api'h.vl from Baltiiuore County Court. Assumpsit on a promis- sory note by the indorsee (the appellant), against the last indorser (the appellee). The declaration contained two counts, one on the note, and one for money lent and advanced. The facts as agreed upon were these : The action is brought upon a promissory note drawn on the twenty-seventh of April, 1813, by John E. Dorsey, for $3000, payable ninety days after date to Walter Dorsey, or order, by him indorsed to the defendant, or order, and by the de- fendant indorsed to the plaintiff, or order. Across the face of the note was written in red ink, " This note, lield by Edward Pannell, at the time of signing the deed of trust from Wm. H. Dorsey and others to Henry Payson and others, forms part of the lien of $G4,o00 to W. M'Mechen, mentioned in said deed. John E. Dorsey." All the signatures to the note were admitted. Due and legal notice of its non-payment by the drawer was given to the several indorsers ; and the plaintiff was the holder of the note at the time it became due. The above-mentioned writing in red ink was made and signed by John E. Dorsey, and was so made and signed by him in pursuance and in execution of a power vested in him by the deed hereinafter mentioned. A deed of trust was executed by William H. Dorsey and others to Henry Payson and others, on the twenty-third of June, 1813, a copy of which was annexed, and admitted to be a true and correct copy, and that the signature and seal of Edward Pannell, the plaintiff, to the said deed, was his signature, and that he had duly executed tlie deed within the fifty days prescribed therein. No part of the sum specified in the note, and for the recovery of which this action was 570 DISCHARGING INDORSER OR DRAWER. brought, had been paid or satisfied to the plaintiff. The question on this statement of facts was, wliether or not the plaintiff was entitled to recover ? The deed referred to was dated the twenty- third of June, 1813, and was between William H. Dorsey, John E. Dorsey, and Walter Dorsey, of the first part, Robert Gilmor, &c., of the second part, Henry Payson, William M'Mechen, &c., of the third part, " and the creditors of the said William H. Dorsey, John E. Dorsey, and Walter Dorsey, who shall sign and seal these presents within fifty days next ensuing the day of the date hereof, and also such other creditors of the said William H. Dorsey as are hereinafter specially provided for (without their signing and seal- ing these presents), of the fourth or other part." The deed then states that sundry tracts of land, &c., thereinafter mentioned, had been mortgaged to Robert Gilmor, &c. ; that William H. Dorsey, (fee, were indebted to sundry persons in divers sums of money, which they were incapable of discharging otherwise than in the manner thereinafter mentioned ; that " in order to discharge the said several debts, they have proposed and agreed to convey, &c., unto the parties of the third part, and the survivors, &c., for the benefit of the parties thereto of the second part, and of such of the said parties of the third part as are creditors, and of the rest of the creditors of the said William H. Dorsey, &c., in the manner and under and subject to the powers, provisos, and conditions hereinafter expressed and declared, all and singular the real and personal estate hereinafter described or mentioned." The said William H. Dorsey, &c., pursuant to the said agreement, and in consideration of the said sums of money so due and owing from them, and in consideration of the sum of one dollar, &c., granted, (fee, to Henry Payson, &c., sundry tracts of land, &c. ; to have and to hold the said lands, &c., unto the said Henry Payson, &c., and the survivors, &c., upon certain trusts, <fec. That certain funds be applied, in the first place, to discharge the debt due to Robert Gilmor, &c. In the second place, one-half, <fcc., to be ap- plied to the payment of 819,000 due and owing by John E. Dorsey for borrowed money, and to extinguish the interest on 864,400, and any indorsements or engagements which shall be admitted by John E. Dorsey within fifty days, over and above that sum, being the admitted lien of the said William M'Mechen on the estate and property, <fec. After stating sundry other things it proceeds as fol- lows : " And such of the parties hereto of the third part, as are PANNELL V. M'MECHEN. 571 creditors, and all the parties hereto^ of the fourth part whose names are hereunto sul)scril)ed and seals aflixed, do hereby re- spectively signify and declare their assent to the terms and con- ditions of this deed, and their approbation of tlie jjrovisions hereby made for the satisfaction and discharge of their several and respective debts and claims, and in consideration thereof they do severally and respectively release, acquit, and by these presents for ever discharge, the said William H. Dorsey, John E. Dorsey, and Walter Dorsey, their heirs, etc., and each and every of them, and from the payment of the debts and sums of money due or owing to them, the said creditors, from or by the said William H. Dorsey, John E. Dorsey, and Walter Dorsey, jointly, or from or by any or either of them jointly or individually ; and also from all other claims and demands whatever, from the beginning of the world to the date of these presents. Provided that the said release shall not operate in favor of, or be construed to release any persons or person who may Ijc bound for the said William H. Dorsey, Jolni E. Dorsey, and Walter Dorsey, or any or either of them, or who may have indorsed any notes or note drawn or indorsed by the said William H. Dorsey, John E. Dorsey, and Walter Dorsey, or any or either of them." This deed was signed, sealed, and ac- knowledged by the Dorseys and Gilmor, and by all the parties named therein, and among others by the plaintiff. On these facts the County Court gave judgment for the defendant, and the plain- tiff appealed to this Court. Johnson, J. The present is an appeal from a judgment obtained by the appellee on a suit brought against him l)y the appellant, decided on a case stated. [After stating the facts he proceeded.] On those facts the plaintilT ought and would have recovered a judgment. The defence relied on is that the plaintiiT, the indorsee, and holder of the note, released the drawer and the first indorser, and thereby discharged the last indorser. In forming an opinion in this cause, the nature of the release in question, and the manner and terms on which it was obtained, demand particular attention. The drawer and the first indorser, finding themselves in emliarrassed circumstances, unal)lc to meet their engagements as they became due, propose to compound with their creditors ; and on the twenty-third of June, 1813, executed a deed of trust to certain trustees, of whom the defendant was 572 DISCHARGING INDORSEE OR DRAWER. one, of a large real and personal estate, to be by them applied towards the payment of their debts, in the order directed by the deed ; thereby securing, or attempting to secure, to the defendant in this cause, the payment of the notes in question, on the terms that such of their creditors as should come in and assent, by be- coming parties to the deed, should participate and have an interest in the property so conveyed. The deed itself contains a clause by which the drawer and the first indorser arS released, on the express terms that such release should not extend to any other person, but that such person should continue responsible as if the deed had not been executed. To those terms the plaintiff and defendant assented, and signed their names, and set their seals to the instru- ment. It is on that release, so obtained, and on such express stipulations, that the defendant, against the express terms of the instrument itself, relies for his exoneration. The first question which arises is, ought a release on principle so obtained, with the consent of all parties interested, specify- ing its extent and object, to be extended beyond the stipulated object ? The second is, will the law, against the express agreement of all the parties interested, enlarge the release so as to produce a result different from the express stipulations ; in otlier words, to give to the last indorser the benefit of the release against his express agreement ? The object of the deed of trust was to give to the creditors of the drawer and first indorser all the benefit they could derive from the property so conveyed, as between them this arrangement was of considerable moment ; without it the second indorser would have had nothing to rely on but the individual responsibility of the drawer and first indorser ; that individual responsibility he was willing to release, on the substitution of the property conveyed on the terms and on the conditions prescribed by the deed. It may be asked, why must a release, to which all persons in- terested are parties, have an effect different from that they agreed on ? Will it violate any well-known rule of law, or is it incon- sistent with any principle of justice or propriety ? So far from the latter being the case, the reverse appears to follow ; for as the original debtors were bound to pay the whole, and as they could not, but were willing to transfer, on terms acceptable to all inter- PANNELL V. M'MECHEN. 573 ested, what they had, for the easement of those wlio were bound for them, the refusal of liim then holdnig the obligation to accede to sucli terms, would present grounds of complaint ; not such, it is true, as would exonerate those who were bound for them. But although it would not free them, yet it is evident such refusal, in Its result, must draw more from the funds of the last indorser than otherwise would have been the case. With tlie assent of tiie holder of tiic note, a part, if not the whole, might have been raised from tiie funds of the drawer and first indorser. Those funds could not be ol)tained except on their discharge ; that discharge the second indorser was willing to assent to, remaining himself responsible. But, if such discharges cannot be obtained without releasing the last indorser also, then no accommodation for his benefit, requiring the assent of the holder, can ever be ob- tained. The question then is, must the release of the drawer and first indorser, by virtue of any fixed principle of law, release also the next indorser, when he is a party to the instrument contain- ing the release, expressly declaring such should not be the effect ? In a case of this description, when a person claims tiie benefit of a release against its terms, to which he has assented, it might be expected some decisions in support of the position would have been produced ; none such have been cited. The cases relied on are, that a release given to a joint obligor, or to joint and several obligors, will release the other, and that a release to one trespasser, will release the co-trespasser. As to tiie case of the joint obligor released, discharging the other, the principle of the decision seems to be, that unless it ex- tended to all, the person to whom the release was given could obtain no benefit l)y it ; and therefore, that a release given to such an obligor, should extend to the co-obligor, although the release on its facts contained a proviso to the contrary. The only case which has been produced of such a limited or restricted release is Everard v. ilerne, in Littleton, 100 ; but the counsel differ in opinion as to the real state of that case. The one supposes the bond to have been joint only, the other joint and several. The reason why it is conjectured to have been joint and several is that the suit was brought against one. There is noth- ing in the case from which it is to be inferred the bond was several as well as joint, except only that one was sued. Nor is it deemed of any importance whether joint, or joint and several. But sup- 574 DISCHARGING INDORSER OR DRAWER. posing the case in Littleton to have been on a joint and several bond, yet it seems not to meet the case before the Court ; for nothing is disclosed by that case of the assent of the co-obligor to such release producing such an effect. It is presumed that the release in that case was on a joint bond, for if the bond was joint and several, the obligor might have sued one, omitting to sue him he wished to benefit ; a release therefore was not necessary, un- less it was intended, as between the obligors themselves, to change the co-responsibility, and cast the whole burden on him whom the obligor elected to remain liable. But the case in Littleton is the only authority cited with a restrictive release. All the other cases of releases are where the releases are gen- eral, importing satisfaction ; and the debt, once satisfied, whether joint, or joint and several, the demand of the obligee was at an end, and of course he could recover from no person — differing materially from a release showing by itself the claim still existed, — differing materially from a case, where, by the facts as agreed on by tlie parties, it is expressly admitted that no part of the money has been paid or satisfied. The cases most apposite to the cause before the Court are where 4;he holder of a note, or bill, gives time, which would exonerate the drawer or indorser ; but which fact of giving time is deprived of that effect in consequence of the assent of the person who would have been bound, if such time had not been given. The time given is the ground of discharge or exoneration, the assent de- prives the time so given of such an operation. Therefore, without saying that a release to a person bound jointly ajid severally, with a proviso attempting to limit its effect, can operate to the discharge of the co-obligors not included in the release, the Court are clearly of the opinion, that the release given in this case cannot discharge the defendant from his responsibility as indorser of the note on which the suit is brought. The judg- ment of the Court is therefore reversed. Judgment reversed. Sohier v. Loring, G Cusb. 537, was a similar case, except that the indorser sued was not a party to the composition deed. The opinion of the Court was delivered by Metcalf, J. The composition made with the acceptors would have discharged the drawers and indorsers, if there had not been inserted in the composition deed a proviso that it should not prejudice the Iiohlers' remedies against any other par- ties besides the acceptors. Bayley, Bills (2d Am. ed.), 357, 358. The first question in the case therefore is, what is the legal effect of that proviso ? PANNELL V. M'MECHEN. 575 It is settled in Enj^land that a disdiarge or giving time by a creditor to his principal debtor will not <lischarge the surety, if there be an agreement between the creditor and the principal debtor that the surety shall not be dischargt'd. And this rule of law is applicable to parties to bills of exchange and |)romissory notes, who are liable only on the failure of i>rior parties, though they arc not technically sureties of those parties. 1 Stepli. N. P. 9:50; Montagu, Composi- tion, 36; Burge, Suretyship, 210; Chitty, Bills (10th Am. ed.),4->0; Byles, Bills (2d Am. ed.), 202. See also Mallet v. Thompson, 5 Esp. 178. The same doctrine was advanced by Messrs. Hamilton and Kiker in argument, and was recognized by the Supreme Court of New York in Stewart v. Eden, 2 Caines, 121, very soon after it had been laid down by Lord Eldon, in Ex parte Giffonl, 6 Ves. 805. In this last case Lord Eldon said sureties would not be discharged by a discharge of the principal, if there was '* a reserve of the remedy " against the surety, and that Lord Thurlow had so admitted in a previous case not re- ported. He afterwards laid down this principle more authoritatively in Boultbee t?. Stubbs, 18 Ves. 20, and Ex jxDte Carstairs, 1 Buck, oGO. In Ex j)artr Glen- dinning, 1 Buck, 517, he said: "If a man by deed agree to give his principal debtor time, and in the deed expressly sti[)ulate for the reservation of all his remedies against other persons, they shall still remain liable, notwithstanding the arrangement between their principal and the creditor." In Nichols v. Norris, 3 Barn. & Adol. 41, the Court of King's Bench decided that a composition like that in the present case, made with the indorser of a note given for his accommodation, did not discharge the maker. It was said by the Court that such composition deeds were very common," and that the special pro- viso took the case out of tlie common, rule as to the discharge of sureties bj^ giving time to the principal. In 18-46, the case of Kearsley v. Cole, 16 Mees. & W. 128, came before the Court of Exchequer. That was an action for money paid for the defendant, for whom the plaintiff had been surety. The defence was, that the defendant had made an assignment to his creditors, who had covenanted not to sue him. But it appeared that there was a proviso in the deed of assignment, that any creditor might execute it without prejudice to any specific lien or security, or to any claim against any surety, and that this proviso was inserted with the knowledge and consent of the plaintiff. lie was afterwards called on as surety of the de- fendant, and paid the claim. The (piestion was, whether this payment was to the use of the defendant, or was a voluntary payment which gave him no right to reimbursement. The Court held that the plaintiff was entitled to recover, — he not having been discharged from his suretyship by the deed of assignment. The opinion of the Court was given by Mr. Baron Parke, who fully and clearly stated the decisions and the principles upon which they were made as follows : " The question is, what is the effect of a discharge with reserve of remedies con- sented to by the surety ? "We do not mean to intimate any doubt as to the effect of a reserve of remedies without such consent; and the cases are numerous that it prevents the discharge of a surety, which would otherwise be the result of a composition with, or giving time to, a debtor by a binding instrument ; and the reserve of remedies has that effect upon this principle : first, that it rebuts the implication that the surety was meant to be discharged, which is one of the rea- sons why the surety is ordinarily exoneratetl by such a transaction ; and, second- 576 DISCHARGING INDORSER OR. DRAWER. ly, that it prgvents the rights of the surety against the debtor being impaired, — the injury to such rights being the other reason ; for the debtor cannot complain if, the instant afterwards, the surety enforces those rights against him ; and his consent tliat the creditor shall have recourse against the surety is, impliedly, a consent that the surety shall have recourse against him. This is the effect of what Lord Eldon says in Ex jiarte Gilford and Boultbee v. Stubbs, as to the re- serve of remedies ; and the general proposition that, with that recourse, the composition or giving time does not discharge the surety, is supported by those and the following cases : Ex iiarte Glendinning : Nichols v. Norris ; Smith v. Winter, 4 Mees. & W. 454, and others. This point must therefore be consid- ered as settled. Some remarks have, indeed, been made by Lord Denman, in the case of Nicholson v. Revill, 4 Adol. & Ellis, 675, on the doctrine of Lord Ehlon, in Ex jxaie GifFord, throwing doubt on its correctness, on the supposition that Lord Eldon had held that a creditor could release one joint and several debtor, and hold another liable by a reserve of remedies ; which would certainly be against the decision in Cheetham v. Ward, 1 Bos. & Pul. 630, unless the in- strument of release could, by reason of the context, be construed to be a cove- nant not to sue, as it was in the case of Solly v. Forbes, 2 Brod. & Bing. 38. But we consider it clear that Lord Eldon meant only to apply the doctrine to cases where there was no release, but a composition or giving time not amounting to a release, which is the present case ; and, with reference to it, the rule laid down by Lord Eldon is not impeached by Lord Denman\'s remarks." And the decision of the Court was that the surety's consent to the creditors' reserve of their remedy against him did not alter the law of the case in favor of the principal. These doctrines were incidentally recognized by Mr. Justice Wilde, in Ameri- can Bank v. Baker, 4 Met. 175, and were adopted and applied by the Court of Appeals of Maryland, in Clagett r. Salmon, 5 Gill & J. 314. It is very obvious that a principal debtor may gain little or nothing by such a composition as this with his creditor, inasmuch as he is left liable to the like proceedings against him by his sureties, which his creditor might have instituted if no compositioji had been made. But if he pleases to subject himself to that liability by voluntarily executing an agreement which has that effect, there is no legal reason why he should not be held to that agreement. On these grounds we are of opinion that the holders of the bills in the pres- ent case were rightly permitted by the master to prove their claims thereon against the drawers and indorsers, — the latter not having been discharged by the com- position made by the former with the acceptors. See also Hutchins v. Nichols, 10 Cush. 299 ; Gray v. Brown, 22 Ala. 262 ; Cowper V. Smith, 4 Mees. & W. 519 ; Bruen v. Marquand, 17 Johns. 58. Though the acceptor enter into a composition deed with his creditors, the drawer will not be discharged by a release of the acceptor from the holder, if he (the drawer) retain funds of the acceptor for the purpose of meeting the bill. Sargent v. Appleton, 6 Mass. 85. An agreement entered into between the holder and the acceptor of a bill dis- honored for non-payment, that the acceptor shall pay to the holder the amount of the bill and no more, discharges the drawer, though his assignees, he being then a bankrupt, are parties to such agreement. De La Torre v. Barclay, 1 Stark. 7. mayiikw v. boyd. 577 William E. Mayiiew c. William Boyd. (5 Maryland, 102. Court of Appeals, Deceiiibor, 1853.) Mortf/af/e sinirili/ sold without iitdoiser's asseut. — An indorsement of tlirec notes was made, in consideration of tlie execution of a mortgage at tlie same time by tlie maker to tlie lioider, by tlie terms of wbich tlie mortg.agee was to sell the property only on default of tbe maker to pay tlie notes at tlieir maturity. Wlien the first note was due it was dishonored, but by the assent of all parties a new one was substituted in its place. The mortgagee, after the original, but before the new note or any of the others matured, sold the property with the assent of the mortgagor, but not of the indorser, applied the proceeds to pay the first two notes, and sued the indorser upon the third. Ilild, that the right to sell, which accrued upon the dishonor of the first note, was taken from the mortgagee by the substitution of the new one in its place, and the sale before the maturity of the latter was a violation of the contract between the parties and discharged the indorser. General rule. — Any dealings with the principal debtor by the creditor which amount to a departure from the contract by which an indorser is to be bound, and which, by possibility, might materially vary or enlarge the latter's liability without his assent, discharge the indorser. Appeal from Baltimore County Court. Assumpsit by the appellant, as holder, against the appellee, as indorser, of a promissory note for $900, drawn by one W. B. Pyfer, in favor of one Robert Close, dated October 25, 1848, and payable in one year after date. Plea non-assumpsit. Exception. The making, indorsement, and protest of the note, and due notice thereof to the defendant were admitted. Tlie de- fendant tlien offered in evidence a mortgage executed V»y Pyfer, the maker of the note, to Mayhew, the plaintiff, of certain iiouse- hold furniture in a hotel in Baltimore city. This mortgage bears the same date as the note, and recites Pyfer's indebtedness to Mayhew for §2089.23, for which he had given three notes of the same date with the mortgage, one payable to Boyd and the other two to Close, and indorsed by Boyd and Close, one for §900, at one year (being the one in suit), another for §594. Gl, at six months, and the other for 8'")94.G2, at four months. The condition was, that if Pyfer should pay to Mayhew the said sum of §2089.23 " according to the tenor and effect of said notes," the mortgage should be void ; otherwi.se, ^layhcNV might sell the mortgaged property, and apply the proceeds to the payment thereof and the balance to the mortgagor, 37 578 DISCHARGING INDORSER OR DRAWER. When the note for 1594.62, at four months, became due it was protested, and due notice given to the indorsers ; and shortly after- wards another note for $614.39, dated eighth of March, 1849, was made by Pyfcr, payable at forty days, to Close, and indorsed by him and Boyd, by way of renewal of the protested note, including the principal, interest, and costs of protest of the original note, and the interest for the time tlie new note had to run, which was de- livered by Close to Mayhew, who thereupon delivered to him the said original note. It was further in proof, that on the eighth of April, 1849, after the original, but before the new note or either of the others mentioned in the mortgage became due, by the consent of the mortgagor and the authority of the mortgagee, the mort- gaged property was sold and the proceeds paid over to Mayhew, who applied them to the notes as they fell due. The fund was more than sufficient to pay the two first falling due, which were not demanded of Pyfer nor protested, nor any notice given to the indorsers of their payment or non-payment. The sale was fairly made ; and it was proved that Pyfer's house was well furnished in the summer of 1849. and that he went to California in June, 1849, taking with him property or merchandise to the amount of $400 or •1500, and died there in 1850. It was further proved, that Close and Boyd indorsed said notes at the request of Pyfer ; and when they called on Mayhew and proposed to become indorsers on said notes mentioned in the mortgage, it was understood and agreed that Pyfer would execute said mortgage. Upon the whole evidence the plaintiff offered three prayers, in substance as follows : — 1. This prayer, after leaving to the jury to find the sale of the mortgaged property by the mutual consent of Pyfer and Mayhew, and payment over of the proceeds to the latter by the former on account of the indebtedness mentioned in the mortgage before the notes for $614.39 and $594.61 became due, asserts Mayhew's right to apply the same to pay said notes without any demand on Pyfer or giving any notice to the indorsers of their payment or non-pay- ment ; provided the first was a renewal of one of the original notes which was not otherwise paid, and that he was not bound to credit the note in suit with any more of said proceeds than may remain after paying those two. 2. This prayer leaves to the jury to find the making, indorse- ment, and protest of the note in suit, that Mayhew fairly applied the proceeds of sale to pay the notes secured by the mortgage, that MAYHEW V. BOYD. 579 the sale was fair and with the consent of the mortgagor, and such application left only a balance of the last note due (the one sued on), and then asserts that May hew was under no legal obligation to protest the two former notes in order to hold Boyd lial)le on the one in suit. 3. This asserts tliat if the jury find that no actual loss or dam- age was sustained by Boyd from the sale of the mortgaged property and application of the proceeds as above stated, then the facts of the sale being made before the time limited for it in the mortgage and without the consent of Boyd, are not sufficient of themselves entirely to l)ar the plaintiff's right to recover in this action. The defendant then asked an instruction, that if the jury find the maiving and indorsement by Close and Boyd of the notes as mentioned in tlie mortgage ; that Pyfer executed said mortgage to secure their payment ; that the note for !r5")04.(j2 was paid and settled by another for -^614.39, drawn by Pyfer and indorsed by Close and Boyd ; that Mayhew, before said notes or either of tliem became due, sold the mortgaged property without the consent of Close and Boyd or either of them ; tiiat the notes for §014.39 and •$594.61 were not protested for non-payment, and Close and Boyd did not receive, and Mayhew made no effort to give them, any notice of their non-payment ; that Pyfer, at the time the two last-mentioned notes became due, was in such circumstances that Close and Boyd could or might have recovered their amount from him ; that the proceeds of said sale amounted to more than the note sued on with interest and were received by Mayhew, then he is not entitled to recover. The Court (^Frick, C. J. and Lc Grand, A. J.) rejected the plaintiff's prayers and granted that of the defendant. To this ruling the plaintiff excepted, and the verdict and judgment being against him appealed. Mason, J. The record in this case shows that the indorsement by the defendant of Pyfer's notes to the plaintiff was I)ased ujwn the security afforded by tiie mortgage, and therefore the mortgage may be regarded as the consideration of the agreement into which the surety entered when he consented to indorse the notes. Tiio terms of the mortgage, therefore, nuist be strictly complied with by the plaintiff in order to bind the defendant as indorser. One of those terms is, there shall be no sale of the mortgaged property until 580 DISCHARGING INDORSEE OR DRAWER. default of the principal debtor to pay the notes upon their maturity. We tiiink this part of the contract between the several parties thereto has been departed from in the sale which has taken place, under the circumstances detailed in the evidence. This sale took place before the maturity and dishonor of the notes in question, and without the assent, and, for all we know, without the knowl- edge, of the indorsers. It is true the first of the original notes had fallen due and was dishonored, but it is equally true, by the assent of all parties, another note was substituted in the place of it, which thereby took from the plaintiff his right to sell under the mortgage for the non-payment of that note : the effect of the substitution of the one note for the other was to place the new note in the same relation to the mortgage that the first one had borne. Before these notes became due, as we have already shown, the sale took place. But it may be said, that although this might have been a depart- ure from the strict letter of the contract between the parties, yet it cannot be shown that the indorsers were prejudiced thereby or their liability enlarged. Whether this was or was not the result of the premature sale, does not vary the question. Any dealings with the principal debtor by the creditor which amounts to a de- parture from the contract by which a surety is to be bound, and which by possibility might materially vary or enlarge the latter's liabilities Avithout his assent, operates as a discharge of the surety. In this case it is not improbable, much less impossible, that if the plaintiff had duly protested the first two notes as they fell due and were dishonored, the indorsers, or one of them, might have paid them off, and by immediately suing the debtor thereon, might have secured the debt and thereby reserved the whole of the mortgaged property in the hands of the plaintiff for the purpose of meeting the third and last note upon its maturity. The sale of the mort- gaged goods, under the circumstances under which it took place, deprived the indorser of the opportunity of pursuing tlie course we have pointed out, and of the chances, at least, of relieving himself from liability altogether. Believing that the sale of the property under the circumstances was a violation of the terms of the contract with the indorsers, by which their rights might have been prejudiced, they are thereby discharged. Judgment affirmed. farmers' and mechanics' bank v. rathhone. 581 Farmers' and ^Iechanics' Bank v. Henry Uathbone. (26 Vcrinoiit, li). Supreme Court, , 185-J.) Distinction betiveen bill for value and accommodation bill. — If a bill of exchange be drawn and accepted at a time wlien the drawer has an open account witli the accept(jr, for goods which he is in the course of sending to the acceptor for sale, and it appear to have been the understanding of tlie parties, at the time, that the bill was to be paid by the acceptor, and its amount be entered in the general account, it will be treated as a bill drawn for value, imposing upon the acceptor the primary obligation to pay it, and cannot be held an accommodation bill ; and its legal character, in this*espect, will not be affected by any alteration of the balance of the account, nor by the fact, afterwards ascertained, that the drawer was indebted to the acceptor at the time of the acceptance. The release of the drawer, in sucli case, by the holder, will not discharge the acceptor, but will be treated as a reUnquishment, merely, by tlie holder, ot so much secu- rity wiiich he had for the payment of the debt. Accommodation paper. Release ofdraicer. — An indorsee, for value, of a bill of exchange, who became such before its maturity, and in ignorance that it was given for accom- modation, has a right to treat all parties thereon as liable to him according to their relative positions on the bill, and to regard the acceptor as the principal debtor, and the liability of the drawer as collateral ; and this right is unaffected by any subse- quently acquired knowledge, that the bill was given for accommodation. In such case a release of the drawer, by the holder, has no efTect on the ultimate liability of the acceptor. And in this respect the rule is the same m equity as at law. Assumpsit on two bills of exchange for $600 each. The declara- tion contained two counts ; the first count was as follows : — " The defendant is attached to answer to the ])laintifTs in a plea of the case for that one Caleb E. Barton heretofore, to wit, on the fifth day of October, a.d. 1844, at Charlotte, in said county of Chittenden, according to the custom and usage of merchants from time immemorial, used and approved of within this State, made his certain bill of exchange in writing, bearing date the day and year last aforesaid, and directed the said bill of exchange to the said defendant, at number thirty-five. Water Street, New York, and thcrel)y, then and there requested the said defendant thirty days after the date thereof, to pay to the order of one Samuel H. Barnes, the sum of six hundred dollars, for value received, and then and there delivered said bill of exchange to the said Samuel H. Barnes, which said bill of exchange the said defendant after- wards, to wit, on the day and year last aforesaid, ui)on sight there- 582 DISCHARGING INDORSER OR DRAWER. of accepted according to the usage and custom of merchants. And the said Barnes to whose order the payment of the said sum of money in said bill of exchange specified was to be made, after the making of said bill of exchange, and before the payment of said sum of money, to wit, on the day and year aforesaid, at the place last aforesaid, according to the said custom and usage of merchants, indorsed said bill of exchange, and then and there ordered* and appointed the said sum of money in the same speci- fied to be ])aid to the said plaintiffs, and then and there delivered the said bill of exchange so indorsed as aforesaid to the said plain- tiffs, and the said plaintiffs aver that afterwards and when said bill oS exchange became due and payable according to the tenor and effect thereof, to wit, on the seventh day of November, a.d. 1844, to wit, at number thirty-five, Water Street, in the city of New York, in the State of New York, one of the United States of America, that is to say, at Charlotte, aforesaid, the said bill of ex- change was duly presented and shown for payment thereof to a clerk in the store of the acceptor, according to the said custom and usage of merchants, and payment of the said sum of money in said bill of exchange specified, was then and there duly re- quired, but that neitlier the said defendant nor any person or persons on behalf of said defendant, did or would when the said bill of exchange was so presented and shown for payment thereof, as aforesaid, or at any time before or afterwards pay the said sum of money therein specified, or any part thereof, but then and there wholly neglected and refused so to do, of all which said premises said defendant afterwards, to wit, on the day and year last afore- said, had notice, by means whereof according to said usage of merchants, he, the said defendant, then and there became liable to pay to said plaintiffs said sum of money in said bill of exchange mentioned, when he should be thereunto afterwards requested ; and being so liable, he, the said defendant, in consideration thereof afterwards, to wit, on the day and year last aforesaid, at the place aforesaid undertook and then and there faithfully promised the plaintiffs to pay them tlie said sum of money, in said bill of exchange specified, when he should be thereunto afterwards re- quested." The second count was for another bill of exchange for a like sum, of which the following is a copy : — farmers' and mechanics' bank v. rathbone. 583 " $600. Charloti'e, Vt., 2otli Oct., 1844. " Tliirty days after date please pay to the order of Samuel IT. Barnes, six hundred dollars value received and charge to account of Yours, (fee. Caleb E. Barton, Charlotte, Vt. " To Mr. Henry Rathbone, 35 Water Street, New York." And indorsed by the said Barnes, and accepted by the defendant. The case was tried March term, 1852, — Pierj}oi7it, J., prcRidrngr Plea, the general issue and trial by tiie Court. On the trial, the plaintiffs proved the drawing and indorsing of the bills declared upon, and their acceptance by defendants as averred, and that they were regularly discounted by them before their maturity ; that the same were duly protested for non-pay- ment, and due notice given to charge the drawer and indorser. It appeared that no payments had been made upon them other than what appear in statement, marked " B," which was as fol- lows : — Draft due Nov. 7, 1844 $600 OO Protest, &c 1 75 Interest to July 10, 1846 70 52 Draft due Nov. 27, 1844 600 00 Expense 1 75 Interest to July 10, 1846 68 19 $1342 21 July 10, 1846, Cash 612 00 $730 21 Interest to March 17, 1848 86 28 $816 49 March 17, 1848, Cash 500 00 $316 49 It appeared from the depositions, of one Ferguson, and Curtis Rathbone, introduced by defendant, that prior, and up to the ac- ceptance of the drafts, Barton, the drawer, being in Charlotte, in this State, had been in the liabit of consigning cheese to the de-^ 584 DISCHARGING INDORSER OR DRAWER. fentlant at New York, for sale on commission and of drawing on the defendant for the proceeds, and that the latter was in the habit of accepting the drafts. That the bills in suit were so drawn and accepted, the defendant believing, when the last-mentioned bills were accepted, he had enough of Barton's property to meet them ; but that at their maturity Barton was indebted to defendant on account • apart from the bills in suit, and the latter had no property or funds in his hands of the former wherewith to meet them. That the bills in suit are those charged October 11th and 30th, 1844, in the defendant's account appended to the deposition of Ferguson, and were respectively accepted at those dates, and were charged over to Barton iii the same manner in which the other acceptances were in the said account. The defendant also intro- duced in evidence the following instrument : — "In consideration of five hundred dollars, to the Farmers' and Mechanics' Bank, paid by Caleb E. Barton, of Charlotte, the said bank hereby wholly release and discharge the said Barton from all liability or indebtedness to said bank, which said bank have or may claim to have for, or on account of, any and all notes, checks, drafts, or bills of exchange or acceptances to which Henry Rath- bone is in any wise a party, either as maker, drawer, indorser, or acceptor, or payee, or drawee, and also from all liability on any paper which has been sued against said Barton, in favor of said bank or any other paper said bank may have against Barton, pre- vious to the seventeenth of March instant, which said Rathbone was or is any wise a party to. " In witness whereof we have hereunto afhxed the seal of said Bank, at Burlington, this thirtieth day of March, a. d. 1848. (Signed) " Farmers' and Mechanics' Bank. [l. s.] " By John Peck, Pres't " The defendant also proved, that plaintiff's cashier impressed their seal thereon, and subsequently delivered the instrument to Barton's attorney, and that the plaintiffs were then as much in the habit of sealing instruments by impressing their seal upon the paper, as by sealing in any other way. That July 10, 184G, Barton paid plaintiffs the six hundred and twelve dollars entered in the above statement '' B," when they discharged a mortgage, which they held against him as drawer ; and that he supposed he was thereby discharged from any further farmers' and mechanics' bank v. RATHBON'E. 585 liability on the bills ; but tiiat the jilaintifTs understood that he was not. Afterwards plaintiffs sued JJarton, as drawer, and after suit and on March 17, 1848, rather than stand trial he paid five lunidrcd dullars on the hills, the same entered in statement " B," with the understanding that he was to be discharged as drawer; but there was no other agreement to discharge him than what ap- pears in said instrument, which was executed in pursuance of such understanding, and in consequence of the last payment, which sum last paid is the same mentioned in said instrument. That on making said payment, the suit against him was with- drawn. The signature to the instrument was admitted to be that of John Peck's, then president of plaintiffs. The defendant also introduced the affidavit of his attorney, Ashbel Peck, filed in the cause, on a motion for continuance, March 2o, 1847, in which affi- davit Mr. Peck testified that he " made arrangements with the defendant, to take the testimony of his book-keeper in New York (defendant's brother), to show that the drafts in suit are accom- modation drafts, as between defendant and the drawer, Caleb E. Barton, and that defendant had overpaid said Barton, exclusive of the drafts in suit, and that defendant was to go to New York, and expected to go in a few days, and write me the time and place and person before whom he would take the testimony. I was then to give notice to plaintiffs, and have the testimony taken in in season for this term, &c." But there was no proof, that the plaintiffs, previous to the execution of the release to Barton, had notice of the contents of the affidavit, excei)t so far as it was known to their prosecuting attorneys in this suit, to whom the same was actually known at the time of its filing. It appeared that the plaintiffs discounted the bills to Barton, under his representations and iu the belief that they were drawn on cheese consigned to the defendant, and supposed that the de- fendant had in his hands property or funds of Barton sufficient to meet them when they were discounted and accepted ; and that plaintiffs never had any knowledge to the contrary, except so far as they were informed of the same by said affidavit and by the appearing at the taking of said depositions. It also appeared that there was no evidence tending to show that the defendant had any knowledge of, or consented to, the release of Barton previous to its execution. Tiie plaintiffs claimed judgment for the balance of said bills 586 DISCHARGING INDORSER OR DRAWER. unpaid, upon these facts and the evidence referred to. The County Court rendered judgment for the defendant. Exceptions hy plaintiffs. IsHAM, J. This action is brought on two bills of exchange, drawn by Caleb E. Barton on the defendant, Henry Rathbone, of the city of New York ; both of which were duly accepted, and before maturity, were discounted, and transferred by indorsement to tlie plaintiffs. When the bills matured, they were dishonored, duly protested, and notice thereof given to the drawer. On the trial of the case, at the circuit, the defendant insisted, that the bills were accommodation bills ; and, upon the facts stated in the bill of exceptions, he now insists, that the bills are of that character, that the drawer is the person primarily liable, that the acceptor stands as his surety, and that the release of the drawer, by the plaintiffs, operates as a discharge of the defendant, as ac- ceptor. It is admitted, that if these bills are not accommodation bills, but are really bills for value, the release will not affect the liability of the acceptor. It will discharge all persons interme- diate between the holders and drawer, but not those prior on the bills, nor those on whom rests a primary or absolute liability to pay them. English v. Derby, 2 B. & P. 61; Bailey, J., in Cla- ridge v. Dalton, 4 Moore & S. 226 . Chitty, Bills, 451. We are not satisfied that these bills are to be treated as accom- modation papers. It is true the fact is found in the case, " that at the maturity of the bills, the drawer was indebted to the acceptor on account, apart from the bills in suit, and that the latter had no funds in his hands of the former, wherewith to meet them." But, in connection with this statement, it equally appears from the ex- ceptions, that during the season of 1844, the drawer, at different times, consigned to the defendant as commission merchant, for sale on his account, a quantity of cheese, the gross proceeds of which amounted to $7848.78 ; and from the statement in the account of sales, we perceive that a much larger amount than the sum of these bills was realized therefrom, after these acceptances were given. The account arising from the sale of this property, com- menced in July, 1844, and closed in November of that year. There has been no statement of that account rendered, or balance ascertained by the parties. As between them, tlie whole account remains open and subject to their future liquidation. While this farmers' and MECFIANICS' bank v. RATIIBONE. 587 account was accruiii<r, these bills were drawn and accepted, oljvi- oiisly and with the understanding that they w6re to be paid by the defendant, and the amount so paid be entered into their general account. During that period, they doul)tless anticipated, that the balance would be sufficient to pay these bills, and have been respectively disappointed in the amount finally realized therefrom ; so that there is now a balance due the acceptor, as stated in the account of sales. But as these l)ills, at first, were drawn upon projjcrty consigned to the accej)tor, and he accepted them with the same means of knowledge whicii the drawer had, and thereby assumed the primary obligation to pay them, there is no propriety in treat- ing the bills otherwise than as creating obligations of that char- acter, after they have passed, in due course of business, into the hands of an indorsee. In so treating them, we are manifestly carrying into eflfect the mutual intention of the parties when the bills were drawn and accepted ; for it is distinctly stated in the case that both the drawer and the drawee supposed and believed that there were funds sufificient in the hands of the drawee to pay them at maturity, and under that belief the drawer made such represent- ations to the i)laintiffs, at the time of their indorsement and discount. The legal effect and cliaracter of bills of exchange, so drawn- and accepted, is not changed, or affected, by any alteration of the balance of the account, nor even by the fact if it should be after- wards ascertained, that there was an indebtedness, at the time of the acceptance, from the drawer to the acce])tor. This principle is fully illustrated by the case of Bagnall v. Andrews, 7 Bing. 217. Indeed, the facts in that case, and the principles there established, have such a direct application to this case, that we cannot consider these bills otherwise than as bills for value, without entirely disre- garding the authority and principles of that decision. In that case when the bill was drawn, the drawer had an open account with the acceptor, for goods which he was in the course of sending to him for sale ; neither of them at that time knew the state of the ac- count ; " and it afterwards turned out, that the drawer was, at the time of the acceptance, indebted to the acceptor, instead of the acceptor being indebted to the drawer." Before the bill be- came due, tiie drawer became bankrupt, and indorsed the bill to the plaintiff, who was ignorant that an act of bankruptcy had been 588 DISCHARGING INDORSEE OR DRAWER. committed. The drawer being called as a witness, was objected to as being interested, on the ground that this was an accommodation bill, and that if the plaintiff recovered, he would be responsible to the defendant, not only for the amount of the bill, but for the costs of that suit. Tindal, C. J., after remarking that such conse- quences would follow, if this was an accommodation bill, and that the witness would be incompetent, observed, that " we think, upon the facts in the case, the bill was not an accommodation bill. At the time it was drawn, the drawer had an open account with the de- fendant for goods sent, and which he was then in the course of sending to him for sale. The drawer might, at that time, reason- ably expect, that the acceptor would pay the bill out of funds that might be in his hands, when the bill arrived at maturity ; for the evidence is express, that, at the time the bill was drawn, neither the drawer or acceptor knew the state of the account. A bill so drawn and accepted cannot be treated as an accommodation bill, nor, consequently, is there any implied obligation, on the part of the drawer, to indemnify tlie acceptor against the costs of any action which may be brought against him." 1 Phil. Evid. 61 ; 9 Serg. & Rawle, 237. If that case is to be treated as sound in principle, it makes a final disposition of the case under consideration ; for under that authority, these bills cannot be considered as accommodation bills, but must be treated as bills for value ; the acceptor being the party primarily liable, and the drawer considered only as his surety, or guarantor. In such case it was properly remarked, that the re- lease of the drawer was a relinquishment merely of so much security, which the plaintiffs had for the payment of the debt, and which in no event can affect the liability of the acceptor. It is very evident, also, that the plaintiffs could have sustained no action against the drawer of these bills, unless they had been duly protested and notice given. This principle is founded on the consideration, that a primary liability for their payment rests only upon the acceptor ; while that of the drawer is contingent and collateral, and arises upon the default of the acceptor. The neces- sity of protest and notice, in such cases, is not avoided by a fluc- tuating balance in their accounts, nor even by the fact, where there exists an open account, that there is an indebtedness from the drawer to the acceptor. Orr v. Magenuis, 7 East, 359 ; Blackhaw V. Doren, 2 Camp. 503 ; In re Brown, 2 Story's C. C. 502, 521 ; farmers' and mechanics' bank v. rathrone. 589 Story, Bills, § 811 ; 2 Smith's Lead. Cas. 20 ; Smith's Merc. Law, 31o; ];■> Fetors, 303. But if these bills are to be regarded strictly as accommodation bills, the same result, we think, must follow. In such case, it is insisted, that the drawer is the person primarily liable ; that the acceptor is to be treated as his surety, and that the holder of the bills is bound so to regard and deal with them, notwithstanding the terms of the bill, whenever he has notice, tliat the acceptance was for accommodation ; whether that notice was received at the time he took the bills, or at any subsequent period. It is jiroper to ol)servc, that this question does not now arise be- tween the drawer and acceptor ; as between tlicm the consideration may be inquired into and the true relation of the parties shown ; but the question is presented in a case between the acceptor and an indorsee for value, without notice, that the bill was for accom- modation at the time he became the holder. When these bills were received by the plaintiffs, they were invested with those legal rights, and became subject only to those duties that arose from what appeared on the face of the bills. Their legal effect and the relative liability of the drawer and acceptor could not be changed or altered by any fact not then appearing. These principles have a peculiar application to bills of exchange, as they are designed for commercial purposes ; and their applica- tion is required to impart to them that credit and currency which is necessary to insure the purposes for which they were intended. At the time the plaintiffs became indorsees they had the right, on the one hand, and were bound, on the other, both at law and in equity, to regard the acceptor as primarily liable, and the drawer as his surety ; they could have released, compounded with, or given time to the drawer, without in any way affecting their right to hold the ultimate liability of the acceptor. Story, Bills, ^ 420, 430 ; 15 Peters, 303 ; 1 Mees. & W. 374. Such being their right at the time they became the holders of the bills, there is no pro- priety or authority in saying, that that right can be subsequently changed, or affected, by a mere notice from the acceptor to the holder, that the drawer had neglected to provide funds for the pay- ment of the bills ; or by any act of the drawer and acceptor, to which the plaintiffs were not a party, and to which they have never given their assent. Theob. on Pr. <k Sur. 216. The plaintiffs, as holders of these bills, were not subject to any 590 DISCHARGING INDORSEE OR DRAWER. of the equities existing between the original parties, and without their assent those equities cannot be imposed upon them. The case of Mallet v. Thompson, 5 Esp. 178, was an action by an in- dorsee against the maker of an accommodation note for the payee. The holder received part-payment, under a composition, from the payee, and covenanted not to sue him, which is a virtual release, knowing wlien he received the bill, that it was given for accommo- dation. Lord Ellenborough ruled, that the maker was liable, not- withstanding the payment and release ; for his liability on the face of the note was primary and principal, and that of the indorsers was collateral and secondary ; and whatever may be their liabilities between themselves, such was their liability to the holder. It was also held that the release would have no effect between the maker and payee ; for whatever the maker was compelled to pay he might call upon the payee to repay ; the release in no way dis- turbed their relations. On the application of the same rule to this case, whatever the acceptor may be compelled to pay, he can call upon the drawer to repay, notwithstanding the release ; for their relations are not disturbed by its execution. It is evident, also, in this case, from the release itself, that a discharge of the bill was not intended by the parties, but simply a release of the drawer, by the holders, from any farther claim which they had personally on him, leaving the holders to pursue their remedy against the acceptor, as the party primarily liable. Story, Prom- issory Notes, § 423. In the case of Laxtou v. Peat, 2 Camp. 185, and CoUott v. Haigh, 3 Camp. 281, a different doctrine was applied to accom- modation bills, where the holder, at the time he received the bills, knew that they were for the accommodation of the drawer. Lord Ellenborough remarked, " that as it was an accommodation bill, of which all parties had notice, the acceptor can only be considered as a surety for the drawer ; " and the acceptor was discharged by time being given tlie drawer. If these cases can be sustained on principle, they have no application to this case ; for it may be said with more propriety, that if one take a bill of excliange, knowing at the time that it was for accommodation, he thereby assents to receive and hold it subject to that equity of the parties ; while no sucli suggestions can be made in this case, as tliese plaintiffs had no such notice, when the bills were received and discounted. farmers' and mechanics' bank v. rathbone. 591 The doctrine of those two cases was, liowever, sul)scquently shaken by Justice Gibbs, in Kcrrisoa v. Cooke, 3 Camp. ot;2, and was afterwards overruled in the Common Pleas, in the case of Fentuni v. Pocock, o Taunt. 192, in which Mansjie/d, C. J., ob- served " that the case of Laxton v. Peat was the first, in which it was held, that the acceptor was not the first and last person com- pelled to pay the bill to the holder; and that they were compelled to differ, and hold, that it is impossible to consider the acceptor of an accommodation bill in the light of a surety for the drawer ; and that if the holder had known, in the clearest manner, that at the time of giving the bill, it was for accommodation, it would make no manner of dillerence." With this view of the case, Heath, J., and Chamhre, J., agreed. It will be at once perceived, that in this case, the acceptor was held as the principal and primary debtor on an accommodation bill, known to be such l)y the holder, when he received it ; and that act of the holder, which would have dis- charged a sCirety, was held not to affect his liability. We are not called upon, in this case, to approve or disapprove of the doctrine of that case, to the extent to which it was carried ; but it is a de- cided authority for saying, that an indorsee for value, of a bill of exchange, who became such before its maturity, and in ignorance that it was given for accommodation, has a right to treat all par- ties thereon as liable to him according to their relative positions on the bill, and to regard the acceptor as the principal debtor, and the lialjility of the drawer as collateral ; and that tiiis right is un- affected by any subsequently acquired knowledge, that the bill was given for accommodation. In such cases it is regarded as a mere truism to say, that a release of the drawer, by the holder, has no effect on the ultimate liability of the acceptor. The case of Fentum v. Pocock, has been sustained and approved by the subsequent cases in England; Price v. Edmonds, 10 Barn. & C. 578, 584 ; Nichols v. Norris, 3 Barn. & Adol. 41 ; Harrison V. Courtauld, ib. 36 ; Rolfe v. Wyatt, 5 Car. & P. 181 ; 1 Moody & M. 14 ; Yallop v. Ebers, 1 Barn. & Adol. 098, 703. It is to be observed, also, that the same view of the subject is entertained by the different elementary authors. Chitty, Bills, 344 ; Smith's Merc. Law, 332 ; 3 Kent's Com. 104 ; Bayley, Bills, 304 ; Story, Promissory Notes, §§ 418, 423. This subject has arisen before many of the courts in this coun- try, and the rule is generally sustained, " that the parties to a bill, 592 DISCHARGING INDORSER OR DRAWER. or note, are bound by the character which they assume upon' the face of the bill ; if by that they are liable as primary debtors, or as principal, then, as to the liolders, they are bound as such ; and his knowledge, at the time when he takes the bill, that they or either of them are accommodation parties, will not vary the case." Montgomery Bank v. Walker, 9 Serg. & Rawle, 229; s. c, 12 Serg. & Rawle, 382; White v. Hopkins, 3 Watts & Serg. 99; Lewis V. Hanchman, 2 Barr, 416 ; Commercial Bank v. Cunning- ham, 24 Pick. 270, 275 ; Church v. Barlow, 9 Pick. 547, 551 ; In re Babcock, 8 Story's C. C. 393'; Sanford v. Lambert, 2 Blackf. 137 ; Clopper, Adm'r v. Union Bank of Maryland, 7 Har. & J. 92. In the case of Claremont Bank v. Wood, 10 Vt. 582, where several, some of whom were sureties, signed a note, " each as principals," and promised to pay, it was held, that as to the hold- ers, they were to be regarded as principals, and not as sureties ; and yet the primary liability of the acceptor, and the secondary liability of the drawer, is as expressly set forth on these bills, as if it were written out in full over their respective signatures. In either case, to vary their respective liabilities, as they have as- sumed them on the face of the bills and note, would be to vary and control their intended operation, and, in effect, to enforce a contract, which the parties never made. On this subject it is important to observe a material distinction between joint and several promissory notes, or obligations, and bills of exchange, or notes, on which the parties have assumed only successive liabilities. In the former case, as between the makers and tiie holders, who at the time received the note with notice of the circumstances, under which it was given, the strict relation of principal and surety may exist, and evidence of that fact is not considered as contradicting its. specific provisions, but as consistent with its terms ; and the right of contribution, arising out of that relation, exists between them. 2 Am. Lead. Cas. 289, 303, in notes. But the drawer, and acceptor, and indorsers, of a bill or note, have not assumed a joint and several liability ; neither are they strictly sureties ; but are liable to each other, in the order of their becoming parties ; and when the action is on the bill, or instrument, creating such successive liabilities, by an indorsee for value, without notice that the bill was given for accommodation, such testimony is inadmissible for the purpose of converting their successive liabilities into a joint and several obligation, or placing farmers' and mechanics' bank v. rathbone, 593 therrt in the relation of principal and surety. The testimony clearly contradicts the express provision of the bill, and materially changes its legal effect. Unquestionably those liabilities may be changed, as between the parties, by an express contract to that effect, which may be enforced between them. But this in no way affects the rights of a holder, who, at least, became such in igno- rance of that arrangement. Under such circumstances, the holder has only to look to the bill itself and the genuineness of the sig- natures, to ascertain the nature and extent of the liability of the parties thereon ; and they are liable to him in the successive order in which their names appear upon the face of the bill. McDonald V. Magruder, 3 Peters, 471 ; Flint v. Day, 9 Vt. 345 ; Brown v. Mott, 7 Johns. 361. This doctrine is sustained in Story's Treatise on Promissory Notes, in which, § 418, he observes, that " the strong tendency of the more recent authorities, is to hold that, in all cases, the holder has a right to treat all the parties to a bill as liable to him exactly to the same extent and in the same manner, whether he knows, or not, the note to be an accommodation note ; for, as to him, all the parties agree to hold themselves primarily, or secondarily, liable, as they stand on the note ; and that they are not at liberty, as to him, to treat their liability as at all affected by any accommodation be- tween themselves." And in § 483, he farther says: "Nor would it make any difference in the case, that the released party was, in point of fact, the party ultimately bound to pay the note, and that the other party was a mere accommodation maker, payee, or indors- er, for his benefit; or at least, it would not make any difference, unless the fact of its being such accommodation note were, at the time of receiving the note, and not merely at the time of the re- lease, known to the holder." Story, Bills, §§ 291, 368, 432, 434. Chancellor Kent, 3 Kent's Com. 104, also observes, that " the acceptor of a bill is the principal debtor, and the drawer the surety, and nothing will discharge the acceptor, but payment or a release. Accommodation paper is now governed by the same rules as other paper. This is the latest and the best doctrine, both in England and this country." As these bills were received and discounted by the plaintiffs l>e- fore their maturity, witiiout notice that they were for accommoda- tion, we are satisfied, from the authorities, that they had a right to treat the acceptor as the principal debtor, and the drawer as liable 38 594 DISCHARGING INDORSER OR DRAWER. only on his default. In such cases there is no difference between accommodation bills and bills for value ; in either case, a release of the drawer from any farther liability to the holder will have no effect, as a discharge of the acceptor from his primary liability on the bill ; and this right, so to treat the parties on the bill, remains unaffected by any notice subsequently given, that the bill was for accommodation. It is insisted, however, that the release of the drawer will in equity discharge the acceptor, and that the principles which pre- vail in that Court, are now equally available at law. From an examination of the cases in chancery, we entertain a decided con- viction that the same principles, on this subject, prevail in equity as at law. If any diversity of opinion exists in that Court on this question, it has arisen more from a misapprehension of the rule at law, and a desire to conform to the principles there estab- lislied, than from any rules prevailing in equity, at variance with them. There is much propriety in this ; for the principles regu- lating bills of exchange have their origin in mercantile usage, and have been adopted to meet the exigencies and wants of com- mercial transactions ; it is therefore equally the policy of courts of equity, as of courts of law, to make the application of, and en- force those principles, in relation to these securities, which experience has found necessary, to preserve their negotiability and credit. In the case of the Bank of Ireland v. Beresford, 6 Dow, 233, Lord Eldon expressed his opinion of the case of Fentum v, Pocock, and observed, that, " if it went on the principle, that inquiry is not to be made into the knowledge of the party, but that all shall be taken as appearing on the face of the bill, I think it a most wholesome doctrine." The case is important only, as showing the individual opinion of Lord Eldon on that question, and as showing that no different rule had then prevailed in chancery. In the case of Glendinning, ex parte, 1 Buck, 517, Lord Eldon re- fused to adopt the principle of the decision of Fentum v. Pocock, and recognized the general doctrine, as held in Laxton v. Peat. That was the case of an accommodation acceptance, and known to be such, by the holder, when he received the bill. We are, there- fore, not called upon to approve or disapprove of the doctrine of that case, for in this case, the plaintiffs had no notice, when the bills were received and discounted, that they were for accommo- dation. farmers' and mechanics' bank v. rathbone. 595 If the plaintiffs in this case had received the bills with knowl- edge that they wore given for accommodation, we do not say but that the defence would l)e available > for when one takes a bill, even before maturity, with notice of a given fact, it is not unrea- sonaV)le that ho should be charged with the consequences that result therefrom, as if the bill had been received overdue. But that principle does not apply, when the bill is taken before matu- rity, without notice, and for value ; for the bill is then held inde- pendent of all equities existing between the original parties ; and Lord Eldon, in that case, nowhere intimates that the principle would have such an application. It is only to the case of an accommodation 1)111, and known to be such by the holder when he received the bill, that he made the application of that rule. The case, however, which should and does exert a controlling influence in our decision of this case, is that of Harrison v. Court- auld, 8 Barn. & Adol. 36. That case, it will be perceived, was sent from chancery by the Master of the Rolls, for the opinion of the Court of King's Bench. This circumstance alone creates the inference, that in relation to bills of exchange, on which the par- ties have assumed successive liabilities, the principles of equity are the same as at law, and that, if the acceptor of these bills is not discharged at law he would not be in equity ; for it would be an idle proceeding for chancery to send a case to a court of law to ascertain the principles prevailing there, unless those principles have equal application in chancery. In that case, as we have assumed in this, the bill was accepted for the accommodation of the drawer, and was indorsed for value before its maturity. In that case, as in this, the holder was ignorant, at tlie time he re- ceived the bill, that it was given for accommodation, but was after- wards informed of that fact, before the act was done, which the acceptor claimed operated as his discharge. It will at once be perceived, how very similar are the two cases, in every important particular. On the hearing of that case, the decisions at law and in equity were considered ; and all the judges, C. J. Tentcrden, and Parks, Taunton, and Patterson, JJ., certified to the Court of Chancery that the acceptor was liable on the bill, the same as on a bill for value. Whether, therefore, we apply to this case the princijiles jirevail- ing in equity, or at law, the result is the same. The plaintiffs having no notice at the time they received the bills, that they 596 DISCHARGING INDORSER OR DRAWER. were given for accommodation, had a right to treat the drawer as collaterally liable thereon, and the acceptor as the principal and primary debtor ; and this right of tiie holder remains unaffected by any subsequent knowledge which he may have, that they were for the accommodation of the drawer. Under such circumstances, the release of the drawer in no way affects the "liability of the de- fendant as acceptor. This view of the case renders it unnecessary to pass upon other questions which were urged in the argument of the case. The result is, that the judgment of the County Court must be reversed, and the case remanded. Bank of Montgomery Co. v. Walker, 9 Serg. &Rawle, 229, was a similar case, except that the holder knew that the note was accommodation paper. It was held that ihe maker was not discharged; the Court approving the language of Lord Mansfield in Fentum v. Pocock, 5 Taunt. 192, quoted In the principal case. To the same effect are Murray v. Judah, 6 Cow. 484 ; Cloppers v. Union Bank, 7 Harris & J. 92 ; Cronlse v. Kellogg, 20 111. 11 ; Lambert v. Sanford, 2 Blackf. 137 ; Hansbrough v. Gray, 3 Grat. 356. In all of these cases the holder knew that the bill or note was accommodation paper ; and yet the acceptor or maker was held liable. A different rule probably prevails in New Hampshire and Louisiana. See Parks v. Ingram, 2 Foster, 283 ; Adle v. Metoyer, 1 La. An. 254. But notwithstanding that the weight of American authority seems in favor of the rigorous doctrine laid down by Lord Mansfield in Fenton v. Pocock, we still think that in sound reason due payment by or release of the party for whose accommodation a note or bill was made or accepted, should discharge the paper in the hands of one who has notice that it was given for accommodation. In addition to Glendinning, ex parte, 1 Buck, 517, per Lord Eldon, cited in the principal case, Lazarus v. Cowie, 3 Q. B. 459, per Lord Denman, in 1842, Is an authority directly holding this view. See note to Eastman v. Plumer, ante, 345. KEITH V. GOODWIN. 597 SURETYSHIP. RoswELL R. Keith v. Major L. Goodwin. (31 Vermont, 268. Supreme Court, November, 1858.) When stircti/ hoUhn as principal, as to guarantors. — Wlien a person signs a note as surety for tlie makers and intrusts it to them, for tlie purpose of obtaining tlie money upon it, and they subsequently obtain furtlier guarantors, upon tlie credit of all the signers, under the belief that they are joint principals, and in order to procure the money upon the note, such surety will be holden as a principal to indemnify the guarantors, if they are compelled to pay the note. Contribution. Stipulation for full indemnity. — One who signs a note as guarantor or surety, others having before signed the same as sureties, may stipulate for full indemnity of each and all the former signers, or make that the condition of his own undertaking ; and in that case he will not be liable to contribute with the other sureties to the payment of the note. And the facts and circumstances attend- ing the signing or the guaranty of payment of a note, may be sufficient to indi- cate as clearly as an express stipulation or condition, the terms of the undertaking. The case is stated in the opinion of the Court. Redfield, C. J. The note in question was executed by the mem- bers of a partnership or joint-stock company, and by this defendant as surety for them, by their procurement. One of the principals then procured the plaintiff and others to guaranty the payment of the note. The fact that the defendant was surety did not appear upon the face of the note, nor was it known to the plaintiff at the time he made the guaranty. Tlie note was made payable to the Vermont Bank, and was procured to be executed, and the guaranty to be made, for the purpose of raising money upon it at that bank, it would seem. John A. Page, the cashier of that bank, on his own account discounted the note while it was still current, and subsequently, but before it became due, sold and indorsed it, in the name of the bank, to one Uubbard, who, after it fell due. called upon the plaintiff for payment, and he paid it, taking Hub- bard's indorsement upon the note. 598 SURETYSHIP. The plaintiff now seeks to recover the whole amount of the note of the defendant, as a joint maker or principal in tlie note, and if not in that capacity, then as co-surety, to recover of him his pro- portion of the amount paid. The defendant had no knowledge that any one was expected to guaranty, or that any one did guaranty the payment of the note, or that tke note was put in circulation, or if so, that it had not been paid, until called upon by the plaintiff to pay it. I. It is objected that the note was never discounted in the man- ner contemplated at the time of its execution, and that therefore the defendant never became liable upon the note. We think the fact that this note was discounted by the cashier of the bank where it was made payable, and by him indorsed as the cashier, in the name of the bank, must be regarded as a sufficient recognition or adoption of the note by the bank, to render it bind- ing upon all the parties to the contract, within the decisions in this State. This very point is, in effect, decided in Bank of Burlington V. Beach, 1 Aik. 62. The doctrine of this case has been repeatedly recognized in this Court, and never questioned. The same rule prevails in the State of New York. Bank of Chenango v. Hyde, 4 Cow. 567 ; Bank of Rutland v. Buck, 5 Wend. 66. This last case is where the note was procured, and made payable to the Bank of Rutland, for the purpose of raising money to pay upon an execu- tion. The bank refusing to make the discount, the note was received substantially in payment upon the execution, and by consent of the bank was sued in their name for the benefit of the officer. And precisely the same point was decided by this Court, not many years since, in the county of Orleans. We cannot think, therefore, that the present case can be regarded as carrying the rule beyond where it has already been carried. And there is noth- ing in the principle of these decisions which does not commend itself to our sense of justice and propriety. We are aware that a different rule, to some extent, prevails in the States of Massachusetts, Maine, and Ohio, as the cases referred to in the argument show. But we think the rule adopted in this State, Bank of Burlington v. Beach, supra, and which has been so long acted upon here, far better calculated to subserve the ends of justice and fair dealing, than that which denies the recovery upon that ground. When a note is executed for the purpose of raising money in the KEITH V. GOODWIN. 599 inai'kct, althougli made payable to a particular bank or firm, it is well understood that this is generally regarded by Ijusiness men as rather a formal than a substantial part of the note. If the note were made payable at a particular bank, to the order of the makers, it would be much tlie same thing. So, too, if made pay- able to bearer gen.erally. The name of the person to whom the note is payable is mere form. It is undcrstoojl that it is going into the market as money, and in exchange for money, to any party who will make the discount. If negotiated at the bank, it may pass into other hands the next hour. And there is no claim that this will have any tendency to release the sureties. "NVe think there is no dilhculty with the case upon this point. II. In regard to the right of the plaintiff as against the defendant, upon the note, we think the law is settled l^eyond all question, that he is, at all events, to be treated as a co-surety with the defendant, if not also as a surety for the defendant as a joint maker and prin- cipal in the note, so far as he is concerned. As to the objection founded upon the case of Gardner i\ Walsh, 32 Eng. L. <fe Eq. 162, that the guaranty was such an alteration of the note, being done without the consent of the defendant, as will avoid the note, we cannot regard this as coming fairly within the principle of that case. That case is not parallel with the present. There the decision goes upon the ground that after a note becomes effectual as a contract by delivery, it is not compe- tent for the holder, without the consent of tlie makers, to procure an additional signer ; that this is a material alteration and avoids the contract, whether it operates favorably or unfavorably to the other signers. Whether the decision to this extent is sound or not (and we do not intend to question that case), we think the rule thus laid down could have no application to a case like the present. Here the note was signed by the defendant, as a joint principal, and intrusted to his associates, and if he had signed as surety upon the face of the note, and intrusted it to his principals, the rule would have been the same. He thereby gives those to whom he intrusts the note an implied authority to obtain cither additional sureties, as joint makers, or guarantors, indefinitely, until the note is fairly launched in the market as a security, having two distinct parties, licfore that it is merely inchoate, and it is clear that the procuring of additional signers, guarantors, or indorsers, comes fairly within the implication of authority giveu 600 SURETYSHIP. the party to whom the defendant's signature is intrusted, and which at that time, so far as additional signers are concerned, is to be regarded as merely blank, or, in one sense, as an authority to use the credit of the party, either alone or with others, in the form in which he has signed. But the idea that no other indorse- ment or guaranty is to be procured, and that if the note will not go in that form* it is not to be used unless all the parties consent to the introduction of other parties, is certainly contrary to the understanding of commercial men, which is the law of such cases, and the only just basis of the implied contract resulting from the facts. It being now well settled by the case of Deering v. The Earl of Winchelsea, 2 Bos. & Pul. 270, that a surety, although signing another instrument guarantying the same debt, must be regarded as a co-surety with all the sureties to the original contract, there w^ould seem to be no question of the right of the plaintiff to claim a remedy to that extent against the defendant, even if he had, at the time of making the guaranty, known the defendant to have been a mere surety. This point was decided by this Court in Flint V. Day, 9 Vt. 345. See also Norton v. Coons, 3 Denio, 130 ; Barry v. Ransom, 2 Kern. 462 ; Tobias v. Rogers, 3 id. 59 ; Cray- thorne v. Swinburne, 14 Yes. 160 ; Bering v. Earl of Winchelsea, 1 White & Tudor's Lead. Cas. in Eq. 85, and notes, English and American, where the subject is elaborately examined, and the cases fully presented and accurately digested. III. But it seems to a majority of the Court that the plaintiff is equitably entitled to treat the defendant as he held himself out upon the contract ; i. e., as principal. There was nothing to ultimate that the signers were any thing but joint principals. And the defendant having so signed the note and intrusted to the others, with authority to obtain additional signers, or guarantors, it was giving them authority to represent the defendant as a co-principal ; and by presenting the note merely, and asking a guaranty of the plaintiff, a virtual representation was made that the defendant stood as joint principal. The case may well be supposed of the defendant being the only responsible signer, and the guaranty being made wholly upon his credit. If he could afterwards be allowed to falsify this representation, thus held out upon the face of the paper, it might certainly work great injustice to the guarantor. KEITH V. GOODWIN. 601 But this is a question depending mainly npon authority, we are aware, and should be decided upon the settled principles deducible from the adjudged cases. It is admitted by all the writers upon this subject, and in all the cases where the question has arisen, and l)y all the judges, without exception, who have had occasion to speak of the point incident- ally, that any one who is not in fact a joint or sole principal in a contract, but who binds himself for its fulfilment as a surety merely, may so stipulate at the time of entering into the obligation, as not to be liable to contribution with the other sureties who have signed before him. And the form of doing this is not important. Nor is it important that this should appear upon the contract. And where one signs as surety, after other sureties have signed, and without privity with them, it is not important that they should be made aware of the terms upon which subsequent sureties become holden. If the subsequent sureties become bound for the perform- ance of the very same thing as the former ones, and especially by the same contract, the right of contribution is created in favor of the former sureties, unless there is some stipulation to the con-, trary. It is upon this ground that the action for contribution was maintained in Flint v. Day, supra, against Mr. Day, who stood much in the relation of the plaintiff here, the note being paid by the prior sureties, and the suit brought to compel contribution of the last surety signing, but who signed on the back of the note in blank ; and the Court held that he thereby became a joint maker, and liable to contribution with the other sureties. But even that case, upon its facts, is more doubtful than it was then regarded by the Court. The later cases do not fully suj)port it. But where there is any thing in the form of the contract or the nature of the transaction, to show that the subsequent sureties did not expect to be holden as co-sureties with the others, but to stand merely as sureties for all the former signers, they are entitled to full indemnity from each of the others, or all jointly. As if the surety sign expressly as surety for all the above signers, or when he signs, saying he is willing to be responsible for all of them. In such case he is not liable lo contribution. 1 Story, Eq. Jur, § 498 ; Chitty, Contracts, 598 ; Lead. Cas. in Eq. GS^ and notes ; Pendlcbury v. Walker, 4 Younge & C. 424 ; Moore r. Isley, 2 Dev. & B. Eq. 372. This very point is expressly decided in Craythorne v. Swinburne, 14 Ves. 160. 602 SURETYSHIP. The facts of this last case seem to us very analogous to those of the present case, so far as the liability of the plaintiff to share the burden of paying this note, with the defendant, is concerned. lu that case, as well as in this, the undertaking of the last surety was without the knowledge, expectation, or privity of the former ones ; it was done, too, in both cases, to induce the advance of money upon the first contract, and because it could not be obtained with- out such additional indemnity or guaranty. And in the case of Craythorne v. Swinburne, it was clearly held that there was no duty of contribution among the two classes of sureties. It is held that in the case of Craythorne v. Swinburne the indemnity was by a separate instrument, and here it is upon the same paper, but by a distinct contract, referring to the other for brevity, as written above. We cannot suppose it could have made any difference in the present case if the plaintiff had given his guaranty upon a separate piece of paper, writing the note or describing it, instead of referring to it as written above. In the case of Craythorne v. Swinburne, the question was determined upon the circumstances and oral evidence in the case as matter of fact, and made depend- ent upon the intention of the last surety. The same question might here very properly have been submitted to the jury, if there really is any conflict in the evidence, or if there should be here- after, it might be proper to have the finding of the jury upon this point. But so far as the testimony is developed in the bill of exceptions, it seems to be all in one direction. 1. The form of the plaintiff's guaranty shows that he merely undertook for the solvency of all the primary signers of the note. 2. The manner of executing the note, the purpose of obtaining the guaranty, as well as the form of it, all look in the same direc- tion. And unless the defendant can satisfy the jury that at the time the plaintiff signed the guaranty, he really expected to stand merely as a general surety, we think he is bound to indemnify him, as much so as if he had signed at his request, and upon his express assurance that he would see him harmless. As matter of fact, or implication from facts, we cannot but regard the consideration that the plaintiff's contract was in the form of a guaranty, as of some significance. The word guaranty in strictness may not import more than a promise or undertaking. But in commercial KEITH V. G'OODWIN. G03 circles, and among business men generally, the term is understood in a more 8])eciric sense. A guarantor is not a maker or indorscr, but one who is understood to assume more the oljligation of an indorser than of a maker. JJoth the indorscr and guarantor are understood to undertake for tiie maker, and as an aid to his undertaking. And originally the guaranty was understood to be operative only upon condition of the failure of the maker to per- form the contract. And that is the present import of all guaranties which are conditional or doi)endent upon some prior act to be performed l)y some other party, as that the note or contract is collectible ; /. e., may be enl'orccd by due process of law. And even absolute guaranties, like the present, are understood differ- ently, and therefore entitled to a different construction, from au absolute promise to pay a note. If that had been the purpose of the plaintiff, and those who signed with him in this case, they would have merely underwritten the other signers of this note. The very fact that they made a separate contract, and that in the form of a guaranty, shows very fully that they did not intend a mere joint undertaking with the makers. We think the only fair construction of the plaintiff's undertaking, as between himself and the makers of the note, is, that he bound himself to whomsoever should be the holder of the note that the signers were responsible, and would pay the amount at maturity. And although, as between himself and the holder, this l)ound him absolutely to the payment of the note, if not paid by the makers, without notice of the default on the part of the makers, tiiat being a fact of which he was bound to take notice, yet, as between him and them, his undertaking was for them jointly, and not jointly with them. Judgment reversed., and case remanded. The questions in regard to the responsibility of sureties upon notes or bills, or, what is the same thing in other terms, the obligations of acconnnodation makers and acceptors, both among tliemselves and in regard to other parties, are of paramount interest to the profession. AVe will here, in a brief way, refer to some few of the more recent decisions uj)on these questions. There has been, first and last, considerable controversy how far one who is induced to sign a note or bill by fraudulent representation, is legally bound by it ; as where one or more of the former signatures upon the credit of which one sub- scribes or indorses the paper is in fact forged or obtained by duress or fraud, or for any other reason not binding upon tiie party. In the case of Seely r. The Peo- ple, 2 Am. Law Reg. x. s. 3-14; s. c, 27 ill. 17.!, the plaintilf in error signed a 604 SURETYSHIP. bond as surety after others had executed it; but one of the names appearing upon the bond as surety was shown to have been forged. The (Jourt held the fraud such as to avoid the instrument as to sureties signing under such mistake. And it has been often held that where one signs an instrument not negotiable, on condition that some other name or names shall be procured to it before the same is delivered, and this condition is not complied with, and the instrument delivered without it, the party cannot be holden. Pawling v. The United States, 4(h-anch, 219 ; Fletcher V. Austin, 11 Vt. 447. So if it be agreed that a composition deed shall not be de- livered until all the creditors sign, that condition must be observed in order to render the instrument binding upon any one who signed under that at^surance. Johnson v. Baker, 4 Barn. & Aid. 440. And in Pidcock v. Bishop, 3 Barn. & C. 605, it seems to be held that any departure from the contract of surety- ship will exonerate the surety. Awde v. Dixon, 5 Eng. L. & Eq. 512 ; Lloyd v. Howard, 1 id. 227 ; Palmer v. Richards, ib. 529 ; Leaf v. Gibbs, 4 Car. & P. 466. And this seems to be the English rule upon the subject. The creditor must see to it that he obtains a valid obligation against all upon whom he relies for its per- formance. And he cannot excuse himself from responsibility for the fraud of the principal debtor on the ground that the surety signed upon his assurance, and must look to him exclusively for its performance, as has been held in some American cases. York County Mat. Fire Ins. Co. v. Brooks, 3 Am. Law Reg. N. s. 399 ; s. c, 51 Maine, 506, where it was held that a surety who signed a bond at the request of the principal, and upon the assurance that he would also procure two others named and known to him to be responsible also to sign it before he delivered it, but failed to do so, this being wholly unknown to the obligee who accepted the bond, is still responsible. There is undoubtedly great plausibility in the argument that, in such cases, where the surety intrusts the bond to the principal in perfect form and with nothing to indicate that other signatures are required to complete the contract, as will be the case where other names appear in the body of the instrument, that he thereby puts it in his power to impose upon the obligee, and should therefore be held responsible for his conduct in that di- rection. But where the paper is not negotiable, the obligee is bound to see that all parties execute the same understandingly, and free from fraud or force. And in the precise case stated above, in the English Court of Exchequer Chamber, Swan V. The North British Australian Company, 10 Jur. N. s. 102 (1864) ; s. c, 8 Jur. N. s. 940 ; s. p. 7 Jur. n. s. 400, it was held that the surety was not hold- en. We cannot but feel that the English rule is the more salutary one in com- pelling caution in those who accept paper, as well as in those who execute it. The opposite rule unquestionably has too much the appearance of attempting to drag in every one where it can possibly be done, and turning them over to some other remedy or redress to which they never expected to look for indemnity. The whole subject is reviewed with great learning and ability by ]\Ir. Justice Hay, in Deardorft' v. Foresman, 5 Am. Law Reg. n. s. 539, which is here adopted as the best review of the authorities we could give. Ray, J. Action by the appellee upon a promissory note, against Deeds, DeardorfF, and Lehman. Deeds suffered a default. The other defendants an- swered in two paragraphs. First, that at the date of the note in suit. Deeds, who was insolvent, applied to them to execute the note Avith him, as his sureties, to the plaintiff, which they refused to do ; that he fraudulently represented to KEITH V. GOODWIN. 605 thorn that if they woiihl sign the note he could procure as co-sureties with them eU;ven other respoiisihle men, who are named, and tliat lie wouhl not dtdiver the note to the phiintiff until such sifjnatures were procured; that he faih'd to [iro- cure the names he liad promised, but delivered the note to the plaintiff. The note was made payable to the order of the plaintiff. The second paragra[)h of the answer averred the same facts, and was sworn to. The Court below sus- tained a dcmiirier to both [)araj;raphs. Tills is here assigned as error. Tiie appellants insist that the ruling in the ease of Pepper i'. The State, 22 Ind. o99, recjuires that the decision of the Court below in this case should be re- versed. We will consider the ease cited only so far as may be necessary to de- termine its effect upon the question now before us. That case holds that, in an action upon an oflitial bond given to the State, the sureties may defend, either upon the ground that the names of persons aj)pearing to be signed to such bond were forged, and that they executed the bond upon the faith that such signatures were genuine, or that they were induced to execute and deliver the bond to the principal obligor upon the condition, or upon the consideration, or upon the promise, that certain other persons would sign it. It is, however, expressly said by the judge who delivered the opinion, in overruling the petition for a rehear- ing, that " we do not say that the same rule that applies to bonds taken pursuant, to a statute, would apply in private transactions." We are not disposed to ex- tend the effect of that decision to instruments negotiable either by statute or by the law merchant, unless required to do so upon authority or principle. And as the case cited is put rather upon authority than principle, we will consider how far the decisions require us to extend the ruling. Indeed, the opinion given upon overruling the petition for a rehearing rests, except so far as it is based upon the construction of the statute, which constru(;tion we are not called upon to review, upon the case of Bibb i'. Reid ct al., 3 Ala. 88, which, it is stated in the opinion, " is directly in point, and after much rellection we are prepared to say is, in our judgment, good law." That case cites the law as stated thus, in Sheppard's Touchstone, 59 : " So it must be delivered to a stranger ; for if I seal my deed and deliver it to the party himself as an escrow, upon certain condi- tions, &c., in this case, let the form of words be what it will, the delivery is ab- solute, and the deed shall take effect as his deed presently, and (in reference to the legal operation of the deed), he is not bound to perforin the condition." The opinion proceeds : " The rule as above stated in the Touchstone, has been recognized in the United States in the cases cited from 5 Cranch, 351, 8 Mass. 2i?0, and 2 Sumner, 487; but it does not appear to obtain at this day in England, as appears by the case of Johnson el al. v. Baker, 4 Barn. & Aid. 440, where a composition deed was delivered by a surety who had signed the deed to a creditor, not to be operative unless all the other creditors executed it. It was held that the deed ■was delivered as an escrow, and that all the creditors not hav- ing executed it, the surety was not bound. To the same effect are the ca^es cited from 3 Wend. 380; 11 Vt. 448; 4 Cranch, 219; 2 Harrington, 396; 11 Peters, 86." The Court seem evidently to have misconceived the effect of the decision in the ease of Johnson et al. v. Baker. The creditors were all parties to the deed of composition, and when the debtor alone had executed it '' the deed was then delivered to one of the creditors, in order that he might get it executed by the rest of the creditors." It does not very clearly appear that be- 60b' SURETYSHIP. cause an instrument, after being executed by one party may be delivered to anotlier party to be executed by him, and presented by him to otl)ers who are parties to the deed for their execution, and still not become a deed fill executed by all parties, that therefore a deed, perfect in form and execution, may be delivered by the grantor to the grantee as an escrow. Nor is the citation of the ruling in Pawling et cil. v. United States, 4 Cranch, as conflicting with the later case of Moss r. Riddle, fj Cranch, satisfactory, especially as the later case is in conllict with the doctrine asserted by the Alabama Court. But we will ex- amine that case more carefully in the course of this opinion, only remarking in passing that, whatever the case in 4 Cranch does decide, which we will endeavor to determine in the subsequent review of the case, it certainly does not hold that a delivery may be made by the obligor of the bond to the obligee, as an escrow. Nor does the case of the United States v. Leffler, 11 Peters, examined hereafter, establish any such doctrine. The case in 3 Wend. 380, was where a bond had been executed by nine persons as obligors, " and sent to New York to be deliv- ered to the plaintiff on certain terms and conditions, by which the obligors in- tended to be indemnified for having become bound for the payment of the money. The plaintiff's refused to receive the hand on the terms and conditions proposed. Subsequently, on the 29th October, 1824, five of the obligors, but not those sued in the action, without the knowledge or consent of the defendants in this action, having made a new and different arrangement with the plaintiffs by which the security relied on by the defendants for their indemnity was yielded up, de- livered the bond to the plaintiffs." It was held that the bond was not obligatory upon the four who never entered into the new arrangement with the plaintiffs. The bond was dated Sept. 21, 1824, and the plaintiffs had then notice of the terms upon which the delivery was authorized ; they refused to receive it upon those terms, but, on the 29th October, made other terms with five of the parties to the bond. The plaintiffs knew the terms on which the delivery was author- ized, and refused to accept upon those terms ; and the case simply decides that, where the extent of the agent's authority is known to the person who deals with him, the principal cannot be bound outside of that authority. The case is good law, but not specially relevant to the text. The case cited from 11 Vt. was where the names of seven sureties appeared upon the face of the bond, and only two of the sureties ever executed the same. The instrument was plainly incomplete until executed by all those whose names appeared as parties. The decision in Herdman v. Bratten, 2 Har. supra, was that the deed could not be delivered to the party as an escrow. This is an express denial of the doc- trine it is cited to sustain. So also the case of The State v Chrisman et al., 2 Ind. 126, decides that " a bond cannot be delivered as an escrow to the obligee." In the case of The Madison. &c.. Plank Road Co. v. Stevens, 10 Ind. 1, Mr. Justice PcrJfciTw states the decision thus: "One co-obligor may perhaps deliver a bond to another co-obligor as an escrow ; but an instrument cannot be so de- livered to the obligee or payee, or the agent of either. Such delivery is in law absolute. Peters, U. S. Dig. tit. Escrow; Foley v. Cowgill, 5 Blackf. 18; The State V. Crisman, 2 Ind. 126; Wright v. The Shelby, &c., Co., 16 B. Mon. 4. See 7 Ind. 600 ; 6 id. 183 ; 9 id. 25. And parol evidence cannot be given to KEITH V. GOODWIN. 607 vary the legal efTect of such di'liverv, or the terms of the instrument delivered. This has been too often decided to recjuire a citation of authorities to evidence it. Hiatt et al. v. Simpson, 8 Ind. 2.56." The case of Foley v. Cow;,'ill was for a failure to deliver hof^s at a ct-rtain time and place, accordinj^ to a written agreement. The defendant answered that the agreement mentioned " was delivered to tlie plaintifr as nn escrow, setting out the contingency on which it was to become l)iiiding on tiie defendant, wliich, it is averred, had never happened." The Court ruled that if the instrument " be delivered to the obligee on such contingency, the condition is a nullity, and the delivery absolute." And yet, witiiout attempting to overrule or question these cases in our own State, the Court, in overruling the petition (or a rehearing, rests the decision of the case of Pepper v. Tlie State, supra, except so far as a construction is given to the statute, upon an Alabama case in direct conflict with these repeated rul- ings of our own Court. If the doctrine upon whix;h the Alabama case proceeds be the law, that a deed or other written instrument may be delivered to the grantee or obligee as an escrow, it of course follows that a surety may make such a delivery to his principal. But, in our opinion, such a position is not only without support, but is in conflict with all authority. In the case of Worrall v. Munn, 1 Seld. 229, the instrument, an agreement to execute a conveyance, was delivered conditionally to the agent of the party to whom the deed was afterward to be executed. The Court declares that the law puts the question at rest ; that the delivery to the agent was a delivery to his principal. " This was a delivery as an escrow ; such a delivery can only be made to a stranger. It cannot be made to the party. If made to the })arty, no matter what may he the form of the words, the delivery is absolute." Ward v. Lewis, 4 Pick. 518; Fairbanks i'. Met calf, 8 Mass. 230. Mr. Parsons says : " A note, as well as a deed, may be delivered as an escrow, and the law of escrow is substantiallj* the same in both cases. ... A note cannot be delivered directly to the promisee, to be held by iiim as an escrow." 1 Notes tJi: Bills, 51 ; Badcock v. Steadman, 1 Root (Conn.), 87. W»! will examine the cases cited in tlie original opinion in the case of Pepper V. The State, supra. Pawling ef al. r. The United States, supra, was an action " upon an official bond given by Ballinger, as collector of the revenue, and signed and sealed by Pawling, Todd, Adair, and Kennedy, as his sureties, who pleaded that they delivered the same as an escrow to one Joseph Ballinger, to be safely kept, &c., upon condition that, if Simon Ingleman and William Patton, named on tlie face of the honil, should execute the same as co-sureties, then the bond should be delivered to James Morrison, supervisor, on behalf of the Unit- ed States as their deed, and not otherwise ; and that the same never was executed by Ingleman and Patton." Here the representative of the government had no- tice, on the face of the instrument, that the same was not complete, — not having been executed by all tiie parties whose names appeared upon its face as co-obli- gors. To have held this delivery of the instrument obligatory upon the parties when the writing itself proved the execution to be incomplete, would have been in contradiction of its express terms. In the United States v. Leffler, 11 Peters, supra, the question under consid- eration is not discussed either by court or counsel, and the statement of facts 608 SURETYSHIP. does not disclose whether tliere had ever been any Intentional delivery of the bond, or, if delivered, by whom such delivery was made ; and* tlie only question considered was as to the competency of witnesses to prove a conditional execu- tion. Under what circumstances such a defence was admitted does not appear. If the names of other parties appea'red on the face of the bond, such a defence would have been admissible under the ruling in Pawling v. The United States, supra. As no question was made by counsel, it was probably controlled by that decision. If it were otherwise, the validity of such a defence was not so clearly established upon authority, that Ave are authorized to suppose it would have passed unquestioned when presented in the Supreme Court of the United States for the first time. The case cited from 3 Barr (Penn.), 308, was where a party, in executing a bond, expressly stipulated that it should not be delivered up until twelve names were obtained, and the persons who were procuring names to the bond for the benefit of third parties agreed that they would not deliver it until it was so exe- cuted. It was held that such bond was in their hands as an escrow, and until the condition was performed it could not lie delivered. So in the case cited from 2 Leigh, 157, where the deputy-marshal procured a party to sign a forthcoming bond taken upon execution, and agreed not to file the bond in Court until other persons had signed it, it was held that he could not make a valid delivery until the condition was performed. And again in 2 Johns. 248, it was held that a sheriff might deliver a deed to an attorney to be held as an escrow, aiid only de- livered to Ills client on compliance with the condition. The case of Sharp v. United States, 4 Watts, 21, decided that a bond containing in its body two names as sureties, was not binding on one who signed it, unless it was shown that he dispensed with the execution of it by the other. The case in 7 Pick. 91, ruled that " where a bond is signed and sealed but not delivered to the obligee, and it is afterward put into the possession of the obligee by a person who has no authority to deliver it, the obligee cannot maintain, an action on the instru- ment." In the case cited from 7 Ohio, 375, the Court permitted the party receiving the deed to testify that he only received it for the purpose of enabling him to convey to a third party. That the purpose and consideration of the deed was to enable him, as agent of the grantor, to execute a conveyance to another. We are unable to find the case cited, or any case in 4 Johns, having even as remote relation to the subject under consideration as those we have commented upon. In 34 N. Hamp. 460, the rule is stated that, " if a deed is placed in the hands of a depositary to be delivered to the grantee upon the death of the grantor, provided it is not previously recalled, but the grantor reserves the right and power of recall at any time, it is not a good delivery." In 13 Pick. 75, the presumption arising from the fact of a deed having been registered, is discussed. The case cited from 1 Johnson's Cases decides that, " where the grantor held the deed until the consideration should be paid, and died before payment, there was no delivery." The remaining authorities cited in Pepper v. The State, supra, refer to the question of agency ; the decision proceeding, so far as those authorities are rele- vant, upon the ground that the obligor in a bond is the agent of the obligee, and KEITH V. GOODWIN. 609 the obligee is therefore responsible for all bis representations to his sureties. It is unnecessary for us to examine these authorities, as the appellant in this caae does not assume the position that a person may, as principal, make a valid con- tract with himself as agent. As a (juotation is made from a note by Judge Red- field in the April number, 1«G3, of the American Law Register, p. I34G, which rests upon the case of Pawling r. The United States, supra, we will cite the opinion of the same author in the May number 18G4, of the same magazine, p. 402 : " It seems to us upon principle that, where there is nothing upon the face of the paper indicating that other co-sureties were expected to become parties to the instrument, and no fact Is brought to the knowledge of the obligee before he accepts the instrument calculated to put him on his guard In regard to that point, and which would naturally have led a prudent man interested in the opposite direction to have made Imjulry before accepting the security, the fault cannot be said to rest to any extent upon the obligee. And, on the other hand, where the surety intrusts the bond to the principal obligor in perfect form, with his own name attached as surety, and nothing upon the paper to indicate that any others are expected to sign the instrument in order to give it full validity against all the parties, he mcdce.s such principal his agent to deliver the same to the obliyee, be- cause such Is the natural and ordinary course of conducting such transactions ; and If the principal under such circumstances gives any assurances to the surety in regard to procuring other co-sureties, or performing any other condition be- fore he delivers the bond, and which he fails to perform, the surety ijiviny confi- dence to such assurances must stand the hazard of their performance, and cannot implicate the obligee in any responsibility in the matter, unless he is guilty of fraud or rashness in accepting the security.''^ In the note to the April number of the magazine referred to, some authorities are cited as sustaining the application of the doctrine laid down in Pepper v. The State, to " promissory notes and other contracts not negotiable, or to negotiable contracts before negotiation." The case cited, Lloyd v. Howard, 1 Eng L. & Eq. 227, was where "A, being the payee and holder of a bill of exchange, wrote his name upon It, and gave it to B for the purpose of getting it discount- ed. B never paid A any money in respect to the bill, but kept it until it teas overdue, when he delivered it to C without receiving any value for it. Held, that there was no indorsement by A to B." The fact that C received the bill when overdue, could give him no right to insist that the apparent indorsement , by A to B should be treated as real. The decision in the case of Palmer v. Richards, lb. 529, wa^ where " the drawer of a bill of exchange Avhich had been accepted, wrote his name across the back of the bill, and delivered It to A to get discounted, who, instead thereof, while the bill was running, deposited It with B as security for money advanced to himself, without fraud on the part of B. Held, that this was a valid indorsement of the bill by the drawer to B." In the case of Leaf V. Gibbs, 4 Car. & P. 4G0, the facts show that the plaintiff, who was the payee of the note, knew that when the defendant signed as surety, the agreement was that his mother was also to sign the note with him, and that she afterwards refused, and the confidential clerk of the plaintiff stated to tlie agent of the defendant and his mother that the arrangement was, in consequence of such refu- sal, incomplete. The Court held that the defendant was not liable unless he waived the execution of the note by his mother. Where the payee receives the 3y 610 SURETYSHIP. instrument with full knowledge of its incomplete condition, in fact it would, it seems to us, be a fraud to permit him to take advantage of its apparently perfect condition. The decision in the case of Awde v. Dixon, 5 Eng. L. & Eq. 512, also cited, cannot be reconciled with the American decisions. Mr. Parsons re- fers to that case as in conflict with the settled law in this country. 1 Bills & Notes, 111. .The Court, to sustain their ruling, declare it to be the law in Eng- land, that if one signs a negotiable instrument in blank, and delivers it with au- thority to fill it up for £100, and it is filled up for £200 and negotiated, the maker will not be liable. Lord Mansfield did not thus state the law in Russell t'. Langstaffe, 2 Doug. 514, and in this country such a doctrine is against all authority, and a decision resting upon it cannot be considered in our courts as affording any -aid in the determination of legal questions. FuUerton v. Sturges, 4 Ohio State, 529 ; 1 Parsons, supra, and authorities cited. The decision in Awde V. Dixon, proceeds upon the ground that the writing of the greater sum in the instrument would constitute the crime of forgery, and Alderson, B., placed the decision in the case upon that ground. This is perhaps correct under the English statute, but the Supreme Court of Massachusetts, in Putnam v. Sullivan, 4 Mass. 45, held otherwise, on the ground that the instrument had been deliv- ered upon a trust, intending that something should afterward be written, to which the name should apply as an indorsement. Judge Bedfield, however, seems to have regarded the English decision in the case of Swan v. North British, &c. Co., 10 Jur. N. s. 102, as conflicting with the view expressed in the note we have quoted from. In that case, " where A was induced by his broker to send him blank forms of transfer, which the broker filled up with numbers and descriptions of shares different from those of the com- pany intended by A, being shares in the defendant's company, and by means of a duplicate key which he had procured to be made without the knowledge of A, obtained certificates from a box of A's, necessary to perfect the transfers, and also forged the names of the attesting witnesses ; held, in an action against the company for damages, and for a mandamus to restore the plaintiff's name to the registry, that the acts of the plaintiff were not such as estopped him from show- ing that the deed of transfer was a forgery." In other words, that where the act of the plaintiff, in trusting the agent with the blank forms of transfer, did not enable the agent to commit a fraud upon a third party, but such fraud could only have been consummated by the addition of larcen}- and forgery, in such case the plaintiff was not estopped. We admit that we are unable to understand • what decision a Court could legitimately render in such a case having any rela- tion to the question now under consideration. There has also been a case decided by the Supreme Court of Tennessee, 5 Humph. 133, which rests for support upon the cases we have already examined in 4 Cranch and 11 Peters, and in our opinion is not sustained by those authorities. Counsel have cited to us also the case of The State v. Bodly, 7 Blackf. 355. There were in that case no questions decided or discussed by the Court involv- ing any point now under consideration. Nor could such questions have been presented in that case, as the bond when delivered contained the name, in the body of the instrument, of the other party who was to execute it, and the clerk who was to receive the bond had actual notice of its imperfect execution, he being the witness called to prove the fact that the sureties signed on condition KKITH V. GOODWIN. 611 that the person whose name was witli theirs in tlie body of tlic l)on<l shoiihl also execute it. Since the decision in the case of Pepjjcr v. The State, tlie New York Court of Appeals has rendered a decision, holding that where a bond is executed by sureties, and delivered to one of their number to keep until also executed by another surety, that the instrument, until so executed, is held as ai^ escrow. The People V. Bostwick, 32 N. Y. 445. Blackstone defines a delivery as an escrow, to be a delivery " to a tliird per- son to hold till some conditions be performed on the part of the f/rantee.'''' See also 4 Kent, 454 ; 1 Coke, 'Ad a. In Greenleaf's Cruise on Real Property, b. 4, p. 29, it is said: " The deliv- ery of a deed may be either absolute, that is to the grantee hirasdf or to some person for him, or else conditional, that is to a third person, to keep it till some- thiiui is done by the grantee; in which last case it is not delivered as a deed, but as an escrow." The instrument is as perfect and complete in form when deliv- ered as an escrow, as though it were to be delivered absolutely. An instrument delivered as an escrow cannot be withdrawn, but remains in the liands of the holder to be delivered over to the party for whose benefit it was executed, when- ever he performs the conditions upon which the original delivery was made. But so long as tile instrument remains in the hands of one of the parties, it has no force whatever. When a decision is based upon so total a disregard of the essentials constitut- ing the delivery of an instrument as an escrow, it may be well to look closely to the authorities which are cited to sustain this line of ruling. Those authorities are the ones we have already reviewed, with the additional one of The State Bank v. Evans, 3 J. S. Green (N. J.), 155, which was a case *' where the defendant's name was on the bond as one of the sureties, and he proved that the bond was brought to him by one of his co-sureties, and that when he signed it he delivered it to his co-surety and said to him : ' Now this bond is not to be delivered up until all the persons named in it have signed it.' " The Court held that the testimony was admissible, and that it overcame the presump- tion of any legal delivery arising from the mere fact of the obligee having pos- session of the bond. This is simply another case where the instrument disclosed upon its face that it had not been executed by all the parties. But while citing authorities which, as we have seen, do not sustain the position they are quoted to support, the case of The I'eoplc r. Bostwick entirely overlooks a decision ren- dered a year earlier by the Supreme Court of Maine, in which it was held that " where a surety to a bond signs upon the assurance that the principal will pro- cure two other persons specified and known to such surety to sign the bond be- fore he delivers the same, which he fails to do, but this is wholly unknown to the obligee at tlic time lie accepts the bond, such surety is bound to perform the obligation." The case of Carr et al. v. Moore, 2 Ind. 602, was an action of " debt on a bond given to a school commissioner, signed by A. C. and P. As to P. the bond was a forgery. The bond was delivered to C, the principal, to be signed and sealed, and it was redelivered to the connnissioner by A. and C. perfected. The commissioner was ignorant of the forgery, the name of P. having been placed upon the bond after its delivery to C. (or the signatures. Jleld, that A. was lia- 612 SURETYSHIP. ble on the bond." Mr. Justice rerkins, who delivered the opinion, says : " Had Carr (the principal) induced Athon (the surety) by fraud to execute the bond, still the school commissioner, being ignorant of the fact, could not, we suppose, be alFected by it." There was no proof, however, of such fraud, and the ex- pression must therefore be taken, we suppose, rather as the judgment of the writer of the opinion, than as the ruling of the Court. But it is certainly enti- tled to consideration and respect. The case of IMillett v. Parker et ah, 2 Met. (Ky.) 608, reviews the authori- ties very fully upon this question, and holds that " a conditional delivery to the principal by a person who subscribes a paper as a surety, will not make such paper a mere escrow. The delivery of the paper, to constitute an escrow, must be made to a*third person, and not to a co-obligor ; and this whether the instru- ment be assignable or not." The case of The State v. Chrisman et al., 2 Ind. 126, was an action of debt upon an administrator's bond. Nelson, one of the defendants, filed the follow- ing plea, verified by oath: " That the said supposed writing obligatory in the declaration mentioned, was signed by him upon condition that twelve or fifteen other good men signed it, which was not done ; and that unless said number of persons did sign it, it was not to be considered his deed." A demurrer was sus- tained to the answer. The Court say: "This plea admits the signature to the bond, and does not deny that the same was delivered to the obligee. When so signed and delivered it became absolute." Upon the face of the bond it appears that the name of Nelson was written next following that of the principal, and was followed by the names of six other sureties. The presumption in law is that the names were signed in the order in which they appear upon the instrument, and as the obligee was the State, and the delivery was the filing of the completed instrument with the clerk, no delivery could have been made by Nelson to the obligee upon his signing it. So that the decision of the case results, that no de- livery by any of his co-obligors could be made to the obligee of the instrument as an escrow, but the delivery by any of them rendered Nelson liable on the bond. It was also held in the case of Taylor & Co. v. Craig, 2 J. J. Marshall, 449, that a conditional delivery of a promissory note, by a surety in the note to his principal, did not make the instrument an escrow, but that the plaintiff had the right to hold the surety responsible without regard to the condition he had im- posed upon the principal at the time of the delivery. The Bank of the Common- wealth V. Cuny, 2 Dana, 142, recognizes this as the law. Again, in the case of Smith V. Moberly, 10 B. Mon. 266, in deciding a similar question, this language is used: "But a delivery of a writing of this character, under such circum- stances, to the principal, does not have the effect of characterizing it as a mere escrow ; but on the contrary the principal should be considered as the agent of the surety, and empowered by him to pass the writing to the person to whom it may be made payable, and his delivery as being sufficient to make it effectual, unless the payee had notice of the special terms upon which it was signed. The .implied discretionary authority to use the note, arising out of its possession by the principal, uncontradicted by its terms or any thing apparent on its face, can- not be restricted by any agreement between the payors themselves, of which the payee had no notice." The Supreme Court of Vermont have also held that KEITH V. GOODWIN. 613 where a note payable to a bank was signed by a principal and one suret}-, with an agreement on the part of the principal with such surety that he would procure another surety, which was not done, before he procurcfl the note to be discount- ed, it will constitute no defence, unless the officers of the bank were cognizant of such agreement. Passumpsic Bank v. Goss, 31 Vt. 315. It seems clear, on principle, that a surety cannot make a delivery of a bond to his principal as an escrow, upon condition that other names shall be procured before its delivery to the obligee. The very definition of an escrow involves the holding of the instrument, complete in form, signed and sealed, prepared for delivery to the obligee by a third person who acts as the agent of the obligors and obligee, and who is to make the delivery, not upon some act done by the obligors, but upon the performance of some condition by the obligee. There are but two parties to the instrument, and so long as it is held by the principal it cannot be said to be delivered for any purpose, for it remains still in the hands of the one party, who is only to be bound in any manner upon its delivery to the other. And where there is no delivery of the instrument by the one party executing it, it cannot be said to be held as an escrow. Can a delivery then be made to the principal, as the agent of his sureties, for any other purpose than an unconditional delivery to the obligee ? The interest of the principal is clearly to procure the acceptance of his bond by the obligee at the earliest moment, and with the least number of sureties. Experience proves, and the law so regards it, that it is a hardship to procure bail, and the interest of the principal is to avoid this hardship. On the other hand, the interest of the sureties is as clear to avoid a delivery until their pro ra/rt liability has been reduced by the execution of the bond by other co-sureties. It is a well-established principle of law, that he who has an interest in the do- ing of a particular act, cannot accept an agency in the same matter for others whose interests are adverse to his own. A person will not be permitted to as- sume an agency for others, where the interests of his principal would be in direct conflict with his personal interests. In Copeland v. Mercantile Ins. Co., 6 Pick. 198, Merlon, J., says: "It is a rule of law well settled, and founded in the clearest principles of justice and sound policy, that the agent of the seller can- not become the purchaser, or the agent of the purchaser." Judge Story, in liis work on Agency, § 211, says : " For the like reason (that is, for the same reason that forbids an agent of the seller himself to become the buyer), an agent of the seller cannot become an agent of the buyer in the same transaction." And again, § 9 : " Yet we are to understand that they cannot, at the same time, take upon themselves incompatible duties and characters. . . . A memorandum made and signed by a seller, at the request of the purchaser, will not bind." See 3 Parsons, Contracts, p. 11 ; Smith's Merc. Lsw, 149; Wright r. Dannah, '2 Camp. 203; Farebrother v. Simmons, 5 Barn. & Ad. 333; Rayner v. Linthorne, 2 Car. & P. 124 ; Cooper r. Smith, 15 East, 103. In The Utica Ins. Co. v. Toledo Ins. Co., 17 Barb. 132, it is said: "The general principle that a party cannot act for himself in the same transaction in wliich he undertakes to act for another is well settled, and the validity of a contract in which he acts, and to which 'he is a party as agent for a third person and also in his own behalf, does not depend upon the question whether he makes an advantage by the transaction. . . . The character of agent for one party to a contract, and that of principal upon the 614 SURETYSHIP. other part, are incompatible." Ex parte Bennett, 10 Ves. 381 : Florance v. Adams, 2 Rob. 556 ; Beal v. McKiernan, 6 Louis. 407 ; Bentley v. Columbia Ins. Co., 19 Barb. 595. The law, indeed, makes the principal for a special purpose ; i. e., the delivery of the instrument, the agent of liis sureties. Their delivery of the instrument to the principal, after placing their names upon it, authorizes the principal to make the delivery to the obligee ; for such is the channel through whicli the paper would properly pass in reaching the obligee. And the delivery of the instru- ment to be by him at once transferred to the obligee, is a delivery entirely con- sistent with the interests and inclination of the principal, and for such a purpose the delivery is proper. The original contract is between the principal on the bond and the obligee. The compliance with the contract is the delivery of the bond by the principal obligor to the obligee, duly executed by himself and his sureties. The contract between the principal on the bond and his sureties is, that they will enable him to comply with his original contract. For this purpose they sign and deliver to him the instrument, that in the fulfilment of his original contract he may deliver it to the obligee. Now is it not clear that, as the general purpose of the delivery by the sureties to the principal is that he may make a delivery to the obligee, no conditions im- posed upon such delivery will bind the obligee unless they are known to him ? In the case of Pickering v. Busk, 15 East, 38, Lord Ellenborrmgh, C. J., states the law thus : " Strangers can only look to the acts of the parties, and to the external indicia of property, and not to the private communications which may pass between a principal and his broker ; and if a person authorize another to assume the apparent right of disposing of property in the ordinary course of trade, it must be presumed that the apparent authority is the real authority. I cannot subscribe to the doctrine that a broker's engagements are necessarily, and in all cases, limited to his actual authority, the reality of which is afterward to be tried by the fact. It is clear that he may bind his principal tvithin the lim- its of the authority with lohich he has been apparently clothed by the principal in respect to the subject-mailer ; and there would be no safety in mercantile transac- tions if he could not. If the principal send his commodity to a place where it is the ordinary business of the person to whom it is confided to sell, it must be intended that the commodity was sent thither for the purpose of sale. If the owner of a horse send it to a repository of sale, can it be implied that he sent it thither for any other purpose than that of sale ? Or if one send goods to an auction-room, can it be supposed that he sent them th'ther merely for safe cus- tody ? " And where the surety signs and delivers the bond to the principal, from whom it would naturally pass to the obligee, are we to suppose that such de- livery to the principal was merely for safe custody ? The rule laid down in the case cited is, where the commodity is sent in such a way, and to such a place, as to exhibit an apparent purpose of sale, the principal will be bound, and the purchaser safe. " Bayley, J. : If the servant of a horse-dealer, with express directions not to warrant, do warrant, the master is bound ; because the servant, having a general authority to sell, is in a condition to warrant, and the master has not notified to the world that the general authority is circumscribed." And is not the surety upon a bond, who delivers it to his principal in apparent proper condition to be by him delivered to the obligee, and with the general authority to KEITH V. GOODWIN. 615 make such delivery, but circumsoriljed by a condition unknown to the obligee, bound by the delivery which the principal may make in disregard of the londi- tion ? The rule is stated, by a learned author thus: "An agent's authority is that which is given by the declared terms of his appointment, notwithstanding secret instructing ; or that with which he is clothed by the character in which he is held out to the world, althougli not within the words of his commission. What- ever is done under an authority thus manifested, is actually within the authority, and the pi'ineipal is bound for tliat reason; for he is bound equally by the author- ity which he actually gives, and by that which, by his own acts, he appears to give. . . . The appearance of the authority is one thing, and for that the princi- pal is responsible." 1 Parsons, Contracts, 44. The surety places the instrument, perfect upon its face, in the hands of the proper person to pass it to the obligee, and the law justly holds that the apparent authority with which the surety has clothed him, shall be regarded as the real authority, and as the condition imposed upon the delivery was unknown to the obligee, therefore the benefit of such con- dition shall not avail the surety. Thus, in our opinion, should the rule be established upon principle ; and, as it appears by the examination we have made, that the authok'itles relied upon to sustain a contrary rule are In the main irrelevant, and are In turn quoted to sup- port the cited decisions which are really in point, we are inclined, after a review of all the cases, to regard the real weight of well-considered decisions as sus- taining the rule which to us .seems to rest also upon a correct principle. So far as the decision of the case of Pepper v. The State, supra, rests upon the construction of the statute, and upon the fact of forgery, we are not called upon to review it. The action of the Court below upon the demurrer was correct. Judgment affirmed. It seems to be entirely well settled that where the instrument is of a negotiable character, and is actually negotiated while current, in the due course of business and for value to a bona fide party, the surety must be held responsible in all such cases, unless there is something upon the face of the paper to indicate its incom- pleteness. Passumpsic Bank v. Goss, 31 Vt. 315 ; INlcCramer v. Thompson, 7 Am. Law Keg. N. s. 92, In which latter case the authorities are very care- fully commented upon by Wright, J. It has sometimes btHin made a question how far a surety, before he Is made to pay any portion of the debt, can be regarded as standing in the light of a creditor to the principal debtor. But it seems, upon principle as well as authority, to be most undeniable that when the surety is compelled to pay the debt, or any part of it, his right attaches to be treated as a creditor from the time of assuming such suretyship. So, too, securities given to Indemnify sureties are founded upon most unques- tionable consideration for value. Uhler v. Semple, 5 C. E. tireen (20 N. J. Ch.), 288. But it has sometimes been held that the creditor cannot under all circumstances claim the benefit of such securities. Jones r. Quinnlpiack Bank, 29 Conn. 25. But see N. B. Savings Inst. v. Fairhaven Bank, 9 Allen. 175-178. The subrogation of the surety upon the payment of the debt, to all the rights of the creditor Is clearly recognized In the American courts, although subroga- tion, in form. Is a remedv derived from the Roman civil law. Irick v. Black, 616 SURETYSHIP. 2 C. E. Green (17 N. J. Ch.), 189. And in the case last cited the right of the surety, by means of a bill in equity, to compel the principal debtor, after the debt falls due, to make payment of the debt is fully recognized. And it is here declared that where the creditor has the means of fully indemnifying himself out of the property of the principal debtor, and will be subjected to mo loss or delay thereby, he may in equity be compelled by the surety to seek his redress by means of resort to the property of the principal debtor. But this rule is subject to many exceptions ; and the better opinion now seems to be that in such cases the surety must assume the debt and accept the transfer of such collateral rem- edies as the creditor may possess. 1 Story Eq. Jur. §§ 499 et seq., 499 e, and cases cited in note, tenth edition. The question of the defences to which a surety for the husband to secure the wife's separate estate to her may avail himself is discussed in Barr v. Greenawalt, 62 Penn. St. 172. In cases of insolvency the surety may sometimes compel the creditor to resort to collateral remedies for the collection of his debt before attempting to enforce it against him. Thus it has been held that where the payee of a note had deceased, and the administrator was attempting to enforce the same against a surety, the maker of the note being insolvent, but entitled to a distributive share in the estate of the payee, the surety might compel the administrator first to resort to such distributive share. Wright v. Austin, 56 Barb. 13. The author- ities are cited in the opinion, and carefully classified. The operation of the statute of limitations as between surety and principal, and accommodation parties among themselves, and between indorser or drawer and prior parties, is a question of interest and importance. In the first two cases mentioned, it is pretty well settled that the statute begins to run from the time of payment. Barnsback v. Reiner, 8 Minn. 59 ; Preslar r. Stalworth, 37 Ala. 402 ; Hale v. Andrews, 6 Cow. 225 ; Tillotson v. Rose, 11 Met. 299 ; Rey- nolds V. Doyle, 1 Man. & G. 753 ; Collinge v. Heywood, 9 Ad. & E. 633 ; Byles, Bills, 333; Angell, Limitations, 112, 113. But see Webster v. Kirk, 17 Q. B. 944. It would seem from analogy to these cases, and from the fact that the right of action of the indorser or drawer accrues only upon payment, that the statute should begin to run from that time. See Reynolds v. Doyle, and Collinge v. Heywood, supra. But the contrary is held in Webster v. Kirk, supra, and by the courts of Pennsylvania. Kennedy v. Carpenter, 2 Whart. 844 ; Farmers' Bank v. Gilson, 6 Barr, 51. The ground taken in the Pennsylvania cases is, that the indorser must sue upon the paper, as to which the statute begins to run at maturity. Perhaps the rule may be different where it is held that such party is not limited to an action upon the paper, but may sue for money had and re- ceived. See Ellsworth v. Brewer, 11 Pick. 316. We are informed that a case is now pending in the Supreme Court of Massachusetts, involving this point. It may be well to note that Reynolds v. Doyle does not appear to have been be- fore the Court in Webster v. Kirk ; and that no reasons are given for the deci- sion in the latter case. BAYARD V. SHUNK. 617 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMExNT OF DEBT. Bayard v. Shunk. (1 Watts & Sergeant, 92. Supreme Court of Pennsylvania, May, 1841.) Pmjment in bank-bills. — If a creditor receive current bank-notes in payment, tliis dis- cliarges tlie debt; tbougli, by reason of the failure of the bank, of wliicii both par- ties were ignorant at tlie time, tlie notes were wortliless wlien received. In this case, notes of the Commercial Bank of Millington had been received by the plaintiff's attorney in payment of a judgment against the defendant and another. Said bank had actually failed several days before this transaction, though both parties were ignorant of this fact at the time ; and the bank-notes were worth- less when received. The question was whether the judgment were satisfied. Gibson, C. J. Cases in which the bills or notes of a third party were transferred for a debt, are not to the purpose ; and most of those which have been cited are of that stamp. Where the parties to such a transaction are silent in respect to the terms of it, the rules of interpretation are few and simple. If the securities are transferred for a debt contracted at the time, the presumption is that they are received in satisfaction of it ; but if for a precedent debt, it is that they arc received as collateral security for it ; and in either case it may be rebutted by direct or circumstantial evi- dence. But by the conventional rules of business, a transfer of bank-notes, though they are of the same mould and obligation be- twixt the original parties, is regulated by peculiar principles and stands on a different footing. They are lent by the banks as cash ; they are paid away as cash ; and the language of Lord Mansfield in Miller v. Race, was not too strong when he said, " they are not goods, nor securities, nor documents for debts ; but arc treated as 618 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMENT. money, as cash, in the ordinary course and transaction of business by the general consent of mankind, which gives them the credit and currency of money to all intents and purposes ; they are as much money as guineas themselves are, or any other coin that is used in common payments as money or cash." If such were their legal character in England, where there was but one bank, how emphatically must it be so here where they have supplanted coin for every purpose but that of small change, and where they have excluded it from circulation almost entirely. It is true, as was remarked in Young v. Adams, 6 Mass. 182, that our bank-notes are private contracts without a public sanction, like that which gives operation to the lawful money of the country ; but it is also true that they pass for cash both here and in England, not by force of any such sanction, but by the legislation of general consent, in- duced by their great convenience, if not the absolute necessities of mankind. Miller v. Race is a leading case which has never been doubted in England or, except in a case presently to be noticed, in America ; and it goes very far to rule the point before us ; for if the wheel of commerce is to be stopped or turned backwards in order to repair accidents to it from impurities in the medium which keeps it in motion, except those which — few and far between — are occasioned by forgery, bank-notes must cease to be a part of the currency, or the business of the world must stand still. The weight of authority bearing directly on the point, is decisively in favor of the position that bona fide payment in the notes of a broken bank discharges the debt. Though Camidge v. AUenby, 6 Barn. & C. 373 ; s. c, 13 Eng. Com. Law Hep. 202, was not a case of pay- ment in bank-notes, but in the cash notes of a banker who had failed a few hours before, it was held that if they were to be con- sidered as cash, the debt would be discharged ; but if as negotiable paper merely, the holder was bound to use due diligence in pro- curing payment of them ; and that in either aspect the same result was inevitable. Such notes, however, though formerly called gold- smiths' notes, have not been treated as cash by the merchants or the courts. Strictly speaking, they are ordin*ary promissory notes ; for none but those of the Bank of England are considered bank- notes in that country. The judges, however, seem to have hesi- tated as to their precise character in that case ; but they distinctly decided that bona fide payment in notes which have received the qualities of money from the conventional laws of trade, is absolute BAYARD V. SHUNK. 619 satisfaction, notwithstanding the previons faihirc of the drawer. In America we have a decision directly to the point in Scruggs v. Gass, 8 Yerg. 175, in which the Supreme Court of Tennessee held that payment in the notes of a bank which had failed, discharged the debt; and in Young v. Adams, already quoted, we have a decision of the Supreme Court of Massachusetts to tlie same purport. In contrast with these stands Lightljody v. The Ontario Bank, decided liy the Supreme Court of New York, 11 Wend. 9, and af- firmed in the Court of Errors, 13 Wend. 101.^ The judges and senator who delivered opinions in that case, seem not to have coin- cided in their intermediate positions, though they arrived at the same conclusion. The chief justice who delivered the opinion of the Supreme Court, appears to have thought that a bank-note stands on the footing of any other promissory note ; that as he who parts with what is valuable ought on principles of natural justice to receive value for it in return, a Aendor is not bound by an agreement to accept promissory notes should they have been bad at the time of the transaction ; and that payment in tiie notes of an insolvent bank is no better than payment in counterfeit coin. It is obvious that this involves a contradiction ; for to confound bank-notes with ordinary promissory notes would sul)ject a debtor, who had paid them away, to the risk of the bank's ultimate solven- cy. In the Court of Errors, the chancellor, having premised that a State is not at liberty to coin money, or make any thing a legal tender but gold or silver, and consequently that the practice of receiving bank-notes as- money is a conventional regulation, and not a legal one, concluded that where the loss has already iiappened by the failure of the bank, there is no implied agreement that the receiver shall bear it ; and that if he were called on to express his sense of the transaction at the time, he would say what natural justice says, that the risk of previous failure in the value of the medium must be borne by the debtor. He would more probably say that he had not thought or formed an opinion about it. Sena- tor Van Schaik also insisted much on the natural justice of the principle, and asserted that no case in the books authorizes an in- ference that bank-notes arc considered as money excci)t in the universally implied condition that the banks which issued them are able to redeem them at the time of the transfer. In Miller i'. Race, however, we have seen that Lord Mansfield asserted on the other hand that they arc money without any qualification whatever ; 1 Post, 404. 620 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMENT. and Camidge v. Alleiiby, as well as Scrugc^s v. Gass, affirms that they may retain the character of money after the period of the bank's failure. To assume that solvency of the bank at the time of the transfer is an inherent condition of it, is to assume the whole ground of the argument. The conclusion concurred in by all, however, was that the medium must turn out to have been what the debtor offered it for at the time of the payment. How does that consist with the equitable principle that there must be, in every case, not only a motive for the interference of the law, but that it must be stronger than any to be found on the other side ; else the equity being equal, and the balance inclining to neither side, things must be left to stand as they are (Fonb. b. 1, c. v. § 3 ; ib. c. iv. § 25) ; in other words, that the law interferes not to shift a loss from one innocent man to another equally innocent, and a stranger to the cause of it ? The self-evident justice of this would be proof, were it necessary, that it is a principle of the common law. But we need go no further in search of authority for it than Miller v. Race, in wliich one who had received a stolen bank-note for a full consideration in the course of his business, was not compelled to restore it. It was intimated in The Ontario Bank v. Lightbody, that there was a pre- ponderance of equity in that case, not on the side of liim who had lost the note, but of him who had last giren value for it. Why last ? The maxim, prior in tempore, potior in jure, prevails be- tween prior and subsequent purchasers indifferently of a legal or an equitable title. It is for that reason the owner of a stolen horse can reclaim him of a purchaser from the thief; and were not the field of commerce market overt for, every thing which performs the office of money in it, the owner of a stolen note might follow it into the hands of a bona fide holder of it. But general convenience requires that he should not ; and it was that principle, not any consideration of the equities betwixt the parties, which ruled the cause in Miller v. Race. But a more forcible illustration of the principle, were the case indisputably law, might be had in Levy v. The Bank of the United States, 4 Dall. 234 ; s. c, 1 Binn. 27 ; in which the placing even a forged check to the credit of a depositor as cash — a transaction really not within any principle of conven- tional law — was held to conclude the bank ; and to this may be added the entire range of cases in which the purchaser of an article from a dealer has been bound to bear a loss from a defect BAYARD V. SHUNK. 621 in the quality of it. And for the same reason that the law refuses to interfere between parties mutually innocent, it refuses to inter- fere between those who are mutually culpable ; as in the case of an action for negligence. The rule of the admiralty, being that of the civil law, would apportion the loss ; but it Wks no place in any other court. What is there, then, in the case before us to take it out of this great principle of the common law ? The position taken by the courts of New York is, that every one who j)arts with his property is entitled to expect the value of it in coin. Doubtless he is. He may exact payment in precious stones, if such is the bargain. But where lie lias accepted without reserve wiiat the conventional laws of the country declare to be cash, his claim to any thing further is at an end. Bills of exchange and promissory notes enter not into the transactions of commerce, as money ; but it impresses even these with qualities which do not belong to ordinary securities. The holder of one of them, who has taken it in the ordinary course, can recover on it, whether there was a considera- tion between the original parties or not ; and if no man can part with his property, except subject to an inherent right to have the worth of it, at all events, why should not the drawer of a note be at liberty to show want of consideration against an indorsee, on the ground that no one can pledge his responsibility without having received what he expected for it ? Or why, on the supposed moral and public considerations that were invoked in the discussion of the general principle, should the vendee of a chattel be bound to pay for it, though it turn out to be inferior in quality to what he expected it to l)e ? It is because it would stop the wlieels of com- merce to trace the defect through a series of transactions to the author of it ; and dealers must therefore take the risk of it for the premium of the profits. And may not dealers, as well as insurers, take the risk of an event which may have already hap- pened ? The creditor does agree to take the risk of the bank's solvency when he makes its notes his own without reserve. The assertion that it is always an original and subsisting part of the agreement tliat a bank-note shall turn out to have been good when it was paid away, can be conceded no farther than regards its genuineness. Tiuit genuine notes are supposed to be e([ual to coin, is disproved by daily experience, which shows that they cir- culate by the consent of the whole communities at their nominal 622 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMENT. value when notoriously below it. But why hold the payor respon- sible for a failure of the bank only when it has been ascertained at the time of the payment, and not for insolvency ending in an ascertained failure afterwards ? As the bank may have been actually insolvent before it chose to let the world know it, we must carry his responsibility back beyond the time when it ceased to redeem its notes, if we carry it back at all. Were it not for the conventional principle tiiat the purchaser of a chattel takes it with its defects, tlie i)urchaser of a horse, with the seeds of a mortal disease in him, might refuse to pay for him, though his vigor and usefulness were yet unimpaired ; and if we strip a payment in bank-notes of the analogous cash principle, why not treat it as a nullity, by showing that the bank was actually, though not osten- sibly, insolvent at the time of the transaction ? It is no answer to say the note of an unbroken bank may be instantly converted into coin by presenting it at the counter. To do that may require a journey from Boston to New Orleans, or between places still further apart, and the bank may have stopped in the mean time ; or it may stop at the instant of presentation, when situated at the place where tlie holder resides. And it may do so even when it is not insolvent at all, but perfectly able eventually to pay the last shilling. This distinction between previous and subsequent failure, evinced by stopping before the time of the transaction or after it, is an arbitrary and impracticable one. To such a payment we must apply the cash principle entire, or we must treat it as a transfer of negotiable paper, imposing on the transferee no more than the ordinary mercantile responsibility in regard to presenta- tion and notice of dishonor. There is no middle ground. But to treat a bank-note as an ordinary promissory note would introduce endless confusion, and a most distressing state of litigation. We should have reclamations through hundreds of hands, and the inconvenience of having a chain of disputes between successive receivers, would more than counterbalance the good to be done by hindering a crafty man from putting off his worthless note to an unsuspecting creditor. No contrivance can prevent the accom- plishment of fraud, and rules devised for the suppression of petty mischiefs have usually introduced greater ones. The case of a counterfeit bank-note is entirely different. The laws of trade extend to it only to prohibit the circulation of it. They leave it, in all besides, to what is the rule both of the common BAYARD V. RHUNK. 623 and the civil law, which requires a thing parted with for a price to have an actual, or at least a potential, existence (2 Kent, 408) ; and a forged note, destitute as it is of the quality of legitimate being, is a nonentity. It is no more a bank-note than a dead horse is a living one ; and it is an elementary principle that what has no existence cannot Ijo the subject of a contract. But it cannot ))e said that the genuine note of an insolvent bank has not an actual and a legitimate existence, though it be little worth ; or that the receiver of it has not got the thing he expected. It ceases not to be genuine by the bank's insolvency ; its legal obligation as a contract is undissolved ; and it remains a promise to pay, though the promisor's ability to perform it be impaired or destroyed. But as the stockholders of a broken bank are the last to be paiti, it is seldom unable in the end to pay its note-holders and depositors ; and even where nothing is left for them, its notes may be })arted with at a moderate discount to those who are indebted to it. We seldom meet with so bad a case as the present, in which every thing like etTects, and even the vestiges of the bank, disappeared in a few hours after the first symptoms of its failure. But inde- pendent of that, the difference between forgery and insolvency in relation to the transfer of a bank-note, is as distinctly marked as the difference between title and quality in relation to the sale of a chattel. What then becomes of the boasted principle that a man shall not have parted with his property until he shall have had value, or rather what he expected for it ? Like many others of the same school, it would be too refined for our times, even did a sembUmce of natural justice lie at tiie root of it. But nothing devised by human sagacity can do equal and exact justice in the apprehension of all men. Tiie best that can be done, in any case, is no more than an approximation to it ; and when the incidental risks of a business are so disposed of as to consist with the general con- venience, no injustice will in the end be done to those by whom they are borne. Commerce is a system of dealing in whicli risk, as well as labor and capital, is to be compensated. But nothing can be more exactly balanced than the equities of parties to a payment in regard to the risk of the medium when its worthless- ness was unsuspected liy cither of them. The diirerence between them is not the tithe of a liair, or any other inlinitesinKil (piantity that can be imagined ; and in such a case, the common law allows 624 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMENT. a loss from mutual mistake to rest where it has fallen, rather than to remove it from the shoulders of one innocent man to the shoul- ders of another equally so. Tlie civil-law principle of equality, liowever practicable in an age when the operations of commerce were few, simple, and circumspect, would be entirely unfit for the rapid transactions of modern times ; it would put a stop to them altogether. No man can withhold his praise of the civil law, as a wonderful fabric of wisdom for its day, or deny that it has con- tributed largely to the best parts of our jurisprudence ; but all its materials of superior value have already been worked up in our more commodious modern edifice ; and if the cultivation of an acquaintance with it is to beget a desire to substitute its abstract principles for the maxims of the common law, — the accumulated wisdom of a thousand years' experience, — it were better that our jurists should die innocent of a knowledge of it. This longing after its peculiar doctrines began with Mr. Verplanck's commentary on the decision of the Supreme Court of the United States in Laidlaw v. Organ, 2 Wheat. 178 ; and it was subsequently indulged by the Supreme Court of his own State, so far as to sap the founda- tion of its own sound decision in Seixas v. Woods, 2 Caines, 48. In Laidlaw v. Organ, the purchaser refused to disclose his informa- tion that the article had risen in the market, and there was there- fore room for a pretence of inequality in the circumstances of the parties ; but where they have acted, as in this case, in equal ignorance, and with equal good faith, that pretence, flimsy as it was even there, is wanting, and the law, on principles of justice as well as convenience, refuses to interfere between them. It is therefore unnecessary to insist on the provisions of our statute of 1836, which enacts that " it shall be lawful for the officer charged with the execution of any writ of fieri facias, when he can find no other real or personal estate of the defendant, to seize and take the amount to be levied by such writ, of any current gold, silver, or copper coin belonging to the defendant, in satisfaction thereof ; or he may take the amount aforesaid of any bank-notes, or current bills for the payment of money, issued by any moneyed corpora- tion, at the par value of such notes." At least for the purpose of seizure in execution, therefore, bank-notes are money ; and had the sheriff returned tiiat he had seized these notes as the defend- ant's property instead of the property itself, it would not be pre- tended that the debt was undischarged. But though he returned ONTARIO BANK V. LIGIITBODY. C25 the facts specially, the notes were received as cash by the plaintiff's attorney ; and after that, on no principle whatever could the trans- action be thrown open. The plaintiff's case is an unfortunate one, but we could not relieve him without imposing an equal misfortune on the defendants. Judgment affirmed. See next case and note. Ontario Bank v. Lightbody. (13 Wendell, 101. Court of Errors of New York, December, 1834.) Payment in bank-bills. — If the holder of commercial paper receive bank-notes in pay- ment of the same, the risk of the solvency of the bank whicli issued the notes is upon him wlio gave tiiera, in the absence of agreement ; and tlierefore if the bank liad actually failed or stopped payment at the time the notes were received, and this was unknown at the time to the holder, this will not constitute paj;ment of his paper, though such bank-notes were current at the place where they were received, at that time. Assumpsit to recover the amount of a note of the Franklin Bank, paid to the plaintiff by the Ontario Bank^ the defendant below, on a draft drawn by him upon his funds on deposit. The Franklin Bank had actually stopped payment at this time, though the facts were unknown to both parties, and though the notes of that bank were current at that time at the place where they were received. Walwouth, Chancellor. The question to be decided is, which of the parties shall sustain the loss in reference to the bill of the Franklin Bank, received l)y Lightbody, })aid upon the ]>rcscntment of his check. The law is well settled, that where the note of a third person is received in payment of an antecedent debt, the risk of his insolvency is upon the party from whom the note is received, unless there is an agreement or understanding between the parties, either express or implied, that the party who receives the note is to take it at his own risk. The same principle is applicable to the notes of an incorporated bank, except that as to the latter there is always an implied understanding between the parties that if the bill, at the time it is received, is in fact what the party receiving it supposes it to be, he is to run the risk of any future failure of the 4U 626 BANK-BILLS AND OTHER TAPER TAKEN IN PAYMENT, bank. This implied agreement between the parties arises from the fact that bills of this description, so long as the bank which issued them continues to redeem them in specie at its counter, are by common consent treated as money, and are constantly passed from hand to hand as such. The receiving them as money, however, is not a legal, but only a conventional regulation, adopted by the common consent of tlie community ; as no State is authorized to coin money, or to pass any law by which any thing but gold or silver coin shall be made a legal tender in the payments of debts. Tliis principle of considering bank-bills as money, which the re- ceiver is to take at his own risk, cannot, therefore, be carried any further than the conventional regulation extends ; that is, to con- sider and treat them as money so long as the bank by which they are issued continues to redeem them in specie, and no longer. When, therefore, a bank stops payment, its bills cease to be a con- ventional representative of the legal currency of the country, whether the holder is aware of that fact or not; from that moment the bills of such bank resume their natural and legal character of promissory notes, or mere securities for the payment of money ; and if they are afterwards passed off to an individual who is isqually ignorant of the failure of the bank, there is no agreement on his part, either express or implied, that he shall sustain the loss which has already occurred to the original holder of the bills. Upon the principles applicable to cases of mutual mistake, as those principles are administered in courts of equity, it is now settled that, if an individual passes to another a counterfeit bill^ or an adulterated coin, both parties supposing it genuine at the time it was received, the one wiio passes it is bound to take it back and give him to whom it was passed a genuine bill or an unadulterated coin in lieu thereof, or, in other words, to make good the loss. Markle v. Hat- field, 2 Johns. 455. That principle of natural justice is equally applicable to the case under consideration. The actual loss had been sustained by the failure of the bank while the plaintiffs in error were the holders and owners of the bill ; and it is a maxim of the law, that the loss is to him who was the owner at the time such loss happened, if both parties were ignorant of the loss at the time of making their contract. Here, the one party intended to pay, and the other supposed he was receiving the bill of a bank which was redeeming its bills at its counter. Suppose the inquiry had been made of the defendant, " Do you expect to sustain the ONTARIO BANK V. LIGHTBODY. 027 loss if the ])ank slioiikl fail before you shall have j»artod witli this bill?" The answer, according to the implied understanding of the parties, arising from the nature of the transaction, and considering the bills of specie-paying banks as money, would ofrtainly have been the aflfirmative. iiut if he had been asked, " Do you under- stand that you are to bear the loss, if it should hereafter be ascer- tained that the Franklin Bank has now actually failed and stopped payment? " he would unquestionably have answered, " No ; in that event, as the loss would have happened while you was the owner of the bill, natural equity requires that you should bear it ; and I shall expect you to take Ijack the bill and give me one which is good." The principle adopted by the Supreme Court in this case, is also the only one which can protect the honest and unsuspecting against the frauds of those who might be disposed to take advantage of the ignorance of others as to the failure of a banking institution. A person who has heard of the failure of a bank while he has some of its bills on hand, will naturally be tempted to get rid of them for the purpose of avoiding a loss he might otherwise sustain ; and if he was disposed to be a rogue, he would keep his knowledge of the failure to himself until he could pay out his bills to those who were ignorant of the fact, and in such case he would escape with impunity, if those to whom he passed them were required to prove that he was aware of the failure at the time they received the bills from him. And even if the first person to whom a l)ill was passed should be so fortunate as to obtain proof to establish the fraud, if he had honestly parted with the l)ill while he was yet ignorant of the fact, so that the one who had received it from him could not call for repayment, the original holder of the l)ill, who was guilty of the fraud, would still escape with impunity. On the whole, I am satisfied with the judgment of the Supreme Court in this case ; not only as perfectly legal and just, but also as that which is most consistent with the substantial interests of the community, and founded upon a correct principle of pul)lic policy. Van Schaick, Senator. A powerful effort was made l)y the coun- sel for the plaintitTs in error, and many authorities were cited to prove that bank-notes have been treated and viewed as /none// both in this country and in England ; and he argued that payment in good faith, in bills current at the time and place of the transaction, 628 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMENT. constituted a full discharge of the obligation of a debtor to his creditor, even though, as in the present case, the bank, in the bills of which the payment was made, had failed previous to the making of the paym|nt. The authorities adduced by the counsel were misapplied ; and I consider it a full answer to the argument which was founded upon them, to say, that there is no adjudged case in the books to author- ize the inference that bank-notes have ever been considered as money, except under the universally implied understanding, that the banks which issued the paper were able to redeem or to substi- tute a full equivalent for their issues ; and therefore it is not a sound inference from the cases to say that the paper of a bank shall be entitled to the same consideration as money, after the bank has failed, that it had before, in consequence of the confidence in its stability. To test this position, it will be sufficient to select a few of the strongest cases. Miller v. Race, 1 Burr. 452, was the case of a bank-note stolen from the mail, and which fell into the hands of the defendant, an innkeeper, honestly in the course of his busi- ness. The Court decided that the action would lie upon the general course of business, and the consequences to trade and commerce, which would be much incommoded by a contrary deci- sion. Lord Mansfield, in that case, says that bank-notes ought not to be compared to what they do not resemble, — goods, securities, or documents for debts ; that they are treated as money, as cash by the general consent of mankind. " They are as much money as guineas themselves are, or any other current coin." The impor- tance attached to the influence of the decision in this case upon trade and commerce is evidently overrated. The equity of the case itself is on the side of the party who last gave, in the pursuit of an honest calling, a valuable consideration for the money. Circum- stances might change this ; but, generally speaking, traders and others cannot be upon their guard to learn whether the sums of money they receive, suitable to the extent of their business, are stolen or found. But the case itself, and the character given by Lord Mansfield to bank-notes as money ,*assumes the fact of the unquestioned solvency of the maker of the note. This is all im- portant; for there is a vastly wider difference between the note of an insolvent and that of a solvent bank, than there is between a good note and an equal amount in guineas. In the case of The Bank of the United States v. The Bank of the State of Georgia, 10 ONTARIO BANK V. LIGHTBODY. 629 Wheat. 333,^ notes issued by the Bank of Georgia had been altered so as to increase the amount of the promise to pay from $590 to 'fioOOO. Having been received in the Bank of the United States, they were, in the ordinary course of their exchanges, re- mitted to the Bank of Georgia, which received them as (jenuine^ but subsequently discovering the alterations, otTered to return them. The tender to return the notes was not made until nineteen days after their receipt. The case came before the Supreme Court of the United States upon a writ of error from the Circuit Court of Georgia. Tiie Supreme Court reversed the judgment of the Court below upon two points : 1. Because the Circuit Court had refused to instruct the jury, that, if they believed the evidence, the plain- tiffs were entitled to recover the balance due 1)y their customer's book ; 2. Tliat the plaintiffs were entitled to interest from the commencement of the action. !Mr. Justice S'fory, who delivered the opinion of the Court, did not consider that this was a case of a special deposit, but the notes were paid as money upon general account, so that, according to the course of business, and the understanding between the parties, the identical notes were not to be restored, but an equal amount in cash was to be paid ; that the notes passed into the general funds of the Bank of Georgia, and became its property. Upon this ground, the action as to form was maintained. But in going into the merits, great stress was laid by the Court upon the fact that these were not the notes of another bank, or the security of a third person, but were received and adopted by the bank as its own genuine notes, in the most absolute and unconditional manner ; and the wliole general reasoning of the case, separate from the principles of other cases wliich are brought to sustain collateral points, goes upon the broad ground that a bank is bound to know its own paper. This position is laid down with so much emphasis, that it must be considered as the controlling reason for the judgment of the Court. How the ques- tion of a special deposit would have been treated by the Court, if the paper had been the altered notes of the United States Bank itself, or of any other bank, cannot now be known ; neither does the case reach the question of the notes of a third bank, being at the time of the exchange or deposit, an insolvent institution. In l.Ld. Raym. 738, it was held, an action did not lie against the assignee of a bank-bill, l)ecause he had it for a valuable consid- eration ; and it always is an inquiry whether the bearer came fairly 1 Post, 650. 630 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMENT. by it. None of the cases proceed exclusively upon the mere simil- itude between bank money and cash, and the answer is the same to all the cases which hold bank paper equal to money, as it must be to that in. which Lord Mansfield declares that bank-notes are as much money as guineas are ; that is, that the judges always allude to genuine and solvent notes. There are some individual oj)inions of judges, however, which appear to militate against this position. In the case of Young v. Adams, 6 Mass. 182, a payee recovered against a payer the amount of a $5 counterfeit bill, which had been given him with other money. It is impossible to find in this case any thing to support the doctrine, that a payment made in the bills of an insolvent bank is valid. Yet the judge says, argumen- tatively, in a supposed case, " When the bills paid are true and genuine, the responsibility of the bank is, we believe, at the risk of the receiver. But it is admitted that this construction goes " farther in favor of the currency of bank-notes or bills, than the authorities warrant in regard to private notes or bills, or even bankers' notes in England when accepted in payment." But the suggestion is afterwards qualified in the following manner : " Pri- vate notes, that is, of individuals or companies, whether incorpo- rated or not, where the currency of them is not regulated by some notorious and peculiar usage, when accepted in payment or dis- charge of an existing contract, are taken at the risk of the payer." And the converse of this proposition must be, that such notes as are regulated by notorious and peculiar usage are at the risk of the payee. But if this proposition were the foundation of a case to be decided, it is not certain that this would be a satis- factory view of the question, since between the circulation and appreciation of public bank-notes, issued by different institutions, there is as great a difference as between public bank-notes as such, and private notes, whether of private banks or individuals. To say, because the community has become by habit inspired with confidence in the trustworthiness of banks and bank paper, that therefore a payment made in the paper of a broken bank, not knowing it to be broken, discharges the debt, is a principle not dispoverable in any system of ethics or jurisprudence. Policy may be deemed to require that bank circulation should be protected by a leaning in support of its reputation with the public ; but it is unnecessary. If worthy, it will stand without the aid of legal decisions, which tend to pervert the right, and which some judges ONTARIO BANK V. LIGHTBODY. 631 believe give a dangerous facility to bank circulation. Tiie conven- ience of a bank, and the honesty of its administration, are its safeguards. When these are withdraNrn, law can render to its circulation no effectual aid. In ordinary use, and for many legal purposes, as in a bequest in a will or when bills are taken on execution, bank-notes are deemed and taken to be money ; but after the payer has become insolvent, they can be so considered only for the purpose, of identification. In real payments, they must possess money's worth. Not having that intrinsically, it is to be sought for in the ability of the issuer to redeem his paper. The strict legal definite character given to bank paj)cr l)y our laws is, that of ])romises to pay and evidences of debt, and this is at least consistent with the reality ; and when so considered, the case stands in a new light. When a bank issues a note or bill, it creates a debt. By law, this dcl)t ninst be paid in specie, if it be demanded. Into the engagement thus to pay, every bank necessarily enters, when it receives its charter. By the terms of this agreement, neither party regards bank paper as money. The circulation of its bills is derived from its credit ; and its credit is the concomitant of its acknowledged and perma- nent solvency. Its bills circulate like coined metal, so long as their representative character remains unimpaired ; but a bank- bill is not money, according to the understanding between the parties, any more than it is money according to the signification of that word. It is admitted that bank-notes, as the circulating medium of the country, have ac([uired the denomination of money, from their convenience as a substitute for gold and silver, and their utility in promoting the objects of trade, and in exchanging the products of industry ; but after a bank has failed, its notes are deprived of those characteristics of money which entitled them to that appellation by the custom of trade, while they continued at a value equivalent with specie, or nearly so. Their convertibility into specie being lost, and their power of circulation having de- parted, not one of the ingredients of money remains, and they can be legally defined only as unpaid promissory notes. But it may be well to show more particularly that our statutes do not yield to bank-notes the character of money, even while they circulate. In the act concerning " monied corporations," 1 R. S. 589, § 1, they are called notes or other evidences of debt. In the Session Laws of 1830, c. 243, § 1, p. '2^jo, the designation is still 632 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMENT. more explicit : " Notes, bills, or other evidence of debt, purporting to be a bank-note." In the acts incorporating banks, their appel- lation is evidence of debt ; and wlicn mentioned in connection with bonds and promissory notes, they are not distinguished as money, but are regarded in the light of promises to pay. Besides, the in- herent qualities and appropriate characteristics of all bank paper, are those which belong to promissory notes, " or documents for debts," and so I think we must consider them for the purpose of this adjudication. If bank-notes be considered as mere promissory notes, then the rule to be applied to this case is, that " paper is no payment of a precedent debt ; it is always taken under the condition to be payment if the money be paid in convenient time." Ward v. Evans, 2 Ld. Raym. 928. This is the settled law, and the custom of trade in this country, " unless the party make it his own by agreement, or by the act of negotiating it. The cases of Puckford V. Maxwell, 6 T. R. 52, and Owenson v. Morse, 7 id. 64, were decided upon modifications of this rule. The paper, possessing no value at the time the contract was made, and there being no agreement that the party was to take it at his own risk, was held to be a nul- lity, and the party might act as if no such bill had been given. In Markle v. Hatfield, 2 Johns. 455, the same principle prevailed ; the party did not receive the compensation intended ; it was a forged bank-note. In Johnson v. Weed, 9 Johns. 311, the Court says : " The books all agree that there must be a clear and special agree- ment that the vendor shall take the paper absolutely as payment, or it will be no payment, if it afterwards turns out to be of no value." The fact of an agreement is matter for the jury. Owing to the extraordinary aptitude of the people of this country for business and trade, — to the immense amount of our resources, which the application of industry and science are developing with constantly accumulating benefits to the community, and which require the indispensable aid of capital to bring them to market, and to the nearly total absence of specie in large districts of coun- try, — paper money has been rendered the common medium of the exchanges of property, or of barter, to a greater extent among us than in any other nation on the globe. Its great convenience and the hitherto indispensable necessity for its use have created the idea that it should be clothed with the attributes of real money ; and this opinion necessarily gains ground among the undiscerning; but it ought not to be permitted to subvert the established princi- ONTARIO BANK V. LTGHTBODY. 633 pies of moral justice. When a citizen sells an article for cash, he is entitled to demand for it, not false, or spurious, or insolvent, but good money, whotiicr it be in coin or l)ills ; and when a man pays a debt, the medium of payment must turn out to be what he represented it to be at the time of payment. The preceding view of the subject demonstrates that the understanding that bank-notes shall pass current as cash is entirely conventional, and cannot be traced to an original principle ; but the understanding that money shall be good at the time of payment is an original and always subsisting part of the agreement ; it goes to the root of every con- tract ; it relates to its essence and substance ; and, in strict morals, this consideration must take precedence of every other implication that may arise upon a bargain for money, or in the payment of a debt. In the case before the Court, tlie bill was not at the time wliat the receiver supposed it to be. The tacit agreement and understanding between tlie parties was, what the universal under- standing is in every traffic for money ; that the paper is good at the time of passing ; and this is a previously existing and more important understanding than that it circulates as money. Mr. Gallatin, in his essay on the Currency and Banking of the United States, p. 29, says : " A payment made in bank-notes is a discharge of the debt, the creditor having no recourse against the person from whom he has received the notes, unless the bank had previously failed." This sagacious statesman did not fail to per- ceive that the inherent defects of paper money rendered it impos- sible to make it fuKil at all times the offices of real money, and that in the event of the failure of the bank, a question of equity might arise l^etween innocent parties to the transfer and acceptance of these notes. He does not merely reserve the point, but expresses a decided opinion, without appearing to apprehend that the cur- rency of paper money will be retarded by the promulgation of an incontrovertible position. The principle adopted by Mr. Gallatin is founded upon common usage and • general consent, by which every person receives bank money which has become current, under the implied understanding that it is good and the bank sol- vent. If a bank lias failed before the transfer of its notes from one person to another, the primary condition of the contract has been touched in its vital part ; the understanding is not fulfilled ; the contract is a nullity. The want of knowledge at Utiea of the fail- ure of the bank jit New York cannot be permitted to remove the 634 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMENT. consequences tluit ensued immediately upon the failure. The money must be lost in the hands of him who hold it when the bank failed. On great moral and public considerations. I can have no hesitation in deciding the case upon this' principle, and especially as it will have a tendency to prevent attempts which have fre- quently been ma'de to commit frauds by the circulation of insolvent bank paper. There was no default in the party who received bad money for good. He transmitted tlie note immediately to New York, and, upon its return, offered it to the bank, but it was refused. I am therefore of opinion that the judgment of the Supreme Court ought to be affirmed. On the question being put. Shall this judgment be reversed ? all the members of the Court present, twenty in number, with one ex- ception voted in the negative. So the judgment of the Supreme Court was affirmed. The rule declared in Ontario Bank v. Lightbody is certainly more consistent ■with natural justice and fair dealing than that maintained in Bayard v. Shunk. Mr. Justice Story, in his work on Promissory Notes, § 389, after stating, as the rule, that declared in Ontario Bank v. Lightbody, says, in a note : "After all, the point seems to resolve itself more into a question of fact, as to the intent, than as to law ; and it must and ought to turn upon this, whether taking all the cir- cumstances together, the bill was taken as absolute payment by the holder, at his own risk, or only as conditional payment, he using due diligence to demand and collect it." Fogg V. Sawyer, 9 N. Hamp. 36.5, is a well-considered case which supports the New York doctrine. In delivering the opinion of the Court, Parker, C. J., said : — " It is contended, in this case, that the equity is equal between the parties, — that there must be a loss upon the bills which were received by the plaintiff, and that, both parties being equally innocent, the law should not interfere. It is not quite clear that both parties were equally innocent in this transaction. The case finds that it did not distinctly appear that the failure of the bank was known to the defendant, but it did appear that it was unknown to the plaintiflf. A sus- picion, however, that the defendant had knowledge of the failure, at the time he made the purchase, can have no effect upon the present decision, as no question of that kind has been submitted to the jury. " There are cases where the parties being ecjually innocent, or equally guilty, neither can support an action against the other ; but the principle upon which they are founded is not applicable to this case. On the supposition that neither knew of the failure of the bank, at the time of the sale, the plaintiff contracted to sell the oxen, and the defendant to pay therefor a certain price. There is nothing in the case to show any agreement, in fixing upon the price, that payment ONTARIO BANK V. LIGHTBODY. 635 was to l)e received in bills of the Chelsea Bank. Tlie jtarties, then, niuft have contemplated a payment in money, or in somethiiif^ which was equivalent to money, and usually received as such. In fact the plaintiff might have declined receiving any thing but coin, and the defendant could not have performed his contract except by the payment of coin, if it had been rerjuired. The ri;,'ht to require coin was waived, liut still there is nothing to sliow that an equivalent was not to be received. " When, therefore, the plaintiff received the bills, he received them, and the defendant paid them, as money. It was in that way only that the defendant could perform what he had undertaken to do, which was, to pay a sum of money. The bills represented money, — were doing the oflice of money, — and should have been of the value of money at the place where they purported to be re- deemable, and convertible into money. The plaintiff was as much entitled to receive good bills, if he consented to take bills, as he would have been to have received good coin, in case the payment had been made with specie ; and it is not doubted that in such case, if the payment had been made in counterfeit coin, the plaintiff would have been entitled to recover The same is true of counter- feit bills, when they have been passed in payment. Young v. Adams, 6 Mass. 1S2 ; Markle v. Hatfield, 2 Johns. 455 ; Grafton Bank v. Hunt, 4 N. Hanip. 4S,s. " The case of a payment in bills of a broken bank cannot be distinguished, in principle, from that of a payment in counterfeit money. From the time of the failure of the bank they cease to be the proper representatives of money, whether they are, at the time, near to, or at a distance from, the bank. They may have a greater value than counterfeit bills, but in neither case has the party received what in the contemplation of both parties he was entitled to receive, if the contract was to pay a certain sum. In neither case has he received money, or its representative. The sum contracted to be paid has not been paid in money, or any thing which by usage passes as money, or which was entitled at the time to represent it ; and the party has, therefore, failed to pay what he con- tracted to pay. Wentworth i'. Wentworth, 5 N. Hamp. 410. Counterfeit coin may contain a portion of good nutal, and thus have some value, but this would not make it a good medium of payment. Entire worthlessness, or not, is not, therefore, the criterion. "It can make no difference whether the party making the payment knew, at the time, that the bank had failed. That is of as little consequence as it is whether he knew that the pieces of coin or bills which he paid were counterfeit. Having undertaken to pay a sum of money, the question is, whether he has per- formed his obligation. " It is not sufficient that the bills, in this case, might have been current at the place of payment, when the payment was attempted to be made. They should have been current, or convertible into specie, at the place where they purported to be redeemable. When the defendant paid them as money, he took this risk upon himself If they were not so, they were not what they purported lo be, and what they were taken for. " There is no equity in the case which should lead to a different result. When the bank failed the loss fell upon the defendant, as the holder of the bills, it he held them at that time. If he had not received information of his loss, that is 636 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMENT. of no consequence. The bills were no longer redeemed on demand, and a loss, greater or less, had accrued. There is no equity in transferring this loss to the phuntifF, because he afterwards received the bills supposing them to be equivalent to money. If he had agreed to take the risk, that would have presented the case in a different aspect. Or if he had agreed to exchange the oxen for the bills, that might have altered the case. But the bare reception of the bills in payment cannot be considered as evidence of an agreement to take the risk, because the defendant offered thcMn as money, and the plaintiff received them as such, without knowledge of the failure. *' If the bills had been convertible into money, at the bank, when the plaintiff received them, they would have been what they purported to be, and the risk of a- subsequent failure, while they were in his possession, would have been with the plaintiff. "The plaintiff having offered to return the bills in a reasonable time, is entitled to treat the case as if they had not been received, and to recover the balance due on the sale of the oxen. " Judgment for the plaintiff ^ There are several other cases which sustain this view. See Wainwright v. Webster, 11 Vt. 576; Frontier Bank v. Morse, 22 Me. 88; Timmis v. Gibbins, 14 Eng. Law & E. 64; Harley v. Thornton, 2 Hill (S. C), 509; Thomas v. Todd, 6 Hill (N. Y.), 340; Townsends v. Bank of Racine, 7 Wis. 185; Westfall V. Braley, 10 Ohio State, 188. But the Pennsylvania doctrine has been adopted in several States. See cases cited by Chief Justice Gibson ; also Lowrey v. Murrell, 2 Port. Ala. 280 ; Corbit V. Bank of Smyrna, 2 Harr. Del. 235, Layton, J., dissenting; Ware v. Street, 2 Head, 609 ; Edmunds v. Digges, 1 Grat. 359. See also Commonwealth v. Stone, 4 Met. 43; Snow v. Perry, 9 Pick. 539; Alexander r. Dennis, 9 Port. Ala. 174 ; Alexander v. Byers, 19 Ind. 301 ; Dakin V. Anderson, 18 Ind. 52 ; Aldrich v. Jackson, 5 R. I. 218 ; Houghton v. Adams, 18 Barb. 545; Baker v. Bonesteel, 2 Hilton, 397; Oilman v. Peck, 11 Vt. 516; Ex ])arte Blackburne, 10 Ves. 204 ; Bank of the United ^tates v. Bank of Georgia, j)ost, 650. THE PHfENIX INSURANCE CO. V. ALLEN. 637 The PricENix Insurance Company v. John Allen. (11 Michigan, 501. Supreme Court, July, 1863.) Pai^ment by paper of third jxtrli/. Duty of creditor. — Where a party receives a draft as conditional payment of a debt due him, his right of action upon thetlebt is suspended until tiie draft is properly i)resented for paj'ment and payment refused. By receiv- ing such draft, the creditor accepts die duty of doing every thing with respect thereto which is necessary to fix the liability of the parties ; and the onus is upon him to show that he has performed that duty when he seeks to recover upon the original cause of action. The case is stated in the opinion of the Court. Christiancy, J. This was an action of assumpsit brought by Allen, the plaintiff below, against the company, to recover the amount of a loss by fire under a policy issued by the company to Allen. The declaration contained counts upon the policy, and the com- mon counts. The plea was the general issue. It appeared from the evidence introduced by the plaintiff (and of these facts there was no dispute), that on the twentieth day of April, 1861, the loss under the policy had been adjusted by compromise between Allen and the company (the latter acting through one Holden, their agent, having power to adjust losses), at the sum of 81106.25, whicli was agreed by said agent to be paid by a draft drawn by him on the general agents of the Phcenix Company at Cincinnati " payable in Chicago exchange." Tlie draft for the amount was so drawn on the same day, upon R. H.' and H. M. Magill, general agents of the company at Cincinnati, i)ayable to the order of Allen at one day's sight. Tins draft was indorsed by, Allen to Stephens and Beatty, of Detroit, for whose use the action was brouglit ; the plaintiff, however, retaining some interest in it (but what, did not appear). Stephens and Beatty indorsed and transmitted this draft to Harrison and Hooper, their agents in Cincinnati, for present- ment and demand of i)ayment, who duly presented it to the drawees, on the second of May, 1861, and received and accepted from the drawees, as and for a compliance with said draft or order, a bill of exchange drawn by J. H. Bussing <fc Co., bankers at Cin- 638 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMENT. cinnati, upon Hoffman and Gelpecke, bankers at Chicago, and indorsed by said R. H. and H. M. Magill, general agents as afore- said. This last draft was in the following words and figures : — " 11106.25. Walnut Street Bank : Cincinnati, May 2, 1861. " Pay to the order of R. H. and H. M. Magill, general agents, 11106.25 current funds. " G. H. Bussing & Co. " To Hoffman and Gelpecke, Chicago, 111." This draft was received by Stephens and Beatty, at Detroit, from their agents in Cincinnati, on the fourth day of May, 1861, and on the twenty-fifth- day of the same month they transmitted it by mail to their agents in Chicago, for presentment and demand of payment ; and, on the twenty-ninth day of the same month, it was duly presented to Hoffman and Gelpecke, the drawees, and payment demanded, which payment was refused ; and it was thereupon pro- tested for non-payment, and due notice thereof given. It was admitted there were daily mails between Detroit and Cincinnati, between Detroit and Chicago, and between Detroit and Grand Ra[)ids, and that the several times occupied in the trans- mission of the mails between these several points were as fol- lows : Between Detroit and Cincinnati, from twelve to twenty-four hours ; between Detroit and Chicago, from twelve to fourteen hours, and between Detroit and Grand Rapids, less than twelve hours ; There was no other evidence touching the question of diligence in presenting the draft for payment. The draft was offered in evidence by the plaintiff, under the common counts, but rejected by the Court on the ground that it was not negotiable, because payable in current funds, and not in cash. As the plaintiff does not complain of the judgment, and we think the draft was properly excluded for another reason, it is only important to notice this point for the bearing it may be sup- posed to have upon another question in tlie cause. But in the absence of all evidence that any thing else than cash was treated as current funds in Chicago, we do not see how the Court could assume judicially to know the fact or presume it ; until this should be made to appear, the current funds in which it was made pay- able, should, we think, be held to be such funds only as were cur- rent by law. We must therefore treat this draft as a negotiable bill of exchange payable in money. It does not appear to have THE PHfENIX INSURANCE CO. V. ALLEN. 639 been obtained for tbe purposes of exchange, that is, for the pur- pose of transmitting funds to Chicago ; but it is clear tliat it was received in payment of tiie llrst draft or order drawn by Ibjlden and indorsed to Stephens and Beatty, or, in other words, in j)ay- moiit of tlie sum due the pkiintiff for liis loss under the policy. Whether received in absolute or conditional payment, was a ques- tion for the jury \\\m\\ the evidence. Had they found it was received as absolute payment, they could not have found for the plaintiff, as his remedy would then clearly have been confined to the draft itself, which the plaintiff was not allowed to introduce in evidence. It is only, therefore, in respect to its reception as con- ditional payment that we are to consider the question of the plain- tiff's right to sue for the original indebtedness, and the question of diligence in presenting the draft for payment. Its reception as conditional {)aymcnt would operate as a suspension of the plain- tiff's original right of action till the draft sliould be properly presented for payment, and such payment was refused. See authorities cited 2 Am. Lead. Cas. 182. And wc think the plain- tiff, by such acceptance, must also be understood to have accepted the duty of doing every tlnng with respect to the paper which was necessary to fix the liability of the drawer and indorsers, and the onus of proving that he has performed this duty when he seeks to recover upon the original cause of action for wiiich the paper was received. In Jennison v. Parker, 7 Mich. 355, it was held by a majority of this Court that where a draft drawn by a third person was indorsed by the debtor, and l)y him sent to the creditor to be applied when paid, the creditor made the ])apcr his own, and could not sue u|)on the original debt if he neglected the steps necessary to hold the debtor liable as indorser. We sec no reason for departing from the rule there laid down. We think the same reasons ai)ply here, not only with reference to the indorser, but with at least equal force to the drawers also ; since, if the drawers have been dis- charged by the neglect of the holder to present for payment in due time, the indorsers (who, so far as the present question is concerned, may be considered as the company for whom they acted) would lose their remedy over upon the drawers ; for there is nothing in the case to show that the drawers could be held liable without due presentment. In 2 Am. Lead. Cases, p. 183, u[»on a careful review of the cases 640 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMENT. it is laid down as a general priifciple of the law merchant that, " a plea that the plaintiff has taken the note or bill of a third per- son on acconnt of the cause of action, is a sufficient bar to the suit, which can only be removed by showing that the ordinary course of business has been pursued with reference to the security thus taken, and that it has, notwithstanding, proved inadequate as a means of payment." As a general rule we think this is just and equitable to all parties, though we think the same special cir- cumstances affecting the time of presentment and notice might be shown as in cases between indorser and indorsee. Thus under- stood, the rule is substantially the same as that which requires presentment to be made within a reasonable time, having reference to the ordinary course of business, and the circumstances of each particular case. The law upon this subject, as a general rule, adapts itself to the ordinary course of business, or, more properly speaking, the ordinary course of business constitutes the general rule of law. When the ordinary course of business has estab- lished a rule as to time of presentment, which the law has recog- nized, courts are bound judicially to notice it without proof, as in the case of bills payable at a specified day or a certain number of days after date ; and doubtless the ordinary course of business may, to some extent, be judicially noticed in other cases. But where the law has adopted no rule as to time of presentment, ex- cept that it shall be within a reasonable time, as in the case of bills payable at sight, like the present, the Court cannot, without overlooking the objects for which such presentment and notice of non-payment are required, say, as matter of law, that any delay is reasonable beyond that which may be fairly required in the ordi- nary course of business without special inconvenience to the holder; or by the special circumstances of the. particular case. And in a case like the present, where the paper does not appear to have been obtained for mere purposes of exchange, but in payment of a precedent debt ; and was not put in circulation, but detained by the plaintiff for twenty-one days before it was transmitted for presentment; if we cannot take judicial notice that tliis delay was greater than required by any considerations of necessity or con- venience in the usual course of business, we certainly cannot, without evidence ujjon the point, determine, as matter of law, that this length of time was required by any such considerations, or authorized by any usage or course of business which we can judi- THE PIKENIX INSURANCE CO. V. ALLEN. 641 cially notice without proof. If fliere was any thing in the special circumstances of the case to require it, or 'to excuse the delay, those circumstances should have been proved. But no such evi- dence was given or offered. Nothing whatever was shown to ex- cuse or explain the delay, or to show why the paper might not, with equal convenience to the holder or any other person, have been sent by the first, or next succeeding mail. There was, there- fore, no evidence before the jury tending to show that the time was reasonable. Tlie time — the unexplained delay of twenty-one days — was shown. But there was no evidence of. any usage or course of business, nor any special circumstances connected with the particular case, from which the jury could be authorized to draw any inference that the time was reasonable. And the burden of proof upon this point rested upon the plaintiff. So far as the jury are to pass upon the question of reasonable time, their verdict must be based u{)on evidence before them. If from the naked fact of the length of time, the jury are to determine its reasonableness without any evidence bearing upon the point, they must necessarily determine it as a question purely of law ; and tliis is not within their province. The Court therefore erred in submitting the ques- tion to the jury. Had there been evidence upon the point, the questions might have arisen, which were so fully and ably discussed by the counsel, whether the reasonableness of the time was a question of fact for the jury, or, the facts being undisputed, a question of law for the Court, or, if disputed, of mixed law and fact, to be. decided by the jury under the charge of the Court upon the law. But tlie plain- tilT, upon whom the burden of proof rested, having failed to pro- duce any evidence tending to sliow that the time was reasonable, and there being no such evidence in the case, these questions are not i)roperly before us, and we shall not enter upon their discus- sion. But whatever view may be taken of these (questions, we can see no ground on wdiich the counsel for the plaintiff could be allowed to read to the jury, and to comment upon decided cases upon the question found in the books of reports. So far as the question was one of law, these cases and the arguments upon them were for the consideration of the Court only ; so far as it was a question of fact, it was to l)e decided by the jury upon the facts given in evidence in the regular course of the trial. .See Darby v. Ouseley, 36 Eug. L. & Eq. 519 ; and the finding of courts or 41 642 BANK-BILLS AND OTHER PAPER TAKEN IN PAYMENT. juries in other similar eases would be wholly inadmissible as evi- dence in any stage of the trial. As there was no evidence tending to sbow the time to be reason- able, and the Court held the question to be one of fact for the jury, and permitted the reported cases to be read to them against the objection of defendant's counsel, the jury must naturally have inferred that they were at liberty to consider those decided cases as evidence upon which they had a right to base their verdict. Tiie cases could only be properly read to, or considered by, the jury upon the hypothesis that they were to decide the question as one of law ; and such, in this case, must have been the result, so far as their verdict may have been in any way influenced by the cases and the argument based upon them. The judgment must be reversed, with costs, and a new trial granted. In most States of the Union taking a note or bill for a pre-existing debt is prima fade only conditional payment, and the burden is upon the debtor, in an action upon the original debt to show that the intention was otherwise. Story, Promissory Notes, §§ 104, 117, 389, 438, and numerous authorities cited. But in Maine, Massachusetts, Vermont, Indiana, and Louisiana, the presumption is that the paper is taken in absolute payment, if it is negotiable ; the presumption, however, may be repelled by proof. Descadillas v. Harris, 8 Greenl. 298 ; Wiseman v. Lyman, 7 Mass. 286 ; Spooner v. Rowland, 4 Allen, 485 ; Wait v. Brewster, 31 Vt. 516 ; Arnold v. Sprague, 34 Vt. 402 ; Gaskin v. Wells, 15 Ind. 253 ; Hunt v. Boyd, 2 La. 109. The ruling in the principal case that the party who takes a bill or note for a pre-existing debt must take the proper measures to charge the parties to the same, on pain of discharging the party from whom he received it, is well settled. See Story, Bills of Exchange, § 109 ; ib. Promissory Notes, § 117, and authori- ties cited. But if the debtor give his creditor a bill drawn on another who has no effects in his hands, and who refuses to accept it, the creditor may treat the bill as waste paper, and resort to his original demand. Stedman v. Gooch, 1 Esp. 3, per Lord Kenyan. See Kearslake v. Morgan, 5 T. R. 513; Tarleton v. Allhusen, 2 Adol. & Ellis, 32 ; Puckford v. Maxwell, 6 T. R. 52 ; Ilsley v. Jewett, 2 Met. 168. As to the receipt of forged paper, see Bank of the United States v. Bank of Georgia, post, 650. CANAL BANK V. BANK OF ALBANY. 643 FORGERY. Canal Bank v. Bank of Albany. (1 Hill, -287. Supreme Court of New York, May, 184L) Recovery of moneij paid upon for()ed indorsement. Notice. — Money paid by the acceptor of a bill to an innocent holder under a forged indorsement of the payee may be recovered, if seasonable notice of the forgery be given. Assumpsit against the defendants, indorsees of a draft drawn on the plaintiffs by the Montgomery County Bank, payal)le to the order of E. Bentley, Jr. Bentley's indorsement was forged, and the paper finally passed for value and without notice into the liands of the defendants. It was then presented to the plaintiffs and paid. A little over two months afterwards the acceptors noti- fied the defendants that tiie payee's name was a forgery, and called upon them to refund, which they refused to do ; whereupon this action was brought to recover the sum paid. After speaking of the competency of Bentley as a witness, the Court proceeded ; the opinion being delivered by CowEN, J. On the merits, there was nothing in the nature of the transaction to conclude tlie plaintiffs against showing the forg- ery. They had done no act giving currency to the bill on the strength of Bentley's name. Even had they accepted it on the day when it was drawn, the defendants could have holden them concluded only in respect to the genuineness of the drawer's name, he being their immediate correspondent. Chitty, Bills, 330, 7 Am. ed. of 1839. And the act of payment could amount to no more. Id. Neither acceptance nor payment, at any time, nor under any circumstances, is an admission tiiat the first, or any other indorser's name is genuine. lb. G28. In point of title, then, the case of the defendants was tlie same as if the name of Bentley had not appeared on tlie bill. They have obtained money of the plaintiffs without right, and on the exhibition of a forged 644 " FORGERY. title as a genuine one. The plaintiffs paid their money under the mistaken belief thus^ induced that the name was genuine. To a note or bill payable to order, none but the payee can assert any title without the indorsement of such payee; not even a bona fide holder. lb. 2SG a, 430. But it is said, the equities of the parties are equal, and the de- fendants having possession, must prevail. No doubt the parties were equally innocent in a moral point of view. The conduct of both was bona fide, and the negligence or rather misfortune of both the same. It was the duty, or, more properly, a measure of pru- dence, in each to have inquired into the forgery, which both omitted. But this raises no preference at law or equity in favor of the defendants, but against them. They have obtained the plaintiffs' money without consideration ; not as a gift, but under a mistake. For the very reason that the parties were equally inno- cent, the plaintiffs have the right to recover ; and that was con- ceded throughout, in the authority cited on another point by the defendants' counsel. United States Bank v. Bank of Georgia, 10 Wheat. 333, 354. ^ The whole course of argument and authority in that case, went on tlie fault of the party who paid the money. It was likened to the case of a bank paying a check, on which the name of the drawer was forged, which was again assimilated to the acceptance of a bill of exchange, where the drawer's name is forged. It was said that, in such cases, the payor or acceptor takes upon himself the knowledge of his correspondent's hand- writing, and shall be concluded. Even that is going a great way, unless some bona fide holder has purchased the paper on the faith of such an act. But it is sufficient to distinguish the case, that it goes on the superior negligence of the party paying or accepting. At page 355, the Court draw an express distinction between the effect of acceptance or payment as a recognition of the drawer's, and the indorser's handwriting. It is said, the forgery of an in- dorsement is not a fact which the acceptor is presumed to know. And perhaps the decision in the case cited should be rested entirely on negligence in the Bank of Georgia. Vid. ib. p. 344 ; also the case of the Gloucester Bank v. The Salem Bank, IT Mass. 33, cited 10 Wheat. 350. But, it is said, the plaintiffs here delayed giving notice of the forgery, from the twenty-eighth of March till the seventh of June. 1 Post, 650. CANAL BANK V. BANK OF ALBANY. 645 Under what circumstances, is not disclosed ; for tlie point of delay was not made at the trial. That is a suf|^cieiit reason why it should not be listened to liere. But I am not willing to concede that delay in the abstract, as seems to be supposed, can deprive the party of his remedy to recover l)ack money paid under the circumstances before us. It is said, the defendants had indorsers behind them ; and by delay, tiiey were prevented from charging them, by giving seasonable notice. Admit this to be so ; the plaintiffs did not stand in the relation of a holder. ' They were the drawees, and advanced the money by way of payment. They would never, therefore, think of notice to the defendants, till they accidentally discovered the forgery. If there had been any unrea- sonable delay after such discovery,' another question would he pre- sented. I infer from the rigor of the case cited by the defendants' counsel. Cocks v. Masterman, 9 Barn. & C. 902, that he would exact as great, indeed greater diligence in giving notice, than is necessary to fix an indorser. There the plaintiffs had paid to the defendants, the holders, an acceptance, purporting to be in the name of the plaintiffs' customers. The bill was drawn payable at the plaintiffs' bank. The next day, discovering the forgery, they, on the same day, gave notice to the defendants and the indorsers. This was held too late. The Court even declined to give an opinion, whether notice on the very day of payment would have entitled the plaintiffs to recover ; but held, that notice on the very day was at all events necessary, and that short of this, the plain- tiffs were not entitled to recover. They said the holder must not, by want of notice, be deprived of the right to take steps against the parties to the bill on the very day when it was paid : and they admitted that this was requiring one day increased diligence, be- yond what would have been required in the ordinary case of dis- honor. In the latter case, they allowed that notice on the next day would have been in season. In a previous case of payment under the like circumstances, notice having been given on the very day, the bankers who paid for their customers, were allowed to recover. Wilkinson v. Johnson, 3 Barn. & C. 428. In this earlier case, the payment was made for the honor of indorsers, whose bankers the plaintiffs were. Both cases were treated by the Court, as standing on the same principles, thougli. in the latter case, they do not put it distinctly on any principle. In tiie earlier case, they said the plaintiffs were not the drawees, or acceptors, 646 FORGERY. nor the agents of any supposed acceptors. The same thing may, I take it, l)c said of tbe latter case, though the plaintiffs assumed to pay for the acceptors. They could scarcely have intended to pay as mere agents for the acceptors, an act which would have extinguished the bill, and cut them off from a remedy against the drawers and indorsers. Where a bill or note is payable at a bank, and no express direction given by the principal to the bank, on its coming in with indorsers, the bank, of course, takes the paper as a purchaser, or holder ; and, for its own indemnity, presents it to the principal for payment, on the very day, or as soon as may be. Thus, there is a good chance to detect the forgery of his name ; and hurry the notices to the other parties. Whatever forg- eries there may be, are soon brought to light. In the earlier of the two cases cited, the Court said, " the general rule of law is clear and not disputed; viz., that money paid under a mistake of facts, may be recovered back, as being paid without consideration." In the latter case, the Court do not deny the rule, nor that it would apply to the case l^efore them. But to enforce it, they re- quire an almost impracticable diligence. I doubt whether this case can be sustained, except upon its own peculiar circumstances, if it can be sustained at all. In all the previous cases, where a recovery had been denied, there was carelessness, or delay, or both. Smith v. Mercer, 6 Taunt. 76, was much like Cocks v. Masterman, and there had been a neglect to discover the forgery and give notice, for a week's time. The case of Price v. Neale, 3 Burr. 1354, was one of palpable neglect, in both payment and delay. Some other cases turn on similar principles. Barber v. Gringell, 3 Esp. 60 ; United States Bank v. Bank of Georgia, and Gloucester Bank v. Salem Bank, before cited ; Levy v. Bank of United States, 1 Binn. 27 ; s. c, 4 Dall. 234. If Cocks v. Master- man is to be followed, it must, I think, be on the same principle. The plaintiffs paid on the faith of their correspondent's name. The former were not named as drawees ; but they had a superior knowledge of their correspondents' handwriting, which they neglected to exert. It might, therefore, have been reasonable to require that they should overcome the objection of neglect, by such a speedy movement as to save all possible advantage to the holder, against the prior parties. But, where each party enjoys only tlie same chance of knowledge, no case demands any thing more than reasonable diligence in giving notice, after a discovery of the forg- CANAL BANK V. BANK OF ALBANY. 647 ery. The common case of paying forged bank-notes, is one instance. And navy and victualling bills, have been treated as standing on the same footing. Jones v. Ryde, 5 Taunt. 488 ; Bruce v. Bruce, ib. 405, note. These are cases of transferring notes from one to another, which turn out to be unavailal)l(; by reason of a forgery, in respect to which botii parties are equally ignorant, the one being no more guilty of neglect than the other ; indeed, neither being negligent, but both being impo.sed upon under the exercise of ordinary diligence. At all events, it does not lie with the payor to complain of the very neglect imputable to himself. Neglect to give notice, after cliscovering tlie forgery, is another matter. Vide Chitty, Bills, Am. ed. of 1839, p. 463. If the indorsers are to be charged, as such, why should not the accidental delay in discovering the forgery, on a paid bill espe- cially, operate as an excuse for not giving them immediate notice ? The defendants did not disclose their agency, and must, there- fore, as between them and the plaintiffs, be taken to have acted as principals. They obtained the money of the plaintilis on a bill of exchange, payable to the order of Bentley, under a forged indorse- ment of his name. Money has been successively paid by mistake of the several indorsees, the plaintiffs, the defendants, the Bank of New York, (fee, and the remedy by each is plain. It is by action over, each against his respective indorser. The bill has never been put in a regular course of negotiation, for want of Bentley's name. No one who has advanced money on it, therefore, obtained what he supposed he had got ; and the indorsers, beside being liable as such, may each be sued, as having received money without consideration. The proof offered, relative to the custom of banks to collect paper received liy them as agents, witliout communicating the name of their principal, would have disclosed a case in which it would be apparent that the defendants might or might not have been agents. The object of the ])roposed proof was, to supply the want of direct evidence, that notice of the agency had been given by them at the time. Till they had superadded proof of another custom, for banks never so to receive paper and collect as prin- cipals, the proposed evidence could have had no tendency to affect the plaintiffs with such notice. Knowledge that the defendants might be acting as agents, was not enough. This is so of every 648 FORGERY. man ostensibly transacting business as a principal. Vide Mills v. Hunt, 20 Wend. 481. The proof offered and rejected was, there- fore, irrelevant. JYew trial denied. If the forgery of the, payee's signature were on the paper when tliu drawer put it into circulation, the acceptor cannot recover from an innocent -hohler to whom lie has paid it. See Plortsman v. Henshaw, ante, 57, and note. But if the forgery is owing to the fault or carelessness of the drawer, he must bear the loss. Young v. Grote, 4 Bing. 253 ; Morrison v. Buchanan, 6 Car. & P. 18. Sec Belknap v. National Bank of North America, 100 Mass. 376, cited in full in note' to Bank of the United States v. Bank of Georgia, post, 650. Respecting the question of the reasonable time within which notice of the forgery should be given, it has been said that the strict rule of the English courts has not been adopted in this country ; and that what is reasonable time will depend upon the circumstances of each case. 2 Parsons, Notes and Bills, 598, 599. See Bank of Commerce v. Union Bank, 3 Comst. 230 ; Worrall v. Gheen, 39 Penn. State, 388 ; Gloucester Bank v. Salem Bank, 17 Mass. 33 ; Pope V. Nance, Minor (Ala.), 299 ; Bank of St. Albans r. Farmers' and Mechanics' Bank, 10 Vt. 141 ; McKleroy v. Southern Bank of Kentucky, 14 La. An. 458. See also Chitty, Bills, 431, 432. The late case of Merchants' National Bank v. National Eagle Bank, 101 Mass. 281, discusses this subject of negligence in its relation to the rules of the Clearing House. The facts will sufficiently appear in the opinion of the Court, delivered by Colt, J. This action is brought by the plaintiffs to recover the amount of a check drawn upon them and paid by them through the agency of the Boston Clearing House, there being no funds of the drawer in their hands at the time of the payment. It is Avell settled by recent decisions that money paid to the holder of a check or draft drawn twithout funds may be recovered back, if paid by the drawee under a mistake of fact. And though the rule was originally subject to the limitation that it must be shown that the party seeking to recover back had been guilty of no negligence, it is now held that the plaintiff in such case is not precluded from recovery by laches in not availing himself of the means of knowledge in his power. It is otherwise if the money is intentionally paid without reference to the truth or falsehood of the fact, and with the intention that the payee shall have the money at all events. Appleton Bank v. McGilvray, 4 Gray, 518 ; Kelly V. Solari, 9 Mees. & W. 54 ; Townsend v. Crowdy, 8 C. B. x. s. 477. This right to recover back the money, however, will in no case be permitted to prejudice the payee who has suffered any damage, or changed his situation in respect to his debtor by reason of the laches of the plaintiff, or his failure to return the check within a reasonable time. It is plain, in the case here presented, that if the plaintiffs had paid this check at their own counter under a mistake of fact, they could have maintained this action to recover it back. Is there any thing in the manner in which the pay- ment was in fact made, or in the relation of the parties to each other as members of the Clearing House Association, which prejudicially affects this right? CANAL BANK V. BANK OF ALBANY. 649 It is declarod hy tlic articles, wliich were sigiu*(l by the plaintifTand (l<'f»?n<lant banks, to l)e the object of" tlie association to elFect at (^ne time ami ]tlace tlie daily exchanges between the several assoeiated banks, and the paynaent of the balances resolting from such exchanges. An early hour is fixed for making these exchanges, and a later time in the day for the receipt and payment of balances from the debtor and creditor banks. These settlements are ujafle, not from an examination in detail of the vouchers presented, but from ujemoranda and tickets accompany injx them. .And any mistakes resulting from this mode of settlement are to be adjusted directly l)etween the banks which are parties tiierein. It is furtiier provided that " whenever checks are sent through the Clearing House which are not good, they shall be returned, by the banks receiving the same, to the banks from which they were received, as soon as it shall be found that said checks are not good ; aiul in no case shall they be retained after one oVlock." Under this arrangement, the payment required of the Clearing House to a creditor bank, upon a check presented, must be regarded as only provisional until the liour of one o'clock, to become complete only in case the check is not returned at that time. And if by any mistake of fact the return of the check is not so made, then, as between the two banks, it is to be treated as a payment made under a mistake of fact, precisely to the same extent, and with the same right to reclaim, which would have existed if the payment Iiad been made by the simple act of passing the money across the counter directly to the payee on the presentation of the check. The manifest purpose of the provision is, to fix a time at which the creditor bank may be authorized to treat the check as paid and be able to regulate with safety its relations to other parties. We cannot adopt the theory that a failure to present a bad check, before the time named, to the bank sending it through the Clearing House, works an abso- lute forfeiture, and is in itself a perfect bar to any action to recover the amount of such check. The whole arrangement, in all its provisions and declared purposes, is to be construed together. And the law will not construe any portion so as to subject parties to a penalty or forfeiture of their rights, where other reasonable inter])retation can be given which will give effect and consistency to the whole. The parties have, in terms, affixed no penalty or forfeiture to the stii)ulation under consideration ; and a failure to comply with its terms must leave the par- ties in the same position, and precisely as they would stand when a payment is made under a mistake of fact in the 'ordinary way. Afler one o'clock, the defendants, upon the failure to return the check, had the right to consider it paid, and to treat it so in their dealings with others. The report finds that the delay in its return was occasioned by a mistake on the part of the messenger, a mistake which was (juite as nuich a mistake of fact as if it had been produced by the false time of a clock which was relied on. And no suggestion is made that there has been any change of circumstances, after the time when the de- fendants had a right to treat the check as i)aid, and before it was returned, which would now subject the defendants to damage or loss, and render it unjust for the plaintilFs to recover. AVc have considered the case as if the agreement required the return of the check to the bank from which it was received before or at one o'clock ; but it will be noticed that the stipulation is, that the check shall in no case be retained after one o'clock. If it were necessary to save a penalty or a forfeiture, it might 650 FORGERY. be hold that the delivery of it to a messenger before one o'clock, to be returned to the bank depositing it, with suflicient time, in the absence of any accident or mistake, to reach the bank before that hour, would be a compliance with its terms, although it was not in fact delivered until some minutes after. Judgment on the vei'dict for the plaintiffs. See Overman v. Hoboken City IJank, 2 Vroom, 563; s. c, 1 Vroom, 61. The President, Directors, &c., of the Bank of the United States v. The President, Directors, &c., of the Bank of the State of Georgia. (10 Wheaton, 333. Supreme Court of the United States, February, 1825.) Bank's own forged bills received as cjenuine. — If a bank receives from a debtor forged notes purporting to be its own, as genuine, and passes them to the credit of the debtor, who acts in good faith, the receiving bank is bound by such credit ; and it cannot recover from the depositor and debtor tiie amount of the forged bills. The case is stated in the opinion of the Conrt. Story, J. This is a case of great importance in a practical view, and has been very fnlly argued upon its merits. The Bank of Georgia having originally issued the bank-notes in question, they were, in the course of circulation, fraudulently altered, and having found their way into the Bank of the United States, the latter presented them to the former, who received them as genuine, and placed them to the general account of the Bank of the United States, as cash, by way of general deposit. The forgery was not discovered until nineteen days afterwards, upon which notice was duly given, and a tender of the notes was made to the Bank of the United States, and by them refused. Both parties are equally innocent of the fraud, and it is not disputed, that the Bank of the United States were holders, bona fide., for a valuable considera- tion. Under these circumstances, the question arises, which of the parties is to bear the loss, or, in other words, whether the i)lain- tiflfs are entitled to recover, in this action, the amount of this deposit. Some observations have been made as to the form of the action, the declaration embracing counts for the balance of an account stated, as well as for money had and received, &c. But, if the BANK OP THE UNITED STATES V. BANK OF GEORGIA. 651 plaiiitilTs arc entitled to recover at all, we see no oi)jcctioM to a recovery upon either of these counts. The stiiu sued for is tiie balance due upon the general account of the parties, and it is money had and received to the use of the plaintilfs, if the transac- tion entitled the plaintiiTs to consider the deposit as money. It is clearly not the case of a special deposit, where the identical thing was to be restored by the defendauts ; the notes were paid as money upon general account, and deposited as such ; so that, according to the course of business, and the understanding of the parties, the identical notes were not to be restored, but an equal amount in cash. They passed, therefore, into the general funds of the Bank of Georgia, and l>ecame the property of the bank. The action, has, therefore, assumed the proper shape, and if it is maintainable upon the merits, there is no difficulty in point of form. We may lay out of the case, at once, all consideration of the point, how far the defendants would have been liable, if these notes had been the notes of any other bank, deposited by the plaintiff, in the Bank of Georgia, as cash. That might depend upon a variety of considerations, such as the usages of banks, and the implied contract resulting from their usual dealings with their customers, and upon the general [)rinciples of law applicable to cases of this nature. The modern authorities certainly do, in a strong manner, assert, that a payment received in forged paper, or in any base coin, is not good ; and that if there be no negli- gence in the i)arty, he may recover back the consideration paid for them, or sue upon his original demand. To this effect are the authorities cited at the bar, and particularly Markle v. Hatfield, 2 Johns. 4o5 ; Young v. Adams, G Mass. 182 ; and Jones r. Ryde, 6 Taunt. 488.^ But, without entering upon any examination of this doctrine, it is sufficient to say that the present is not such a case. The notes in question were not the notes of another bank, or the security of a third person, but they were received and adopted by the bank as its own genuine notes, in the most absolute and unconditional mannor. They were treated as cash, and carried to the credit of the plaintiff in the same manner, and with the same general intent, as if they had been genuine notes or coin. INlany considerations of j)ul)lic convenience and policy would authorize a distinction between cases where a bank receives forged ^ See Ontario Bank v. Lightbody, ante, 625, and note. 652 FORGERY. notes purporting to be its own, and those where it receives the notes of other hanks in payment, or upon general deposit. It has the benefit of circulating its own notes as currency, and command- ing thereby the public confidence. It is bound to know its own paper, and provide for its payment, and must be presumed to use all reasonal)lo means, by private marks and otherwise, to secure itself against forgeries and impositions. In point of fact, it is well known, that every bank is in the habit of using secret marks, and peculiar characters, for this purpose, and of keeping a regular register of all the notes it issues, so as to guide its own discretion as to its discounts and circulation, and to enable it to detect frauds. Its own security, not less than that of the public, re- quires such precautions. Under such circumstances, the receipt by a bank of forged notes, purporting to be its own, must be deemed an adoption of them. It has the means of knowing if they are genuine ; if these means are not employed, it is certainly evidence of a neglect of that duty, which the public have a right to require. And in re- spect to persons equally innocent, where one is bound to know and act upon his knowledge, and the other has no means of knowl- edge, there seems to be no reason for burdening the latter with any loss in exoneration of the former. There is nothing uncon- seientious in retaining the sum received from the bank in payment of such notes, which its own acts have deliberately assumed to be genuine. If this doctrine be applicable to ordinary cases, it must apply with greater strength to cases where the forgery has not been detected imtil after a considerable lapse of time. The holder, under such circumstances, may not be able to ascertain from whom he received them, or the situation of the other par- ties may be essentially changed. Proof of actual damage may not always be within his reach ; and therefore to confine the remedy to cases of that sort would fall far short of the actual grievance. The law will, therefore, presume a damage actual or potential, sufficient to repel any claim against the holder. Even in relation to forged bills of third persons received in payment of a debt, there has been a qualification ingrafted on tlie general doctrine, that the notice and return must be within a reasonable time ; and any neglect will absolve the payor from responsibility. If, indeed, we were to apply the doctrine of negligence to the present case, there are circumstances strong to show a want of BANK OF THE UNITED STATES V. BANK OF GEORGIA. 653 due diligence and circumspection on the part of the Bank of Geor- gia. It appears from the statement of facts, that all the genuine notes of that bank of the denomination of one hnndred dcjllars, in circulation at this time, were marked with the letter A ; whereas twenty-three of the forged notes of one hundred dollars hore the marks of the letter 1>, C, and I). Tiicsc facts were known to the defendants, but unknown to the plaintiffs ; so that by ordinary circumspection tlie fraud might have been detected. The argument against this view of the subject, derived from tlie fact, that the defendants have received no consideration to raise a promise to pay this sum, since the notes were forgeries, is certainly not of itself sufficient. There are many cases in the law, where the party has received no legal consideration, and yet in which, if he has paid the money, he cannot recover it back ; and in which, if he has merely promised to pay, it may be recovered of him. The first class of cases often turns upon the point, whether in good faith and conscience the money can be justly retained ; in the latter, whether there has l)een a credit therel)y given to or by a tliird person, whose interest may be materially atTected by the trans- action. So that, to apply the doctrine of a want of consideration to any case, we must look to all the circumstances, and decide upon them all. Passing from these general considerations, it is material to in- quire, how, in analogous cases, the law has dealt with this matter. The present case, does not, indeed, appear to have been in terms decided in any court ; but if principles have been already estab- lished, which ought to govern it, then it is the duty of the Court to follow out those principles on this occasion. Tlic case has been argued in two respects : first, as a case of payment, and, secondly, as a case of acceptance of the notes. In respect to the first, upon the fullest examination of the facts, we arc of opinion, that it is a case of actual payment. We treat it in this respect, exactly as the parties have treated it ; that is, as a case where the notes have been paid and credited as cash. Tlie notes have not been credited as notes, or as a special deposit ; but the transaction is precisely the same as if the money had been first paid to the plaintitfs, and instantaneously the same money had been deposited by them. It can make no difference that the same agent is employed by both parties, the one to receive, and the other to pay and credit. Upon what principle is it, then, that the 654 FORGERY. Court is called upon to construe the act different from the avowed intention of the parties ? It is not a case where the law construes an act done with one intent to be a different act, for the purpose of making it available in law ; to do that, e// pres^ which would be de- fective in its direct form. Here the parties were at liberty to treat it as they pleased, either as a payment of money, or as a credit of the notes. In either way it was a legal proceeding, effectual and per- fect ; and as no reason exists for a different construction, we think that the parties, by treating it as a cash deposit, must be deemed to have considered it as paid in money, and then deposited ; since that is the only way in which it could legally become, or be treated as cash. Nor is there any novelty in this view of the transac- tion. Bank-notes constitute a part of the common currency of the country, and, ordinarily, pass as money. When they are re- ceived as payment, the receipt is always given for them as money. They are a good tender as money, unless specially objected to ; and, as Lord 31ans/ield observed, in Miller v. Race, 1 Burr. 452, they are not, like bills of exchange, considered as mere securities or documents for debts. If this be true in respect to bank-notes in general, it applies, a fortiori, to the notes of the bank which receives them ; for they are then treated as money received by the bank, being the representative of so much money admitted to be in its vaults for the use of the depositor. The same view was taken of this point in the case of Levy v. The Bank of the United States, 4 Dall. 234 ; 1 Binn. 27, where a forged check had been accepted by the bank, and carried to the credit of the plaintiff (a depositor) as cash, and upon a subsequent discovery of the fraud, the bank refused to pay the amount. The Court there said : " It is our opinion, thai when the check was credited to the plaintiff as cash, it was the same thing as if it had been paid ; it is for the interest of the bank that it should be so taken. In the latter case, the bank would have appeared as plaintiffs ; and every mistake which could have been corrected in an action by them may be corrected in this action, and none other." The case of Bolton V. Richard, 6 Durn. & East, 139, is not, in all its circum- stances, directly in point ; but there the Court manifestly con- sidered the carrying of a check to the credit of a party, was equivalent to the transfer of so much money in the hands of the banker, to his account. Considering, then, the credit in this case as a payment of the BANK OF THE UNITED STATES V. BANK OF GEORGIA. 655 notes, the question arises, whether, after a payment, the defend- ants would be permitted to recover the money back ; if they would not, then they have no right to retain the money, and the plain- tiffs are entitled to a recovery in the present suit. In Price v. Neal, o Burr. 1355, there were two bills of ex- change, which had been paid by the drawee, the drawer's hand- writing being a forgery ; one of these bills had been paid, when it became due, without acceptance ; the other was duly accepted, and paid at maturity. Upon discovery of the fraud, the drawee brought an action against the holder to recover back the money so paid, both parties l)eiiig admitted to be equally innocent. Lord Mansfield, after adverting to the nature of the action, which was for money had and received, in which no recovery could be had, unless it be against conscience for the defendant to retain it, and that it could not be allirmed that it was unconscientious for the defendant to retain it, he having paid a fair and valuable con- sideration for the bills, said, " here was no fraud, no wrong. It was incumbent upon the plaintiff to be satisfied that the bill drawn upon him was the drawer's hand, before he accepted or paid it. But it was not incumbent upon the defendant to inquire into it. There was notice given by the defendant to the plaintiff, of a bill drawn upon him, and he sends his servant to pay it, and take it up. The other bill he actually accepts, after which, the defendant, innocently and bona fide discounts it. The plaintiff lies by for a considerable time after he has paid these bills, and then found out that they were forged. He made no objection to them at the time of paying them. Whatever neglect there was, was on his side. The defendant had actual encouragement from the plaintiff for negotiating the second bill, from the plaintiff's having, witiiout any scruple or hesitation, paid the first ; and he paid the wholo value bona fide. It is a misfortune which has happened without the defendant's fault or neglect. If there was no neglect in the plaintiff, yet there is no reason to throw off the loss from one inno- cent man upon another innocent man. But, in this case, if there was any fault or negligence in any one, it certainly was in the plaintiff, and not in the defendant." The whole reasoning of this case applies with full force to that now before tlie Court. In re- gard to the first bill, there was no new credit given by any accept- ance, and the holder was in possession of it before the time it was paid or acknowledged. So that there is no pretence to allege. 656 FORGERY. that there is any legal distinction hetween the case of a liolder bcibre or after the acceptance. 13uth were treated in this judg- ment as being in the same predicament, and entitled to the same equities. The case of Neal v. Price has never since been departed from ; and, in all the subsequent decisions in which it has been cited, it has had the uniform support of the Court, and has been deemed a satisfactory authority. Tiie case of Smith v. Mercer, 6 Taunt. 70, was a stronger application of the principle. There, the acceptance was a forgery, and it purported to be payable at the plaintiff's, who was a banker, and paid it, at maturity, to the agent of the defendant, who paid it in account with the defendant. A week afterwards the forgery was discovered, and due notice given to the defendant. But the Court (Mr. Justice Chambre dissent- ing) decided, that the plaintiff was not entitled to recover. Two of the judges proceeded upon the ground, that the banker was bound to know the handwriting of his customers ; and that there was a want of caution and negligence on the part of the plaintiff. The Chief Justice, without dissenting from this ground, put it upon the narrower ground, that during the whole week the bill must be considered as paid, and if the defendant were now compelled to pay the money back, he could not recover against the prior indors- ers ; so that he would sustain the whole loss from the negligence of the plaintiff. The very case occurred in the Gloucester Bank V. The Salem Bank, 17 Mass. 33, where forged notes of the latter had been paid to the former, and, upon a subsequent discovery, the amount was sought to be recovered back. The authorities were there elaborately reviewed, both by the counsel and the Court, and the conclusioji to which the latter arrived was, that the plaintiffs were not entitled to recover, upon the ground, that by receiving and paying the notes, the plaintiffs adopted tliem as their own, that they were bound to examine them when offered for payment, and if they neglected to do it within a reasonable time, they could not afterwards recover from the defendants a loss occasioned by their own negligence. In that case, no notice was given of the doubtful character of the notes until fifteen days after the receipt, and no actual averments of forgery until about fifty days. The notes were in a bundle when received, which had not been examined by the cashier until after a considerable time had i^ elapsed. Much of the language of the Court as to negligence, is to be referred to this circumstance. The Court said, " the true BANK OP THE UNITED STATES V. BANK OF GEORGIA. 657 rule is, that the party receiving such notes must examine them as soon as he has opportunity, and return them immediately, if he does not, he is negligent, and negligence will defeat his right of action. This principle will api)ly in all cases where forged notes have l>een received, l>ut certainly with more strength, when the party receiving them is the one purporting to be bound to pay. For he knows better than any other whether they are his notes or not ; and if he pays them, or receives them in payment, and con- tinues silent after he has had sufficient opportunity to examine them, he should be considered as having adopted them as his own." Against the pressure of these authorities there is not a single opposing case ; and we must, therefore, conclude, that both in England and America, the question has been supposed to be at rest. Tlie case of Jones v. Ryde, 5 Taunt. 488, is clearly distin- guishable, as it ranged itself within the class of cases, where forged securities of third persons had been received in payment. Bruce v, Bruce, 5 Taunt. 495, is very shortly and obscurely re- ported ; but from what is there mentioned, as well as from the notice taken of it by Lord Ciiief Justice Gibbs, in Smith v. Mercer, 6 Taunt. 77, it must have turned on the same distinction as Jones V. Ryde, and was not governed by Price v. Neal. But if the present case is to be considered, as the defendants' counsel is most solicitous to consider it, not as a case where the notes have been paid, but as a case of credit, as cash, upon the receipt of them, it will not help the argument. In that point of view, the notes must be deemed to have been accepted by the de- fendants, as genuine notes, and payment to have been promised accordingly. Credit was given for them, as cash, by the defend- ants for nineteen days, and, during all this period, no right could exist in the ])laintifTs to recover the amount against any other per- son from whom they were received. By such delay, according to the doctrine of Lord Chief Justice Gibbs, in Smith v. Mercer, 6 Taunt. 76, the prior holders would be discharged ; and the case of the Gloucester Bank c. The Salem Bank, 17 Mass. 33, adopts the same principle ; so that there would be a loss produced by the negligence of the defendants. But, waiving this narrower view, we think the case may be justly placed upon the broad ground, that there was an acceptance of the notes as genuine, and that it ♦ falls directly within the authorities which govern the cases of 42 « 658 • FORGERY. acceptances of forged drafts. If there be any difference between them, the principle is stronger here than there ; for there, the acceptor is presumed to know the drawer's signature. Here, a fortiori, the maker must be presumed, and is bound to know his own notes. He cannot be heard to aver his ignorance ; and when he receives notes, purporting to be his own, without objection, it is an adoption of them as his own. The general question, as to the effect of acceptances, has re- peatedly come under the consideration of the courts of common law. In the early case of Wilkinson v. Lutwidge, 1 Str. 648, the lord chief justice considered that the acceptance of the bill was, in an action against the acceptor, a sufficient proof of the hand- writing of the drawer ; but it was not conclusive. In the subse- quent case of Jenys v. Fawler, 2 Str. 946, the lord chief justice would not suffer the acceptor to give the evidence of witnesses, that they did not believe it the drawer's handwriting, from the danger to negotiable notes ; and he strongly inclined to think that actual forgery would be no defence, because the acceptance had given the bill a credit to the indorsee. Subsequent to this was the case of Price v. Neal, already commented on, in which it was thought that the acceptor ought to be conclusively bound by his acceptance. The correctness of this doctrine was recognized by Mr. Justice Bulle7\ in Smith v. Chester, 1 Durn. & East, 654, by Lord Kenyan, in Barber v. Gingell, 3 Esp. 60, where he extended it to an implied acceptance ; and by Mr. Justice Dampier, in Bass v. Olive, 4 M. &S. 15, and it was acted upon by necessary im- plication by the Court, in Smith v. Mercer, 6 Taunt. 76. In Levy V. The Bank of the United States, 1 Binn. 27, already referred to, where a forged check, drawn upon the bank, had been accepted by the latter and carried to the credit of the plaintiff, and on the re- fusal of the bank afterwards to pay the amount, the suit was brought, the Court expressly held the plaintiff entitled to recover, 4ipon the ground that the acceptance concluded the defendant. The case was very strong, for the fraud was discovered a few hours only after the receipt of the check, and immediate notice given. But this was not thought in the slightest degree to vary the legal result. " Some of the cases," said the Court, " decide that the acceptor is bound, because the acceptance gives a credit to the bill, ttc. But the modern" cases certainly notice another reason for his liability, which we think has much good sense in it ; namely, BANK OP THE UNITED STATES V. BANK OP GEORGIA. 659 that the acceptor is presaraed to know the drawer's handwriting, and by his acceptance to take this knowledge ujjon himseir.'' After some research, we have not l)een able to find a single case, in which the general doctrine, thus asserted, has been shaken, or even doubted ; and the diligence of the counsel for the defendants on the present occasion, has not been more successful than our own. Considering, then, as we do, that the doctrine is well-estab- lished, that the acceptor is bound to know the handwriting of the drawer, and cannot defend himself from payment by a subsequent discovery of the forgery, we are of opinion, that the present case falls directly within the same principle. We think the defendants were bound to know their own notes, and having once accepted the notes in question as their own, they are concluded \>y their act of adoption, and cannot be permitted to set up the defence of forgery against the jjlaintifTs. It is not thought necessary to go into a consideration of other cases cited at the bar, to establish, that the acceptor may show that the accepted bill was void in its origin, as made in violation of the Stamp Act, etc. ; for all these cases admit the genuineness of the notes, and turn upon questions of another nature, of public policy, and a violation of the laws of the land. Nor are the cases appli- cable, in which bills have been altered after they were drawn, or of forged indorsements, for these are not facts which an acceptor is presumed to know. Nor is it deemed material to consider in what cases receipts and stated accounts may be opened for sur- charge and falsification. They depend upon other principles of general application. It is sufficient for us to declare that we place our judgment in the present case, upon the ground that the defendants were bound to know their own notes, and having re- ceived them without objection, they cannot now recall their assent. We think this doctrine founded on public policy and convenience ; and that actual loss is not necessary to be proved, for potential loss may exist, and the law will always presume a possible loss iiy cases of this nature. The remaining consideration is, whether there has been a legal waiver of the rights of the plaintilfs derived under the cash de- posit, or, in other words, whether they have consented to treat ^t as a nullity. There is nothing on which to rest such a defence, unless it is to be inferred from the letter of Mr. Early, the cashier of the Bank of the United States, under date of the seventeenth of March, 1819, addressed to the cashier of the Bank of Uuuts- 660 FORGERY. ville. That letter contains information of the forgery of the notes, and then proceeds ; " by the person whicli we shall in a few days send to your place, as heretofore intimated, we will forward these altered bills for the purpose of getting yoii to exchange them for other money." Now, there is no evidence that this letter was ever shown to the Bank of Georgia, or its con- tents ever brought to the cognizance of its officers. It states no agreement to take back the notes, or to transmit them, on account of the Bank of the United States, to Huntsville. For aught that appears, the intention may have been to transmit tliem on account of the Bank of Georgia, under the expectation that the latter might desire it. But what is almost conclusive on this point is, that on the same day the Bank of Georgia had made a tender of the notes to the plaintiffs, which had been refused. This is wholly inconsistent with the notion that they had agreed to take them back, or to .treat the previous credit as a nullity. Assuming, therefore, that the cashier had a general or special authority for tlie purpose of extinguishing the rights of the plaintiffs, growing out of the prior transactions (which is not established in proof), it is sufficient to say, that it is not shown that he exercised such an authority. And the case of Levy v. The Bank of the United States affords a very strong argument, that a waiver witliout some new consideisation, upon a sudden disclosure, and under a mistake of legal rights, ought not to be conclusive to the prejudice of the party, where, upon farther reflection, he refuses to acquiesce in it. The subsequent letter of the twenty-fifth of March, demonstrates, that the intention of waiving the rights of the l)ank, if ever enter- taiiied, had been at that time entirely abandoned. The letter from the Huntsville Bank, of the fourth of May, can- not vary the legal result. What might be the rights of tlie plain- tiffs against that Bank, in case of an unsuccessful issue of the present cause, it is unnecessary to determine. The contract, whatever it may be, is res inter alios acta, from which the defend- ants cannot, and ought not to derive any advantage It only remains to add, that if the plaintiffs are entitled to re- cover the principal, they are entitled to interest from the time of iiMBtituting the suit. Upon the whole, it is the opinion of the Court, that the Circuit Court erred in refusing the first and third instructions prayed for by the plaintiffs ; and for these errors the judgment must be re- versed, with directions to award a venire facias de novo. On the BANK OF THE UNITED STATES V. BANK OP GEORGIA. 661 second instruction asked by the plaintiffs, it is unnecessary to ex- press any opinion. Judgment reversed accordingly. In Matlier v. Lord Maidstone, 18 Com. B. 273, (185G) the question of f'orj^ed acceptance's is considered. Jervis, C. J., in delivering tlie opinion of the Court, said: "lam of opinion tliat our judgment in this case must be for the plaintifl". As a general rule, the holder of a bill of exchange has a right to know whether or not it has been duly honored by the acceptor at maturity ; and when tlie bill is presented, if the acceptor pays it, the money cannot be recovered back, if the acceptor has the means of satisfying him- self of his lial)ility to pay it, though it should turn out that the acceptance was a forgery. Can it make any dinTerence that, instead of paying money for the bill, he takes the bill, examines it, and gives another acceptance in ^ieu of it? The replication in this case having been amended, the facts which appear upon the whole record are these : A bill of exchange was drawn by Villiers upon the defendant, and accepted by the defendant for the accommodation of Villiers, and indorsed by Villiers to Clark, and by Clark to the plaintifl"; that bill was pre- sented and dishonored, and notice of the dishonor duly given to Villiers and Clark, in order to preserve the holder's remedy over against them; the bill was subsequently offered to the defendant, who having had an opportunity of inspect- ing it, kept it, and gave the plaintiff a renewed bill at three months ; and a month afterwards he discovered that the acceptance was not his signature, and that he was not liable, and he proposed to return the bill, having delayed the plaintiir of his reuiedy against the parties liable for thirty days. Under these circumstances, I appre!i(.'nd the defendant could not be allowed to say that the acceptance was not his handwriting." Mr. Justice Cresswell: " I am clearly of the same opinion. A man accepts a bill of exchange purporting to be drawn by one Thompson, and pays.it, and it afterwards turned out to be a forgery ; lie cannot afterwards be permitted to say that he paid the money under a mistake. I apprehend the same result must follow if in lieu of money a fresh acceptance is given ; and particularly where the party has retained the instrument in his hands so long as the defendant has done in this case." See Beeman v. Duck, 11 Mees. & W. 251 ; Leach v. Buchanan, 4 Esp 22G ; Cooper r. Le Blanc, 2 Strange, 1051; Barber v. Gingell, 3 Esp. GO; Hall v. Fuller, 5 Barn. & C. 750; Levy v. Bank of the United States, 1 Binn. 27 ; and the recent case of Stout v. Benoist, 39 Mo. 277. See also Morris V. Betiiell, Law Rep. 5 Com. P. 47, cited at length, post, p. 669. But the acceptor does not warrant the genuineness of the signature of afiy party except that of the drawer; not even that of the payee indorsed before acceptance. See Ilortsman r. Henshaw, ante, 57, and note. If however the drawer puts a bill into circulation, bearing a forged indorsement of the payee, the former thus warrants such indorsement to be genuine ; and the acceptor cannot, on discovering the forgery, recover the amount paid to a subsequent bona fide holder. He has paid the bill to the person to whom the drawer directed, and must look to the latter for indemnity. Id. See also bleacher v. Fort, 3 Hill, (S. C.) 227, cited in full in note to Hortsman v. Henshaw, ante, 69. 662 FORGERY. And it has been held In one case that the rule that the acceptor admits the genuineness of the signature of the drawer must be taken strictly, and does not apply to a forgery In the body of the paper. Bank of Commerce v. Union Bank, 3 Comst. 230. But this may be doubted. See Ward v. Allen, 2 Met. 53 ; Van Duzer v. Howe, 21 N. Y. (7 Smith) 5:51; Hall v. Fuller, 5 Barn. & C. 750; Langton v. Lazarus, 5 Mees. & W. 629; Chltty, Bills, 428; Byles, Bills, 323; note to Hortsman v. Henshaw, ante, 57. An exception Is made to the rule where the defendant becomes the holder of a forged draft before acceptance by the plaintiff, and before he had any knowl- edge of its existence, and when the loss had already attached ; the acceptor giving notice of the forgery immediately upon discovering the same. In such case It has been held that the acceptor may recover the sum paid. McKleroy v. Southern Bank of Kentucky, 14 La. An. 458. In this case the opinion of the Court was delivered by Land,^. The evidence In this case establishes the following facts, viz : — The plaintiffs were the factors of James Smith, a cotton planter, residing in the State of Arkansas. One John Zimraer, who had for a few months been a private tutor in Smith's family, assuming the name of John Belmont, fo^-ged a draft on the plaintiffs. In the name of Smith, as follows : — $986. , " Homestead, Nov. 5th, 1857. " On the loth December, 1857, pay to the order of John Belmont nine hun- dred and eighty-six dollars, value received, and chai'ge the same to the account of Jas. Smith. "To Messrs. McKleroy and Bradford, New Orleans, La." ZImmer also forged a letter of Introduction, in the name of Smith, to Shotwell and Son, of Louisville, Kentucky, as follows: — "Homestead, Nov. 5th, 1857. "Messrs. Shotwell and Son. ' ' Gentlemen, — I introduce to you Mr. John Belmont, a gentleman who resided in my family as our tutor. Having been sick, he Is now ti'avelling to Improve his health. I gave him a draft on McKleroy and Bradford, my commission house in New Orleans, which he Is desirous to get cashed In your city. If you can give Mr. Belmont any assistance, by perhaps recommending my draft, as Mr. Belmont Is a stranger in your city, and not yet fully recovered, you will greatly oblige me. I am, gentlemen, yours respectfully, "James Smith." The house of Shotwell and Son had been In correspondence with James Smith for about twelve years ; and being deceived by the forger, indorsed the draft for the purpose of enabling the holder to negotiate it. The draft bearing the In- dorsements of John Belmont and of Shotwell and Son, was presented for discount at the Branch of the Southern Bank of Kentucky, and being considered good, was purchased by the bank. The draft was remitted to the Louisiana State Bank, with the following additional indorsement upon it — " Pay to R. J. Pal- frey, cashier, J. B. Alexander, cashier." The draft thus Indorsed, was presented to plaintiff's for acceptance by the Louisiana State Bank, and was accepted on the last of November, or first of December, and was paid at maturity, on the 18th December, 1857, by the plaintiffs to the agent of the Southern Bank of Ken- BANK OF THE UNITED STATES V. BANK OF GEORGIA. GG3 tucky. In January, l.sr).S, Jainos Sinitli, bein;,' in the city, made known to the plaintifTs, upon an examination of liis account with them, tliat the draft was a forgery. Mr. Shotwell, of the house of Shotwell and Son, was in this city at the time, and was immediately sent for, and the fact of forgery communicated to him. On the 9th January, 1858, the plaintiffs gave formal notice by letter, of the forgery, to A. L. Shotwell and Son, to the Southern Bank (jf Kentucky, and also the Louisiana State Bank. This suit was instituted by the plaintiffs to recover back the money paid on the draft, on the ground of payment in error. There was judgment for the defendant, and the plaintiffs have appealed. The district judge held, that the acceptance of a bill of exchange admits the genuineness of the drawer's signature, and that where an acceptor has pai<l to a 6o?irtj^(7e holder of a forged draft or bill, having no notice of the forgery, he can- not recover back the money paiil, although the forgery is established by the most conclusive evidence. And where one of two innocent persons must puffer, he who has misled the other, or has omitted his duty, must bear the loss. These principles of law are well established, and admit, perhaps, of neither doubt nor controversy, and if applicable to this case, must determine the rights of the parties. The defendant became the holder of the draft, before it was accepted by the plaintiffs, and before they had any knowledge of its existence, and consequently, before the defendant had any right of action against them for its recovery. The plaintiffs, therefore, had done no act which induced the defendant to believe the signature of the di-awer to be genuine, at the time the bill was purchased. How, then, can it be said that the defendant purchased the bill on the faith of the plaintiffs' acceptance, or on their guarantee of the genuineness of the drawer's signature? Or how can it be said that the plaintiffs misled the defendant at the time of the purchase of the bill, or was then guilty of the omission of any duty toward the defendant as the purchaser of the bill ? If the defendant had purchased the bill on the faith of the acceptance of plain- tiffs, or had sustained any loss in consequence of their negligence, we would have no difficulty in affirming the judgment of the lower court ; but such are not the facts made known to us by the record. The defendant purchased the bill on the faith of the indorsement of Shotwell and Son, which was a warranty of the genuineness of the drawer's signature to the bank; and there is no good reason, why the accidental payment made by the plaintiffs should inure to the benefit of the defendant. IMr. Chitty says on this subject, " If he [the holder] thought fit to rely on the bare representation of the party from whom he took it [the bill], there is no reason that he should profit by the accidental payment, when the loss had already attached upon himself, and why he should be allowed to retain the money, when, by an immediate notice of the forgery, he is enabled to proceed against all other parties, precisely the same as if the payment had not been made, and consequently, the payment to him has not in the least altered his situation, or occasioned any delay or prejudice. It seems that, of late, upon questions of this nature, these latter considerations have influenced the Court in determining whether or not the money shall be recoverable back ; and it will be found, on examining the older cases, that there were facts affording a distinction, and that upon attempt- 664 FORGERY. ing to reconcile them, they are not so contradictory as might on first view have been supposed." Chitty, Bills, 404. The facts in this case afford the distiniition to which Mr. Chitty refers, and take the case out of the general rule, which prevents the acceptor of a bill of exchange from recovering back the money paid in cases of forgery of the drawer's signature. The loss had already attached, before the bill was either accepted or ])aid, and the acceptors gave immediate notice to the defendant, and Shotwelland Son, after ascertaining for the first time, from James Smith, in whose name the bill was drawn, the fact of forgery. The evidence shows that plaintiffs accepted the bill, in the language of the witness, " chiefly through the respectability of the channels through which it came." It is, therefore, difficult to conceive upon what principle of equity or right the defendant can be permitted to retain the money paid in error by the plaintiffs, upon the facts of this case. No authority applicable to the particular circumstances of this case has been cited by the defendant's counsel, and we have no hesitation in reversing the judgment upon the authority of Mr. Chitty, above quoted. . In a case like the present, the acceptor is not estopped from proving the forg- ery of the bill. It is, therefore, ordered, adjudged, and decreed, that the judgment of the lower court be avoided and reversed ; and it is now ordered, adjudged, and de- creed, that the plaintiffs do have and recover of the defendant the sum of nine hundred and eighty-six dollars, with five per cent per annum interest, from the eighteenth day of December, 1857, with costs in both Courts. A case (National Bank of North America v. Bangs) is now pending in the Supreme Court of Massachusetts, as we are informed by counsel, presenting facts somewhat similar to those in McKleroy v. Southern Bank of Kentucky, supra ; and which the plaintiff will endeavor to bring within the rule in that case. Though the general rule is that the drawee by acceptance admits the genuine- ness of the drawer's signature, or, more strictly speaking, is precluded from alleging that the drawer's signature has been forged, still it seems that in sound reason the doctrine should be restricted to the case of an action against an inno- cent indorsee; and that it should not apply in a suit against the payee of an unnegotiable or unindorsed bill, who has received money from the acceptor under a forgery of the name of the drawer. The reason why the acceptor is jirecluded from recovering against an innocent indorsee is that the latter has honestly paid value for the bill, and that it would be an unjust loss to require him to refund ; it would be a loss, because he had parted with his money in taking the bill ; it would be unjust, because the inducement to take the bill may have been, and usually is, the very fact of acceptance and confidence in the acceptor. See Bank of St. Albans v. Farmers' & Mechanics' Bank, 10 Vt. 141. But no such reason exists where the acceptor seeks to recover from the payee. The payee can be no loser by refunding money paid under a forgery of the drawer's signature. His debt against the one whose name was forged as drawer, if the latter owed the payee any thing, would remain ; it could not be paid by a forgery. He could still re- cover it, whether he refunded to the acceptor or not. So not being involved in BANK OF THIC UNITED STATES V. BANK OF GEORGIA. 6G5 any loss by being reijuircil to refinid, it woulil be great injustice to tiie aeceplor t9 allow the j)ayee to retiiiii the money. The recent case of National Park Bank v. Ninth National Bank, .5o Barb. 87, is one of nnuh importance. It is there held, Mr. Justice Sutherland, dissenting, that where the drawee of a bill, containing a forgery of the drawer's name, and also an alteration of the sum payal)le and of the name ol' the payee, has paid the same to a bona Jidc holder, he may recover the excess i)aid above tlie amount originally inserted in the bill. This alteration of the amount of the draft was held by a majority of the ( 'ourt to con.«titute an exception to the general rule that the drawee must bear the loss when he pays a forged draft. See Bank of Commerce v. Union Bank, .'5 Comst. 230; Goddard v. Merchants' Bank, 4 Comst. 147; Worrall v. CJheen, :i9 Penn. State, .388; Bruce v. Bruce, 5 Taunt. 49.">; Hall V. Fuller, 5 Barn. & ('. 760; Young r. Grolc, 4 Bing. 2.03 ; Pagan r. W>lie, Ross, Leading Cas. Bills and Notes, 194; Graham v. Gillespie, ib. 195; "Wilkin- son V. Johnson, 3 Barn & C. 428. Another exception has been made in Ohio, where either by express agreement, or a settled course of business between the jjarties, or by a general custom in the place, and applicable to the business in which both parties are engaged, the holder takes ujjon himself the duty of exercising some material precaution to prevent the fraud ; and by his negligent fltilure to perform it, has contributed to induce the drawee to act upon the paper as genuine, and to advance the money upon it. It is also held to be an exception to the rule, if the parties are in mutual fault, or where the money is paid upon a mistake of facts in respect to which both were bound to inquire. Ellis v. Ohio Life Insurance Co., 4 Ohio State, ()28, per PiOnney, J. See Goddard v. Merchants' Bank, 4 Comst. 147; In-ing Bank v. Wetherald, 36 N. Y. 335. If a bill of exchange, payable to order, be accepted payable at the acceptor's bankers, and the indorsement of the payee be forged, and the bankers pay the bill to a party presenting it for payment, they are guilty of no breach of duty towards the acceptor in making the payment ; but they cannot charge the amount of the l)ill in account against him, though the payee be a stranger to them, and they have no immediate means of ascertaining the genuineness of his signature, and have dealt with the bill in the ordinary course of business. Robarts v. Tucker, 4 Eng. Law & E. 236, in the Exchequer Chamber. Per Maule, J., in the course of the argument : " I conceive that if a bill were presented to a banker by a stranger, with an indorsement on it of a person necessary to make out the title, but unknown to the banker, the banker would be justified in refusing to pay at once." Per Parke, B., upon the same point: "Probably in such a case the obligation wouM be to pay in a reasonable time." The question of negligence on the part of the drawer arose in the recent case of Belknap v. National Bank of North America, 100 Mass. 376. The case is one of great interest, and we give the full report of it. It was Contract to recover .'?70l. 49 deposited by the plaintiffs with the defendants. Answer, that the defendants didy i)aid upon checks of the jjlaiutiffs the amount sued for. At the trial in the Superior Court before Morton, J., it was not disputed that the defendants paid the amount on two checks, signed by the plaintiffs, the first QQG FORGERY. of wliich was in form substantially as follows ; and the second precisely resembled it, except in the name of the payee (Edward Williams), the number of the check (10,982), and the amount thereof ($371.86) : — o a S 3 " The National Bank of North America. $[329.63.] Boston, [June 12,] 1867. =3 I Pay to [Alfred Boyden or bearer] -o r - ordor - [Three Hundred Twenty-Nine] liars, [Sixty-Three] Cents. No. [10,980] [Lyman Belknap & Co."] Each check was filled out upon a lithographed blank, and those portions which were written by hand in ink are designated by being inclosed within braeskets in the foregoing copy. Across the lithographed words '' or order" in each check was drawn a broad line with a lead pencil. The only question raised was, whether the defendants were justified in making payments on these checks ; and there was evidence tending to show facts as follows ; — One of the plaintiffs signed six such lithographed blanks, on June 13, 1867, and left them in charge of Wilde, the plaintiffs' book-keeper, to be filled up and sent by mail to parties living at a distance, in settlement of accounts due from the firm. Wilde handed them, together with the six statements of account, to Bryant, a clerk twenty-one years old, who had come into the plaintiffs' employ- ment on June 10 ; and directed Bryant to fill them out to correspond in date and amounts with the accounts, and make them payable to the respective orders of the parties to whom they were intended to be sent. Bryant filled them out accordingly, and returned all the papers to Wilde, who examined the checks, compared them with the accounts, found them correctly drawn, placed internal revenue stamps upon them, which he cancelled with the initials of the firm and the date, and then put them, with the accounts, into envelopes, which he addressed to the respective payees, sealed and delivered to Bryant, near evening, to take to the post-ofHce. The plaintilTs, who were commission merchants, had kept a bank account with the defendants for six or seven years, and drew on the defendants, and mailed to their consignors, as many as two or three thousand cheeks each year, using always the same lithographed form, and invariably drawing them payable to order, for the purpose of procuring receipts upon them. In drawing money for their own use, or to pay notes, the plaintiffs frequently drew checks payable to "notes payable or order," but in all such cases some one of the plaintiffs per- sonally, or their book-keeper, received the money from the bank. All of the six checks but the two in question were returned to the plaintiffs in due course of business, indorsed by the parties to whom they were mailed. The payees of these two, within a few days after June 14, gave notice to the defend- ants that they had not received the remittances due to them on their accounts ; whereupon the plaintiffs went to the defendants' bank and tliere found the two checks, altered by the insertion, in ink, in Bryant's handwriting, of the words " or bearer" after the names of Boyden and Williams, and by the cancellation of the words " or order " by the line drawn by lead pencil ; and the teller of the BANK OP THE UNITED STATES V. BANK OF GEORGIA. 667 bank, being then asked, could not tell to whom he had paid these two checks, or either of them. Bryant came to the plaintiffs' place of business early on the morning of June 14, and about ten o'clock went away " to be gone for an hour or two," and never came back. Much evidence, which, by the decision of this Court, has become inimaterial, was introduced on the question whether the defendant's teller used due care in paying the two checks. On the whole case, the plaintiffs requested the judge to rule as follows : 1. *• That, if tlie checks were altered by erasing tfie words ' or order' and inserting the words ' or bearer,' alter they were executed by the plaintiffs, and without authority from them, the checks were void, and the defeiulaiits could not set up a payment under them to defeat the plaintiffs' claim, unless the plaintiffs were guilty of negligence with respect to them. 2. " That, if the checks were altered by erasing the words ' or order,' and in- serting the words ' or bearer,' and the alteration was apparent on the face of the instrumeiit^i, it was the duty of the defendants, before paying the checks, to as- certain whether the alterations were authorized ; otherwise they would run the risk of their being unauthorized. 3. " That, if the checks were taken from the letters in which they were inclosed, and the alterations were made with a fraudulent purpose, after the execution of the checks, by a clerk of the plaintiffs, who was merely employed and authorized to take the letters containing the checks to the post-ofiice, the plaintiffs were not responsible for his fraudulent acts, although lie may have been employed to fill in the body of the checks under the direction of the book-keeper who had charge of the filling in of the checks. 4. " That, if the checks were altered by cancelling the words ' or order,' and inserting the words ' or bearer,' without the authority of the plaintiffs, and after the plaintiffs had signed the checks, such alteration was a forgery, and the bank paid the checks at its own risk." The judge declined so to rule; and instructed the jury " tliat, if the words ' or bearer ' were written in the checks before they were sent out by the plain- tiffs' book-keeper, the bank was justified in paying the checks ; but if the words * or bearer' were inserted after the checks were issued, it did not necessarily fol- low that the plaintiffs would not be held on the checks ; that if the checks were signed in blank by the plaintiffs, and given to Wilde to be filled up, and he delivered them to Bryant, and directed him to fill them up, and they were filled up by him, leaving a blank space after the names of the payees and before the printed words ' or order,' and they Avere then issued in that form, and he, Bryant, afterwards inserted in the blank space the words ' or bearer,' in the same handwriting as the rest of the written part of the checks, and if the jury should find there was nothing in the appearance of the checks, when presented to the teller for payment, to excite any suspicion, or which ought to have excited any suspicion on his part, or to indicate that the checks had been altered after they were issued, and he exercised due care in paying them, then the bank would be protected in making the payment ; that, as matter of law, the mere fact of the printed words ' or order ' having been erased, the words ' or bearer ' being in the checks, would not in itself alone be such a suspicious circumstance as would deprive the bank of this defence, but that that fact, with the other facts in the 668 FORGERY. case, niiirht .show want of clue care on tlie part of the teller; " and the jury were instructed on this point " to take into consideration the fact of the erasure of the words ' or order ' and all the other facts in the case, and if, upon all the facts, there was anj' thing suspicious in the appearance of the checks when presented for payment, or which ought to have excited suspicion, or if the teller did not exercise due care, then the fact that the plaintiffs had been careless in respect to the checks would not relieve the defendants from liability; and further, that, if there was any thing suspicious in the appearance of the checks, or whicli ought to have excited suspicion, or if there was any want of due care on the i)art of the teller in paying the checks, then any practice, at the banks in Boston, to pay checks to persons presenting the same, if known to the teller, or identified by some person known to him, though there was such identification upon payment of the checks in question, would not protect the hank in paying the same.'" The jury found for the defendants, and the plaintiffs alleged exceptions. Chapman, C. J. It appears that the plaintiffs signed several checks di-awn upon the defendants, payable to [blank] or order, and left them with Wilde, their book-keeper, to be filled up and sent by mail to several parties living at a distance, for the payment of debts owed to them severally. "Wilde handed these checks to Bryant, the clerk, to be filled up with the proper dates, names and amounts, leaving them payable to the order of the several creditors. Bryant did so, and then returned them to t"lie book-keeper, who examined them, found them correct, stamped them, cancelled the stamps, placed them, with the accounts to be paid by them, in envelopes, sealed the envelopes, and addressed them to the proper persons. It is not necessary to consider the question whether any part of tl)e plaintiffs' conduct thus far was careless ; for their confidence was not abused, but every thing had been properly done. The case is not different from wiiat it would have been if he had given the blanks to the clerk to fill up before they signed them, and had sjgned them after they were filled up, stamped and returned to them. The sealed letters were delivered to the clerk to carry to the post-office. We cannot assume, as is implied in the instructions, that it was careless on the part of the plaintiffs to send sealed letters to the post-office by a clerk, although the clerk knew their contents. For he could not obtain access to the contents with- out committing a crime. The checks were not intrusted to him as in the cases of Putnam v. Sullivan, 4 Mass. 45, or Young v. Grote, 4 Bing. 253. He obtained possession of the checks surreptitiously; and, by the erasure of the words " or order," and inserting the words " or bearer," he committed a forgery ; for it was a fraudulent alteration of the instruments in a material part, whereby a new operation was given to them. Before the alteration, the checks could only be paid to the creditor or his order, and such payment would discharge the debt which each check was designed to pay. After the alteration, each check was payable to any one who should present it. Such an alteration would vitiate the instruments, even in the hands of a bona fide holder for value. Wade v. Withington, 1 Allen, 561. The case was presented to the jury upon the question of the diligence or fault of the defendants, and the Court are of opinion that this was an erroneous view of it. Exceptions sustained. BANK OF THP: UNITED STATES V. BANK OF GKOKGIA. G09 "When an innocent holder of nef.'otiable paper parts with it by delivery, witliout indorsing it, in payment of a debt due, or then created, as, for example, in payment for goods then purchased, or by way of discount for money then loaned by a bank, banker, or individual, and the paper proves to have been forged, the debt or loan not being paid by it may be recovere*]. In such case there is a warranty implied by law that the paper is genuine, as there is tliat coin or bank-notes used for like purposes are genuine. Per Hhcpley, C J., in Bax- ter V. Duren, 29 Me. (1(J Shepl.) 434, 440 (1849), citing Jones v. Hyde, 5 Taunt. 488 ; Fuller i\ Smith, 1 Car. & P. 197 ,* Camidge i'. Allenby, 6 Barn. & C. 873; Coolidge v. Brigham, 1 Met. 547. " When no debt is due or created at the time, and the [forged] paper is sold as other goods and elfects arc, the purchaser cannot recover from the seller the purchase-money. There is in such case no implied warranty of the genuineness of the paper. The law respecting the sale ol" goods is ai)plicable. The only implied warranty is that the seller owns or is lawfully entitled to dispose of the paper or goods." Id., citing Bank of England v. Newman, 1 Ld. Kaym. 442; Fenn v. Harrison, 3 T. 11. 7o7 ; Fydell v. Clark, 1 Esp. 447 ; Emiy v. Lye, 15 East, 6; Ex j^aiie Shuttleworth, 3 Ves. 368; Ex parte Blackburne, 10 Ves. 204; Ellis v. Wild, 6 Mass. 321. Tlie learned chief justice says that the cases upon this subject are in appar- ent, but not real conllict; and that " the principal difliculty appears to have been experienced in coming to a conclusion whetlier the paper when discounted or sold was received in payment of a debt or loan due or then created, or taken by way of purchase and sale." He proceeds to say : " The use of the, word ' discount ' in two different senses, has also contributed to introduce obscurity; it being used in some of the cases, and by some judges, to designate the re- ception of paper in payment of a loan or debt, and in other cases, and by other judges, in the sense in which it appears to have been used by the broker in this case, to designate the reception of it on a sale as a piece of property." But the editor of Story, Promissory Xotes, § 118, says that the distinction above drawn may well be doubted, both on principle and authority; citing Rie- man v. Fisher, 4 Am. Law Reg. 433, in which the doctrine of Baxter v. Duren is directly denied. Rieman v. Fisher takes the broad ground tiiat a public bill-bro- ker who sells commercial paper inipiiedly warrants the genuineness of the signa- tures and indorsements ; and that if the paper should prove to be forged, the loss must fall upon the vendor. And this is the doctrine of the English Courts, and seems to be the better rule. See Gurney r. Womersley, 4 Ellis &, B. 133, decided in 1854. See also Cabot Bank v. Morton, 4 (iray, 156, per Shaw, C. J.; IMerriani /-. Wolcott, 3 Allen, 258; Canal Bank v. Bank uf Albany, ante, p. 643. The question of estoppel by payment of a forged bill has arisen in several in- stances. The most recent case is that of Morris v. Bethel!, Law Rep. 5 Com. P. 47, decideil in 1869. TliIs was an Action by the holder against the defend- ant as the acceptor of a bill. The case was this : In August, 1;S67, the defend- ant paid a bill of exchange, of which the plaintiff was the holder, upon which the defendant's name had been written as acceptor without his authority. In an action against him upon another bill similarly accepted, the jury found that the acceptance was not the defendant's signature, or written witii his authority; that 670 FORGERY. the forged signature was not adopted by the defendant ; that the defendant did not know that tlie phiintifF was the holder of the former bill ; and that he did not lead the plaintiff to believe that the acceptance written on the bill sued upon was his. The Court unanimously held that the fact that the defendant had paid the bill in August, above mentioned, did not estop him from denying that the bill declared on was accepted by him or with his authority ; that the circum- stances were properly submitted to the jury ; and that the judge was not bound to tell them that, as matter of law, the plaintiff was entitled to recover. The Court distinguished the case from Barber v. Gingell, 3 Esp. 60. Bovill, C. J., said : *' If it were made to appear that there had been a regular course of mer- cantile business, in which bills have been accepted by a clerk or agent whose sig- nature has been acted upon as the signature of the principal, there would be evidence, and almost conclusive evidence, against the latter, that the acceptance was written by his authority. That was the case of Barber v. Gingell. It would have been idle to contend there that the defendant was not responsible for the signature." See also Beeman w. Duck, 11 Mees. «fc W. 251; Mather r. Lord Maidstone, cited at length, ante, p. 661. PINTARD V. TACKINGTON. 671 LOST BILLS AND NOTES. [As to stolen paper, see Goodman v. Simonds, ante, 230, and note.] PiNTARD V. TaCKINGTON. (10 Johnson, 104. Supreme Court of New York, January, 1813.) When owner may recover. — Tlie plaintiff declared on a promissory note, payable on demand, and stated that the note had been lost or destroyed ; and the existence and contents of the note being proved, and it not appearing that the note was negotiable, or if negotiable, that it liad been negotiated, htkl, that the plaintiff was entitled to recover. In error, on certiorari., from the justices' court of the city of New York. Tackington brought an action in the Court below, against Pintard, and declared for money had and received by the de- fendant to the use of the plaintiff; and also that the defendant, in May, 1811, being indebted to him, for work and labor to the amount of $G2, gave his note to the plaintiff, for that amount payable on demand ; that the plaintiff put the note in his chest on board of the vessel of the defendant, and that the defendant sailed out of the port, with the plaintiff's chest on board containing his clothes and the note, leaving the plaintiff behind. A witness for the plaintiff testified, that after the return of the defendant to New York, in the vessel, Avhich was about three months after the trunk was i)ut on board, he apjAied as attorney of the plaintiff, for the note, to the defendant, wlio said he did not know where it was, but supposed it was in the plaintiff's chest, in the fore part of the vessel, but that he could not then get at the chest, and that the witness must call again ; that he called again, and on opening and examining the chest the note could not be found. The defendant admitted that he had given such a note to the plaintiff. Another witness testified that she saw the plaintiff, (who was a sailor), put the note into the chest, which was put on board of the defendant's vessel. 672 LOST BILLS AND NOTES. The Court below, being of opinion that there was sufficient evidence of the loss of the note, and of the existence of a debt due from the defendant to the plaintiff, for which the note was given, gave judgment for foO, being the extent of their juris- diction. Per Curiam} The declaration of the plaintiff below consisting of a detail of his case, is to be liberally construed so as, if possi- ble, to meet and embrace the proof. We have never required any technical nicety or form in pleadings, in the justices' courts, be- cause tiie pleadings are usually by parol, and managed by the par- ties, without the aid of counsel. The plaintiff, therefore, declared for money had and received, and upon a lost note, which he par- ticularly described, and as having been given for work and labor. If, therefore, the testimony will entitle him to recover, either upon the note, by proving its existence, loss and contents, or upon the original debt, for work and labor, the judgment ought to be sup- ported. We see no reason why the recovery upon the note, as a lost note, was not good. It does not appear that the note was negotiable, or, if negotiable, that it had ever been indorsed, and the existence and contents of the note, were fully proved, and the circumstances were enough to authorize a conclusion that it had been lost or destroyed. The cases which have not permitted a re- covery at law, upon negotiable paper which was merely lost and not destroyed, were those in which the paper had been indorsed before it was lost. Pierson v. Hutchinson, 2 Camp. N. P. 211, and note ; and the cases cited by Lord Eldon in 6 Ves. 812. The Court below went, perhaps, upon the ground of the existence of the previoiis debt ; and that the recovery upon that was to be sup- ported, notwithstanding the giving of the note. The better opinion on this point seems to be, that the acceptance of negoti- able paper, on account of a prior debt, is prima facie evidence of satisfaction, and that you cannot recover upon the old debt with- out some explanation, or giving some account of the note. Kear- slake V. Morgan, 5 T. R. 515 ; Richardson v. Rikeman, cited in 5 T. R. 517 ; Holmes and Drake v. D'Camp, 1 Johns. 34. But this was not shown to be negotiable paper, and if that was the intend- ment, in the first instance, as seems to have been the conclusion of the Court in Angel v. Felton, 8 Johns. 149, yet the plaintiff below cave as sufficient an account as the nature of the case, and 1 Kknt, C J., Thompson, Spencer, Van Ness, and Yates, JJ. PINTARD V. TACKINGTON. ^ 673 the condition of the parties would well admit, of the loss of the note, without i^s hciiig ne<rotiatcd and indorsed. On either ground therefore, wo think tiie judgment ought to l)e supixjrted. Juchjmeyit affirmed. There is no conflict upon this subject. See Story, Prouiissory Xotes, § 451, and authorities cited. But in respect to paper negotialile and negotiated, the cases are not in harmony. See Rowley v. Ball, post, 080, and cases following. Even in the case of destruction of negotiable paper, the plaintiff will not be allowed to recover, if he voluntJirily destroyed it himself. Vanauken v. Ilurn- beck, 2 Green (X. J.) 17H; Fisher i'. Mershon, 3 Bibb, .">27 ; Blade v. Noland, 12 Wend. 173. jNIr. Justice Nelson, in this last-named case, said: "I concede the rule insisted on by the counsel for the plaintiff below to the fullest e.xtent borne out by the authorities, and they are numerous ; and still am of opinion that the plaintiff did U'Jt give such jjroof of the loss of the note to justify the secondary proof of its contents, or to entitle him to resort to the original con- sideration. \i tliere had been satisfactory proof of the loss or destruction of the notf', the omission to give a bond of indemnity under the statute (2 Rev. Sts. 406, §§ Ih, 70), would not have interfered with the recovery; for the provisfon of the statute on this subject is limited to negotiable pajyo: There is no evidence that the note in question was negotiable, and it seems to be settled that the Court will not ]) resume a lost note to be negotiable. 10 Johns. 104 ; 3 Wend. 344. "The proof is, that the plaintiff deliberately and voluntarily destroyed the note before it fell due ; and there is nothing in the case accounting for or afford- ing any explanation of the act, consistent with an honest or justifiable purpose. Such explanation the plaintiff was bound to give affirmatively, for it would be in violation of all the principle^! upon which inferior and secondary evidence is tol- erated, to allow a party the benefit of it, who has wilfully destroyed the higher and better testimony. The danger of this very abuse of a relaxation of the gen- eral rule greatly retarded its introduction into the law of evidence, and it was for a long time confined to a few extreme cases, such as burning of houses, robbing, or some unavoidable accident. It was contended by Chancellor Lansiny, in the case of Livingston v. Rogers, 2 Johns. Cas. 488, after an examination of all the leading cases on the subject, that secondary evidence was not admissible to ])rov(! the contents of a pa[)er, where the original had been lost by the neijligence or /acZ/e*' of the party or his attorney. He failed to convince the Court of Er- rors to adopt his views in a case where the negligence was not so great as to create suspicion of design. Further than this I could not consent to extend the rule. I have examined all the cases decided in this Court where this evidence has been admitted, and in all of them the original deed or writing was lost, or destroyed by time, mistake, or accident, or was in the hands of the adverse party. Where there was evidence of the actual destruction of it, the act was shown to have taken place under circumstances that repelled all inference of a fraudulent design. 2 Johns. Cas. 38S ; 2 Caines, 303 ; lU Joims. 303,374; 11 id. 446 ; 8 id. 14y; 3 Cow. 303; 8 id. 77; 3 Wend. 344; Peake's Ev. 972, Am. ud.; 10 Co. b8 ; Leyfield's Case ; 3 T. R. 151 ; 8 East, 288, 289 : Gilb. Ev. 'J7. "In Leyfield's Case, Lord Coke gives the obvious reasons why the deed or 43 674 LOST BILLS AND NOTES. instrument in writing sboukl be produced in Court. 1 . To enable the Court to give a right construction to it from the words ; 2. To see that there are no ma- terial erasures or interlineations ; 3. That any condition, limitation, or power of revocation may be seen ; for these reasons oyer is required in pleading a deed. But he says in great and notorious extremities, as by casualty by fire, &c., if it shall appear to the judges that the paper is burnt, it may be proved by witnesses so as not to add aiiliction to ailliction. " The above is in brief the foundation of the rule in these cases of secondary proof of instruments in writing, and it has been much relaxed and extended in modern times from necessity, and to prevent a failure of justice ; yet I believe no case is to be found where, if a party has deliberately destroyed the higher evi- dence without explanation showing affirmatively that the act was done with pure motives, and repelling every suspicion of a fraudulent design, that he has had the benefit of it. To extend it to such a case would be to lose sight of all the reasons upon which theTule is founded, and to establish a dangerous precedent. We know of no honest purpose for which a party, without any mistake or mis- apprehension, would deliberately destroy the evidence of an existing debt; and we will not presume one. " From the necessity and hardship of the case, courts have allowed the party to be a competent witness to prove the loss or destruction of papers ; but it would be an unreasonable indulgence, and a violation of the just maxim, that no one shall take advantage of his own wrong to permit this testimony, where he has designedly destroyed it. ^^ Judgment reversed.'''' See also Bank of Louisville v. Summers, 14 B. Mon. 306 ; Wade v. New Orleans Canal, &c., Co., 8 Rob. La. 140; Des Arts v. Leggett, 16 N. Y. (2 Smith), 582; s. c, 5 Duer, 156; McGarr v. Lloyd, 3 Penn. State, 474; Tower V. Appleton Bank, infra, 674, and note. As to the presumption respecting negotiability, see Dean v. Speakman, 7 Blackf. 317 ; Chaudron v. Hunt, 3 Stew. 31 ; Hough v. Barton, 20 Vt. 455. Thomas T. Tower v. The President, Directors, &c., of THE Appleton Bank. (3 Allen, 387. Supreme Court of Massachusetts, January, 1862.) Bank-bills. Circumstantial evidence of destruction. — The owner of bank-bills wliich can- not be identified or distinguished from other similar bills, cannot maintain an action against the bank which issued them, upon circumstantial evidence that they have been destroyed, and a tender of indemnity. Contract against a banking corporation, to recover the amount of sundry bank-bills issued by it, and alleged to have been destroyed by fire. TOWER V. APPLETON BANK. " 675 At the trial in the Superior Court, there was evidence tending to sliow that t^ie plaintiff left the bills in question in his trunk, in his room in a house in Chicago, Avhich was burnt witliin an hour afterwards, and that no person entered the room after ho left it, and that the trunk and its contents were l>nrnt with Ibo house. There was no other evidence of the destruction of the l)ills. Upon this, and other evidence which is not necessary to be stated here, Putnam, J., instructed the jury that if the plaintiff was the owner of the bills, and they were destroyed by fire, and the plaintiff notified the defendants and demanded the amount thereof, and tendered a bond of indemnity, he was entitled to recover ; and the jury returned a verdict for the plaintiff. The defendants alleged exceptions. Hoar, J. The reasons upon which it has been held that the owner of a negotial)le promissory note, which is lost or destroyed, may maintain an action upon it against the maker, although it may have been indorsed in blank, and therefore made transferable by delivery, were stated in the case of Fales v. Russell, 10 Pick. 315.^ The general doctrine is, that where a writing is evidence of a contract, the loss or destruction of the writing does not destroy the cause of action, and that secondary evidence of the contract is admissible. The objection to the application of this doctrine to the case of a negotiable bill or note, payable to bearer, or payable to order and indorsed in blank, is given in Hansard v. Robinson, 7 Barn. & C. 90. Lord Tenterden there says : " The general rule of the English law does not allow a suit by the assignee of a chose in action. The custom of merchants, considered as part of the law, furnishes, in this case, an exception to the general rule. What, then, is the custom in this respect ? It is, that the holder of the bill siuill present the instrument, at its maturity, to the acceptor, demand payment of its amount, and upon receipt of the money deliver up the bill. The acceptor, paying the bill, has a right to the possession of the instrument for his own security, and as his voucher and discharge pro tanlo in his account with the drawer. If, upon an offer of payment, the holder should refuse to deliver up the bill, can it be doubted that the acceptor might retract his offer or retain his money?" This was the case of an indorsee against the acceptor of a lost bill of exchange ; and the judgment of the Court was, that the plaintiff's only remedy was 1 Post, 683. 676 LOST BILLS AND NOTES. ill equity, where the Court could provide for an adequate indemnity to the defendant, as a condition of payment. And^such lias been the rule in England, in tlie case of lost notes, niitil it was modified by statute. The statute of 9 & 10 W. 3, c. 17, § 3, provided in the case of inland bills expressed to be for value received, and payable after date, " that in case any such inland bill or bills of exchange sliall happen to be lost or miscarried within the time before limited for payment of the same, then the drawer of the said bill or bills is and shall be obliged to give another bill of the same tenor with those first given ; the person or persons to whom they are and shall be so delivered giving security, if demanded, to the said drawer, to indemnify him," &c. The statute of 17 & 18 Vict, c. 125. § 87, contains the more extensive provision, that "in case of any action founded upon a bill of exchange or other negotiable instrument, it shall be lawful for the Court or a judge to order that the loss of such instrument shall not be set up, provided an indemnity is given to the satisfaction of the Court or judge, or a master", against the claims of any other person upon such nego- tiable instrument." But without any statute provision, the case of Fales v. Russell *is an authority to show that in this Commonwealth the plaintiff, in the case of a note lost or destroyed, will not be required to resort to a court of chancery for a remedy ; but that a court of law, while it fully recognizes the right of the defendant to the security which the production and giving up of the negotiable instrument declared on would afford, has authority to prescribe an equivalent security, by a sufficient and reasonable indemnity. Almy v. Reed, 10 Cush. 421. It has been held otherwise in New York. Rowley v. Ball, 3 Cow. 303.1 Whether the same rule is applicable to bank-notes, intended to circulate, and actually circulated as currency, is the question pre- sented by the case at bar ; and we believe it has never been decided in this Commonwealth. Although a bank-note is the promissory note of a corporation, it differs in some important respects from other promissory notes. It is intended not merely as the evidence of a single contract, to become worthless when that contract is performed, but to be issued repeatedly, and to pass from hand to hand with the utmost freedom. They are commonly made upon paper of a peculiar quality, embellished and distinguished by vignettes and other ornamental engraving ; and are of some value 1 Post, 680. TOWER V. APPLETON BANK. 677 to the bank which issues them. In The People v. Wiley, 3 Hill (N. Y.), 194, it was held that bank-notes jirepared for issue, but still in the possession of the bank, were the subject of larceny. It was said by Mr. Justice Wilde, in Hinsdale v. Larned, IG Mass. 68, that " there can be no ^reat doubt tliat the statute of limita- tions is not aj)plicable to demands on bank-notes, where the action is brought aj^ainst the corporation ; because the circulation of such notes is daily renewed ; and because lapse of time is no presump- tion of payment, these notes never being paid, unless given up by the holder at tiie time of payment." This was so fixed by statute afterward. Rev. Sts. c. 120, § 4. Whether payment can be en- forced without a previous demand at the bank, if no place of payment be stipulated in the note, is a question which we believe has never been determined in this Commonwealth. In Maine, it has been decided that they do not differ in this respect from other promissory notes payable on demand, and that the commencement of the action is a sufficient demand. Bryant v. Damariscotta Bank, 18 Me. 240. The same opinion was given in tlie STipreme Court of New York by Wood worth, J., in Bank of Niagara v. M'Cracken, 18 Johns. 493 ; but in Jefferson County Bank v. Chap- man, 19 Johns. 322, the same judge observed that this was only^i^ his individual opinion, and was not decided by the Court. In Haxtun v. Bishop, 3 Wend. 9, 21, Chief Justice Savage expressed thfe same opinion ; but the point was not essential to the decision of the case. Some implication that the legislature regard the right of a bank to the possession of its bills, as a condition of paying them, to be different from that of .the maker of an ordinary promissory note, may perhaps be found in the provision in St. 1859, c. 116, § 1, " that banks may replevy their bills upon payment or tender of the amount due upon them." Gen. Sts. c. oT, § 05. And a similar inference might be drawn from the provision that banks shall be subject to a penalty for not paying bills presented at their banking-house in business hours ; as if this were regarded as the breach of the contract with the bill holders. Gen. Sts. c. 57, § 59. The case of Hinsdale v. Bank of Orange, G Wend. 378,' was an action to recover upon bank-notes which had been cut in two, for the purpose of transmission through the mail, and one-half of them lost. The plaintiff" was allowed to recover, on the ground 1 Post, 706. 678 LOST BILLS AND NOTES. that by severing the notes their negotiability was destroyed. But Mr. Justice Marcij took a distinction between the loss and the destruction of a note, and said : " If the owner of a bill loses it, he cannot recover ; but if he can prove that it is actually destroyed, he may." In Bullet V. Bank of Pennsylvania, 2 Wash. C. C. 172, a similar decision was given by Mr. Justice Washington; and again, upon a very full discussion, in Martin v. Bank of United States, 4 Wash. C. C. 253. In each of the two latter cases, no distinction is made between a bank-note and any other promissory note payable to bearer ; but the general principle is asserted, first, that the note is only the evidence of the contract, the loss or destruction of which may be supplied by secondary evidence ; and secondly, that, if upon any other ground than fraud or perjury the maker might be subject to be twice charged, the plaintiff should not be allowed to recover, except upon furnishing an adequate indemnity, which could only be provided by a court of equity. But aside from any specific distinction applicable to all bank- bills issued as currency, there is a difficulty in the plaintiff" 's case as presented upon the facts reported. The evidence of the de- fstruction of the bills is merely circumstantial, and not positive. Upon the doctrine of Pales v. Russell, the plaintiff", by his own negligence or misfortune, is unable to do what it was the right of the defendants to require, for their own security, namely, to give up the bills when paid. If the bills were shown to be actually destroyed, beyond all question or controversy, the case might be different ; as, for instance, if the destruction were admitted by the pleadings. But upon the mere preponderance of proof, which is sufficient to authorize a jury to find a fact in issue, we think it is not to be assumed conclusively that the bills are destroyed, without further provision for the defendants' security against their reappearance. If, then, it is sought to provide this security by a bond of indemnity, how can such a bond be given ? There is nothing to distinguish or identify the bills which the plaintiff says have been destroyed. Against a second payment of what bills are the defendants to be indemnified ? How could they show that any bills already redeemed, or hereafter to be redeemed, were or were not the bills in question ? Clearly there could be no mode of determining the fact, until their whole circulation of bills of the same denojnination should be called in. But suppose that TOWER V. APPLETON BANK. 679 several parties should sue upon bills alleged to have been de- stroyed, and should recover, each giving a bond of indemnity. If it should afterward appear that all the bills had not been destroyed, upon which bond would the defendants have a rem- edy? The answer given to this ol>jection by the plaintiff's counsel is, that the defendants issue bills in such form as they choose, and that the plaintiff should not be prejudiced because they are issued in such a form as not to be distinguished from each other. But this is not a satisfactory answer. The defendants have not contracted to redeem their bills, except upon their production and delivery ; and it is the negligence or misfortune of the plaintiff that they cannot be produced. The plaintiff is then bound to furnish an equivalent ; to put the defendants in as good a con- dition as if the bills were produced. If he cannot do this, he has no right to shift the consequences of the loss upon a party h\ no wise answerable for- it. It is deserving of consideration, also, that the defendants do not stand upon any equality with the plaintiff in the trial of the question whether the bills are really destroyed. The plaintiff is a competent witness for himself ; and the pro- duction by the defendants of any number of bills exactly like those said to be destroyed would be no defence, unless the whole issue of such bills were accounted for. Upon the whole matter, the Court are of opinion that to permit a plaintiff to recover upon such proof as this case presents, upon bills circulating as currency, and available to any one taking them bona fide, without such means of distinguishing the particular bills as would admit of an adequate indemnity, would ojien a wide door to fraud, would be incompatible with the reason'able security and rights of the defendants, and is not required by law. Exceptions sustained. It was at one time thoujiht in England that not even proof of destruction of a negotiable note or bill was sudicient ground for an action at law. Han:<ard v. Robinson, 7 Barn. & C. 90 (1^27). And this doctrine has the sanction of Judge Story, Promissory Notes, § 449. But the opinion expressed in Hansard v. Rob- inson was only a dictum ; and the more recent cases hold a different doctrine. See Wright v. Maidstone, 1 Kay & J. 701 (1.S55) ; Blackie r. Pidding, 6 Com. B. 196 (184S); Woo.lford v. Whiteley, Moody & M. 517 (18;Ut). And it is now the accepted rule both in Eiijiland and America, that an action is maintain- able at law on a bill or note which has been destroyed without the volition of the holdeV. See Clarke v. Quince, 3 Dowl. 2G ; Moore v. Fall, 42 Me. 450; Des 680 LOST BILLS AND NOTES. Arts V. Leggett, 16 N. Y. (2 Smitli), 582; Aborn v. Boswortli, 1 R. I. 401; Wade V. Wade, 12 111. 89; Thayer v. King, 15 Ohio, 242; Bank of the United States V. Sill, post, 699 ; Pintai^d v. Tackington, ajite, 671 and note. Rowley v. Ball. (3 Cowen, 803. Supreme Court of New York, October, 1824.) No action at law o)i lost negotiable note. — An action at law cannot be sustained on a negotiable promissory note payable to bearer, by the owner, on proof that the note was lost, though he siiow that it was lost after it became due. When, the owner may sue at law. Error, from the Common Pleas of the county of Munroe. The cause was originally commenced by Rowley against Ball, before a justice of that county, who. gave judgment against Ball, who ap- pealed to the Common Pleas, where the cause was tried January 10th, 1822. Rowley declared against Ball upon a promissory note given by the latter to one William Huxley, payable to him or bearer, for $30, dated on or about the middle of June, 1819, and transferred to the plaintiff ; and the declaration averred that the note had since been stolen, lost, or destroyed, or taken from the plaintiff without his consent or knowledge. Plea, the general issue. Upon the trial, J. D. Bailis testified, that he had seen a note in Rowley's possession, purporting to have been given by Ball, for $30, dated some time in June, 1819. The precise time when it was payable he could not tell ; but recollected that it was payable to William Huxley or bearer, and whe]i he saw the note, which was in April, 1821, it was due. It was admitted by Rowley's counsel, that Ball could neither read or write, but signed by his mark ; and that there was no subscribing witness to the note. Rowley, the appellee, swore that he put the note into his pocket- book, and sometime after made diligent search' for it, both in his pocket-book and desk, but could not find it ; that the note was either lost, stolen, or destroyed ; that he had reason to believe that the note had been taken from his pocket-book, and given to Ball ; for the story of his having lost the note came to him from -Ball ROWLEY V. BALL. 681 before he knew or suspected the loss. On being cross-examined, be stated that it was first suf^gested to him that tl»e note was lost by Samuel' Darling, his own brotfler-in-law. Hiram Huxley swore that he came to Ball's in company with his brother, John Huxley, who told Ball that he had a note against him, which was given to William Huxley. Ball rej)lied, that whoever held the notes must pay for keeping William Huxley's wife ; ))ut requested John Huxley to take a gun of him, and apply it on the notes ; and it was agreed between them tliat John Huxley should take the gun upon trial, and, if he liked it, he should allow $14 on the notes. If he did not like it, he was to return it. John Huxley testified that he received of William Huxley, two notes against Ball, in the State of Ohio, one for $30, and one for $20, as they were read to him ; that be could neither read nor write ; that he went to Ball's as stated by Hiram Huxley, in company with him, and told Ball that he had notes against him, which were given to William Huxley, one for $30, and one for $20, and he answered, that whoever held the notes must pay him for keeping William Huxley's wife. The witness requested Ball to pay him some money ; but Ball said he could not. He then requested him to let the witness have some leather ; but Ball answered that he had none to spare. The conversation then fol- lowed about the gun, as stated by Hiram Huxley. The witness took the gun, but afterwards returned it, and sold the 8')0 note to one Clarke. The counsel for Ball insisted, that he ought not to be put upon his defence, till Rowley had proved the actual destruction of the note. The counsel for Rowley insisted, that there was already suflicient evidence of the destruction of the note, or, at least, sufficient to entitle him to go to the jury, upon the ground that he had i)roved the loss of the note after it fell due. This was op- posed by Ball's counsel ; and, — The judges gave their opinion, that the several matters proved and given in evidence, were not sufficient to entitle Rowley's coun- sel to go to the jury, inasmuch as an actual destruction of the note had not been proved ; that Rowley could not recover on a negotiable note, although it was lost after it became due, unless this was followed by proof of its destruction ; and gave judgment of nonsuit. To this opinion, Rowley's counsel excepted ; and the cause came to this Court upon a bill of exceptions, containing the above matters. 682 LOST BILLS AND NOTES. WooDwoRTH, J. No exception was taken to the proof given as to the execution of the note. Were it necessary, liowever, to express an opinion, I should consider the evidence prima facie sufficient. The witness stated to the defendant that he held two notes against hiin, given to William Huxley ; one for $30, the other for $20. The defendant, in reply, admitted the notes, and offered to make part payment. The identity of the note to which the confession related is established with reasonable certainty. The case of Shaver v. Ehle, 16 Johns. 201, is clearly distinguishable from the present. Tlie remaining question is, whether an action at law can be sus- tained on a negotiable promissory note, payable to bearer, by a person who was the holder, on his proving that the note was lost. If the note had not been negotiable, or, if negotiable, had not in fact, been negotiated, the plaintiff would be entitled to recover. Pintard v. Tackington, 10 Johns. 104.^ The cases which have not permitted a recovery at law upon negotiable paper lost, but not de- stroyed, were those in which the paper had been indorsed before it was lost. Pierson v. Hutchinson, 2 Camp. 211 ; Ex parte Greenway, 6 Yes. 811. In this case, the note being payable to the bearer, the holder could make out, prima facie, a cause of action, and although the note was due at the time it was lost, the maker v^ould be exposed to the hazard of showing that fact by legal evi- dence. It would, therefore, seem to be a hard doctrine, which should place the maker in this situation, without requiring an in- demnity. In Such cases, it is better to leave the party to his remedy in equity, where a suitable indemnity will be provided against any subsequent recovery. This subject peculiarly belongs to equity jurisdiction. In Ux parte Greenway, Lord Eldon ob- serves : " I never could understand by what authority courts of law compelled parties to take the indemnity." In Pierson v. Hutciiinson, Lord Ellenborough held, that whether an indemnity be sufficient or insufficient, is a question of which a court of law cannot judge ; and although there are dicta, that, upon the offer of an indemnity, the indoi'see of a lost bill may recover at law, they are so contrary to the principles upon which the judicial sys- tem rests, he could not venture to proceed upon them. Chitty, in his Treatise on Bills, p. 173, ed. of 1817, is of opinion that where the bill lias been lost after it became due, there is no reason why 1 Ante, 671. PALES V. RUSSELL. 683 the person who lost it should not be permitted to proceed at law, without oflering an indemnity, inasmuch as the law would, in such case, secure all the j)arties to the bill against future liability to a person who becomes the holder of it after itJftills due. This is undoubtedly correct, ))rovided the maker of the note, or acceptor of the bill, could prove that it came to the liands of the holder after due. If, in the present case, the plaintiff recovers against the defendant, and subsequently a suit is commenced on the note by another, claiming to l)e a hoim fide holder, the recovery had would not alone be a sufficient defence. The defendant must also prove the fact, that it was due when it was lost by the present plaintiff". If he could not, then the subsequent holder would re- cover, on the ground that it did not appear he received the note after it became due. It is not necessary that the plaintiff" should have a remedy at law in such a case. His redress is ample in equity, where the defendant can be protected against subsequent liability. I have not found any adjudged case on this precise point ; but, from the reason of the thing, and the analogy to cases where notes have been lost after they were indorsed, I think the action cannot be sustained, without proving that the note was destroyed. Judgment affirmed. A different rule from that declared in the above case prevails in several States. See Fales v. Russell, infra. Elisha F. Fales et ah v. William O. Russell et al. (16 Pickering, 315. Supreme Court of Massachusetts, March, 1835.) Actio7i at law mainlainable on lost negotiable jHijKr. — Wliere a negotiable promissory note, indorsed in blank, was stolen from the holder before it was due, Juld, that he might recover the amount from the maker, in an action at law, on filing a bond sufficient for the maker's indemnification. Assumpsit upon two joint and several promissory notes, dated June 29, 1882, made by the defendants, and payable to E. W. Calef or order, in nine months from the date, one note being for 684 LOST BILLS AND NOTES.' the sum of $313.56, and the otlier, for the sum of $300. The declaration contained the general counts ; but there tvas no count declaring upon the notes. By an agreed stjgjeraent of facts it appeared, that the notes, which had been indorsed in blank by the payee, were on Septem- ber 10, 1832, stolen fgom the plaintiffs, who were then the iiolders, that the notes had never been paid or heard of since the theft, to the knowledge either of the plaintiffs or of the defendants ; that immediately after the notes were stolen, the plaintiffs informed the defendants of the fact, requesting them not to pay the notes to any person but to the plaintiffs themselves, or to their order in writing, separate from the notes ; that notice of the theft was given imme- diately in the newspapers, cautioning all persons against buying them ; and that the plaintiffs had offered to indemnify the defend- ants against any loss, if they would pay to them the amount due upon the notes. Upon these facts, the Court were to enter up such judgment for the plaintiffs or for the defendants, as should be conformable to the law of the case, and to order a default or a nonsuit, according as they should determine that the plaintiffs had sustained or failed to sustain their action. Shaw, C. J. There is little doubt, that according to the law as now administered in England and New York, it would be held upon the facts of this case, that the plaintiffs could not recover. But we think it would be on the ground taken originally, that in such cases it is much better for parties to go into chancery, where all the circumstances of the loss of the securities can be better inves- tigated, and the suitable indemnities for the defendants better esti- mated and adjusted ; and having been so held in many instances, the rule has become established by precedent, that an action at law will not lie. If this rule is adopted for convenience, and is not founded upon principles which exclude the action of a court of law, then it will not apply where there is no such remedy in chan- cery. Considering the question in this view, we think that with- out usurping the powers of a Court of Equity, and upon well- established common-law principles, we can afford the plaintiffs a remedy. The objection to the plaintiffs' recovery is, that they cannot produce and file the notes. Is this conclusion correct ? The de- FALES V. RUSSELL. 685 livery up of notes and other negotialjlc securities, upon payment of them, and 'the filing of them in court, on obtaining judgment, are not conditions [)recedent of the right to recover in either case. Tliat riglit depends upon other grounds. Th^ delivery up of the note in tiie one case, and the filing it in the cither, is only that rea- sonable acquittance and discharge, adapted «to the nature of the obligation performed, which any man, upon making satisfaction of a demand against him, is reasonaldy entitled to have. Inasmuch as it is payable to any holder, the actual surrender of the security upon payment is the proper and suitable acquittance. I have said that the right to receive depends upon other grounds ; to wit, that the note was made by the defendants, payable to the payee or order, that it was duly indorsed by him to the plaintiff, who became the bo7ia fide holder. All these must appear, and in general the presence of the note is necessary to enaljle the ]ilain- tiff to prove them ; but they may be proved without producing the note, and in the present case they are admitted. The plaintiffs having proved title in themselves, by a well-known rule of evi- dence, such title will be presumed to continue, till a transfer, re- lease, or satisfaction is shown. Upon a case like tliis, where a note has been lost after it was due, it has often been held, that a plaintiff is entitled to recover without the note. Jones v. Fales, 5 Mass. 101. But the title is in fact the same ; the only difference is, that the defendants are exposed to greater risk in the one case than in the other, because, if lost before it was due, there is a pos- sibility that it may have been negotiated to a bona fide holder in the ordinary and regular course of business before it was due. But as this does not affect the plaintiff's title or his actual and real interest in the debt and in the security according to its tenor, but only leaves the defendant exposed to a hazard which, accord- ing to mercantile law and the usage of trade, it is not understood that he is to take, we think he ought to be protected ; and this Court, as a court of law holding a just regulating power over the judgments and proceedings before them, have authority to jire- scribe an equivalent security to the defendants, by a sufficient and reasonable indemnity. To illustrate this view, let us consider a suggestion made by one of the Court, at the argument, in the form of a query, whether it would not be competent for the Court, in the exercise of a just judicial discretion, to continue this action from term to term, until 686 ' LOST BILLS AND NOTES. the statute of limitations should become a bar to any action by any ■ other holder. It cannot admit of any reasc^iable doubt, that this would be within the power of the Court ; and cases may be imag- ined in which this would be a proper remedy. But what would this imply ? Not that the production of the note is a condition precedent to the right of recovery ; because at the end of six years the plaintiff must recover upon the legal right of action which he had when the suit was commenced, or not at all. But it must be on the ground that the lapse of time and the statute of limitations, would afford to the defendants, on rendering judg- ment against them, a security against the reappearance of the note, equivalent to that usually obtained by the production and surren- der of the note. Still it would not be the same identical security, which the general rule of law requires. If that can be done, it seems difficult to conceive any good legal reason why other ample and equivalent security may not be substituted. Considering it in this view, that the production of the note is not essential to the plaintiff's title, but only to the defendant's reasonable security, it appears to us that the objection that a court of law has no jurisdiction to order, or to judge of the sufficiency of an indemnity, is rather ideal tlian solid, and ought not to prevail when the consequence would l)e an entire failure of justice. On the whole, the Court are of opinion, that on filing a sufficient bond of indemnity, with sureties, the plaintiffs will be entitled to recover. Defendants defaulted. The cases which have considered the subject of the two preceding and con- flicting decisions are very numerous, and about equally balanced. They are col- lected in 2 Parsons, Notes and Bills, 297, 298, notes A-, I, and m. An intermediate rule is adopted in Ohio, and supported with strong reasons. The rule in that State is that an action at law will lie if the paper was lost after maturity ; but if lost before maturity, the remedy must be in chancery. Thayer V. King, 15 Ohio, 242. Read, J., in pronouncing the opinion of the Court, said : " This case was reserved for the determination of the single question, whether a recovery could be had upon lost negotiable paper, at law, or whether the remedy in such case was in equity. " Upon this question, there is a conflict of decisions, both in England and the United States. In the decisions which have been made, diflerent and various reasons have been assigned in support of either side ; but from a careful review of the authorities, and a full comprehension of the principles of law controlling the transfer and fixing the right of holders of negotiable paper, it would seem that the only difiiculty in the case grows out of the question of indemnity. AH FALES V. RUSSELL. 687 other matters, and the rights of i)arties, can l>e governed, controlled, and modi- fied in a court oi' law as well as eiiuitv. "It is anecesftary and fundamental principle of negotiable paper, that the inno- cent holder receiving it before due, is entitled to its |ik>ceed8. Tliis is the essence and life of its negotiability. Hence, if the maker should be compelled to pay in case of negotiable paper lost before due, such payment would be "no bar to the recovery in the hands of an innocent holder, who had received it Ijefore due ; and in such case a double recovery might be had upon the same instrument. But if former payment or recovery would l)e a complete bar to any subsetjuent papnent or recovery, the reason of the rule ceases, and the objection to a recov- ery by the owner, no longer exists.- Hence, if the circumstances of the case are such that the negotialjle paper can never be produced for payment a second time, or if produced would permit no right of recovery in tlie hands of the holder, no indemnity in such case being re(|uired to guard against a second payment, re- covery may be had in a court of law. Thus, if the instrument be totally de- stroyed, or if it pass into the hands of the holder, charged with all the e<^uities •which exist against the original holder, the action may be at law. Now, it is a well-recognized principle, that negotiable paper received after it is due, is charged with all the equities existing between the original parties. So, if pay- ment be made to the original holder, ami a recovery be had by him, it would constitute a complete bar to another action brought by any person who should receive it after due. But if it be lost before due, and the original holder com- mence suit, there is a possibility that the paper may be outstanding in the hands of an innocent holder — upon which recovery could be had ; and hence the law will not permit, in such case, a recovery to be had until complete indemnity is furnished against such possibility. Now a court of law has not the power to compel this indemnity ; and hence is forbidden to give judgment or to entertain jurisdiction of the case. A court of law proceeds upon fixed principles, and if the party is entitled to judgment, he is entitled to execution without limit or restraint. But a court of equity being called upon to give its aid, will guard the rights of all parties, and will not permit a recovery until the party seeking it will guard the opposite party from a danger which exists by the misfortune of the very person seeking its aid. It will say, 'You have been unfortunate in the loss of your instrument ; we will relieve you from this dilliculty, provided you will fully guard the other party from all harm which may, by possibility, result from what, except from our aid, would be a misfortune to you.' It has the power to determine the nature of the indemnity and the security. Hence, in those cases in which indenniity Is to be given, relief must be had in ecjuity. A court of law, it is true, might do the same thing, if it had the power; and there is no direct impossibility to prevent its having such powers ; yet, as such is not the case in the distribution of law and equity jurisdiction, as the systems now stand, relief can only be liad in eijuity. " In the case, however, before the Court, no such difliculty exists, as those notes were lost after they were due. " Judgmmt for jilaiiUiJ's.^^ 688 LOST BILLS AND NOTES. * *f Pete^ Chewning v. Louisa Singleton. (2 Hill, Chancery, 371. Court of Appeals of South Carolina, December, 1835.) Remedy in eqniti/. — A party who has lost a note payable to bearer, altliough past due, may come into equity for relief. The ground of jurisdiction is not only that he may give indemnity to the defendant, but th-at he must swear to the loss. This jdIU was filed against the defendant, as executrix and sole legatee of Mrs. Anne Chewning, alleging that the testatrix, in her lifetime, for a valuable consideration, gave the plaintiff her prom- issory note for $650, payable to him or bearer, at ten days after date, and dated in September, 1832. That the note was seen by divers persons in his possession, and that in October, 1832, (after the testator's death), he lost his pocket-book and in it the nT3te. That he has (through her agent) given the defendant notice of the note and its loss, and demanded payment, which has been refused. The bill prays that defendant may answer its allegations, and that the payment of the amount of the note with interest may be decreed, on such terms of indemnity to the defendant against any future liability, as the Court may think proper to impose, and for general relief. , The bill was sworn to loth January, 183.4, and filed the same day. ^ The answer of the defendant denies any knowledge of her tes- tatrix's indebtedness to the plaintiff, or of the note, or of any transaction by which such a debt could have been created. That shortly before the testatrix's death, she heard her say she owed the plaintiff nothing ; and the defendant does not believe that any such note ever existed. She submits that the plaintiff has an adeqnate remedy, if any, at law. Johnson, Chancellor. This case was heard upon bill and an- swer. A motion was made to dismiss the bill for want of equity. 'The motion is granted and the bill dismissed with costs. The note alleged to be lost, and which the bill seeks to set up was, by the plaintiff's own showing, past due when it was lost; and thus the necessity for indemnity no longer exists. The bill is not a bill for discovery ; and if it was, all evidence on the plaintiff's part is CHEWNING V. SINGLETON. ^89 excluded, inasmuch as the answer gives no discovery, but denies that such a note ever qxisted ; and the plaintilf has adequate rem- edy at law. Tlje plaintiff appealed, and now moved to reverse the decree on the following grounds : — 1. That tiic chancellor erred in supposing that the necessity for indemnity is the ground of equity jurisdiction ; whereas it is sub- mitted that the indemnity is the condition which the Court an- nexes ; and that the fact that no necessity exists to require the plaintiff to give it, cannot affect his claim to relief. 2. That there is no adequate relief at law, and chancery will afford it. Harper, J. My views of this case may be gathered from what has been said by me in the case of Davis and Tarleton v. Benbow, 2 Bail.- 427. I have again looked into the authorities on the subject, and find no reason to change any of the views there expressed. It is not questioned but that in some cases a party may come into equity to be relieved, when a bill or note has been lost or de- stroyed. The cases of Walmsley v. Cliild, 1 Ves. Sr. 341 ; Ex parte Grecnway, G Ves. 812, and many others, are sufficient to establish this. The chancellor seems to have decided chiefly on the authority of Mossop v. Eadon, 16 Yes. 430. The master of the rolls, in that case, went upon the ground that the only purpose of com- ing into equity is to offer an indemnity, and as I jjather from the argument in the case, it appeared that the note was not payable to order, so that it could not have been negotiated, and as no action could be maintained upon it by any one into whose hands it might come, indemnity was unnecessary. He therefore dismissed the bill. So the chancellor supposes that as the note in this case, as appears from the plaintiff's own statement was lost after it was due, there was no need of indemnity. Hut with deference, this seems to me to be founded in misconception. Tiie plaintiff does indeed state that the note was lost after due ; but who shall assure the defendant of the truth of that statement 'i Plaintiff states that he has no proof of the loss. It is for defendant's benefit that the party is required to come into equity. If an action had been brought at law, she might well have said to the plaintilf, '' How can you assure me that you yourself have not negotiated the note before it became due, and that it may not now be in the iiands of 41 690 LOST BILLS AND NOTES. a ^l>o7ia fide holder ? " The right to indemnity would have been apparent. But the case of Mossop i\ Eadon, seems to have been overruled by subsequent decisions. In the case of Hansard v. Robinson, 7 Barn. & C. 00, the bill was lost after due. Lord Tenterden, speak- ing of the defendant, says : " But how is he to be assured of the loss or destruction of the bill ? Is he to rely on the assertion of the holder, or to defend the action at the peril of costs ? And if the bill should afterwards appear, and a suit be brought against him by another, a fact not absolutely improbable in the case of a lost bill, is he to seek for the witnesses to prove the loss and to prove tliat the new plaintiff obtained it after it became due ? Has the holder the right, by his own negligence or misfortune, to cast the burden upon the acceptor, even for not discharging the bill on the day it became due ? We think that the custom of merchants does not authorize us to say that this is the law. Is the holder, then, without remedy ? Not wholly so. He may tender sufficient indemnity, and if it be refused he may enforce payment thereupon in a court of equity." In Macartney v. Graham, 2 Simons, 285, the bill had been indorsed specially to the plaintiff, so that no other holder could maintain a suit upon it, and it was argued, on the authority of Mossop and Eadon, that as- no indemnity was needed, the remedy was at law. But the Court said that Mossop V. Eadon had been overruled by Hansard and Robinson. Sir William Grant, in Mossop v. Eadon seems to have overlooked a ground of equity on which the greatest stress is laid by Lord Eldon — a still higher authority. This is the necessity imposed on the party coming into equity to make affidavit of the loss. In Ex parte Greenway, speaking of the decision of the court of law, in Read v. Brookman, 3 T. R, 151, that in case of a lost deed, profert may be dispensed with, he says: "It is questionable whether sufficient attention was paid to the consideration, that in equity the conscience is ransacked, and the party alleging that the instrument is lost, must make an affidavit that it is not in his possession or power." And in Bromley v. Holland, 7 Yes. 20, " The protection this Court gives in that case, is most essential to the iiiterest of justice. Here the party pledges his conscience by his oath that the instrument is lost." East India Company v. Boddam, 9 Ves. 464, was a case of a lost bond. Lord Eldon says, that " if the bond was by a single obligee, the party sued in CHEWNING V. SINGLETON. 691 this Court, stating in his bill that tho.bond was lost, and accc^n- panying his l)ill with an affidavit that it was lost, not as evidence of tlie loss, but as a security for the propriety of jurisdiction." Instances are put in the cases of frauds which might be practised by the wilful suppression or destruction of the instrument, similar to what is suggested in Davis and Tarlcton v. Benbow. It may be observed that this apj)lies still more strongly in the case of a lost bill or note than in that of a bond or deed, as, in addition to the danger of fraudulent suppression or destruction, there is addi- tional danger of tiie instrument's having been fraudulently nego- tiated. There is no doubt, however, but that it was intended to apply in all similar cases. Such is the view taken by Fonblanque in his notes to tiic Treatise of Equity. 1 Fonb. 15, IG, 17, n. /, and by Lord Bedesdale, Mitf. PL 105, 106. It is ordered and decreed that the chancellor's decree be re- versed, and the cause remanded for hearing. Johnson, J., and 0''Neall, J., concurred. If the note or bill lost was negotiable but not negotiated, no offer of indemnity need be made as a ground of equity jurisdiction. A prayer for discovery is sufficient. Hopkins v. Adams, 20 Yt. 407. The facts in this case will sufficiently appear in the opinion of the Court pronounced by Redfield, J. This is a bill to obtain relief, as well as discovery, in regard to a negotiable promissory note, alleged to have been lost when overdue, and not indorsed ; annexing to the bill an affidavit of loss, but no indemnity being tendered to the defendants, either before or at the time of bringing the bill, the plaintiH insisting all the time that none is necessary, though he offi^red a release of the note. The defendants have answered the bill, testimony has been taken, the case has been heard in the court of chancery, and a decree entered for the orator, requiring him to give an indemnity, and to pay the defendants' costs. The case has been argued in this Court mainly, on the part of defendants, upon the ground that the jurisdiction of the court of chancery, in cases like the pres- ent, depends exclusively upon the offer in the bill, of an indemnity to the de- fendants, and that, while the orator resists this, he is not entitled to a decree. Mr. Justice Story, (1 Eq. Jur. p. 103), seems to lay down the rule in the very terms contended for by the defendants' counsel. *' In such a case (that of a lost instrument), a court of equity will entertain a bill for relief and payment, upon an offer in the bill to give a proper indemnity, under the direc- tion of the Court, an not icithout.^'' And he farther says, that " siicii an offer founds a just jurisdiction ; "' citing for the two last propositions, Walmsley r. Child, 1 Yes. Sr. 342, 345 ; Teresy v. Gorey,- Finch, 301. He also cites Glynn r. Bank of England, 2 Yes. Sr. 38; Mossop »» Eadon, IG Yes. 430, 434; Bromley v. Holland, 7 Yes. 19-21 ; Davies v. Dodd, 4 Trice, 176. Upon the slightest examination of these cases, it is apparent that they estab- lish no such proposition* as that cited from the text. All, except the first, seem 692 LOST BILLS AND NOTES. to have no bearing whatever upon the point. Teresy v. Gorey, as reported by Lord Ilardwiclce, in Walmsley v. Child, is only the case of a bill of exchange properly negotiated, and where, by the custom of merchants, no holder is enti- tled to require payment, until he surrenders the bill ; and if it be lost, he cannot do this, and of course can maintain no action whatever at law. So that the only remedy in such case is in equity, and an indemnity should, no doubt, be required in all cases of that character. This is precisely the rule laid down in Hansard r. Robinson, 7 Barn. & C. 901 [14 E. G. L. 20], where it was held, that upon such a bill no action at law could be maintained, although the bill was lost when overdue. The same rule has been adopted in this State. Lazell v. Lazell, 12 Vt. 443. In Glynn v. The Bank of England, Lord Ilardwicke does make an incidental remark to the effect, that one is not ordinarily entitled to come into a court of equity for relief on a lost note, but that he may come for a discovery, and then must seek his relief at law. But the case is decided altogether upon the ground of defect of proof, that the testator had the notes in his possession at the time of his decease (the bill being for the benefit of the estate) . Mossop V. Eadon is the case of a bill cut in halves, and one part only lost. In such a case, I understand, there has never been any difficulty in recovering at law, even where the bill or note is strictly negotiable, and had been negotiated.' This case was tried by the master of the rolls, who seemed to suppose, as almost all the elementary writers upon the subject do, that Walmsley v. Child had settled the law, that the court of chancery had no jurisdiction in the oase of a lost note to grant relief, except where an indemnity was necessary. Bromley v. Holland is upon a totally different subject ; that is, whether a court of equity will sustain a bill to decree the surrender of an impeached bill or note, to be cancelled. The decision is in favor of the jurisdiction. The subject of equity jurisdiction in regard to lost instruments is introduced in the opinion arguendo, merely to illus- trate the subject in hand. The case of Davies v. Dodd is a mere dictum, at most. In that case the only indemnity tendered was the bond of the plaintiff, and he confessedly irresponsible. Still, the jurisdiction was entertained, and the case referred to the deputy remembrancer to determine upon the sufficiency of the indemnity offered, and if any other were requisite, what was sufficient. .... And first, in regard to the case of Walmsley v. Child. Mr. Justice Story says (Eq. Jur. p. 100, in note), " The passage is singularly obscure, and of diffi- cult interpretation; and I have not been able to satisfy my mind, what Lord nardicicJce's real doctrine was, or what were the three cases to which he alluded." The three cases of Lord Hardickke are very apparent. 1. "If the deed, or instrument, concede the title of land, and possession prayed to be estab- lished." 2. " Another case is of a personal demand, where loss of a bond, a bill in equity on that loss, to be paid the demand." 3. " Another case, in which you may come into this Court on a loss, is, to pray satisfaction and payment of it upon terms of giving security." But this case is put mainly upon the ground of the want of an affidavit of the loss accompanying the bill. Lord Hardickke more than once says that such an affidavit is indispensable to the jurisdiction. The same course of reasoning, is pursued in Whitefield v. Fausset, 1 Ves. 388. In Walmsley v. Child there was neither an affidavit of loss, nor offer of indem- nity ; but the affidavit is no doubt indispensable. Without that, the whole pro- ceeding may be a mere contrivance to change the jurisdistion, while the plaintiflF 1 See Bank of the United States v. Sill, jwst, 699. CHEWNING V. SINGLETON. 693 all the while has his note in his pocket. With this safeguard, there seems to me to be no difficulty in maintaining the jurisdiction, upon grounds well recognized in courts of equity. It is obvious, there will be two classes of cases, where a court of ofjuity will be|Called upon to interfere in the case of lost instruments; perhaps tiiree. 1. The holder or loser of such instruments will ai)ply fur a decree of payment. 2. If the loser choose to proceed at law, the maker may apply to a court of equity to decree him a suitable indemnity. 3. The loser may apply to a court of equity for a discovery, merely, in aid of a court of law. In regard to tiie first case, so far as relates to promissory notes not negotia- ble, or not pegotiated, where the loser may sue at law, the principal ground of the jurisdiction must be tiie necessity of a discovery and llie accident, by which that which the parties have constituted the evidence of their contract, has become incapable of performing its destined office. A court of equity will grant relief in all cases of accident or mistake where one party has thereby put it out o his power to obtain what it was intended he should enjoy. So, too, according to the English equity practice before the time of Lord Thurlow, and which has been adopted as the standing rule of practice in this country, the plaintiff may, in every case of a bill for discovery, pray relief if he choose ; and if, upon ob- taining the discovery, the case seems to be one, not specially requiring to be heard in a court of law, for the purpose of a jury trial, or some other, then the court of equity will, in their discretion, proceed and determine the case. In practice, in this country, the case is almost uniformly determined in the court of equity, when once carried there, even for a discovery. And for this purpose, all that seems necessary, to found a jurisdiction for relief, is a bill for discov- ery, alleging a defect of proof at law, by reason of the loss of the note, with a prayer for relief, and an affidavit of the loss. The offer of indemnity seems to be a matter, in which the defendant is solely interested, and not to form any just basis of an equity jurisdiction on the part of the plaintiff, unless it is wliolly to oust the legal forum, — which it has not yet done, except in the case of paper negotiated. The indemnity is a matter in which it seems to us safe to suffer the defendant to move. 2. If the bill is brought by the defendant to restrain the loser of the note from proceeding at law until he give the maker indemnity, then, indeed, the necessity for indemnity is the sole ground of the jurisdiction. The case will, in this view, turn exclusively upon the cpiestion of the defendants' being entitled to indemnity. If that point is made out, the case will be finished in the court of equity ; if not, the bill will be dismissed. But that the plaintiff's case should be made to rest, for its jurisdiction, upon offering an indemnity to the defendant, which he may or may not be entitled to, is certainly not consistent with our views of sound chancery law. 3. If the party seek a discovery merely, he is not required to make affidavit of the loss. And when he seeks relief also, and omits to make allidavit of the loss upon filing tiie bill, he may, no doubt, amend in this particular; and if the defendant omit to demur, but answer admitting the loss, the want of an affidavit is no ground of dismissing the bill. Findlay v. Hinde, 1 Peters, 241-244; Livingston r. Livingston, 4 Johns. Ch. 294; 1 Dan. Ch. Pr. 449, 450; and notes, Perkins' Ed. 694 LOST BILLS AND NOTES. But in the present case there is an aflidavit ; and we think there is not now, the claim being barred by the statute of limitations, if there ever was, any neces- sity of an indemnity to the defendant. The decree of the chancellor must be reversed, and a decree for the plaintifi" without indemnity and without costs. See Blade r. Noland, 12 Wend. 173; Des Arts v. Leggett, 16 N. Y. (2 Smith) 582; s. c, 5 Duer, 156. Samuel B. Tuttle v. Lafayette F. Standish and Trustees. (4 Allen, 481. Supreme Court of Massachusetts, September, 1862.) Action at law. Indemnity. — The owner of a lost note cannot maintain an action at law against an indorser, in a case where a bond to indemnify tlie defendant against being called on a second time to pay the note would not afford to him an adequate protection. Contract against the indorser of a lost note of $500, signed by one Pritchard and given by him as a business note to the defend- ant, to whose order it was payable, and by whom it was indorsed to one Newell, who transferred it to the plaintiff before its maturity. At the trial in the Superior Court, before 3Iorton, J., various ques- tions arose which are not now material. The judge directed a verdict to be returned for the plaintiff, and reported the case for the determination of this Court. Hoar, J. The principles upon which the right to recover on a lost note depends, have been fully considered in a case which came before us since this case was argued. Tower v. Appleton Bank, 3 Allen, 387.^ The general rule is, that where the writing is mere- ly the evidence of a contract, the loss or destruction of the writing does not destroy the cause of action, but renders secondary evidence admissible. But where, from the nature of the contract, the party answerable upon it is entitled to have the writing deliv- ered up to him, for his security, or to enable him to enforce his rights under it, when he is called upon to perform it, as in the case of a negotiable bill or note, if it is lost or destroyed, an action cannot be maintained upon it, unless his rights can be fully secured by a bond of indemnity, or other sufficient security. In the case of the maker of a negotiable promissory note payable to bearer or 1 Ante, 674. TDTTLE V. STANDISH. G95 indorsed in blank, the maker being the party ultimately chargeable, the only hazard to which he is exposed, is that he may be called upon a second time to pay it to a, bona fide holder ; ^nd ajrahist this risk a bond of indemnity seems to afford an adequate protection. The acceptor of a bill of exchange is in a similar position, except that he may want the bill as a voucher in his settlement with the drawer. But even in these cases, the settled doctrine in England and in New York has Ijecn, that the only remedy was in equity, if the note or bill was lost ; their courts considering that a court of law had no authority to order an indemnity to a defendant, as a condi- tion of the plaintiff's right to recover. This doctrine has been recently modified by statutory provisions. In the absence of general equity powers, it was early held in this Commonwealth that the owner of a lost note might recover against the maker, upon giving a bond of indemnity, and that a court of law might require such a bond to be given. Jones v. Fales, 5 Mass. lOl ; Fales v. Russell, 16 Pick. 315 ;i Almy v. Reed, 10 Cush. 421. But all the considerations against allowing such a recovery apply more forcil)ly to the case where payment is de- manded of an indorser ; for he is entitled to the possession of the note, in order to have his recourse over against the maker. Story, Notes, § 108. And see Smith v. Rockwell, 2 Hill (N. Y.), 482.2 And it is apparent that a mere bond of indemnity against being compelled to make a second payment is usually no sufficient sub- stitute to the indorser for the production and delivery of the note. In pursuing his remedy over, he needs the instrument as the evi- dence of his own right. When he has received it from the indor- see by payment, it still retains its negotiable quality. He may wish to dispose of it to a purchaser. If he may do this by an indorsement on a coi)y, when the original is lost, how is he to transfer or preserve the evidence necessary to make it available ? He may have occasion to transmit it for collection to distant places, and the mass of evidence to supply its place is by no means equally transmissible, or ecjually permanent. If he sues the maker, he is not only put to additional trouble and inconvenience in establishing his claim, but is obliged in his turn to furnish a bond of indemnity. There are many cases in which it is difficult to see how a complete equivalent for all that he loses in the loss of the paper can be secured to him. 1 Ante, 683. 2 Cited in full, p. G97. 696 • LOST BILLS AND NOTES. It is very evident that if one is bound by contract to furnish a negotiable note to another, it would be no legal or equitable per- formance of th^t obligation to furnish evidence that the note has been lost or destroyed, and to assign the mere right of property in the contract of which the missing paper was the evidence. There was no case cited at the argument in which there had been a recovery at law against an indorser on a lost note. In Jones V. Fales, 5 Mass. 101, the action was upon several notes ; and a part of them were indorsed by the defendant, and on the others he was promisor. The Court in their opinion make no dis- tinction as to his liability in these different capacities. But it is to be observed of that case, 1. Tliat no point respecting such a distinction was made or presented to the Court ; 2. That the notes were lost from the files of the Court, so that one party was no more responsible for the loss than the other ; and 3. That the notes were found before any judgment was rendered. It is not therefore an authority of much weight upon the question now be- fore us. In Freeman v. Boynton, 7 Mass. 483, 486, it was said by Mr. Justice Parker that a demand on the maker upon a lost note would be sufficient to charge the indorser, if accompanied with a tender of sufficient indemnity ; whicli would seem to imply that a claim upon it might be maintained against the indorser; but the point was not decided. In Renner v. Bank of Columbia, 9 Wheat. 581, a judgment was recovered against an indorser upon a lost note ; but no point was made of any distinction between his case and that of a promisor. In that case, also, it appeared that there had been a previous suit against the maker, in which the note had been used. Considering the point an open one in this Commonwealth, we do not mean to say that the reasoning of the Court in Fales v. Russell is not, in many cases, as applicable to the case of an indorser as of a promisor. If, for example, the note were proved to have been made for the accommodation of the indorser, a simple bond of indemnity might be a sufficient protection to the defendant. If the holder had previously recovered a judgment against the maker, an assignment of the judgment, with such a bond, might secure his rights substantially. And these securities might perhaps be as well afforded in a suit at law, as a condition of the issuing of an execution, as in a suit in equity. But with the full equity juris- diction now existing in Massachusetts, it cannot be necessary to TUTTLR V. STANDISH. " 697 attempt to extend the functions of a court of law to any doubtful cases, for which Cijuity atTords a more apjircjpriate remedy. Tliat jurisdiction allows so much greater latitude in adapting its pro- cesses and decrees to the particular circumstaiiTies of each case, that, with its power of emln-acing and adjusting in one suit the rights and claims of all parties in interest, it seems to furnish the proper tribunal for the prosecution of a claim like that which we are now considering. A simple bond of indemnity would not be an adequate protection to the defendant ; and it would he a novel, and as it seems to us, an impracticalde course, to attempt to devise and impose* an obligation on the plaintiff to do all the affirmative and jiositivc acts which the assertion of the de- fendant's rights against the maker of the note might hereafter require. Whether even a court of equity could give relief, might depend upon circumstances not fully develoi)ed. The objection to the plaintiff's recovery not being the want of an original cause of action, nor that the cause of action has been extinguished, but that he is unable, perhaps by a misfortune only temporary, to produce the paper necessary as the foundation of a judgment, it seems to us that he should have the election to be- come nonsuit, if he shall be so advised ; otherwise the verdict to be set aside and judgment entered upon the report for the de- fendant. In Sinitli V. Rockwell, 2 Ilill, 482, it appeared that before the note sued on became due, it was lost or mislaid by the plaintifr; but demand was made at maturity, and notice of non-payment given, without any objection on account of the absence of the note. No bond of indemnity was offered to or requested by the maker or indorser, who Avere jointly sued in this action ; and it did not appear that cither knew of the loss till suit was commenced. The note was found before the trial, and produced and proved as in ordinary cases. Defend- ants moved for nonsuit on two grounds: 1. That no bond of indemnity was tendered to the defendants when the note was protested for non-payment. 2. That the plaintiffs were bound to prove that indemnity had been tendered to the defendants before suit. The motion was denied, and verdict and judgment given for the plaintiffs. Defendants appealed. The opinion of the Court above was pronounced by Nklson, C. J. If the makers had offered to pay the note in question, but declined on finding that it was lost, or if the indorser had proposed to take it up on receiving notice of protest, with a view of calling upon his principals, the question would have been different from the one now presented. The note being negotiable, neither was bound to make payment without receiving it as their 698 LOST BILLS AND NOTES. vouclier ; or upon tender of ample indemnity against any future liability. This has been deliberately settled, and for the most satisfactory reasons. Hansard v. Robinson, 7 Barn. & C. 90; Rowley v. Ball, 3 Cow. 303 ; ' Chitty. Bills, 423 ; Chitty, Jr., 53. An indemnity may be required in such cases, with a view to proceedings in a court of equity to compel payment notwithstanding the loss. Tender of indemnity should be made to both maker and indorser at the time of demand and notice ; because, as tlie former is not bound to make payment without the production of the note, or indenmity in case of loss, for that very reason payment ought not to be required of the latter till the proper steps have been taken to secure his immediate recourse against his principal. Besides, the indorser\s own liability upon the paper demands indemnity to himself, which should be given without delay, so that he may be in a situation to pay the demand at any time after notice, and look to the maker. Any prejudice he might suffer by reason of neglect on the part of the holder to give the necessary indemnity in either case, would no doubt afford ground for refusing to enforce payment against him on application to a court of equity for that purpose. The holder, therefore, should take the necessary steps, «with all reasonable diligence, to secure a speedy resort to that court in behalf of the surety ; as the conse- quences of delay would justly fall upon the holder, so far as the indorser or any other party standing in that relation upon the paper is concerned. The statute (2 Rev. Sts. 327, § 95, 96, 2d ed.) allows a remedy at law upon a lost negotiable note and bill of exchange, upon giving a bond to the adverse party in a penalty of double the amount of the note or bill, with two sureties to be approved by the court in which the action is pending, conditioned to indem- nify him, his heirs, and personal representatives against all claims on account of the same, and against all costs and expenses by reason thereof. This statute, however, only applies to the remedy, and in no way affects the rights or liabilities of the parties arising out of the proceedings to charge the drawer or indorser. These stand upon the principles of commercial law, the same as before the enactment ; and any defence that might before have been available at law, if the note had not been lost, or in equity, if lost, must be equally so since the statute. But the note in question does not fall either under the doctrine that calls for indemnity with a view to proceedings in equity, or under the above provisions of the statute. It is not a lost note, nor can it be so regarded by either maker or indorser. A copy was duly served with the declaration according to the statute, and the original produced on the trial ; and though it was supposed to have been lost by the bolder at the time it fell due, still it was duly protested and notice given in the ordinai-y way, without any exception being then taken by either party on account of the non-production at the time. Xor have their rights been at all affected one way or the other by the temporary loss of it. I am of opinion, therefore, that the judgment is right, and ought to be afBrmed. Judgment affirmed. 1 Ante, 680. BANK OF UNITED STATES V. SILL. 699 The Bank or the United States v. Sill. (5 Cdnnecticut, lOG. Supreme Court, July, 1823.) Commercial paper cut in halves. — If the bolder of a bank-bill voluntarily cut it in halves, for the sole purpose of transmitting it by mail with greater safety, this will not affect his rights upon such bill. To entitle him to recover on the production of but one of tiie parts, he must show that he is owner of the whole, and account for the absence of the other part. The parts of a divided Ijank-bill are not separately negotiable. Notice 1)1/ the payor of cut bills. — The board of directors of the Bank of the United States gave notice that the bank would not hold itself responsible upon any of its notes whicli should be voluntarily cut into parts, except on the production of all the parts ; wliich notice was published in all the newspai)ers of the city of Phyadel- phia, at whicli place said bank was located ; held, tliat the rigiits of a person in Connecticut, who subsequently became the owner of a note so cut into parts, and who was in possession of one of the parts, and who had never received the notice, were not affected by the same. This cau.se was tried before the Superior Court, October term, 1822, on the plea of non-assumpsit ; when the jury returned a special verdict, containing the following statement of facts. On the first of January, 1817, the defendants, at Philadelphia, made and issued their promissory note, commonly called a bank-bill, signed by ^Yilliflm Jones, their president, and countersigned by Jonathan Smith, their principal cashier, promising to pay to C. S. West, or bearer, on demand, one hundred dollars, of which the plaintiflf, on the fourth of December, 1819, became the lawful bearer. For the purpose of transmitting this bill safely, by mail, from Harpersfield, in the State of Ohio, to Lyme, it was divided, by Robert Harper, the agent of the plaintiff, who held it as the plaintiff's property ; and one-half was enclosed in a letter, directed to the plaintiff at Lyme, which was deposited in the post-office at Harpersfield, and was, on the tenth of January, 1820, received by the plaintiff. On the twelfth of February, 1820, Harper enclosed the remaining half of the same bill, in another letter, directed to the plaintiff at Lyme, and deposited it in the post-office at Harpersfield. It was forwarded by the postmaster at Harpersfield 700 LOST BILLS AND NOTES. but never arrived at the post-office in Lyme, nor was it ever received by tiie plaintiff, but was lost to him. On the fifteenth of May, 1820, the plaintiff, having in his possession the first- mentioned half, and being the lawful owner of ^aid bill, presented such half to the defendants, and demanded payment of the bill, according to its tenor, and gave notice and offered proof of the facts before stated. The defendants refused to pay the bill on any other terms than the production of both halves of it ; and have never paid it. On the twenty-fourth of August, 1819, the board of directors, at their legal and regular meeting, at their banking-house in Phila- delphia, passed the following order : " Bank of the United States, August 24, 1819, The frequent demands made upon the bank, for the payment of its notes, on production of half notes, alleging the loss of the corresponding halves, and the liability to imposition and fraudulent practices, to which it is exposed, by paying such claims ; from which, it is advised, it cannot be duly protected by any evidence, which may accompany such claims, or any security which may be given to indemnify it, render it necessary to re-* fuse payment of such demands. They grow out of the voluntary act of the party who separates the parts of the notes ; and he alone ought to bear the inconveniences and losses consequent upon the act. But as the practice, however improper, has been a common one, and the bank is unwilling, without apprising the public of its intention to withhold even a questionable claim upon it, these demands will be met as usual heretofore until the first of Novem- ber next. But notice is hereby given, that the Bank ©f the United States will not, after the first of November next, hold itself respon- sible upon any of its notes, which shall be voluntarily cut into parts, except on the production of all the parts. By order of the board of directors. Jonathan Smith, cashier." This notice the bank caused to be published in all the public newspapers printed in the city of Philadelphia, for three weeks successively, before the plaintiff's bill was divided ; but none of such papers were received by the plaintiff, or circulated in the town of Lyme. Upon these facts the Superior Court rendered judgment for the plaintiff to recover the amount of the bill, with interest from the time he demanded payment of the bank. The ^defendants there- upon brought the present writ of error. UNITED STATES BANK V. SILL. 701 Peters, J. The plaintiffs in error contend, 1. That the facts alleged and found are not a sufiicient foundation for the admission of secondary evidence to su)>i>ly the want of a jyrofcrt. 2. That the loss or destruction of the bill proceeded from the voluntary act of the defendant in error. 3. That the plaintiffs in error are not liable, in any event, after the pul)lication of their determination not to pay " cut notes," unless all the parts are produced. As to the first exception, it is a well-settled rule, that in declar- ing upon simple contracts a profcrt is not necessary ; and its omission is a mere matter of form, and can be taken advantage of only by a special demurrer. 1 Swift, Dig. 675 ; 1 Chitty, Plead. 349 ; Salisbury v. Williams, 2 Salk. 497. An excuse for the omission is therefore unnecessary. But an excuse has been alleged and found ; was this sufficient to introduce secondary evidence ? If it was improperly admitted, the remedy is a motion for a new trial. It is no ground for error. 8 Day, 29. But it is said that the bill is not lost or destroyed, but only mis- laid. In Beckford v. Jackson, 1 Esp. 3o7, the plaintiff counted ou a deed as " lost or mislaid," upon which issue was taken ; and the same was recognized by Lord Kenyon as warranted by law ; and by the Court for the correction of errors in New York, Livingstgjn v. Rogers, 1 Caincs Cas. in Error, 27, proof by a witness that the paper in question was thrown aside as useless, and that he believes it lost or destroyed, will be sufficient to let in secondary evidence. 1 Phil. Evid. 347, et seq. ; Rex v. Johnson, 7 East, GO ; Kensington v. Inglis ct al., 8 East, 273. 2. It is said that the loss or destruction of the bill proceeded from the voluntary act of the defendants. When the holder of a bill voluntarily and intentionally destroys it, or alters it fraudulently, he has no remedy ; but if he loses, cancels, alters, or destroys it, by accident or mistake, his rights are not affected; his evidence only is impaired. A bill or note is not a debt ; it is only primary evidence of a debt ; and when this is lost, impaired, or destroyed hotia Jidc, it may be supplied by secondary evidence. Was this bill divided and put into the post-office with a view to abandon or destroy it, or to defraud the bank? The verdict expressly finds that this was done solely for the purpose of transmitting it from Ohio to Connecticut by mail, the most usual, safe, and expeditious mode of remittance. The act was indeed voluntary ; but the intent was to preserve. 702 LOST BILLS AND NOTES. Where then is the evidence of voluntary, negligent, or fraudulent loss, or destruction of the bill ? But it is contended that the bank is equally liable to the bona fide holder of the other moiety. This would be true if the moiety of a bill were negotiable. Cases innumerable arc found in the books, where a party may recover, who has lost the primary evidence of his chxi m ; but not if it be negotiable, unless it be destroyed. 1 Phil.' Evid. 347, et seq., and cases.there cited. For the bo7ia fide receiver or holder of negotiable paper without notice is always safe. Miller v. Race, 1 Burr. 452, But a part of a bill is not negotiable ; and the holder cannot recover upon it without proving a title to all the parts. In the present case, the plaintiff is the possessor and bearer of one moiety, and proves himself the "owner of the other ; which the possessor or bearer of the last moiety can never do. He must have received it with notice that the other moiety belonged to somebody else ; and taken it, not on the credit of the bank, but of the bearer, to whom alone he can look for indemnity. Of all the authorities which have been cited, by the plaintiffs' counsel, one only is in point ; for the case oi«Master et al. v. Miller, 4 T. R. 320, so much relied on, has no beaming on the case. It was an action by the indorsees against the acceptor of a bill, the date of which the jury found had been altered after acceptance, while in the hands of the payees, so as to accelerate the time of payment ; and the Court, very properly, adjudged it void. But the case of Mayor et al. v. Johnson et al., 3 Camp. 324, is directly in point. In that case, judgment was rendered for the defendant, by Lord Mlenborough, on the ground that the last half of a bank- bill was negotiable, and would enable a bona fide holder to recover of the bank ; which, with all due deference to an illustrious judge, I am bound to say, is not law. As well might a vignette, or any other fragment torn from a bill, be considered negotiable. The only apology I can make for his lordship is, that he was on the circuit, where business is done in haste, without time and means for investigation and consideration, and where the greatest judges frequently err. " Quandoque bonus dormitat Homerus.^^ 3. The last exception is as extraordinary as it is novel, and is probably the first instance of a debtor's undertaking to prescribe terms to his creditors. It is a sufficient answer to this objection, that their notice never came to the knowledge of the defendant in error, though it was published in the Philadelphia newspapers, at the distance of two hundred miles. BANK OF UNITED STATES V. SILL. 703 All the questions presented by this record have been repeatedly decided by American courts ; and the case of Mayor et al. v. John- son et al. has been expressly overruled. In Patton v. State Bank, and Idem # Bank of South Carolina, on a similar state of facts, the Constitutional Court of South Carolina decided that the cut- ting or severing of a bank-bill destroyed its negotiability ; that the bona fide holder of a part, who owns the whole, can enforce pay- ment ; and that the bearer of a part only has no claim on the bank, because he cannot prove title to all the parts, and he receives it with his eyes open. 2 Nott & McCord, 404. In Armot v. Union Bank, 1(3 Niles Reg. 360, the Circuit Court for the District of Columl>ia decided that the half of a bank-bill is not negotiable ; and that the 'holder of a part, owning the whole, is entitled to recover. And in a more recent case, Martin v. Bank of the United States, Circuit Court, Penn. District, October, 1821, upon the pre- cise statement of facts contained in the verdict in question, Judges Washington and Peters rendered judgment for the plaintiff, not in the hurry of a nisi j/riits trial, as has been suggested in argu- ment, but upon a solemn review of all the cases on this subject, especially of a previous decision of their own, and of Patton v. The State Bank. With these decisions I entirely concur ; and am, therefore, of opinion that there is no error in the judgment com- plained of. Chapman, Brainard, and Bristol, JJ., were of the same opinion. Mosiiicr, C. J., declined giving any opinion. Judgment affirmed. In the case of Martin v. Bank of the United States, 4 Wash. 2.j3, cited in the opinion, supra, Mr. Justice Washington said : " I have carefully reviewed the decision of this Court in the case of Bullet r. The Bank of Pennsylvania. [2 Wash. 172] aided by the light shed upon the (juestion involved in that and in the present case by the able arguments of the counsel on each side. My opinion remains unchanged, and is indeed confirmed by the two American cases cited at the bar, and particularly by the luminous argument of Judge Drayton, in the case of Patton v. The State Bank. "The principles upon which this Court decided the case of Btdlvt r. The Bank of Pennsylvania were, that a bank, or any other promissory note, is the evidence of a debt due by the maker to the holder of it, and nothing more. It is also the highest species of evidence of such debt, and in fact the only proper evidence, if it be in the power of the owner of the note to produce it. But if it be lost or destroyed, or by fraud or accident has got into the possession of the maker, the 704 LOST BILLS AND NOTES. owner does not thereby lose Iiis debt, but the same continues to exist in all its rigor, iinafTet'ted by the accident wliioh lias deprived the owner of the means of proving it by the note itself. The debt still existing, the law, which always requires of a party that he should produce the best evidence of his right of which the nature of the thing is capable, permits him, where such better evidence is lost or destroyed, or not in his power, to give inferior evidence, by proving the contents of the lost paper ; and if this be satisfactorily made out, he is entitled to recover. " If tlie evidence be not lost, but is merely impaired by accident, or even by design, if such design be not to injure the maker or to cancel the debt, the princii)le of law is the same. Cutting a bank-note into two parts does not dis- charge the bank from the debt, of which the note was but the evidence, nor does it even impair the evidence itself, if, by uniting the parts, the contents of the entire note can be made out. If one of the parts should be lost or destroyed, the debt would be no more affected than if the entire parts had been lost or destroyed. The evidence is impaired, indeed, not by the act of cutting the note, bftt by the same accident which would have affected the entire note, had that been lost. In both cases, the owner must resort to secondary evidence, and is bound to prove that the note did once exist, that it is lost or destroyed, and that he is the true, bona fide owner of the debt. If one part oVily of the note be lost, the difficulty which the real owner of it has to encounter in proving his right to the debt is diminished. For if the entire note be lost, the owner of it at the time of the accident may not be entitled to the debt of which it was the evidence, at the time he demands payment, because the note, passing from hand to hand by bare delivery, may have been found, and have got into the possession of a bona fide holder. " But against the real owner of one-half of the note, there cannot possibly be an opposing right. The finder or robber of the other half part cannot assert a right to the debt, because he cannot prove that he came fairly to the possession of the evidence of it. I speak judicially, when I say that he cannot prove that fact, because he cannot do it without the aid of perjury, which the law does not presume, and can in no instance guard against it. If the lost half note gets fairly into the hands of a third person, he takes it with notice that there may be a better title in the possession of the other half, and consequently he looks for indenniity to the person from whom he received the half part, if it should turn out that he was not the real owner of the entire note. It is impossible, there- fore, that the bank can be legally called upon to pay the note twice ; and if the officers of the institution suffer themselves to be imposed upon by insufficient or false evidence, by which means the bank is brought into this predicament, she must abide the loss as being occasioned by an error of judgment in the offuers of the bank, or their want of due caution. The law cannot adapt its provisions to every possible case that may occur, and it therefore proceeds from nccesisity upon general principles applicable to all cases. " If upon any other ground than fraud, or perjury, the maker of the lost note may by possibility be twice charged, the law will not expose him to that risk by relieving the asserted owner of it ; not because there may be imposition in the case, or because the debt ought not to be paid ; but because the proof that the claimant is the real owner of the debt is defective ; for it by no means I5ANK OF UNITED STATES V. SILL. 705 follows, that, because the lost note did belong to him, it may not then be the property of some other person. A court of law therefore will, in such a case, dismiss the parties from a forum which has no means of securing the maker of the note against a double charge, and leave hira to one where those who ask of it etjuity will be compelled to do equity. The case then resolves itself very much into a question of jurisdiction. For it is quite clear tliat the real owner of a debt, the evidence of wliicli is lost, is entitled to supjily the want of the better evidence by that which is secondary, and this rule of evidence is the same in equity as at law. But whether the application for relief shall be in the one court or in the otlier, must depend upon the particular case, and its fitness for the one jurisdiction or the other. " Many diilieidties were stated by the defendants' counsel, to which the practice of cutting the notes and transmitting them by mail exposes banking institutions in identifying the part of a note when produced for payment. That these difTi- culties do in a measure exist must be admitted. But the bank knows that there can be but one owner of the note, and who that one is must be satisfactorily proved, to entitle him to payment of it. The bank has a just right to call for such proof; and if it be truly and faithfully given, there can be no risk in paying it. The possessor of the other half part of the note, as already observed, by whatever means he accpiired it, can never oblige the bank to pay the money over again to him. But after all, the rule of law does not rest upon this circumstance. The maker of the note is bound to pay to the person who proves himself to be the legal owner of it; and the difficulties complained of are not greater than those which attend most litigated questions. " It may not be improper here to observe, that the decision in the case of Bullet V. The Bank of Pennsylvania did not proceed upon any usage applicable to the case. Nohe such was stated in the case agreed or alluded to by the Court. " The next question is new : no case like it was cited at the bar, nor is there any within the recollection of the Court. It is" nevertheless within the range of some general principles of law, by the light of which I think it may be decided. "The question is, whether it was competent to the bank to notify the holders of her notes, that, in case they should be voluntarily cut into parts, she would not pay them, unless all tiie parts should be brought together? I mean to' treat the question as if the notice were brought home to the plaintiff. " It is unnecessary, in this case, to decide how far parties to a contract m.iy, by positive stipulations, change the rules of evidence applicable to that jjarticular contract. If they may do so, it must be upon tiie basis of an agreement assented to by both parties. But upon what principle is it that one party to a contract can prescribe terms to absolve himself from its obligations, without the assent of the other? I know of none. If the bank can dictate to the holders of her notes the condition stated in this notice, upon the performance of which, and not otherwise, slie would pay them, she might with ecpial authority prescribe any other condition, and declare in what case she would pay. and in what case she would not. The note is the evidence of an engagement by the bank to pay a certain sum of money to the bearer of it ; and the general law of the land declares that if such note, or a part of it, should be lost or destroyed, the debt shall nevertheless be paid, upon satisfactory proof being made of the ownership and 46 706 LOST BILLS AND NOTES. loss. Thus sanctioned, these notes pass from hand to hand ; and if the bank can nevertheless discharge her»elf from her obligation to pay them, unless both parts of the note be produced, or unless the note be produced entire (and there is no difference between the two cases), then the arbitrary declaration of the bank must be stronger than the law. This observation applies with equal force to every other species of contract, where one of the parties to it attempts to prescribe to the other the rules of evidence by which alone he will be gov- erned. " I thought the defendants' counsel seemed unwilling to contend that the bank could go the length of declaring that they would not pay a lost note, or one ■which had been torn or defaced by accident. But if the Court be correct in their opinion upon the first point, it follows that the law as much compels the bank to pay the owner of half a note, where the other half is lost, as to pay in the two cases supposed ; and if so, the right of the bank to prescribe terms in the one case, if admitted, would be equally valid in the others. There can be no difference, unless it be that in the one the notes were voluntarily cut, and in the other they were torn by accident. But the owner of the debt being also the owner of the paper which is the evidence of it, he had a legal right to cut it and by doing so, he could not impair the obligation, unless he intended to do so. In all these cases, the note is cut with a view to the security, not to the destruc- tion of the debt, by doubling the chances of preserving part of the evidence of it, in case the other part should be lost. The defendants do not forbid or con- demn the practice, even if it could for a moment be admitted that they had a right to do either. That is not the gravamen stated in the notice ; it is the production of one of the parts for payment, unaccompanied by the other part. That is the case in which the bank declares she will not pay, and in which the law pronounces she shall pay. " I am of opinion that judgment should be entered for the plaintifi'." Hinsdale v. Bank of Orange, 6 Wend. 378, was a similar case, in which Mr. Justice Marcy discusses, with much force, the effect of cutting the paper upon its negotiability. He said: "It has never been held, I believe, that the actual production of a bill or negotiable note is indispensably necessary to enable the holder, or him who last held it, to recover on it. If the owner of a bill loses it, he cannot recover ; but if he can prove that it is actually destroyed, he may. The reason of this distinction is very obvious. Although the note is lost to the rightful owner, it may yet be in the hands of a bona Jide holder, or in the hands of one claiming to be such, and the maker may be called on to pay it without having the means of showing that the holder is not entitled to payment ; but if the note be destroyed, such cannot be the case. Let us apply this principle to the present case. What is the effect of severing the bills ? They may not be absolutely annihilated, nor is their negotiability so effectually destroyed as to prevent its being restored ; for after they have been cut into two parts, the parts may be put together again, and thereby the bills become as valid and negotiable as they were before ; but there is no negotiability in a separate half of any one of the bills. The negotiability of these bills was destroyed, and so were the bills themselves by the severance of them, and presenting one-half of them to the defendant, for all the purposes for which a destruction of negotiable paper BANK OF UNITED STATES V. SILL. 707 is required to enable him who had the riglit to it to recover on it. Lorrl KlloihoroiKjli, 8 Caiiij). :i:j4, tliuu^lit an aelion could not be maintained hy the person who hail scivered a bill, and lost one-half of it ; because, if he could recover on the half not lost, the oilier half might fall into the hand;) of a honajide holder, who would also be entitled to recover, and the maker ought not to be held liable to two parties at the same time. This opinion must proceed upon the ground that the lost half of the bill was negotiable ; for if it was not, there could not be a hoiui J'tiJc holder of it. This appears to me to be a mistaken notion. That half of a bill by itself, and wholly separated from the other half, is not negotiable, is as clear to my mind as the proposition is certain that a part is not equal to the whole. When a bill ceases to exist as a whole, it ceases to have those properties which belong to it as an entirety, one of which is negotia- bility. If negotiability does not belong to a separate half of a bill or note, there can be no objection to sustaining this action on account of the non-production of the lost halves, that would not exist if those halves had been actually destroyed, because they can give to the finder or holder no more right to sustain an action against the defendants than he would have by possessing the ashes of them if they were burned. The owner of a lost negotiable note is entitled, j)ri>7ia facie, to recover against the maker by making proof of the instrument, and showing, as he would be enabled to do, that it was executed by the defendant. But such would not be the case with the holder of the lost half bills ; he would be obliged to show what has been required of the plaintiffs in this case ; that his possession of the half bills was rightful, and that he was the owner of the whole bills at the time they were cut into two parts ; or, in other words, that he owned them at the time of their destruction ; for I hold that the cutting them, under the cir- cumstances of this case, amounts to a destruction of them as negotiable paper. T would not be understood to assert that the cutting of the notes is an absolute destruction ; but, in legal effect, it is a destruction where such a disposition of either of the halves is made as to prevent their being brought together as whole notes, and thus the payment of them claimed of the makers. Such must certainly be the case where one part of them is surrendered to the makers, as was offered to be done in this instance. As to authorities, I would observe that I consider the decision of the Circuit Court of the United States for the District of Columbia, 16 Niles lleg. 360, entitled to as much respect as the niai pn»A- opinion of Lord Ellcnhorouyh. But it is said that the plaintiffs do not show that they were the owners of the bills when they were severed. On this point the evidence is not very full. It was proved that the agent of the plaintiffs, on the thirtieth of Sep- tember, enclosed the right-hand halves of the bills in question in a letter, which was directed and sent to Mr. llossiter at New Haven ; and two days after he, as such agent, enclosed and forwarded in like manner the left-hand halves, which have not since been heard of. It would seem to me like cavilling, to say that this evidence does not show that the bills, before they were severed, or both halves, afterwards and at the same time, were in the hands of the plaintiffs ; and if so, that fact is sufficient to entitle them to recover as holders. The fact of their being the owners at the time the bills were cut and mailed was left to the jury, and the evidence warranted their verdict. " Judgmmt for lAainliffs." 708 LOST BILLS AND NOTES. See also Commercial Bank v. Benedict, 18 B. Men. 307; Farmers' Bank of Virginia u. Reynolds, 4 Rand. 186; Allen v. State Bank, 1 Dev. & B. Eq. 1. But if a bank-note be mutilated in a material part, for the purpose of fraudulently imposing it upon the public, and defrauding the bank which issued it, it is no longer binding on the bank. Northern Bank v. Farmers' Bank, 18 B. Mon, 506. As to notice, see Matthews v. Poythress, 4 Ga. 287 ; Beltzhoover v. Black- stock, 3 Watts, 20 ; Lawson v. Weston, 4 Esp. 56 ; Rowley v. Home, 3 Bing. 2 ; Snow i\ Peacock, ib. 406 ; Beckwith v. Corrall, 2 Car. & P. 261 ; Strange v. Wignev, 4 .Moore & P. 470. AYMAR V. SHELDON. 709 LAW OF PLACE. B. AND I. Q. Aymar v. Sheldon and Others. (12 Wendell, 430. Supreme Court of New York, October, 1»:J4.) Bill draion in one country and indorsed in another. — In an action by an indorsee against an indorser of a bill of excliange drawn in a foreign country, and indorsed and negotiated to the plaintiff .in New York, the law of New York must determine whetlier the proper steps have been taken to charge the indorser. B. & I. Q. Aymar, the defendants below, were indorsers of a bill of exchange drawn by certain parties at St. Pierre, in the French Island of Martinique, on parties at Bordeaux, France. It was made payable at twenty-four days sight to the order of the de- fendants, a firm in New York, at which place they indorsed it to the plaintiffs, they also being citizens of the United States. The bill was presented for acceptance and dishonored; where- upon due notice was given the defendants, and this action insti- tuted. The defendants insisted that they were protected by the law of France, which is sufficiently stated in the opinion of the Court. Verdict and judgment for tlie plaintiffs, to reverse which the de- fendants sued out this writ of error. Nelson, J. The only material question arising in this case is, whether the steps necessary on the part of the holders of the bill of exchange in question, to subject the indorsers upon defiiult of the drawees to accept, must be determined by the Frencli law. or the law of this State ? If by our law, the plaintiffs below are entitled to retain the judgment ; if by the law of France, as set out and admitted in the pleadings, the judgment must be reversed. We have not been referred to any case, nor have any been found in our researches, in which the point notv presented has been ex- 710 LAW OF PLACE. amined or adjudged. But tlierc are some familiar principles belonging to the law merchant, or applicable to bills of exchange and promissory notes, which we think are decisive of it. The per- sons in whose favor the bill was drawn were bound to present it for acceptance and for payment, according to the law of France, as it was drawn and payable in French territories ; and if the rules of law governing them were applicable to the indorsers and indor- sees in this case, the recovery below could not be sustained, be- cause presentment for payment would have been essential even after protest for non-acceptance. No principle, however, seems more fully settled, or better understood in commercial law, than tliat the contract of the indorser is a new and independent con-, tract, and that the extent of his obligations is determined by it. The transfer by indorsement is equivalent in effect to the drawing of a bill, the indorser being in almost every respect considered as a new drawer. Chitty, Bills, 142 ; 3 East, 482 ; 2 Burr. 674, 675 ; 1 Str. 441 ; Selw. N. P. 256. On this ground, the rate of dam- ages in an action against the indorser is governed by the law of the place where the indorsement is made, being regulated by the lex loci contractus, 6 Cranch, 21 ; 2 Kent's Com. 460 ; 4 Johns. 119. That the nature and extent of the liabilities of the drawer or indorser are to be determined according to the law of the place where the bill is drawn or indorsement made, has been adjudged lx)th here and in England. In Hicks v. Brown, 12 Johns. 142, the bill was drawn by the defendant at New Orleans, in favor of the plaintiff, upon a house in Pliiladelphia ; it was protested for non- acceptance, and due notice given ; the defendant obtained a dis- charge under the insolvent laws of New Orleans after such notice, by which he was exonerated from all debts previously contracted, and, in that State, of course from the bill in question. He pleaded his discharge here, and the Court say, " It seems to be well settled, both in our own and in the English courts, that the discharge is to operate according to the lex loci upon the contract where it was made or to be executed. The contract in this case originated in New Orleans, and had it not been for the circumstance of the bill being drawn upon a person in another State, there could be no doubt but the discharge would reach this contract ; and this cir- cumstance can make no difference, as the demand is against the defendant as drawer of the bill, in consequence of the non-accep- tance. The whole contract or responsibility of the drawer was .AYMAR V. SHELDON. 711 entered into and incurred in New Orleans." The case of Potter v. Brown, 5 East, 124, contains- a similar principle. See also 3 Mass. 81 ; Van Raugh v. Van Arsdaln, -j Caincs, 154 ; 1 Cowen, 107 ; 6 Cranch, 221 ; 4 Cowen, 512, n. The contract of indorsement, was made in this case, and t^e execution of it contemplated by the parties in this State ; and it is therefore to be construed according to tiie laws of New York. The defendants below, by it, here engage that the drawees will accept and pay the bill on due presentment, or, in case of their default and notice, that they will pay it. All the cases which de- termine that the nature and extent of the obligation of the drawer are to be ascertained and settled according to the law of the place where the bill is drawn, arc equally applicable to the indorser ; for, in respect to the holder, he is a drawer. Adopting this rule and construction, it follows that the law of New York must settle the liability of the defendants below. The bill in this case is pay- able twenty-four days after sight, and must be presented for acceptance ; and it is well settled by our law, that the holder may have immediate recourse against the indorser for the default of the drawee in this respect; 3 Johns. 202 ; Chitty, Bills, 231, and cases there cited. Upon the principle that the rights and obligations of the parties are to be determined by the law of the place to which they had reference in making the contract, there are some steps which the holder must take according to the law of the place on which the bill is drawn. It must be presented for payment when due, hav- ing regard to the number of days of grace there, as the drawee is under obligation to pay only according to such calculation ; and it is therefore to be presumed that the parties had reference to it. So the protest must be according to the same law, which is not only convenient, but grows out of the necessity of the case. The notice however must be given according to the law of the place where the contract of the drawer or indorser, as the case may be, was made, such being an implied condition. Chitty, Bills, 93, 217, 266 ; Baylcy, [Bills,] 28 ; Story's Conflict of Laws, 298. The contract of the drawers in this case, according to the French law, was, that if the holder would present the bill for acceptance within one year from date, it being drawn in the West Indies, and it was not accepted, and was duly protested and notice given of the protest, he would give security to pay it, and pay the same if 712 LAW OF PLACE. default was also made in the payment by the drawee after protest and notice. This is the contract of the drawers, according to this law, and the counsel for the plaintiffs in error insists that it is also the implied contract of the indorser in this State. But this can- not be unless the indorsement is deemed an adoption of the orig- inal contract of the drawers, to be regulated by the law governing the drawers, without regard to the place where the indorsement is made. We have seen that this is not so ; that notice must be given according to the law of the place of indorsement ; and if, according to it, notice of non-payment is not required, none of course is necessary to charge the indorser. But if the above posi- tion of the plaintiffs in error be correct, notice could not then be dispensed with, the law of the drawer controlling. The above position of the counsel would also be irreconcilable with the prin- ciple that the indorsement is equivalent to a new bill, drawn upon the same drawee ; for then the rights and liabilities of the indorser must be governed by the law of the place of the contract, in like manner as those of the drawer are to be governed by the laws of the place where his contract was made. Both stand upon the same footing in this respect, each to be charged according to the laws of the country in which they were at the time of entering into their respective obligations. I am aware that this conclusion may operate harshly upon the indorsers in this case, as they may not be enabled to have recourse over on the drawers. But this grows out of the peculiarity of the commercial code which France has seen fit to adopt for herself, materially differing from that known to the law merchant. We cannot break in upon the settled principles of our commercial law, to accommodate them to those of France or any other country. It would involve them in great confusion. The indorser, how- ever, can always protect himself by special indorsement, requiring the holder to take the steps necessary according to the French law, to charge the drawer. It is the business of the holder, without such an indorsement, only to take such measures as are necessary to charge those to whom he intends to look for payment. Judgment affirmed. The rule declared in the principal case is stated to be the law in the text- books. Story, Promissory Notes, § 339, note; lb., Bills of Exchange, §§ 176, 177, note ; C'hitty, Bills, 456. A contrary doctrine, however, seems to have been declared in Rothschild v. Currie, 1 Q. B. 43. But Mr. Justice Story criti- .AYMAR V. SHELDON. 71S •cises this case with his usual learning and ability, and considers it unsound. Promissory Notes, § 339, note. And the case has been doubted in England. See Gil)b.s v. Fremont, 20 Eng. Law & E. 555, 557 ; Allen i\ Kemljle, <i Moore, P. C. 314. But Kotiiscliild v. ( urrie was cautiously cited as autlnjrity in the recent case of Ilirschfield v. Smith, Law Rep. 1 Com. PI. 340. In this case, Eric, C. J., in delivering the opinion of the Court, said : " The facts were, that the bill was drawn in England, i)ayable to the drawer's order, directed to and accepted by the drawee in France, payable in France, and was indorsed by the drawer in blank, and delivered to the defendant in England, and by him indorsed in blank and delivered to the plaintiff in England, and indorsed by tlie plaintiff and delivered to one Berle, in France. The l>ill was duly presented in France, and dishonored; and the holder took the stejis required by the law of France to entitle him to recover from the other parties to the bill ; that is to say, the bill was taken to the proper office and a due protest was made, and a copy of the protest was transmitted to the consul for France in the foreign country where the party to the bill was residing; that is to say, as respects the defendant, to the French consul in London ; and by that consul the protest was in due course, according to the French practice, made known to the defendant without delay. "If the action on the bill had been brought in France, upon an indorsement made in France, these facts would have amounted to such notice of dishonor as the law of France requires, and would have entitled the plaintiff to recover. As, however, this action was brought in England, against an indorser indorsing in England, the present question is, whether these facts are evidence of due notice of dishonor, against the defendant, in an action brought ifl England. " Our answer is in the affirmative, on two grounds: first, because the point has been decided in Rothschild v. Currie, 1 Q. B. 43, where the bill was drawn, accepted, indorsed, and dishonored, under circumstances similar to those relating to the present bill, and the facts adduced to show notice of dishonor were also similar, and were decided to be sufficient because they were sufficient according to the law of France ; secondly, if the reason assigned in that be not now adopted, and if the contract of an indorser in England of a bill accepted payable in France be held to be a contract governed bj- the law of England, and so the holder be not entitled to sue in England such an indorser unless he has given due notice of dishonor, according to the law of England, then the ques- tion is, what notice, under such circumstances, amounts to due notice. If the parties lived in P^ngland, and their address was known, the rule is that notice should be sent by the post of the day following the day of dishonor. But in respect of bills dishonored in a foreign country, such a rule cannot always have a literal application, because, among other reasons, the postal regulations may make it impossible. " Due notice is such notice as can be reasonably required under the circum- stances ; and the reasonableness of the notice proved in evidence is a (juestion of law depending on the facts of each particular case ; and such facts are for the jury. . . . If by the law of the place where the bill is payable there are reg- ulations for giving notice of dishonor, in order to make indorsers liable to the holder, a presumption is raised that notice according to those regulations is all that the indorser should require. 714 LAW OF PLACE. " The indorser of a bill accepted, j)ayable in France, promit^es to pay in the event of dishonor in France, and notice thereof. By his contract, he must be taken to know the law of France relating to the tyshonor of bills ; and notice of dishonor is a portion of that law. Then, although his contract is regulated by the law of England relating to indorsement, and although he may not be liable unless reasonable notice of dishonor has been sent to him, yet the notice of dishonor according to, the law of France may be, and we think ought to be, deemed reasonable notice according to the law of England, and be sufhcient in England to entitle the pkintiff to recover according to that law. " It is reasonable to hold that the foreign holder should have time to make good his right of recourse against all the parties to the bill, in whatever country they may be. Here the holder was a Frenchman, in France, The indorsement to him was by the plaintiff, a Frenchman, in Fi'ance. The indorsement to the plaintiif was by the defendant, an Englishman, in England ; and the indorse- ment to that J^nglishman by Lion, the payee, may have been in any country. The inconvenience would be great if the holder was bound to know the place of each indorsement, and the law of that place relating to notice of dishonor, and to give notice accordingly, on pain, in case of mistake, of losing his remedy; whereas there would be great convenience to the holder if notice, valid accord- ing to the law of the place, should be held to be reasonable notice" for each of the countries of each of the parties, unless an exceptional case should give occa- sion for an exception." 'There seems then to be a conflict between the English rule and the American, unless the difference of fact in the cases may afford a ground upon which to recon- cile them. Tlie indorsement to the plaintiff in Hirschfield v. Smith, though made in England was made to a foreigner residing in the country in which the bill was payable. The Court say that there would be serious inconvenience in requiring the holder, a Frenchman, to know the law relating to indorsement in England, and so it would without doubt; but in the principal case, both the plaintiff and defendant, the holder and the indorser, resided in New York, and it was certainly reasonable to suppose that they contracted with respect to the law of New York, and not that of France. And on the contrary, to follow the reasoning of Mr. Chief Justice Erie, it would be quite inconvenient, if not wholly unreasonable, to have required the holder in the principal case to know the law of France, and to take the steps required in that distant country to ren- der his own fellow-townsmen liable upon their indorsement. It is possible that Hirschfield v. Smith may in this way be reconciled with the principal case ; but it seems more difficult to harmonize the former with Allen v. Kemble, 6 Moore, P. C. 314, decided in 1844. The last-named case is a strong authority support- ing the American rule in Aymar v. Sheldon. In Allen r. Kemble the Court said: " It is argued that this bill, being drawn [abroad] payable in Loudon, not only the acceptor, but the drawer, must be held to have contracted with reference to the English law. This argument however appears to us to be founded on a misapprehension of the obligation which the drawer and indorser of a bill incurs. The drawer, by his contract, undertakes that the drawee shall accept and shall afterwards pay the bill, according to its tenor, at the place and domicile of the drawee. If this contract of the drawer be broken by the drawee, either by non-acceptance or non-payment, the drawer is liable for payment of AYMAR V. SHELDON. 715 the l)ill, not wlioro tlie liill is to be paid by the drawee, but where he, the drawer, made his contraet, with his interest, damages, and costs, as tlie law of the country wliere he contracted may allow. . . . " What then is tiie conscciuence of altering in the bill itself, and by the acceptance, the place at which the acceptor is bound to pay P Can it be more than this, that as to the acceptor the locwf nohdionis is altered, and therefore as to him, the lex loci solutionix is altered? But how does this affect the liabilities of the other patties? These bills are addressed to Mr. Mackie, Stranmaer, Scotland; if no place of payment had been mentioned," they would have been payable by the drawee according to tlie law of Scotland. London being fixed as the place of payuient, they are payable by the drawee according to the law of England ; a different law is imported as regards the acceptor, but not as affects other parties." See also Robinson v. Bland, 1 W. Black. 234, 2.3G ; s. c, 2 Burr. 1077 ; Cooper v. Waldegrave, 2 Beav. 282. But the law of the place of payment was applied to an indorser in Ellis v. Commercial Bank of Natchez, 7 How. (Miss.) 294. The contrary rule, and the rule declared in Aymar v. Sheldon, has been adopted or approved in the following cases : Conahan v. Smith, 2 Disney, 9, per Storei; J.; Hatcher v. McMorine, 4 Dev. 122; Wallace «. Agry, 4 Mason, 336, 344, per Stonj, J.: Astor v. Benn, 1 Stuart (Canada), 69; Slacum v. Pomery, 6 Cranch, 221 ; Hazelhurst v. Kean, 4 Yeates, 19; Crawford v. Branch Bank at IMo!)ile, G Ala. 12; Williams v. Wade, 1 Met. 82. See also Allen v. Merchants" Bank of New York, 22 Wend. 21;3, overruling s. C, 15 Wend. 482; Lizardi v. Colien, 3* Gill. 430; Frazier v. Warfield, 9 Sm. & M. 220; Kear- ney V. King, 2 Barn. & Aid. 301 ; Don v. Li])pman, o Clark & F. 1 ; Andrews V. Ilerriot, 4 Cow. 508, and the very learned note of the reporter. As a corollary to the rule declared in the principal case, it is held that the obligation of the maker or acceptor of paper payable at no designated place, is regulated by the law of the country where the paper was made; or accepted. Story, Promissory Notes, §§ 172, d seq. and cases cited. But where a place of payment is named, the law of such place will prevail. Ibid. The following addition.il cases will be found to contain a further exposition of the law of place, in connection with bills and notes. De La Chaumette v. Bank of England, 2 Barn. & Ad. 385; s. c, 9 Barn. & C. 208; Milne j;. Graham, 1 Barn. & C. 192; Trimby r. Vignier, 1 Bing. (N. C.) 151; Worcester Bank ?'. Wells, 8 ]\ret. 107; Rose i\ Park Bank, 20 Ind. 94; Brown v. Bunn, 1(J Ind. 406; Bernard?;. Barry, 1 Greene (Iowa), 388; Peck r. Hibbard, 26 Vt. 608; Wilson V. Lazier, 11 Grat. 477, 482 ; Ory r. Winter, 16 Mart. La. 277 ; Bur- rows V. llannegan, 1 McLean, 31.'). 716 CHECKS. CHECKS. Justin Morrison and Alexander Morrison v. Bailey and Leonard F. Burgess. (5 Ohio State, 13. Supreme Court, December, 1855.) Fom. —The following draft is not a check : W. O. & B. : Pay to B. on the 13th of July, '53, or order, three hundred dollars ; it being jjayable on a future day desig- nated. It is one of the essentials of a check that it shall be payable on demand. Days of grace are not allowed on checks. Distinction between checks and bills of exchange. The case is stated in the opinion of the Court. Bartley, J. This suit was brought against Bailey, as drawer, and Burgess, as indorser, of a paper, of whicli the following is a copy : — $300. Cleveland, O., June 30, 1858. Wicks, Otis, & Brownell: Pay to L. F. Burgess, on the 13th day of July, '53, or order, three hundred dollars. R. B. Bailey. Indorsed by L. F. Burgess. The paper was presented to Wicks, Otis, and Brownell, for pay- ment on the sixteenth day of July, 18';3 ; payment refused, and notice of non-payment given on that day. It is claimed, on the part of tlie defence, that presentment was not made, and notice given, in due time. And the question for determination is, whether this instrument, iipon which suit is brought, is, or is not, entitled to days of grace ; and this depends upon the question whether the instrument is a check eo nomine^ or a bill of exchange, subject to the rules and usages governing ordinary bills of exchange. The distinction between a bill of exchange and a check, although much confused in some respects, by the apparently MORRISON V. BAILEY. 717 inconsistent language of some of tlie adjudicated cases, as well as of some of the elementary writers bearing upon it, is founded in the difference in the nature of these two classes of commercial paper. Checks, being drafts or orders for immediate payment of money, have come into such common use as to supersede, in frequent payments of considerable amounts, not only gold and silver coin, but even hank-notes. And with their general use, certain usages have grown up peculiar to that class of instru- ments, and which have become engrafted on the commercial law of the country. A check is subject to many of the rules which regulate the rights and liabilities of parties to bills of exchange, and so nearly resembles the latter class of instruments, that some authors have defined a check to be, in substance and in legal effect, an inland bill of exchange, payable on demand. But, as Judge Story well* said, in the Matter of Brown, 2 f^tory, 502, althougli a check " nearly resembles a bill of exchange, yet nullum simile est idem.''^ By statute, in Ohio, all bills made negotiable are entitled to three days grace in the time of pay- ment. Rev. Sts. 576. But days of grace, in the time of pay- ment, would be inconsistent with the nature and purpose of a check, which requires no acceptance, and is always payable immediately on presentment. These two classes of commercial paper, although in many respects similar, are to be distinguished in the following par- ticulars, to wit : — 1. A check is drawn upon an existing fund, and is an abso- lute transfer or appropriation, to the holder, of so much money in tlie hands of the drawee ; whereas a l»ill of exchange is not always, or necessarily, drawn \ipon actual funds in the hands of the drawee, but very frequently drawn in anticipation of funds, or upon a previously arranged credit. 2. Tlie drawer of a check is always the principal ; whereas the drawer of a bill frequently stands in the position of a mere surety. 3. As between the liolder of a check and an indorscr, demand of payment within due time is essential to the liability of the latter. Where the parties reside in the same place, the holder should present ^tlie check on the day it is received, or within business hours of the following day ; and when payable at a different place from tluit in wiiich it is negotiated, the check 718 CHECKS. should b(3 forwarded by mail on the same, or the next succeed- ing day, for presentment. B\|t days of grace being allowed to bills of exchange, the time for demanding payment of a bill is different. 4. As between the holder and drawer, however, mere delay in presenting a check in due time for payment, would not dis- charge the latter, unless he had been injured thereby, and then only to the extent of his loss ; but a different rule, in this respect, prevails in case of a bill of exchange. 5. A check requires no acceptance, and, when presented, the presentment is for payment. 6. It is not protestable, or in other words, protest is not requisite to hold either the drawer or an indorser. It is also settled, in Woodruff v. Merchants' Bank, and Bowen V. Newell, above referred to, that any supposed usage of banks in any particular 'place to regard drafts upon them, payable at a day certain after date, as checks, and not entitled to days of grace, is inadmissible to control the rules of the law in relation to" such paper. Motion for new trial overruled and judgment for the plaintiffs. This subject of the likeness of checks to bills, and of the distinction between them, is considered in Keene v. Beard, 8 Com. B. (n. 8.) 372. The facts will sufficiently appear in the opinion delivered by Erle, C. J, I am of opinion that the plaintiff is entitled to judgment on this demurrer. The action is brought by the holiler or bearer of a check against the payee and indorser. The declaration states that one Bodenham on a certain day made a draft or order in writing for the payment of money, commonly called a check on a banker, and directed the same to certain persons trading as bankers, and thereby required them to pay to the defendants or bearer the sum of £11, and then delivered the said draft or order to the defendant, who then in- dorsed and delivered the same to one Lewis, who transferred and delivered the same to the plaintiff, who then became and was and still is the lawful bearer thereof It then goes on to allege that the said draft or order was duly ^jresented for pay- ment and was dishonored. The point urged by Mr. Grant on the argument of the demurrer was, that a check is not to be classed with bills of exchange so far as to be capable of creating a liability in an indorser to the person who may be the holder or bearer of the instrument. I think he has failed to establish that proposition. A check is strongly analogous to a bill of exchange in many re- spects. It is drawn upon a banker ; and, though in practice the banker does not accept the draft, he might for aught I know do so. A check has also some of the incidents of a bill of exchange, if not all, as, in respect of its passing by de- livery, and also in respect of a hona fide holder taking it for value having a better title than the person from whom he received it. Having these incidents MORRISON V. BAILKY. 719 of a bill of cxclianjrc, lias it the further incident of being capable of passing by indorsement ? That is, where the indorsement is made, not by merely placing the name of the party on tlie back of the irlstrumont, but doing so with the inten- tion of passing the title to it, and of incurring all the usual liabilities of an in- dorser of a negotiable instrument? It is admitted here that the defendant's name was placed upon the check animo indorsandi ; and therefore our judgment for the plaintiff is in accordance with the real intention of the parties. The in- dorser intended to give to the indorsee the security of his name and liability on' the instrument. I also think our decision is in accordance with the law, when we hold that a check is a negotiable instrument, and capable of indorsement. Byi.ks, J. I am of the same opinion. I conceive that a check is in the na- ture of an inland bill of exchange payable to the bearer on demand. It has nearly all the incidents of an ordinary bill of exchange. In one thing it dif- fers from a bill of exchange : it is an appropriation of so much money of the drawer's in the hands of the banker upon whom it is drawn, for the purpose of discharging a debt or liability of the drawer to a third person ; whereas, it is not necessary that there should be money of the drawer's in the hands of the drawee of a bill of exchange. There is another difference between the two instruments : in the case of a bill of exchange, the drawer is discharged by default of a due presentment to the acceptor; but, in the case of a check, the drawer is not discharged by a delay in the presentment, unless it be shown that he has been prejudiced thereby ; for instance, by the fail- ure of the banker on whom it is drawn. In all other respects a' check is pre- cisely like an inland bill of exchange. iNIr. Grant is in error when he supposes that the negotiability of inland bills of exchange rested entirely on the statute 9 & 10 W. 3, c. 17. It reposes on the law merchant, as it had been understood and applied for at least a hundred years before the passing of that statute. Bills of exchange indorsed in blank, and promissory notes payable to bearer, were well- known instruments. So, the bonds and notes of foreign States and princes are all treated in this country as negotiable instruments, and are available in the hands of persons taking them for value. That being so, it seems to me to be clear that a check ftills within the class of ordinary bills of exchange ; and, if so, why may it not be indorsed, so as to impose upon the indorser the ordinary liabilities which flow from the indorsement of a negotiable instrument? No inconvenience can result from our holding this ; for, it was distinctly decided in Waynam d. Bend, 1 Camp. 175, that, in an action against the maker of a promissory note payable to A B or bearer, if J;he declaration states that A B indorsed the note to the plaintiff, the indorsement — that is, an indorsement UHimo indorftamU — must be proved. So, in Story on Promissory Notes, § 132, it is said that, " Although a note payable to bearer is transferable by mere delivery, it may also be transferred by indorsement of the payee, or of any other subsequent holder. In such a case, the indorser incurs the same liabilities and obligations as the in- dorser of a negotiable note payable to order, from many of which, in the case of a mere transfer by delivery, he is exempt." It is true that a man's name may and very often is written on the back of a check or bill without any idea of ren- dering himself liable as an indorser. Indeed, one of tha best receipts is the placing on the back of the instrument the name of the person who has received payment of it. Such an entry of the name on the instrument is not an indorse- 720 CHECKS. nient. So, a man froquently puts his name on the back of a hank-note. In all these cases, the act of writing ma); or may not be an indorsement, according to circumstances. All that we mean to decide on the present occasion is, that, where a man indorses an instrument of this sort, animo indorsandi, and delivers it so indorsed to a third person, he renders himself liable to be sued upon the instrument, as indorsee, by any subsequent holder. I entertain no doubt what- ever upon the subject ; and I do not tliink any mischief or inconvenience can result from our so deciding. I may add that I do no injustice to the able argu- ment of Mr. Gran when I observe that it would have been deserving of more attention if it had been addressed to the Court a hundred years ago. Keatinc;, J. I also am of opinion, upon all the authorities, that a check is an instrument which is capable of being indorsed, and that the payee, if he in- dorses it with intent to make himself liable as an indorser, as is alleged in this declaration, is chargeable as such at the suit of any subsequent bona fide holder. Judgment for tJie plaintiff. In Harker v. Anderson, 21 Wend. 372, Cotoen, J., maintained the doctrine, in an elaborate, opinion, that checks were to all intents and purposes bills of exchange payable on demand, the particular point argued by him being that the drawer of a check could always require the same diligence of the holder as to presentment and notice, as the drawer or indorser of a bill. But a majority of the Court expressed no opinion on the point so extensively discussed ; and the weight of authority is against the view taken by that eminent judge. In several later cases in New York, the view taken by Mr. Justice Coioen, has been rejected. S.ee Little v. Phoenix Bank, 2 Hill, 425 ; Woodruff v. Merchants' Bank, 6 Hill, 174. In the former case the question was, whether mere delay in presenting a check for payment would discharge the drawer. The Court held that it would not, unless the drawer had been injured thereby ; but that it was incumbent upon the holder to show affirmatively that no loss had happened to the drawer. Mr. Justice Coiven, however, adhered to his former opinion in Harker v. Anderson, supra, that a check, like a bill, must be j)resented within a reasonable time, or both the drawer and indorser will be discharged. This question is also ably discussed in Matter of Brown, 2 Story, 502, in which Mr.' Justice Story disapproves the doctrine of Judge Cowen in Harker v. Ander- son, supra. MUSSRY V. EAGLE BANK. 721 Benjamin B. Mussey v. President, Directors, &c., of the Eagle Bank. • (9 Metcalf, 306. Supreinc Court of Massachusetts, March, 184.0.) Certification of checks. Inherent power of teller. — Evidence that the teller of a bank, during all the time of his holding office, whenever the convenience of the bank or of its customers required it, certified that checks were " good," which were drawn on the bank by its customers, when funds to the amount of such checks were to the credit of the drawers, and tliat his so doing was, in some instances, known to the bank, and was not forbidden, and that it was the usage of the tellers of otlier banks to do the same thing, does not warrant a jury to infer that the power of so doing was an original, inherent, implied power of the teller, as such. Usage. The usage of issuing certificates of deposit, by a teller of a bank, is not evidence to prove a usage of certifying checks. A teller of a b.ank, as such, has no authority to certify that a check is "good," so as to bind the bank to pay the amount thereof to any person who may afterwards present it ; and a usage for him so to certify a check, to enable the holder to use it at his pleasure, is bad. Assu.MPSiT to recover the amount of a check drawn on the Eagle Bank by G. F, Cook & Co., for $4000, payable to the drawers or bearer, and on which the following words were written by the teller of the bank : " Good. H. B. Odiorne, Teller." Hubbard, J. It is proved that Cook & Co. had no deposit to their credit, in the Eagle Bank, at the time tbe check was drawn, nor when it was presented for payment ; and it is admitted that the action cannot be maintained against the defendants, unless the word " good," written by tlicir teller, and certified by iiis signa- ture, binds the bank. It is also agreed, or proved, that the teller had no direct authority conferred upon him to certify checks as good. Unless, therefore, a teller has power, by virtue of his office, thus to bind the bank ; or a custom thus to certify checks exists among banks, for the purpose of giving them currency with third persons, on the credit of the bank ; or the defendants have sanc- tioned the practice of the making of such certificates, by their knowledge of its use, which they have not forbidden ; this action, it is admitted, cannot be sustained. These several propositions emljrace, substantially, the subjects which have been discussed, and upon which the plaintitr grounds his motion for a new trial. One of the propositions of the plain- 46 722 CHECKS. tiff's counsel is stated thus : That the jury should have been instructed, that if the pro»f should warrant the inference that Odiorne, while teller, certified the checks of the customers of the bank, and this was, in any instance, known to the bank, and was not forbidden ; and that, during the same period, it was the custom of all the tellers of other banks so to certify checks ; the jury would be at liberty to infer an original, inherent, implied power in Odiorne, as such teller, thus to certify checks. But certain facts are stated, in this proposition, as furnishing evidence of inherent power, which are rather applicable to the question and binding nature of a usage. They may prove the latter, while they by no means establish the former. The question of inherent power, and that of usage, should be separately considered, in order to arrive at a correct conclusion. 1. And first, has the teller of a bank an original, inherent, implied power to certify checks as good, by virtue of his office ? Or, in other words, has the teller of a* bank an inherent power to bind the bank to the payment of any given sum of money, at a future time, to any person who shall produce a check, which he has, by writing upon it the word " good," in fact accepted to pay ? Because, unless the word " good " carries with it binding evidence of the fact that the money is in the bank to meet that particular check, and that it will be paid to the bearer at any time when it is presented, it is of no practical utility. It will amount to no more than this; viz., that, at the moment of presentment, the check is good, and will be paid, if then handed in ; but not that it will continue good two hours after, if, not being offered, other checks of the same drawer are presented, to the amount of his deposit in the bank. The office of the teller is implied in the word used to designate it, — to tell or count the moneys of the bank, which are received or paid out. The office is often divided into two branches : that of receiving teller and of paying teller, where the business of the bank is large, and the duties cannot conveniently be united in one person. When united, the duty of the teller is, to receive all moneys offered at the bank in payment of notes and bills pre- viously discounted or lodged for collection, as they severally fall due, and all moneys offered by customers of the bank, to be deposited to their credit in account, whether arising from moneys brought by them to the bank, or the proceeds of discounts made MUSSEY V. EAGLE BANK. T28 for them ; to pay tlie checks of depositors, as the money is, from time to time drawn out, or for notes discounted ; and to redeem the bills of the bank with specie, when the same is demanded. Tills is his official employment; and, in the discharge of these duties, l>e is regularly to account for the moneys he has received and paid out, not only to prevent mistakes, but to charge him when short or delinquent ; and he is also made responsible for the payment of a check, when the drawer has not a like amount to his credit, unless he applies to the book-keeper for information as to the state of the drawer's account ; and then, if an over-payment is made, through the mistake or fault of the book-keeper, he, and not the teller, is responsible for the loss. And when checks on other banks are received in payment, or on deposit, (as is tlie usage among the banks in the city), it is made his duty to attend to their collection by a given hour of the day. These are the powers and duties usually assigned to the office of the teller ; and they are plain and explicit. They relate to the direct receipt or payment of moneys, and to a true and accurate accounting for such receipts and payments. His duties respect the daily cash transactions of the bank, and they do not relate directly to the credits given by the bank to its customers, or borrowers, on the loan of its funds. His office is not confounded with that of the discount clerk, or the book-keeper ; but his daily minutes, and the checks paid or received by him, are handed to the book- keeper, for him to make the proper entries, by which the con- cerns of the bank may be known when tested by the teller's cash on hand. In these powers and duties, thus conferred upon the teller," and to be exercised by him in the discharge of the appropriate functions of his office, there is no inherent, original power, expressly conferred, to enable him to certify that the checks of the depositors at the bank will be good, when presented for payment, at some future time ; nor is such power incident to, or necessary to, the faithful discharge of any of his duties. Powers which are neither incidental nor necessary are not to be implied, when the rights of others are thereby involved. The power in question is, in fact, not only not implied as incidental to the proper performance of the duties of the office, but the teller is not a regular certifying officer, as to the state of any depositor's account ; for he has not the means of certifying it. Nor is he responsible for the book-keeper's statement. Nor does such 724 CHECKS. power exist in the book-keeper ; for, during the business hours of tlie day, he is not the receiver of all the checks drawn by the depositors, as they are paid at the bank, nor is he answerable for the amount, nntil handed to him for entry in his books. Such certificate would, in fact, require the names of l)oth the officers, that the drawer's account was good for the face of the check, before either of them could have evidence of the fact to be certified. Nor could they be secure from difficulty arising out of the constant pressure of business, without actually charging the check thus certified ; and even if charged, they would be without a voucher till the check should be handed in for pay- ment. Such a power of certifying is, in fact, a power to pledge the credit of the bank to its customers ; a power which, by the consti- tution of a bank, can alone be exercised by its president and directors, unless specially delegated by them ; and consequently, it cannot be implied as a resulting duty or authority in any individual officer. Evidence of usage, therefore, can imply no original, inherent, and implied power in tellers thus to certify, however it may bear on the question of binding a bank by the allowance of such a usage. 2. It is contended that a usage for tellers of banks thus to certify that checks are good, and such usage being known to the business community, is a usage binding on banks, and that the holder of a check so certified may recover it from the bank on which it is drawn ; and that proof of a usage, on the part of this bank and the other banks of the city, to allow certificates of deposit to be certified by their respective tellers, is evidence in support of a usage of such tellers to certify checks, or of their authority so to do. Upon this point, the judge, at the trial, instructed the jury, that if any such general usage existed, and if it was a good usage, the defendants would be bound by it ; but whether the usage was good or not, was matter of law for the Court to decide, and was not a question for the jury ; and that a usage to issue certificates of deposit was not evidence to prove a usage of certi- fying checks. In examining the evidence which was offered to the jury, and which is reported at some length, we are well satisfied that no such general usage has been proved ; but that, in some of the banks a practice has existed for one of the officers of the bank, MUSSEY V. EAGLE BANK. 725 and generally the teller, to certify that the check of a depositor is good, when it was necessary for him to use his check at another bank, after bank hours, to prevent the protest of a note ; in which case his check would, of course, be presented for pay- ment, the next morning, by the bank receiving the same ; or occasiojially, when a remittance was to be made to a correspondent at a distance ; and sometimes, for the convenience of the officers, where the money was needed, to be paid at another bank, and the amount of the check was large, to save the labor of count- ing the bill's. The cases vary from the one at bar. They were evidently those of special convenience for a particular occasion, and which, from the uprightness of the officers and the solvency of the parties, worked no mischief. But even these cases were neither proved to be general, nor applicable to all the banks, so as to establish a usage. The case at bar, on the other hand, was the giving of large credits to the persons drawing the checks, to enable them to borrow money on the strength of the certifi- cates. In some banks, checks were occasionally certified for customers, to be used by them, at their convenience, where the funds were in the bank to meet them ; but the practice, as proved, was of such limited extent as not to bear on the question of usage. But if a usage had been proved of the certifying, by the teller, that the clieck is good, to enable a holder to use it after- wards, at his pleasure, we are clearly of opinion that such a usage would be bad, and could not be upheld. It would give to bank-checks, which are intended for immediate use, and are the substitutes for specie, in the ordinary transactions of business, the character of bills of exchange, payable to the bearer, the bank being acceptor, and payable at an indehnite time. It would lead to loans to favored individuals, without the usual security ; it would substitute checks for cash, in the hands of tellers who receive them, and would confer the power upon a single officer to pledge the credit of the bank by the mere writing of his name ; a power never contcmi»hited by the legislature, nor intended to be conferred by the stockholders. It would expose the teller to the frauds of a book-keeper, and both of them to the temptations of unprincipled and greedy men, who might, under various ])re- tences, procure their checks to be thus certified, in the lirst instances, when their deposits were good, and afterwards, when 726 CHECKS. there was no balance to their credit ; allowing interest, as a bonus for the certificate, to the certifying officer, who would afterwards receive such checks as cash. And the present case well illustrates the hazards and the evils to which banking com- panies and their officers are exposed by the allowance of such a practice. It has been pressed, in the argument on the subject of usage, that this certificate of " good," on the check, is but another form of the exercise of a usage, so common in banks, to grant, by the teller, a certificate of deposit of money to the credit of a third person. But we are of opinion, with the judge before whom the trial was had, that usage of the one will not support the practice of the other. The two practices, while having the appearance of resemblance, and although one may be used for the same pur- pose as the other, in the form of a remittance, are, in their character, essentially distinct. A certificate of deposit is regu- larly issued only when money is actually paid into a bank, for the benefit of a third person, and is placed to his credit ; by means of which certificate, and on the return thereof, he can draw for the money deposited ; or, if the money is not actually deposited, but the check of the party procuring the certificate is given, such check is immediately charged to the account of the drawer. This is a transaction in which money is actually paid for the certificate ; and the certificate is no more than entering the amount in the depositor's bank-book. The difference is, that the credit is given to the correspondent of the depositor, and not to the depositor himself. But where a check is cei-tified, as in the case at bar, no money is deposited, no check is received, and the teller can only rely on the declaration of the book-keeper that the check is good. The transaction enters not into the books of the bank ; is not necessarily known by its higher officers ; and yet, it is contended, the bank is bound by the trans- action. In examining the evidence, it is apparent that the defendants have never sanctioned the practice of authorizing their teller to certify checks as good, in order to their being used, by the drawer, to raise a credit with third persons. And, admitting it to be proved (though of that we are not satisfied), that the cashier, in one instance, knew that the teller certified a check of Cook & Co. as good, and did not prohibit him, still, the teller having THE farmers' bank V. BUTCHERS' BANK. 727 no legal right, either express or implied, thus to obligate the bank^ the knowledge of thg easliier could not affect the defend- ants. Such an aciniiescence on the part of the cashier, whether the consequoncc of haste, or ignorance, or improper motive, or a mistaken view of his own powers, could not create a contract between the bank and the holder of any other check thus certified. What the legal consequence would be, if the check was good at the time of such certificate, and was certified with the knowl- edge and acquiescence of the cashier, and was taken, bo7ia fide, on the faith of such certificate so approved, we are not now called upon to express an opinion. The view taken of the case makes it unnecessary to decide on that part of the instructions of the presiding judge, whether Drake took the check under such suspicious circumstances that he was bound to make inquiry. Leaving this subject, therefore, for future consideration, if the point should hereafter arise, we are satisfied that the instructions w^ere sufficiently favorable to the plaintiff, and that there is no just cause for disturbing the verdict. Judgment on the verdict. But see the following case and note. The Farmers' and Mechanics' Bank of Kent County, Maryland, vi. The Butchers' and Drovers' Bank. (16 New York [2 Smith], 125. Court of Appeals, September, 1857.) Certification of checks. — Kbonaful' hoklcT, for value, of a negotiable check certified to be good by tlie paying teller of tlic bank on which it is drawn, whose author- ity to certify is limited to cases where the bank has funds of the drawer to meet the check, can recover of the bank the amount of the check, though tlie drawer had no funds in the bank, and though the certification by the teller was in viola- tion of liis duty, and for the drawer's accommodation. The action in this case was to recover the amount of five cheeks drawn upon the defendants, by one Green, and certified to be good by the paying teller of the defendants. The checks were not drawn on funds, and the teller had no authority to certify checks unless the drawer had funds in the bank to cover them. The plaintiffs were bona fide holders for value, and had judg- pient in the Court below. 728 CHECKS. Selden, J. The jury in this case have found, upon sufficient evidence and under proper instruction^ from the Court, that the plaintiffs were holders, for value, of the cliecks in question. Each of these checks, if duly certified, imposes upon the bank an obliga- tion to retain the amount for which the check is drawn, and which, by the certificate, it admits it has in hand to the credit of the drawer to meet the check when presented, and to pay the same to the holder on demand. This obligation is substantially the same as that assumed by the acceptor of an ordinary bill of exchange ; and the certificates in this case, if authorized, may with propriety be regarded as virtual acceptances of bills, and the bank as liable, if at all, as acceptor. The first ground upon which this liability is resisted is based, not upon any want of authority in the particular agent by whom the checks were certified, but upon a want of power in the bank to bind itself by the contract sought to be enforced. It is insisted that the bank was not authorized by its charter to engage in trans- actions purely fictitious, having no connection with its legitimate business, or to pledge its credit for tlie mere accommodation of third persons. The defendant is a banking corporation, organized under the general banking law of this State ; and it is, I think, a sound position, that such a corporation exceeds its powers when it becomes the mere surety for another, upon a contract in which it has no interest, or lends its credit in any form for the exclusive benefit of other parties. Such a contract is ultra vires, and cannot be enforced against the bank by any person cognizant of the facts. But it by no means follows, when the unauthorized contract is in the form of a negotiable instrument, that the bank can avail" itself of the defence, as against one who, without notice, has become the holder of the paper for value. This question appears to have arisen in the case of Stoney v. The American Life Insurance Com- pany, 11 Paige, 635, and the decision of the Court upon the point is thus stated by the reporter : " A negotiable security of a cor- poration, which upon its face appears to have been duly issued by such corporation, and in conformity with the provisions of its charter, is valid in the hands of a bona fide holder thereof, without notice, although such security was in fact issued for a purpose and at a place not authorized by the charter of the corporation, and in violation of the laws of the State where it was actually issued." THE FARMKIIS' HANK V. HUTCH EUs' BANK. 729 There is a dictum of the chancellor, to the same effect, in the case of Safford v. Wyckoff, 4 Ilill, 442, whore the defence set up was, that the act of the hank, in issuing the hill upon which the action was brought, was iilfro vires. The chancellor there says : " A l)ill, or any other negotiable security, which is not upon its face illegal and unauthorized, is valid in the hands of a bona fide holder, without notice, who has paid a valuable consideration therefor, except in those cases in which the security is made void by statute." So in the case of The Genesee Bank v. The Patchin Bank, 3 Kern. 309, recently decided by this Court, a similar doc- trine is distinctly asserted by Denio^J., although the point was not passed upon by the Court. I have uo hesitation in concurring with these learned judges in the principles thus asserted, and am not aware that a contrary opinion has ever been judicially expressed. A citizen who deals directly with a corporation, or who takes its negotiable paper, is presumed to know the extent of its corporate power. But when the paper is, upon its face, in all respects such as the corporation has authority to issue, and its only defect consists in some extrin- sic fact, such as the purpose or object for which it was issued, to hold that the person taking the paper must inquire as to such extraneous fact, of the existence of which he is in no way apprised, would obviously conflict with the whole policy of the law in regard to negotiable paper. I pass, therefore, to the consideration of that branch of the defence which rests upon the want of authority in Pe1;k, the teller, to bind the bank. In the case of Mussey v. Eagle Bank, 9 Met. 300,^ the Supreme Court of Massachusetts held not only that such a teller had no original inherent power to certify checks, but that a general custom to that effect among banks would conflict with the public interests, and would be bad. I am not entirely satisfied with the reasoning of the Court in that case. The act 'of certifying a check is simply answering the supposed inquiry of one about to take the check, whether the bank has funds of the drawer to meet it ; and no other officer or agent of the bank would seem to be so competent to give the answer as the paying teller. His duties impose upon him the necessity of knowing the state of every depositor's account, lie is charged with all he pays out, and if he jiays a check, with- out funds in hand, he is responsible to the bank for the amount. His knowledge exceeds that of the book-keeper, because, to tiie information obtained from the latter, he adds a knowledge whether Ante, 721. 730 CHECKS. any deposits have been made or checks paid since the last entry in the books. N'o doubt the cashier, by virtiie of his general powers, and his presumed knowledge of all the affairs of the bank, would be competent to answer the question ; but he could only do so by first inquiring of the book-keeper and teller. Why should the applicant be compelled to seek the information through this cir- cuitous channel, instead of going directly to the ultimate source of knowledge on the subject ? The teller is put in the place of the cashier, to perform a portion of his duties. His appointment is virtually a division of the office of cashier ; and that branch of the office which the teller fills embraces those duties which par- ticularly require a knowledge of the state of the accounts of the depositors. Why then should he not be the organ of communica- tion on that subject ? But it is unnecessary in the present case to decide this question, as it clearly appears not only that the teller, Peck, was in the liabit of certifying the checks of customers, with the knowledge of the officers of the bank, but that he was furnished with a book for the express purpose of keeping a memorandum of such checks. His authority to certify, therefore, in a proper case, cannot be disputed. But it is insisted that his power extended only to cases where the bank had funds in hand, he having been expressly pro- hibited from certifying in the absence of funds, and hence that the bank is not bound. It may be doubted whether such a prohibition adds any thing to the restrictions which would otherwise exist upon the powers of the agent. A teller, acting under a general power to certify checks, would be guilty of an excess of authority, and a clear violation of duty, if he certified without funds. The powers of the cashier himself, or other principal financial officer of the bank, would no doubt be subject to the same limita-. tion. To certify a check, when the bank has no funds to meet it, is to make a false representation ; and neither the incidental power of the cashier, nor a general power conferred upon any other officer, could be construed to authorize that. Hence, if a bank is holden, in any case, upon a certificate of its cashier that a check is good, when it has no funds of the drawer, it is not because the cashier is deemed authorized to make such a certificate, but because the bank is bound by his representation, notwithstanding it is false and unauthorized. It would seem, therefore, that the defence insisted upon here THE farmers' bank V. BUTCHERS* BANK. 731 would liave been equally available if the checks in question had been certified by the cashier himself. It might then have been urged, with truth, tliat tlie cashier had violated his duty and exceeded the proper limit of his powers in making the certificate ; and if the argument be sound, that the principal is in no case bound, unless the act of the agent is within the powers either actually or apparently conferred upon him, the bank would not be liolden in such a case. It is no more within the apparent power of a cashier to certify that the bank has funds, when it has none, than it is within that of a teller expressly authorized to certify only when the bank has funds. p]very person would be bound to take notice of the limitation imposed by law vipon the powers of the casliier, or other general agents, no less than of that which is in terms imposed upon the powers of the teller as special agent. Hence, it cannot be pretended that a person who should take and pay value for a check, with knowledge that the bank had no funds of the drawer to meet it, would acquire any valid claim against the bank, although such check was certified by the cashier himself. He would be presumed to know that it was contrary to the duty of the cashier to certify without funds, and this knowledge would have the same effect as that which every one who should take a check, certified by the teller, would be presumed to have of any express restriction upon his powers. It will be seen that, if these views are correct, the present case does not turn in any degree upon the rules applicable to special agencies, but that the question would have been precisely the same if the check had been certified by the cashier or other principal financial officer of the bank. As they may, however, admit of doubt, I shall treat the case as one of an agency specially restricted, and shall simply inquire whether a bona fide holder, for value, of a negotiable check, certified by a special agent whose authority is limited to cases where the bank has funds of the drawer in hand, can enforce payment of the check, provided the bank has no such funds. This is a complex question, depending partly upon the law of principal and agent, and partly upon that of negotiable or com- mercial paper. The defence assumes that principals are bound only by the authorized acts of their agents, and admits of no quali- fication of this general rule, except where the agent has been apparently clothed with an authority beyond that actually con- ferred. But this proposition is too broad to be sustained. Principals have been repeatedly held responsible for the false representations 732 CHECKS. of their agents, not on tlic ground that the agents had any authority, either real or apparent, to make such representations, but for reasons entirely different. In Hern v. Nichols, 1 Salk. 289, the leading case on the subject, where an agent authorized to sell a quantity of silk had made certain fraudulent representations, by which the purchaser was deceived, the principal was held liable. Lord Sblt there said : " Seeing somebody must be a loser by this deceit, it is more reasonable that he that employs and puts a confi- dence in the deceiver should be a loser, than a stranger." The principle of this case has never, I think, been overruled, but, on the contrary, has been repeatedly approved and confirmed. It will be found directly applicable to the present case. The certificate of the teller is a positive representation that the bank has funds to meet the check. If that representation is false, who ought to bear the loss ? The reasoning of Lord Holt, in the case of Hern v. Nichols, applies here with peculiar force. The bank selects its teller, and places him in a position of great responsibility. The trust and con- fidence thus reposed in him by the bank leads others to confide in his integrity. Persons having no voice in his selection are obliged to deal with the bank through him. If, therefore, while acting in the business of the bank, and within the scope of his employment, so far as is known or can be seen by the party dealing with him, he is guilty of misrepresentation, ought not the bank to be held responsible ? It is worthy of consideration that the fact misrepre- sented in this case is not only one peculiarly within the knowledge of the agent, but one with which he is made acquainted by means of the position in which he is placed by the bank, and which it is his especial province and duty 'to know, and which could scarcely be definitively ascertained except by application to him. These circumstances would seem to bring the case decidedly witliin the principles adopted in Hern v. Nichols, and in the subsequent decisions based upon that case. Tliis conclusion is in no respect in conflict with that doctrine of tiie law of agency which makes it the duty of all persons dealing with a special agent to ascertain the extent of his powers. It is conceded that every one taking the checks in question would be presumed to know that the teller had no authority to certify with- out funds. But this knowledge alone would not apprise him that the certificate was defective and unauthorized. To discover that, he must not only have notice of the limitations upon the powers THE FARMKRS' BANK V. HUTCHERS' BANK. 733 of the teller, but of the extrinsic fact that the bank had no funds ; and as to this extrinsic fact, which he cannot justly be presumed to know, he may act upon the representation of the agent. There is a plain distinction between the terms of a power and facts entirely extraneous, upon which the right to exercise the authoiity conferred may depend. One who deals with an agent has no riglit to confide in the representation of the agent as to the extent of his powers. If, tliorofore, a person, knowing that the bank has no funds of the drawer, should take a certified check, upon the repre- sentation of the cashier or other officer by whom the certificate was made, that he was authorized to certify without funds, the bank would not be liable. But in regard to the extrinsic fact, whether the bank has funds or not, the case is different. That is a fact which a stranger, who takes a check certified by the teller, cannot be supposed to have any means of knowing. Were he held bound to ascertain it, the teller would be the most direct and reliable source of knowledge, and he already has his written representation upon the face of the check. If, therefore, one who deals witli an agent can be permitted to rely upon the representa- tion of the agent as to the existence of a fact, and to hold the princi[)al responsible in case the representation is false, this would seem to be such a case. ■ It is, I think, a sound rule, that where the party dealing with an agent has ascertained that the act of the agent corresponds in every particular, in regard to which such party has or is presumed to have any knowledge, witli the terms of the power, he may take the representation of the agent as to any extrinsic fact which rests peculiarly within the knowledge of the agent, and which cannot be ascertained by a comparison of the power with the act done under it. The familiar case of the giving of a negotiable partner- ship note, by one of the partners, for his own individual benefit, affords an apt illustration of this rule. Each of the partners is the agent of the partnership, as to all matters within the scope of the partnershi]) l)usiness, and can bind the firm by making, indorsing, and accepting bills and notes in such business ; but he has no more authority than a mere stranger to execute such paper in his own business, or for the accommodation of others. If he gives the partnership note or acceptance for his own debt, it is void in the hands of any party having knowledge of the consider- ation for which it is given ; but when negotiated to a bona fide 734 CHECKS. holder, the firm is precluded from questioning the authority of the partner, and is effectually bound. The cases in this State by which this doctrine is illustrated and established are numerous and uniform. Livingston v. Hastie, 2 Caines, 246 ; Lansing v. Gaine, 2 Johns. 300 ; Laverty v. Burr, 1 Wend. 529 ; Williams V. Walbridge, 8 id. 415 ; Boyd v. Plumb, 7 id. 309; Gansvoort v. Williams, 14 id. 133 ; Joyce v. Williams, id. 141 ; AVilson v. Wil- liams, id. 146 ; Catskill Bank v. Stall, 15 id. 364 ; s. c, 18 id. 466. It will be found difficult to distinguish these cases, in principle, from that now before the Court. Every person taking the nego- tiable note or acceptance of a partnership, executed by one of the partners in the name of the firm, is bound to know the extent of the partner's authority to bind the firm; but this obligation does not extend to the consideration for which the note or acceptance was given. If given for the private debt of one of the partners, or for the accommodation of third persons, all the cases agree that the burden of proving the holder's knowledge of that fact rests upon the partnership. That the execution is by an agent is as apparent upon the face of the paper, in such cases, as in that of a certified check ; because a partnership can only act in its partner- ship name through agents. The argument resorted to here, therefore, that parties are only bound by the authorized acts of their agents, and that paper issued by an agent without authority is no more obligatory upon the prin- cipal than if it had been forged, is just as applicable to partnership notes given by a partner for his individual debts as to these cer- tified checks. The question is not, in such cases, whether the principaljis bound by the unauthorized act of the agent, but whether he is estopped by the representation of the agent, from disputing facts which show that the act was authorized. There is no analogy between these partnership cases, or the case before the Court and cases where the paper is forged. The fact of the agency, and the trust and confidence reposed by the principal in the agent, create a broad line of distinction between them ; and it is this trust and confidence which constitute the foundation of the liability, and which justify the party dealing with the agent in re- lying upon his representation in respect to facts especially within the agent's knowledge. The giving of a note in the partnership name, by one of the partners, is a virtual representation that it is given in the partnership business, and, if negotiable, this repre-' THE farmers' bank V. BUTCHERS* BANK. 735 sentatiou is deemed in law to have been made to every subsequent bona fide holder of the note. The State oi" Illinois v. Delafield, 8 Paige, 527 ; s. c. in error, 2 Hill, 15i», is another illustration of the same principle. An agent of that State was authorized to dis- pose of certain bonds, but was not to sell them below jjar or on credit. He sold them to Delafield on time and at a sacrifice. The State filed a bill against Delafield for relief, and applied to the Court of Chancery for an injunction to restrain the defendant from nego- tiating the bonds, on the ground that if negotiated the State would be liable to pay them. The defendant's counsel insisted that if the bonds were void in the hands of Delafield they would be equally so in the hands of any person to whom he might transfer them. The chancellor, nevertheless, granted the injunction, saying that, if the securities should pass into the hands of a bona fide holder, the State would be equitably and legally bound to pay them. On appeal to the Court for the correction of errors, the decision of the chancellor was affirmed by a nearly unanimous vote. It would be difficult, I think, to discover any valid distinction, in principle, between this case and the one we are considering. The purchaser. of the bonds from Delafield would, equally with Delafield himself, be presumed to know the limits of the authority conferred upon the agent ; but it must have been held that he would not be bound to inquire as to the extrinsic facts attending the sale or negotiation of the bonds. The principle is well stated in the following proposition, sub- mitted to and approved by the Court, in the case of The North River Bank v. Aymar, 3 Hill, 262: " Whenever the very act of the agent is authorized by the terms of the power, that is, when- ever, by comparing the act done by the agent with the words of the power, the act is in itself warranted by the terms used, such act is binding on the constituent, as to all persons dealing in good faith with the agent. Such persons are not bound to inquire into facts aliunde; the apparent authority is the real authority." The opinion of Mr. Justice Ne/son, who dissented from the ma- jority of the Court in this case, cannot be reconciled with the principle maintained by the same judge in Boyd v. Plumb and Gansvoort v. Williams, supra. The cases are strictly parallel. In that of Aymar, the power of the attorney was limited to the giving of notes, for the use of the principal ; in the others, the authority of the partner was limited to the execution of paper, for 736 . CHECKS. the use and benefit of the partncrsliip ; in both, tlie plaintiffs were regarded by the judge as equally cognizant of the limitations of the power ; and yet, in the cases of Boyd v. Plumb, and Gans- voort V. Williams, he held that the burden rested upon the defend- ants to prove notice to the plaintiff that the paper was not given in the business of the partnership ; while in the case of Ay mar he held that the plaintiffs were presumed to know that the notes were not given for the benefit of the principal, and that the burden of proving the contrary rested upon them. These two positions are diametrically opposed and cannot be made to harmonize ; that taken in Boyd v. Plumb and Gansvoort v. Williams accords with many other cases in this State, and with all the English cases ou the subject. It is true that the decision in the case of The North River Bank V. Aymar was reversed in the Court of Errors ; but the opinions pronounced in that Court have never been published, and conse- quently the views there expressed upon the point in question are unknown. Under these circumstances the principal reason against the reconsideration of a question, which has been passed upon by the Court of last resort ; viz,, that the public needs a fixed and definite rule upon which it can rely in the transaction of business, loses most of its force. The opinion of the Supreme Court, which is published at large in the reports, is more likely to be taken as the rule than that of the Court of Errors, to which attention is rarely directed. The question, therefore, should, I think, be con- sidered as still open for examination ; and I have little hesitation in holding that it was properly decided by the Supreme Court. It is supposed that the cases of Attwood v. Mannings, 7 Barn. & C. 278, and Alexander v. McKenzie, 6 Mann. Gr. & S. 766, are in conflict with the doctrine liere advanced ; but, upon a careful scrutiny of the first of these cases, it will be seen that, if the point we are examining was involved, it received no consideration from the Court. The general principle laid down in that case is in perfect accordance with the views here expressed. It is, sim- ply, that where an agent accepts a bill, in a form which imports that he acts by virtue of a special power, any person taking the bill is bound to inquire into and is chargeable with knowledge of the terms of the power. This is not denied. But the question is„ whether, after inquiring into the terms of the power, and ascer- tahiing, so far as can be done by comparison, that the act of the THE farmers' bank V. BUTCHERS' BANK. 737 agent is within tlie power, he is chargeable, without proof, with a knowledge of extrinsic facts, which show the act to be unautlior- ized. This question, which is the only one which arises here, was not decided, or even adverted to, in Attwood ^. Munnings. The report of that case shows that the plaintiffs neglected even to call for the production of the power, to which they were expressly referred by the terms of the acceptance, and for this culi)al)le negligence they are held responsible by the Court. Justice Bailey says : " A per- son taking such a bill ought to exercise due caution, for he must take it upon the credit of the party who assumes the authority to accept, and it would be only reasonable prudence to require the production of that authority." It seems to have been taken for granted that, if the i)laintiffs had informed themselves as to the terms of the power, they would of course have ascertained the object for which the bill was drawn, and the relation existing between the drawer and the defendant. Indeed, for aught that appears in the report of the case, it may have been shown upon the trial that they were actually apprised of these facts. The case therefore is no authority, except for the undeniable proposition that one who deals with an agent, knowing that he acts by virtue of a special power, is bound to inquire into and ascertain the precise terms of such power. The case of Alexander v. McKenzie has even less bearing upon the point. The report of the case, which is very imperfect, does not show the terms of the special power nor the nature of its limitations. All that the case decides is, that the words " per procuration," affixed to an indorsement or acceptance by an agent, import that the agent acts by virtue of a special power, and are sufficient to charge any one who takes the bill with knowledge of the precise terms of such power. The plaintilT in this case as in that of Attwood v. Munnings, mpra^ Jiad neglected to call for the production of the power, and no attempt was made to show that the indorsement corresponded with its terms. The plaintiff relied mainly upon the fact that the bank had paid two other bills in- dorsed in the same manner. The case, taken as a whole, is a somewhat obscure assertion of the same principle which was adopted in Attwood v. Munnings ; viz., that one who takes a bill, so indorsed, is bound to require the production of the special power, 47 738 CHECKS. and to ascertain by comparison that the bill and indorsement cor- respond in all respects with its terms. The cases of Grant v. Norway, 10 Com. B. 70 Eng. C. L. 665 ; Coleman v. Riches, 29 Eng. L. & Eq. 323 ; and the Me- chanics' Bank v. Tiie Nef York and New Haven Railroad Com- pany, 3 Kern. 599, are plainly distinguishable from the present case. In neither of those cases was the document upon which the question arose negotiable. It was sought there to make the prin- cipal responsible for a false representation of the agent, not to the person to whom the representation was made, but to one with whom the agent had no dealings, and to whom he had made no representation. Upon a careful examination, it very plainly, I think, appears that this was the real obstacle to a recovery in each of these cases. When Sergeant Crowder, counsel for the plaintiffs in Grant v. Norway, cited the case of Hern v. Nichols, and invoked the doctrine there laid down by Lord Holt, Justice Cresswell re- plied : " There the factor entered into a contract with the plain- tiff for his employer. Here you are a step further off. You say your agent, with whom I made no contract, has enabled a man, with whom I did contract, to cheat me." This remark presents, in my judgment, the turning point of the case, and the only obstacle to the plaintiff's recovery, viz., the want of any privity of contract between the plaintiff and the agent. This obstacle was precisely that which the negotiability of the instrument, if established, would have removed ; because the maker of a negotiable instrument is deemed in law to enter into a contract with every one to whom it is afterwards negotiated ; and where the instrument is made by an agent it is in this way only that privity of contract can be established between such agent and the subsequent holders, without which the principal can never be held responsible for the false representations of the agent. Hence it is that we find the counsel for the plaintiffs in the cases of Grant v. Norway, and the Mechanics' Bank v. The New York and New Haven Railroad Company, supra, contending so strenu- ously for the negotiability of the documents in question in those cases. That the want of privity of contract, between the agent and the party seeking to hold the principal responsible, constituted the real difficulty in those cases is also apparent from the report in the case of Coleman v. Riches, supra, which belongs to the same class. t THE farmers' bank V. BUTCHERS' BANK.- 739 There Bond, the agent of Riches, had given a false receipt, not to the plaintiff, hut to Lewis, and Lewis had exhihitcd this receipt to the plaintiff and obtained money upon it. The difficulty in the case was to show the relation between the parties to have been such that the misrepresentation l)y Bond to the agent might prop- erly I)e considered as made \>y him to the plaintiff. To establish this, the counsel for the plaintiff relied upon a course of dealing, which, as he alleged, was known to the defendant. To this the chief justice answered : " I cannot see how the knowledge by Riches of the course of business, according to which Coleman paid on the production of the receipt, would make the showing of the receipt by Lewis, even in Bond's presence, a representation by Riches " (t. e., by the agent of Riches) ; and Justice Williams adds : " Suppose Riches himself had given the fraudulent receipt, would that have constituted a representation by Riches to Cole- man ? " L'pon the same argument being afterwards repeated. Jus- tice Cresswell said : " There is the vice of the argument ; I do not find any evidence of such course of dealing between the plaintiff and the defendant. The course of dealing proved, was that which existed between the plaintiff and the vendors and not between the plaintiff and defendant." It seems impossible to mistake the purport of these remarks. They show that the difficulty in the way of a recovery, in this case, was that no privity of contract was established between Riches, or his agent, Bond, and the plaintiffs, by means of which the misrep- resentations made by Bond could be considered as made to the plaintiffs. Had the receipt been a negotiable instrument, a privity would have been established. I entertain no doubt that had the stock certificates in question, in the case of The Mechanics' Bank v. The New York and New Haven Railroad Company, supra, been held to be negotiable, the plaintiffs would have prevailed ; and such I understand to be the opinion of two of my associates who took part in the decision of that case. The judgment of the Supreme Court should be affu-med. Judgment affirmed. Comstockj J., dissented. The most recent case upon this subject sustains the Now Yorli doctrine as above declared. ^lercliants' National Bank of Boston r. State National Bank of Boston, Supreme Court of the United States, December, 1870. This case was one of the most important ever determined in America, both from the vast 740 CHECKS. amount of money involved, and the importance of the questions to be deter- mined. It is proper to state that the cause was argued by some of the ablest counsel in the country ; and it is to be hoped that for the sake of uniformity the rule now adopted respecting the national banks, in the highest court of America, may be generally accepted, and applied to all banking institutions. The opinion of the Court, in the above-named case, was delivered by SwAYNE, J. This is a writ of error to the Circuit Court of the United States for the District of Massachusetts. The plaintiff in error was the plaintiff in the Court below. It appears, by the bill of exceptions, that upon the evidence in behalf of the plaintiff being closed, the defendant's counsel moved the Court to instruct the jury that it was not- sufficient to warrant them to find a verdict for the plaintiff upon either of the counts in the declaration. This instruction was given. The jury found for the defendant. The plaintiff excepted, and has brought that instruction here for review. This renders it necessary to examine the entire case as presented in the record. . . . On the twenty-sixth of February, 1867, Fuller, the plaintiff's cashier, received from the Second National Bank of Boston $200,000 of gold certificates, and paid the bank, upon their delivery, the amount of their face, and a premium of twenty- five per cent. Payment was made in currency, and legal tender notes. The next day he received from the same bank $200,000 more of like certificates, and paid for them at the same rate in currency, and a ticket of credit by the Merchants' Bank in favor of the National Bank for $175,000. Both transactions were pursuant to an arrangement with Mellen, Ward, & Co., brokers, in Boston. The market premium upon gold at that time was forty per cent. It was under- stood between Fuller, the cashier, and Mellen, Ward, & Co., that the latter might receive the same amount of gold from the Merchants' Bank, at any time thereafter, by paying the amount advanced, compensation for the trouble the bank had incurred, and interest at the rate of six per cent. There had been like transactions upon those terms between the parties prior to that time. The president of the bank was consulted in advance as to both the purchases from the Second National Bank, and approved them. The following testimony is taken from the record : — George H. Davis testified as follows : I am the paying teller of the Merchants' Bank. From about the first of January, 1867, and previous to the twenty-third of February, the bank several times received gold or gold certificates from Mel- len, Ward, & Co., for which it paid currency at the rate of $125 for $100 in gold. At that time they had deposited in the bank about $90,000 in gold. No note, memorandum, or check Avas taken connected with it in any way. The gold was added to the gold of the bank ; on my cash-book it was added to the item of gold, and the gold was mixed with the gold of the bank in the vault. If it consisted of certificates, they were put in a pocket-book kept in my trunk with other certificates and bills. (The paying teller's book was put in, and from the entries in it on the twenty-sixth, twenty-seventh, and twenty-eighth of Feb- ruary, 1867, it appeared that the gold received from Mellen, Ward, & Co., was added to the gold of the bank.) On the twenty-eighth day of February, Carter, of the firm of Mellen, Ward, & Co., and Smith, the cashier of tlie State Bank, called together at the Merchants' Bank. Carter said to Fuller, " We have come in for gold." Smith, the cashier, 4 THK farmers' bank V. BUTCHERS' BAXK. 741 said, "Wo have come to f^et an atuount of goM," and that he would " pay for it Iiy certifying these checks," referring to two papers wliich Carter heM in his liand. The teller handed Fuller eighty-four gold certificates of SoOO) each, making the sura of $120,000. Fuller announced the amount. Smith said that was the amount wanted, and the amount covered by the checks. He received the certifi- cates, certified the checks, and handed them over to the plaintiff's cashier. They were drawn by Mellen, Ward, & Co., upon the State National Bank in favor of Fuller, the plaintiff's cashier, or order, and were certified " (iood. C. II. .Smith, cashier." One was for .^JoO.OOO, and the other for 8-7o,00U. Smith thereupon left the bank with the certificates in his possession. Nothing was said by Fuller to Carter, or by Carter to Fuller, in relation to the checks, and Fuller did not know what checks Smith referred to until they were delivered to him. Smith did not certify or deliver the checks until he had got possession and control of the funds upon which his certificates were app.arently founded, and this was known to the plaintilF's agent when he received the checks. Later, on the same day, Smith and Carter called again at the Merchants' Bank. Fuller was absent. Smith received $60,000 more of gold and gold certificates from the teller, and gave in return a check for $75,000, drawn by Mellen, Ward, & Co., on the State Bank, payable to " gold or bearer." Like the two previous cliecks, it was certified " Good. C. II. Smith, cashier." This arrangement was in pursuance of the same agreement as that under which the gold certificates were delivered in the earlier part of the day. Both transactions were alike within its scope. On the first of INIarch, Havens, the president of the Merchants'' Bank, called at the State Bank and complained that Smith had not paid the checks. Smith said he was going out to get the money. Havens inquired, " Didn't you have the money, — the gold ? Were not gold certificates delivered to you ? " He an- swered, " Yes ; I had them here, but they are not here now. I am going out to get it, and will come in and attend to it." Subsequently, in the same conversation, he said, " You hold the State Bank." Later in the day Havens called upon Stetson, the president of the State Bank. Stetson denied that Smith was authorized to certify the checks, and appealed to a director who was present. The director was silent. In an account which Fuller rendered to Mellen, Ward. & Co., after their failure, showing the disposition of various collaterals which Mellen, Ward, & Co. had deposited from time to time with the Merchants' Bank, the amount paid for gold was put down as a loan, and interest was charged ; but in his testimony before the jury he denied that the money was loaned, and insisted that the gold was bought by the Merchants' Bank. The agreement between Mellen, Ward, & Co. and the Merchants' Bank, rested whollv in parol. No written voucher was given or received on either side touch- ing any of the transactions between the parties. The record discloses nothing else in this connection which it is material to consider. The State Bank was organized under the act of Congress " to provide a national currency," &c., of the third of June, 1864, 13 Stat. 99. The eighth section of that act authorizes such associations, by their directors, to appoint a cashier and other ollicers, and to exercise, " under this act, all such incidental powers as shall be necessary to carry on the business of banking by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits; by buying and selling exchange, coin, and 742 CHECKS. bullion; by loaning money on personal security; by obtaining, issuing, and circulating notes, according to the provisions of this act," &c. It is further provided that the directors may, by by-laws, regulate the manner in which its busi- ness shall be conducted and its franchises enjoyed ; and that its general business shall be transacted at an office " located in the place specified in its organization certificate." The fifth of the articles of association authorizes the board of directors to appoint a cashier and such other officers as may be necessary, and to define their duties. The seventh by-law declares that the cashier *' shall be responsible for the moneys, funds, and other valuables of the bank, and shall give bonds," &c. The seventeenth by-law requires that all "contracts, checks, drafts, receipts, &c., shall be signed by the cashier or by the president, and that all indorsements necessary to be made by the bank shall be under the hand of the cashier or president," unless absent. The by-laws contain nothing further upon this subject. The directors failed to define more specifically the powers and duties of the cashier. Smith, the defendant's cashier, exercised habitually very large powers without any special delegation of authority. An account was kept on the books of the ha.uk with him as cashier, which represented these transactions, and printed blank checks were kept in the bank to facilitate them. The checks given by him for the proceeds of bills discounted and for the purchase of exchange during the five months preceding the twenty-third of February, 1867, amounted in the aggregate to two and a half millions of dollars. This was exclusive of his clear- ing-house checks. His checks for money borrowed of other banks during the six months preceding the same twenty-third of February amounted to one mil- lion five hundred and forty-seven thousand dollars. A^ large number of the cashiers of other banks in Boston were examined, and testified that they exer- cised the same powers under like circumstances. There is no proof that either they or Smith ever certified checks. It is not shown what became of the gold. Perhaps some light is thrown on the subject by the remark of the president of the Merchants' Bank to the president of the State Bank, " that the latter had better go to the sub-treasury, and that he would perhaps find his gold there." We find no reason to doubt that both banks, as represented by their cashiers, acted in entire good faith throughout the transactions until they were closed by the delivery of the last of the certified checks. Neither could then have anti- cipated the difficulties and the conflict which subsequently arose. The first question presented for our consideration is : What was the title of the plaintiff, and what were the rights of Mellen, Ward, & Co., in respect to the gold certificates delivered by the Second National Bank to the Merchants' Bank ? No very searching analysis of the facts disclosed is necessary to enable us to find a satisfi.ictory answer to this inquiry. It does not appear that Mellen, Ward, & Co., had any connection with the certificates received from the Second National Bank until after the plaintiff took the action which they invoked, and came into possession of the property. The Merchants' Bank applied for them, bought them, paid for them, received them, and deposited them with its other assets of like character. It does not appear that any special mark was put upon them, or that a thing was done to distinguish them from the other effects of the bank with which they were min- THE farmers' bank V. BUTCHERS' BANK. 743 glcd. Upon the face of the transaction it was a simple sale by the Scooml Na- tional Bank, whereby the entire title and property became vested in the plain- tiff. But gold was then at a premium of forty per cent in currency. The Merchants' Bank paid but twenty-five, according to the contract between the bank and ^Idlen, Ward, & Co. The latter were to pay, and it is presumed did pay, the additional fifteen per cent. This was a part of the considtration upon which the ^lerchants' Bank entered into the contract. It is evident that the bank did not agree to deliver to Mellen, Ward, & Co., the identical gold certifi- cates which were purchased, but gold, or its equivalent in certificates to the same amount, and any gold, or any certificates would have satisfied the contract. The bank cannot, therefore, be regarded as holding the certificates in pledge. The want of the element, that the identical certificates were to be delivered, is conclusive against that view of the subject. If Mellen, Ward, & Co. had ten- dered performance and called for gold, and the bank had failed to respond, Mellen, Ward, & Co. could have sustained an action for the breach of the con- tract. But they could not have maintained detinue, trover, or replevin against the bank. The real character of the transaction was, that the bank took the title and entire property, but ^lellen. Ward, & Co. had the right to purchase from the bank the like amount of gold, or its equivalent in certificates, accord- ing to the terms of the contract, which were, that they should pay what the bank paid, compensation for its trouble, and interest from the time the purchase by the bank was made. In respect to the $60,000 of gold and gold certificates delivered by the teller in the absence of the cashier, and the excess of gold certificates over 8100,000 delivered by the cashier, the facts are substantially the same as those in regard to the S'lOO.OOO, except that the excess of certificates, and what was delivered by the teller, had reference to gold and gold certificates deposited in the bank by Mellen, Ward, & Co. This difference is not material. With this qualification the same remarks apply which have been made touching the $400,000 of certifi- cates, and we are led to the same legal conclusions. The transactions between the State Bank and the Merchants' Bank were ap- parently of the same character as that between the Merchants' Bank and the Second National Bank. What the understanding between Mellon, Ward, & Co. and the defendant was is not disclosed in the evidence. But it is fairly to be inferred that it was the same as that between them and the Merchants' Bank. When the arrangement was proposed by Carter to Fuller, on the twenty-second of February, Carter said that "when the gold was taken from the Merchants' Bank he thought it would go through some other bank or banks." The assent of Mellon, Ward, & Co., to the sale to the State Bank by the Merchants' Bank extinguished their claim upon the latter. The Merchants' Bank certainly had a title of some kind, and whatever it was it passed to the State Bank unless the contract was void, because the State Bank had no corporate power, or its cash- ier had no authority to make the purchase. The act of Congress expressly authorizes the banks created under it to buy and sell coin. No question of ultra vires is therefore involved. If the Merchants' Bank held the certificates as a pledge, it had a special prop- erty which might be sold and assigned. The assignee in such cases becomes invested with all the legal rights which belonged to the assignor; Such is the 744 CHECKS. rule of the common law, and it has subsisted from an early period. ' Mores v. Conham, Owen, 123; Anon., 2 Salk. 522; Coggs v. Bernard, 3 Salk. 268; Whitakor v. Sumner, 20 Pick. 399 ; Thompson v. Patrick, 4 Watts, 414 ; Story, Bailments, § 324. But we are entirely satis6ed with the other view we have expressed upon the subject. Modus et conventio vincunt legem. It is insisted by the defendant's counsel that the transaction was a loan to Mellen, Ward, & Co. As the bank parted with its title, if there were a loan in the eye of the law, it would not in any wise affect the conclusions at which we have arrived. Recurring to the subject of the authority of the cashier of the State Bank to make the purchase, and excluding from consideration for the present the certi- fied checks, three views, we think, may be properly taken of the case in this as- pect : — 1. If the certificates and the gold actually went into the State Bank, as was admitted by Smith to Havens, then the bank was liable for money had and re- ceived, whatever may have been the defect in the authority of the cashier to make the purchase, and this question should have been submitted to the jury. 2. It should have been left to the jury to determine whether, from the evi- dence as to the powers exercised by the cashier, with the knowledge and acqui- escence of the directors, and the usage of other banks in the same city, it might not be fairly inferred that Smith had authority to bind the defendant by the con- tract which he made with the Merchants' Bank. 3. Where a party deals with a corporation in good faith, the transaction is not ultra vires, and he is unaware of any defect of authority or other irregularity on the part of those acting for the corporation, and there is nothing to excite suspicion of such defect or irregularity, the corporation is bound by the contract, although such defect or irregularity in fact exists. If the contract can be valid under any circumstances, an innocent party in such a case has a right to presume their existence, and the corporation is es- topped to deny them. The jury should have been instructed to apply this rule to the evidence be- fore them. The principle has become axiomatic in the law of corporations, and by no tribunal has it been applied with more firmness and vigor than by this Court. Supervisors v. Schenck, o Wall. 772, 784 ; Knox Co. v. Aspinwall, 21 How. 539 ; Bissell V. Jeffersonville, 24 id. 288 ; Moran v. Miami Co., 2 Black, 722 ; Gelpcke V. Dubuque, 1 Wall. 175, 203 ; Mercer Co. v. Hacket, ib. 83, 93 ; Mayor v. Lord, 9 id. 409, 414 ; Royal British Bank v. Turquand, 6 Ellis & Bl. 327 ; The Farmers' Loan and Trust Co. v. Curtis, 3 Seld. 466 ; Stoney v. American Life Ins. Co., 11 Paige, 635; Society for Savings v. New London, 29 Conn. 174; Commonwealth v. The City of Pittsburg, 34 Penn. 497; Commonwealth v. Alleghany County, 37 id. 277. Corporations are liable for every wrong of which they are guilty, and in such cases the doctrine of idtra vires has no application. Philadelphia and Baltimore R. Co. V. Quigley, 21 How. 202, 209 ; Green v. London Omnibus Co., 7 C. B. n. s. 290; Life and Fire Ins. Co. v. Mechanics' Fire Ins. Co., 7 Wend. 31. Corporations are liable for the acts of their servants while engaged in the THE farmers' bank V. BUTCHERS' BANK. 745 business of their einployment, in the same manner and to the same extent that individuals arc liable under like circumstances. Ranger v. The (ireat Western R. Co., 5 H. L. Cas. 80; Thayer r. Boston, 19 Pick. 511; Frankfort Bank r. Johnson, 24 Me. 490; Aiifrell and Ames, Corporations, §§ 382, .388. Estoppel in pnin presuj)p()ses an error or a fault, and implies an act in itself invalid. The rule proceeds upon the consideration that the author of the mis- fortune shall not himself escape the consequences, and cast the burden upon another. Swan v. North British &c. Co., 7 Hurl. & N. 603; Hern v. Nichols, 1 Salk. 289. Smith was the cashier of the State Bank. As such he approached the Merchants' Bank. The bank did not approach him. Upon the faith of his acts and declarations it parted with its property. The misfortune occurred through him, and as the case appears in the record, upon the plainest principles of justice the loss should fall upon the defendant. The ethics and the law of the case alike require this result. Dezell v. Odell, 3 Hill, 21G. Those who created the trust, appointed the trustee, and clothed him with the powers that enabled him to mislead, — if there were any misleading, — ought to suffer rather than the other party. Farmers' and Mechanics' Bank of Kent Co. i\ Drover.s' and Butchers' Bank, 16 N. Y. 125, 133 ; Welland Canal Co. v. Hath- away, 8 Wend. 480. In the Bank of The United States v. Davis, 2 Hill, 451, 465, Nelson, C. J., said: " Tiie i)lainti(fs appointed the director, and held him out to their customers and the public as entitled to confidence. They placed him in a position where he has been enabled to conunit this fraud." The directors had fraudulently appropriated the proceeds of a bill discounted for the drawer. It was held the drawer was not liable. The reasoning of Justice Seldeii, in the Farmers' and Mechanics' Bank of Kent V. The Butchers' and Drovers' Bank, supra, is also strikingly apposite in the case before us. He said : " The bank selects its teller, and places him in a position of great responsibility. Persons having no voice in his selection are obliged to deal with the bank through him. If, therefore, while acting in the business of the bank, and within the scope of his employment, so far as is known or can be seen by the party dealing with him, he is guilty of misrepresentation, ought not the bank to be responsible ? " The same principle was applied in the New York and New Haven Railroad Co. V. Schuyler, 38 Barb. Sup. Ct., 536 ; s. c. affirmed, 34 N. Y. 30. It was explicitly laid down by Lord IIoU, in Hern r. Nichols, 1 Salk. 289. He there said : " For seeing somebody must be a loser by this deceit, it is more reason that he that employs and puts trust and confidence in the deceiver should be a loser than a stranger," " and upon this the plaintiff had a verdict.'' Smith, by his conduct, if not by his declarations, avowed his authority to buy the certificates and gold in question, from the Merchants' Bank, and the bank, under the circuinstauees, had a right to believe him. We have thus (ar examined the testimony as if the certified checks were void, or had not been given. It remains to consider that branch of the case. Bank- checks are not inland l)ills of exchange, but have many of the properties of such commercial paper ; and many of the rules of the law merchant are alike applicable to both. Each is for a specific sum payable in money. In both cases there is a drawer, a drawee, and a payee. Without acceptance, no action can be main- 746 CHECKS. tained by tlie bolder upon either against the drawer. The chief points of differ- ence are that a check is always drawn on a bank or banker. No days of grace are allowed. The drawer is not discharged by the laches of the holder in presentment for payment, unless he can show that he has sustained some injury by the default. It is not due until payment is demanded, and the statute of limitations runs only from that time. It is by its face the appropriation of so much money of the drawer in the hands of the drawee to the payment of an admitted liability of the drawer. It is not necessary that the drawer of a bill should have funds in the hands of the drawee. A check in such case would be a fraud. Grant, Banking, 89, 90; Keene v. Beard, 8 Com. B. n. s. 372;* Serle v. Norton, 2 Moody & R. 404, note ; Boehm v. Sterling, 7 T. R. 423,430 ; Alexander v. Burchfield, 7 Man. & G. 1061. All the authorities, both English and American, hold that a check may be accepted, though acceptance is not usual. Robson v. Bennet, 2 Taunt. 388, 395 ; Grant, Banking, 89; Chitty, Bills (10th ed.), 2G1 ; Boyd'?;. Emmerson, 2 Adol. & Ellis, 184 ; Kilsby v. Williams, 5 Barn. & Aid. 816 ; Story, Promissory Notes, §§ 489, 490. By the law merchant of this country the certificate of the bank that a check is good is equivalent to acceptance. It implies that the check is drawn upon sufficient funds in the hands of the drawee, that they have been set apart for its satisfaction, and that they shall be so applied whenever the check is presented for payment. It is an undertaking that the check is good then, and shall continue good ; and this agreement is as binding on the bank as its notes of circulation, a certificate of deposit payable to the order of the depositor, or any other obli- gation it can assume. The object of certifying a check, as regards both parties, is to enable the holder to use it as money. The transferee takes it with the same readiness and sense of security that he would take the notes of the bank. It is available also to him for all the purposes of money. Thus it continues to perform its important functions until, in the course of business, it goes back to the bank for redemption, and is extinguished by payment. It cannot be doubted that the certifying bank intended these consequences, and it is liable accordingly. To hold otherwise would render these important securities only a snare and delusion. A bank, incurs no greater risk in certifying a check than in giving a certificate of deposit. In well-regulated banks the practice Is at once to charge the check to the account of the drawer, to credit it in "a certified check account," and when the check is paid, to debit that account with the amount. Nothing can be simpler or safer than this process. The practice of certifying checks has grown out of the business needs of the country. They enable the holder to keep or convey the amount specified with safety. They enable persons not well acquainted to deal promptly with each other, and they avoid the delay and risks of receiving, counting, and passing from hand to hand large sums of money. It is computed by a competent authority that the average daily amount of such checks in use in the city of New York, throughout the year, is not less than one hundred millions of dollars. 1 Ante, 718. THE farmers' bank V. BUTCHERS' BANK. 747 We could hardly inflict a severer Itlow upon the commerce and business of the country than by throwing a doubt upon their validity. Our conclusions as to their lej^al efT(!Ct are supported by authorities of great weij^ht: Bicklord r. First National Bank. 42 111. "JliH ; Willets v. Plia-ni.\ Hank, 2 Duer, 121 ; Harnet v. Smith, 10 Foster (N. H.), 2.';(J ; Farmers' and^Ii-chanics' Bank v. Butchers' and Drovers' Bank, 4 Duer, 219; 14 N. Y. 624; Meads ». Merchants' Bank, 25 N. Y. 143; Brown v. Leckie d al., 43 111. 497; Girard Bank v. Bank of Penn Township, 39 Penn. St. 92. Congress has made them the subject of taxation by name. 13 St. 278. But it is streruiously (k-nied that the cashier had authority to certify the checks in question. To this there are two answers : — 1. In considering the (juestion of his authority to buy the gold, the evidence that he had given his checks for loans to his bank, and for the proceeds of discounts, was fully considered. Our reasoning and the authorities cited upon that subject apply here with equal force. We need not go over the same ground again. The questions whether the requisite authority was not inferable, and whether the principle of estoppel in pais did not apply, should in this connection also have been left to the jury. 2. As before remarked, the organic law expressly allowed the bank to buy coin and bullion. We have also adverted to the provisions of the by-laws, that the cashier shall be responsible " for the moneys, funds, and all other valuables of the bank;" and that "all contracts, checks, drafts, receipts, &c., shall be signed either by the cashier or president." The power of the bank to certify checks has also been sufficiently examined. The question we are now consider- ing is the authority of the cashier. It is his duty to receive all the funds which come into the bank, and to enter them upon its books. The authority to receive implies and carries with it authority to give certificates of deposit and other proper vouchers. Where the money is in the bank he has the same authority to certify a check to be good, charge the amount to the drawer, approi)riate it to the pavment of the check, and make the proper entry on tiie books of the bank. This he is authorized to do virtute officii. The power is inherent in the office. Wild V. The Bank of Passamaquoddy, 3 Mason, 505; Burnham r. Webster, 19 Me. 232 ; Elliot v. Abbott, 12 N. Ilamp. 549, 556 ; Bank of Vergennes r. War- ren, 7 Hill, 91 ; Lloyd v. The West Branch Bank, 15 Penn. St. 172; Badger v. The Bank of Cumberland, 26 Me. 428; Bank of Kentucky i\ The Schuylkill Bank, 1 Parsons Sel. Ca., 182; Fleckner r. Bank of United States, 8 Wheat. 338, 300. The cashier is the executive officer, through whom the whole financial opera- tions of the bank are conducted. He receives and pays out its moneys, collects and pays its debts, and receives and transfers its commercial securities. Tellers and other subordinate oflicers may be appointed, but they are under his direc- tion, and are, as it were, the arms by which designated portions of his various functions are discharged. A teller may be clothed with tiic power to certify checks, but this in itself would not alfect the right of the cashier to do the same thing. The directors may limit his authority as they deem proper, but this would not alfect those to whom the limitation was unknown. Commercial Bank of Lake Erie v. Xorton el al., 1 Hill, 501 ; Bank of Vergennes v. Warren, 7 Hill, 91 ; Beers v. The Phoenix Glass Co., 14 Barb. 358 ; Farmers' and Mechanics' 748 CHECKS. Bank v. Butchers' and Drovers' Bank, 14 N. Y. 624; North River Bank v. Ay- mer, 3 Hill, 2G2, 2G8 ; Barnes v. Ontario Bank, 19 N. Y. 156, 166. The foundation upon wliich this liability rests was considered in an earlier part of this opinion. Those dealing with a bank in good fliith have a right to presume iiSegrity on the pai't of its officers, when acting within the apparent sphere of their duties, and the bank is bound accordingly. In Barnes v. The Ontario Bank, 19 N. Y. 156, the cashier had issued a fiilse certificate of deposit. In the Fanners' and Mechanics' Bank v. The Butchers' and Drovers' Bank, 14 N. Y. 624; s. c, 16 N. Y. 133; and in Mead v. The Merchants' Bank of Albany, 25 N. Y. 146, the teller bad fraudulently certified a check to be good. In each case the bank was held liable to an innocent holder. It is objected that the checks were not certified by the cashier at his Banking- house. The provision of the act of Congress as to the place of business of the banks created under it must bo construed reasonably. The business of every bank, away from its office — frequently large and important — is unavoidably done at the proper place by the cashier in person, or by correspondents or other agents. In the case before us, the gold must necessarily have been bought, if at all, at the buying or the selling bank, or at some third locality. The power to pay was vital to the power to buy, and inseparable from it. There is no force in this objection. Bank of Augusta v. Earle, 13 Peters, 519; Pendleton V. Bank of Kentucky, 1 T. B. Monroe, 182. It is also objected that each of the checks, after being certified, required an additional stamp. The act of Congress relating to the subject directs certified checks to be included in the circulation of the bank for the purpose of taxation. 13 St. 278, c. 173, § 110. This is a conclusive answer to the objection. In Brown v. London, 1 Levinz, 298, judgment in a suit upon two accepted bills of exchange was arrested after verdict because "entire damages" were given, and the count, upon one of the bills, failed to aver that by the custom of merchants and others trading in England the acceptor was obliged to pay. This was in 1671. Other decisions in this class of cases, not less remarkable, are familiar to those versed in the learning of the elder reports. The law merchant was not made. It grew. Time and experience, if slower, are wiser law-makers than legislative bodies. Customs have sprung from the necessities and the con- venience of business and prevailed in duration and extent until they acquired the force of law. This mass of our jurisprudence has thus grown, and will con- tinue to grow, by successive accretions. We have disposed of this case as it is before us. Ilow.fiir it may be changed in its essential character, if at all, by a full development of the evidence on both sides in the further trial, which will doubtless take place, it is not for us to anticipate. The judgment below is reversed, and a venire de novo will be awarded. Clifford and Davis, JJ., dissented. See also Clark National Bank v. Bank of Albion, 52 Barb. .592 ; Irving Bank V. Wetherald, 36 N. Y. 335. INDEX. INDEX. ACCEPTAXCE, agent's duty to present for, 26 et seq., 39 and n. eirect of custom and usage, 'AO in n. when notes and bills payable at or after sight to be presented for, 40 in n., 41 in n. case of foreign Jaills, ib. review of all the cases on the point, 41 in n. what constitutes, 41 et seq. verbal when sufficient, 42 in n. when not necessary, 42, 43 in n. promise to accept, effect of, 43 et seq., 49 in n. et seq. parol promise to accept, 50 in n. et seq. in promise to accept, bill must be pointed out, 52 et seq. permission to draw, effect of, 5G in n. et seq. what facts admitted by, 57 et seq., 59 in n. et seq. effect of knowledge that signature is forged, 02 in n. (See Forgery.) admission of acceptance, 63 in n. supra protest, 64 et seq. when bound to make, ib. what defences allowable against acceptor, supra protest, 87 in n. acceptance after bill dishonored, ib. et seq. rights of party paying for honor of other parties, 88 in n. ' by the United States, 88 et seq. conditional, (7;., 104, et seq., 108 in n. et seq. " when in funds," 108 in n. party not bound to receive conditional, 108 in n. release of drawer will not discharge acceptor, 581 et seq., 696 in n. ACCIDENT, when sulHcient excuse. (See Dkmand and Notice.) ACCOMMODATION PAPER. (See Holder for Value; Payment.) ACTION, who may sue on note or bill, 477, et seq., 478 in n. when may be brought, 480 el seq., 490 in n. d seq., 492 in n., 493 et seq. 752 INDEX. ACTION — continued. post-notes, 480 et seq., S. P. in n. 490. on lost note or bill, 671 et seq. (See Lost Notes and Bills.) ADMISSION. (»9ee Acceptance; Evidence.) AGENT. (See Acceptance.) AT SIGHT. (i'ee Acceptance.) B. BANKRUPTCY, lohen jxirties discharged by. (See Indorsee.) BILLS AND NOTES, when not negotiable. by reason of not being payable in money, 1. payable in Canada money, 1 et seq. payable in bank-notes, 6 in n., 7 in n. New York statute in regard to negotiability, 6 in n. negotiability not indispensable, ib. payable in specific articles, 7 in n. xohen not negrdiable, by reason of being payable on -contingency, 7 et seq. payable out of particular fund, 7 et seq., 8 and n. ■with specific directions, 8 et seq. power to confess judgment, 9 and n. when collateral security named in note, 9 in n. other conditions, &c., 10 and n. certainty as to time of payment and other particulars, 11 et seq., 12 et seq. in n. payable at particular place, 15 et seq. when cut in halves, 699, 703 et seq. (See Lost Notes and Bills.) BLANK. effect of writings in, 215. (See Holder for Value.) BROKEN BANK, payment in bills of. (See Payment.) CHECKS, form of, days of grace, 716 et seq. how differ from bills of exchange, ib., 718 in n. et seq. effect of being certified by teller to' be " good," 721 et seq. rule in Massachusetts, 721. rule in New York, 727 et seq. rule in the Supreme Court of United States, 740 et seq., in n. CASHIER. (See Checks.) CANADA MONEY. (See Money ; Bills and Notes.) CERTAINTY, when and what required in notes and bills, 11 et seq., 12, 13, 14 in notes. (See Bills and Notes.) INDEX. 768 CERTIFICATE, of teller or cashier, effect of, 740 et seq. {See Checks.) COLLATERAL SECURITY. (See Holpkk fou Valuk.) COMPETENX'Y. (See Evidence.) COMl'OSrj ION-DEED, ej/'ect of uj)on parties collaterally holden. (See Indorser.) CONDITIONAL ACCEPTANCE. (See Acceptance.) CONSIDERATION. (See Holder for Value.) CONSTRUCTIVE NOTICE. (See Holder for Value.) CONTINGENCY, as ailecting negotiability of notes and bills, 7 et seq., 8 and n., 9 and n., 10 and n. CONTRACT. (.S'ce Evidence; Indorser; Surety.) CONTRIBUTION. (See Surety.) CUSTOM AND USAGE. (See Acceptance ; Presentment.) D. DAYS OF GRACE, ichen allowed. (See Presentment.) * DEMxVND, of payment. (See Presentment.) DEMAND AND NOTICE, JioiD excused: unavoidable accident, 414 et seq. death of maker, indorser appointed administrator, 423 et seq. question further discussed, 428 in n. where bill drawn without funds, 430 et seq., 441 in n. effect of war, ib. DILIGENCE, degree of. • (See Notice.) when question of law, 410 el seq., 413 in n. DOMICILE. (See Notice.) DR.VWI^R. (See Indorsement ; Acceptance.) DRAWN IN SETS, which one required. (See Evidence.) E. EQUITABLE DEFENCES. (See Holder for Value.) EQUITY. (See Lost Notes and Bills.) ESTOPPEL. (Sec Evidence.) EVIDENCE, what sufficient to prove indorsement, 110 et seq. (See Indorsement.) how far force of arbitrary signs explainable by oral proof, ib. presumptions as to time of indorsement, 213. what required to impeach title of holder, ib. of title to note or bill, 217, 220 et seq. 48 754 INDEX. EVIDENCE — continued. effect of notice or knowledge, 225 in n., 258 et seq., 2G1 et seq. sufficient to put party on inquiry, 235 et seq^. what siiflicient to impeach title, 239 et seq. how far production required, 498 et seq.., 601 in n. bill drawn in sets, 498 et seq. to vary liability of indorser, 5(1.') et seq. competency of party to impeach bill or note by his own, 507 et seq. when indorser competent to prove paymfint, 522 et seq., 527 in n. amount of discussed, 528 et seq. -when notice to be sent, 528 et seq. wh(;n all the witnesses in a continued chain must be called, if). discussion of the force of in a particular case, ib. admissions, notice, contract, estoppel, 536 et seq., 540 in n. of loss of bill or note, G74 et seq. (See Lost Notes and Bills.) EXCUSES OF PRESENTMENT AND NOTICE. {See Demand and Notice.) F. FOREIGN BILL. (See Acceptance.) FORGERY, money paid on forged indorsement when recoverable, 57 et seq., C43 et seq. G48 in n. timely notice required after discovery, ib. ■where forged paper paid by maker, 650 et seq., 661-670. FUNDS, bill drawn without. (See Dejlind and Notice.) G. GIVING TIME, effect of , upon other parties. (/See Indorser.) GUARANTOR. (See Surety.) GUARANTY. (See Indorsement.) H. HOLDER FOR VALUE, note delivered as security for contingent debt, 165 et seq. antecedent debt, 169 et seq. comparative authority of national and State courts, 186 et seq. eiFect of taking note or bill as payment of or in security for existing debt, 195 et seq. question stated on principle, 195, 196. English cases reviewed, 196-199. American cases, 200-202. review of later cases both English and American, 202-208. cases brought down to present time, 208-213. INDEX. 755 HOLDER FOR VALUE — continued. presumption as to time of" indorsement, '2l:^. when presumed to be taken honajide, il>. wliiit evidence rt'<|uired to impeach title of holder, ib. when paper payiiljle on di-manil is overdue, 214. when holder must pay value, ih. extent of recovery, ih. time of payment extended, 21o. acceptance by procuration, U). in blank, ih. what shtdl put party upon iiupiirj', 210. acconnnodatI(Tn paper, lMC), 217. presumption of title, 217 et seq., 220 et seq. equities, ib. defence, by showing breach of executory agreement, 222. what knowledge will defeat holder's title, 225 in n. paper post-dated, 22o ct seq. note void under statute, 22(1 et seq. illegal consideration; burden of proof, 2.')0 et seq. cases referred to. 2.')4, 2.")5 in n. what shall put holder on inquiry, 23.5 et seq. title only affected by bad faith, 239 et seq. <"ases reviewed upon the point, 2.57 in n. et seq. how far affected by notice of defects, 2.58 et seq. indorsee with notice claiming under prior holder without, 261 et seq. collection of cases upon point, 2(J2 in n. of accommodation paper with notice, 263 et seq. when its use is perverted, 264 et seq., 267 et seq., 209 et seq. when taken overdue; right of set-off, 271 et seq., 275 in n. when maker can set up usury as defence, 277 dt seq., 2S0 et seq., 287 et seq. distinction between, and accommodation party, 581 et se/. HOLIDAYS, icJieji paper falls due upon. {See Presentmknt.) HUSBAND AND WH^E. (,Sec Indorse.mkxt.) I. ILLEGALITY. (See Holder for Value.) INDORSEMENT. (See Foisgery.) form of, whether the u.sc of arl)itrary signs in pencil may lie explained by oral proof, 110 et w/., //'. in n. et seq. signing by initials. 111 in n. effect of guaranty u ion note, /7>. immaterial what part of note upon, 112 in n. form of, not material, /7*. b>/ one not a parti/, 112 et seq., 124 ct seq., 131 ef seq., 139 et .<!eq., 143 et seq., loU et seq. 756 INDEX. INDORSEMENT — continued. cases in Massachusetts and other States, 131 in n. New York and other States, 139 in n. Ohio and other States, 150 in n. summary upon the subject, 155 in n. et seq. after viaturity, 156 et seq. in case of the death of one partner, 160 in n. et seq. by wife ivith consent of husband, 161 et seq. cases in different States, 164 in n. INDORSEE. {See Indorsement ; Evidence.) how may be released, additional security; delaying suit, 544 et seq., 546 in n., 547 et seq. extension of time, 544 et seq., 547 et seq., 551 et seq., 554 in n., 558 et seq., 560 in n. < bankruptcy, 558 et seq. recovery against maker, 563 et seq. release of first indorser, 568 et seq. composition deed reserving right against, 569 et seq., 574 in n. mortgage security sold without consent of, 577 et seq. any departure from original contract, ib. INSOLVENCY, effect of. {See Presentment.) J. JUDGIVIENT, effect of upon oilier parties. (See Indorser.) L. LAW OF PLACE. (See Lex Loci.) LEX LOCI, effect of. (See Presentment.) bill drawn in one country and Indorsed in another, 709 et seq. conflict of authoVities, 712 in n. et seq. LOST NOTES AND BILLS, wheti ovmer may recover, 671 et seq. conflict of authority, 673 in n. circumstantial proof of loss, &c., 674 et seq. case of negotiable paper, 679, 680. action at law lies in some States, 683 et seq., 686 in n. remedy in equity, 688 et seq. where note negotiable, but not negotiated, 691 in n. et seq. action at law, indemnity, 694, 697, 698 in n. where one-half the security is lost, 699 et seq., 703 et seq. in n. INDEX. 7'>7 M. MATURITY. (See Indorsement; Pay.mknt.) MONEY, promissory note or 1)111 of e.xchaiij^e must be payable in, 1 et .sc(j, G in n., 7 in n. N. • NATIONAL COURTS, how far decisions of State courts regarded by, 18G et seq. NEGLIGENCE, e fleet of. (See Presentment.) NEGOTIABLE PAPER. (See Holder for Value; Surety; Bills and Notes ; Lo.st Notes and Bills.) NON-PAYMENT, ]>roceedin(js on account of . (See Notice; Payment.) NOTICE. (See Presentment.) form of, 358 et seq., 362 in n., 363 et seq., 371 in n. et seq. mode of sending, 376, 377 in n. when personal I'equired, 378 et seq., 381 in n. by Avhom f^iven, 383 et seq., 384 in n. et seq. the time when should be sent, 388 et seq. where there are successive parties, 390 in n. must be sent by mail of next day, 392 in n. how this construed, 392, 393 in n. et seq. where should be sent, 397 et seq., 404 et seq. to place of domicile commonly siiiruient, ib. how far place of domicile presumj)tively unchanged, 404 in n. where different post-offic;es in same town, 409 in n. where no post-ollice in town of domicile, ib. where party receives mail at different places, 410 in n. degree of diligence required, 391 in n., 410 et seq., 41.) in n. when question one of law, il>. reasonable diligence defined, ib. , (Sec Presentment.) where indorser has received collateral security, 463 in n. waiver of same, 46o in n., 468 et seq., 469 in n. et seq. when promise to pay amounts to waiver of, 473 et seq., 475 in n. (Sec Evidence; FouciEUY.) O. OVERDUE. efect upon riijhts of holler. . (See Holder for Value.) 758- INDEX. p. PARTY, . indorsement by one not. (*See Indorskment ; Evidence.) PAYABLE, HOW. (See Bills and Notes.) PAYMENT. (See Holder for Value.) before maturity, or to one not authorized to receive payment, 331 et seq., r 338 et seq. in n, unaccepted paper discounted by drawee before maturity, 340 et seq., 343 in n. ■• wrongful by principals, effect on surety, 343 et seq., 345 in n. et seq. where parties sign for accommodation, 351 in n. when formal protest required on non-payment, 355 el seq. form of notice on non-payment, 358 etseq., 362 in n., 363 et seq., 371 in n, et seq. payment in bills of broken bank, 617 et seq., 625 et seq., 634 in n. paper of third party, 637 et seq., 642 in n. PERSONAL NOTICE, wJien required. (See Notice.) PLACE, where presentment to be made. (See Presentment.) f LACE OF BUSINESS, effect of being closed. (See Presentment.) POST-DATED. (See Holder for Value.) POST-OFFICE. (.See Notice.) POST-NOTES. (See Action.) PRESENTJVIENT. (See Notice.) and demand of jxiyment, how far necessary, 290 et seq. further discussion of same point, 296, 297 in n. when demand to be made, 297 et seq. effect of usage and custom, 306 et seq. in n. days of grace when allowed, 307 in n. whether on inland bills, &c., 308 in n. how far affected by lex loci, 308 in n. where paper falls due on Sunday or holiday when payable, 309 in n. at what time in the day to be made, 310 et seq. how far affected by usage or convenience, 311 in n. effect of being too early or too late, 312 in n. hour will vary according to circumstances, ib. where to be made, 313 et seq. effect of being in bank unknown to the same, through neglect of its officers, 322 et seq. where maker has removed, 326 in n. effect of oral proof of agreement as to place of, when none named in note or bill, ib. et seq. where maker or acceptor has become insolvent and absconded, 329 in n., 450 et seq., 451, 452 in n. INDEX. *7o0 PRESENTMENT — continual. or where lie has merely removed, o30 in n., 117 el seq., 449, 4.j0 in n., Aiy> et set/. place of business closed, iiujuiry to Ije made, 4">8 in n. mere insolvency or connected with assignment to indorsee, effect of, 4")8 et seq., 4f>l in n. et seq. PRESUMPTIONS. (.See Evidknci;.) PRINCIPAL AND SURETY, • quest ions between. (>St'e Payment; Suukty.) PROCURATION, acceptance by. (See IIoldkh fou Valuk.) PRODUCTION of note or 1)111 when required. (.S'ee EvinEN'Ci;.) PROMISE TO ACCEPT. (.See Acceptanck.) PROTEST, of jiromi^snr)j note unnccessarij, 35.5 et seq. when and how far evidence, 290 el seq. R. RELEASE, effect of upon other parties. (See Indokser.) REMOVAL of maker or acceptor. (See Presentment.) S. SALE of collaterals, ejfcct on other parties. (Se^ Indorser.) SECURITY, effect of giving additional. (See Indorser.) SET-OFF, right of as to overdue paper, &c. (See Holder for Value.) SUIT, who may bring on note or bill, 477, 478. (.See Action.) SUNDAY, tohen paper falls due upon. (See Presentment.) SUPRA PROTEST. (See Accei>tancr.) SURETY, when liable to contribution, 597 et .<>eq., 603-61C in n. when holdon as guarantor merely, (7^ difference between and guarantor, it). how far affected by alteration of contract, (iO.'^-GKl in n. difference in responsibility when paper negotiable, ib. T. TIME, when presentment to be made. (See Presentment; Notice.) 760 INDEX. u. USAGE. USURY. (See Acceptance; Presentiment.) (See Holder for Value.) V. VALUE. (See Holder for Value.) VOID UNDER STATUTE. (See Holder for Value.) W. WAIVER. WAR, effect of. WHEN IN FUNDS. WIFE. WITNESS. ((See Notice.) (See Demand and Notice.) (See Acceptance.) (See Husband ^^d Wife.) (See Evidence.) Cambridge : Press of John Wilson & Son. LAW LKSEAKT Iftrrr' Y OF cAUFrnpsiA <--'S ANGELB5