95-7 Cornell University Law Library. THE GIFT OF LILLIAN HUFFCUT I BINGHAMTON, N. Y. November 27, 1915 9181 irr: ^^-. . 92r"*" ""'^^''^V Library KF 957.A4B59 1894 Cases on the law of bills, notes, and ch 3 1924 018 854 251 Cornell University Library The original of tliis book is in tlie Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924018854251 CASES THE LAW OF BILLS, NOTES, AND CHEQUES TO ACCOMPANY THE EDITOR'S WORK ON THAT SUBJECT EDITED BY < ^- "' " MELVILLE M. BIGELOW Ph.D. Hakvaed BOSTON LITTLE, BROWN, AND COMPANY 1894 Copijrif/ht, 1894 By Melville M. Bigelow (JSIVEBSITY PKESS John Wilson and Son, Cambridge, U.S.A. NOTE. The cases contained in this volume are selected to accompany the editor's work on the Law of Bills, Notes, and Cheques, of the Students' Series ; and they follow the order of the text of^that book. The editor has generally rewritten the headnotes of the cases, putting them of set purpose in the form of briefly-stated rules of law. The headnotes thus furnish a text for what follows, and help to make the report of the case complete after the manner of original law reports. They cannot tempt the student to cut short his work and take them as a substitute for what fol- lows, or even as an epitome of it, for the deduction of rules is no more than an incident of the study of cases. Statements of fact, too, when not contained in the opinion, have often been rewritten, especially when clearness and space could be gained. Matter foreign to the subject in hand has been omitted, as well from the opinion as from the statement preceding, where, and only where, the omission could riot affect the completeness of what was left. The report of a case usually consists of five separable parts ; and to bring about the best results the report IV NOTE. should be studied accordingly, part by part, in natural order. The parts, and their order of sequence, are these : — 1. Nature of the action (e. g., indorsee against malier of a note). 2. Essential facts. 3. Point or points in dispute. 4. Decision (e. g., instrument not negotiable). 5. Ground of decision. Taking up the work accordingly, the student should not leave a case until he can state it, without hesitation, clearly and effectively from beginning to end. CASES REPOKTED. Adams v. King . . Aldous V. Cornwell . Allen, Farnsworth v. . Arnold v. Dresser . . Aymar v. Sheldon . . Baldwin, Munn v. . Bank of Alexandria Swann Bank of Commerce v. Union Bank . . . Bank of United States, Mills D Bank of Utica v. Bender Bay V. Coddington . . Bayley v. Taber . . . Belcher v. Smith . . Bender, Bank of Utica v. Berkshire Bank v. Jones Bethell, Morris v. . Bowling V. Harrison Brown v. Butchers' Drovers' Bank Brown, West v. . . Burkhalter v. Second Na- tional Bank of Erie Burr, Hale v. . . Burson v. Huntington Bush, Townsend o. and 14 244 148 209 373 176 177 249 152 191. 296 286 219 191 212 277 171 77 108 66 142 227 94 Page Butchers' and Drovers' Bank, Brown v. . . . 77 Carew v. Duckworth . . 59 Carrier v. Sears .... 282 Carter v. Union Bank . . 878 Chapman v. Keane . . . 167 Charles, Montelius v. . 122 Chester v. Dorr .... 319 Clarke, Davis v. ... 45 Coddington, Bay i;. . . 296 Coit, Baton v. . . 3U Cornwell, Aldous v. . . 244 Crist w. Crist. . . .78 Dale V. Gear ... 84 Dana v. Sawyer . . 146 Davis V. Clarke . . 45 Dennis, Gilbert ?;. . . . 157 Dix, Shoe and Leather National Bank v. . . 25 Dobbins, Taylor v. . . ■ 25 Dodge, Worden v. . ■ . 19 Dorr, Chester v. . . 319 Downer, Sylvester v. . 35 Downs, Erwin v. . . . 93 Dresser, Arnold v. . . 209 Duckworth, Carew v. ■ . 59 Dunlop V. Silver ... 1 CASES l!Er( IRTED. Ellicott, Grant v. . Erwin v. Downs Exchange Bank of Louis 0. liice . St. Farmers' Bank of Salem, Lawson v. ... Farmers' and Mechanics' Bank v. Rathbone Page 214 93 49 179 Farnsworth v. Allen . 148 Fearing, State Bank v. . 91 Forster, ^Vhistler c. . 73 Foster v. Mackinnon . 237 Foster v. Parker . . . 207 Gear, Dale v- ■ . 84 Gheen, Worrall v. . . 2.J0 Gilbert c. Dennis 157 Goodman v. Harvey . 293 Grant r. Ellicott . . 211 Guild, \V heeler v. . . 3IJ.") Hale V. Burr . 112 Harrison, Bowling v. . 171 Harvey, Goodman t . 293 Hascall v. Whitmore . 32(3 Haskell u. Lambert 22 Heramingway, Kelley ''• 20 Henrietta National Bank c. State National Bank . .50 Henshaw, Hortsman c. 27 1 Her.shey, Works v. . 21 Holmes r. Trumper 258 Horr, Sporry r. . . . 15 Hortsman p. Henshaw 274 Hnngerford, Srabury v. 29 Huntington, llurson v. . 227 Jones, Berkshire Bank /;. 212 Jones, Lehman v. . 211 Page Keane, Chapman v. . ■ 107 Kelley v. Ilemmingway . 20 King, Adams v 14 Kinyon c. Stanton ... 64 Knox, Shaw v. ■ . ■ 83 Lake, ftlusson v. ■ ■ 100 Lambert, Haskell o. ■ 22 Lancaster Savings Insti- tution, SlioeubiM-ger v. . 169 Lawrence County Bank, Moses c. . 221 Lawson v. Farmers' Bank of .Sal.'m ... 179 Leavitt r. Putnam . 317 Lehman i\ Jones . . 211 Loring, Sohier v. . . . 334 IMackinnon, Foster v. . . 237 Madison Square Bank v. Pierce . . . 356 Marks, Mattison v. . . 18 Mathews, Sigerson u. . . 204 Mattison v. Marks . IS McKleroy «. Southern Bank of Kentucky . . 270 McLemore v. Powell . . 329 jMerritt, Quinby o. . . . 11 Mills V. Bank of United States . .152 Minot p. Russ ... 69 Montelius n. Charles . . 122 ]\Ionis V. Bi'thrll ... 277 i\l()ses V. Lawrence County Bank . 221 Munn ( . Baldwin 170 Musson .... Lake . . 100 Neal, Price v. . . 207 Newcomb c. Raynor . . 328 Norton, Windham Bank n. 132 CASES REPORTED. vu Oridge v. Sherborne . . Otsego County Bank v. Warren .... Page 127 150 Parker, Foster v. . . 207 Paton V. Coit 311 Peruvian Railways Co. ». Thames and Mersey In- surance Co . . . . 284 Pettee v. Prout . . 225 Pierce, Madisou Square Bank v 356 Powell, McLemore v. . 329 Pratt, Spear v 48 Price V. Neal ... .267 Prout, Pettee v. . . . 225 Putnam, Leavitt v. . . . 317 Quinby v. Merritt ... 11 Rathbone, Farmers' and Mechanics' Bank v. . . 342 Raynor, Newcomb v. . . 328 Rice, Exchange Bank of St. Louis V. . . . 49 Ross, Swope V 361 Russ, Mi not v. . . 69 Sawyer, Dana v. . . 146 Seabury v. Hungerford . 29 Sears, Carrier v. ... 282 Second National Bank of Erie, Burkhalter v. . . 66 Shaw V. Knox .... 83 Sheldon, Ay mar v. . . 373 Sherborne, Oridge v. . . 127 Shoe and Leather National Bank v. Dix .... 25 Shoenberger t;. Lancaster Savings Institution . . 169 Ken Sigerson v. Mathews Silver, Dunlop v. Small V. Smith . Smith, Belcher v. Smith, Small t. . Snyder, Taylor v. Sohier v. Loring Southern Bank of tucky, McKleroy v. Spear v. Pratt ... Sperry v. Horr . . . Stanton, Kinyon )i. . . State Bank v. Fearing . State Capital Bank v Thompson .... State National Bank, Hen rietta National Bank v. Steele, Wood v. . . . Stetson, Walker v. . . Swann, Bank of Alexan- dria V. . . . Swift V. Tyson . . . Swope V. Ross . . Sylvester v. Downer Page 204 1 215 219 215 111 334 270 48 15 64 91 290 56 253 195 177 300 361 35 Taber, Bayley v. . . 286 Taylor v. Dobbins . . 25 Taylor u. Snyder . Ill Thames and Mersey In- surance Co., Peruvian Railways Co. v. . . . 284 Thompson, State Capital Bank v 290 Townsend v. Bush ... 94 Trumper, Holmes v. . . 258 Tyson, Swift v 300 Union Bank, Bank of Com- merce V. .... 249 Union Bank, Carter v. . 378 viii CASES REPORTED. Union Bank of Weymouth and Braintree v. Willis . 38 Walker v. Stetson . . . 195 Warren, Otsego County Bank v . 150 West V. Brown .... 108 Wheeler v. Guild . 365 Whistler v. Forster ... 73 Whitmore, Hascall v. . . Willis, Union Bank of Weymouth and Brain- tree V. . . . . . Windham Bank v. Norton Wood V. Steele .... Worden u. Dodge . Works V. Hershey . . Worrall v. Gheen . . . Page 326 38 132 253 19 24 256 CASES ON BILLS, NOTES, AND CHEQUES. DUNLOP V. SILVEE. " ^. Circuit Court, District of Columbia, July, 1801. 1 Crauch, 367. A remote indorser of a negotiable promissory note, in Virginia law, is liable to the holder.^ James Cavan made a promissory note payable to Silver et al. or order, sixty days after date, in the sum of $600, for value received, negotiable at the Bank of Alexandria: Sil- ver et al. indorsed the note to Downing & Dowel], who in- dorsed it, 'Pay the contents to John Dunlop or order.' Dunlop had obtained judgment and execution against the maker, who took the oath of an insolvent debtor. He now sued Silver as indorser. Two Counts. 1. A special count stating the making and indorsing, the suit, judgment, execution, and insolvency of the maker, by reason whereof' the defendant became liable, 1 At the February term, 1803, of the Supreme Court of the United States, it was held, contrary to the decision in this case, on error to the same court, that by the law of Virginia an indorsee of a promissory note could not maintain an action against a remote indorser for want of privity. Mandeville v. Riddle, 1 Cranch, 290. The case supra, thus overruled, is reported in Cranch as an Appendix to Mandeville v. Riddle. Its value consists entirely in its exhaustive historical review of the authorities, going back as it does to the very beginning of actions in the Superior Courts. 1 2 CASES OX BILLS, NOTES, AND CHEQUES. etc. 2. Indebitatus assumpsit for money had and received. Plea, non assumpsit, and verdict for the plaintiff subject to the opinion of the court whether the holder can maintain an action against the remote indorser of a promissory note, under Virginia law. The statute of 3 & 4 Anne, e. 9, was not in force in that State ; but an Act of 1786, c. 29, existed, by which ' an action of debt may be maintained upon a note or writing by which the person signing the same shall prom- ise or oblige himself to pay a sum of mone}', or quantity of tobacco, to another,' and that ' assignments of bonds, bills, and promissory notes, and other writings obligatory, for payment of money or tobacco, shall be valid; and an as- signee of any such may thereupon maintain an action of debt in his own name, but shall allow all just discounts, not only against himself, but against the assignor, before notice of the assignment was given to the defendant.' [The decision by Kilty, C. J., and Ckanch, Assist. J., was in favor of the plaintiff, an opinion — by which judge is not stated — having been delivered which occupies nearly a hundred pages in Cranch. No question of the kind is ever raised nowadays, and there is no occasion to follow, in detail, the elaborate examination of the subject made by the court. It is enough, so far as that is concerned, to re- mind the student that the case is an invaluable storehouse of the law of bills of exchange and promissory notes, from its first emergence in the law reports down to the time of the decision. Nowhere else can there be found such an exhaus- tive review of the authorities. It must suffice here to make some important extracts from the opinion, with a view to showing how the custom of merchants touching these in- struments came to be grafted upon the law of England]. [P. 368.] A distinction seems to have been made very early between the contracts of merchants (especially of for- eign merchants) and those of other people. Nearly six hun- dred years ago we find their ' old and rightful customs ' protected by the great charter of English liberties. Magna DUNLOP V. SILVER. 3 Charta, c. 30. . . . In the 13 Edvv. VI. 9, 10, cited by Mol- loy, book 3, c. 7, § 16, it is said that ' a merchant stranger made suit before the King's Privy Council, for certain bales of silk feloniously taken from him, wherein it was moved that this matter should be determined at common law ; but the Lord Chancellor answered, that this suit is brought by a merchant who is not bound to sue according to the law of the land, nor to tarry the trial of twelve men.' [The argu- ment is that the custom of merchants had come to be treated, before the statute of Anne, as part of the common law.] [P. 375.] Porms of pleading often tend to elucidate the law. By observing the forms of declarations which have from time to time been adopted in actions upon bills of exchange, we may perhaps discover the steps by which the courts al- lowed actions to be brought upon them as substantive causes of action, without alleging any consideration for the making or accepting them. The first forms which were used take no notice of the custom of merchants as creating a liability distinct from that which arises at common law, but by making use of several fictions bring the case within the general principles of actions of assumpsit. The oldest form which is recollected is to be found in Eastell's En- tries,' fol. 10 (a), under the head 'Action on the case upon promise to pay money.' . . . This declaration sets forth that A complains of B, &c., for that whereas the said A, by a certain I C, his sufficient attorney, factor, and deputy in this behalf, on such a day and year, at L, at the special in- stance and request of the said B, had delivered to the said B, by the hands of the said I C, to the proper use of the said B, £110 8s. 4 original promisor. 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 considered as an original promisor and surety, if 44 CASES ON BILLS, NOTES, AND CHEQUES. he put it on simultaneously 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.' They 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 either not be chargeable at all, or be chargeable as surety or guarantor, according to the facts proved. Carver V. Warren, 5 Mass. 546 ; Tenney v. Prince, 4 Pick. 385 ; Baker v. Briggs, 8 Pick. 122, 130 ; Oxford Bank v. Haynes, 8 Pick. 423; Story on Notes, §§ 473, 474; Beck with 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 pre- sumed 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 himself, 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 that 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, unquestion- ably, 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 » A mistake. See ante, p. 29 ; Bills and Notes (Students' Series), 33. DAVIS „. CLARKE. 45 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 con- sider 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, ac- cording to the agreement upon which he gives his signature. The fixing of the relation of the party, when he enters into the contract, is necessary for the protection of holders, and for guarding the rights of indorsers whose liability is con- ditional. If it were held otherwise, I 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 regu- larly drawn bills of exchange and promissory notes. Upon this view of the law, as drawn from the various cases, we consider Mirick & Co. to have been joint and several promisors with Thompson, and liable in like manner with him. See BUls and Notes (Students' Series), 105, note. DAVIS V. CLAEKE. 'ij Queen's Bench of England, Trinity, 1844. 6 Q. B. 16. John Hart drew a bill payable to himself br order, addressed to John Hart. C wrote across this, ' accepted, H J C Held, that C could not be sued as acceptor of a bill of exchange directed to him. Assumpsit. The first count stated that ' one John Hart, ' on 8th March, 1838, ' made his bill of exchange in writing and directed the same to the defendant, and thereby 46 CASES ON BILLS, NOTES, AND CHEQUES. required the defendant to pay to him or his order £100,' value received, at twelve months after date, which had elapsed, etc., ' and the defendant then accepted the said bill, and the said John Hart then indorsed the same to the plaintiff; ' averment of notice to defendant, promise by him to pay plaintiff, and that he did not pay. There was also a count on an account stated. The first plea denied the acceptance ; the second the promise; the third alleged a discharge of defendant by the Insolvent Debtors' Court. Eeplication joining issue on the first two pleas, and traversing the discharge alleged in the third, on which issue was joined. On the trial a written paper, in the following terms, was given in evidence for the plaintiff: — ' £100. , , „ , 'London, 8th March, 1838. ' Twelve months after date pay to me or my order one hundred pounds, value received. ' John Haet. 'To Me. John Haet.' Across the face of this instrument was written, in defendant's hand, ' Accepted. H. J. Clarke, payable at 319 Strand.' No other evidence being produced, the court directed a nonsuit. Case argued on a rule nisi for a new trial. LoED Denman, C. J. — There is no authority, either in the English law or the general law merchant, for holding a party to be liable as acceptor upon a bill addressed to another. We must take it on this instrument that the defendant is different from the party to whom it is addressed. Polhill v. Walter, 3 B. & Ad. 114, and Jack- son V. Hudson, 2 Campb. 447, are authorities showing that the defendant here cannot be sued as acceptor. In Jackson v. Hudson, Lord Ellenborough treated an accept- ance by a party not addressed as ' contrary to the usage and custom of merchants. ' DAVIS V. CLARKE. 47 Pattkson, J. — No previous case seems to be exactly- like this. In Jackson v. Hudson, 2 Campb. 447, there was one acceptance by the party to whom the bill was addressed, prior to the acceptance by the defendant. In Gray v. Miluer, 8 Taunt. 739, no party was named in the address; and I must say that the decision in that case appears to me to go to the extremity of what is convenient. It may be considered as having been decided on the ground that the acceptance was not inconsistent with the address, so that the acceptor might be deemed to have admitted him- self to be the party, addressed. But here another person, the drawer himself, is named in the address. I do not know that a party may not address a bill to himself, and accept, though the proceeding would be absurd enough. Then it is said that the defendant is estopped; but that cannot be supported where the instrument shows, on its face, that he cannot be the acceptor. Williams, J. — The only question is, whether the defendant is such an acceptor as is described in the decla- ration; that is, of a bill of exchange directed to him. No doubt this can be so only where he is the drawee; but here the bill is not addressed to the defendant at all. This is therefore not an acceptance within the custom of merchants. Coleridge, J. — The safe course is to adhere to the mer- cantile rule that an acceptance can be made only by the party addressed, or for his honor. Here the last is not pretended, and the first cannot be presumed. If the John Hart addressed is different from the John Hart who draws, there is still no acceptance ; if the same, then the instru- ment is a promissory note, and not a bill of exchange. Rule discharged. 48 CASES ON BILLS, NOTES, AND CHEQUES. SPEAR V. PRATT, i '/ Supreme Court of New York, May, 1842. 2 Hill, 582. If the drawee of a bill of exchange write his name across the face of the bill, this binds him as an acceptor, though statute requires acceptance to be in writing, and signed by the acceptor or his agent. Assumpsit against the drawee as acceptor of a bill of exchange, the drawee having simply written his name across the instrument. The statutes of New York, which govern the case, require acceptance to be in writing and signed by the acceptor. Judgment for the plaintiff by direction of the judge. Motion for a new trial. CowEN, J., for the court. — Any words written by the drawee on a bill, not putting a direct negative upon its request, as ' accepted,' ' presented,' ' seen,' tJie day of the month, or a direction to a third person to pay it, is prima facie a complete acceptance, by the law merchant. Bayley on Bills, 16.3, Am. ed. of 1836, 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 by writing his name at the bottom or across the bill; ' and he mentions this as among the more usual modes of acceptance. Chit, on Bills, 320, Am. ed. of 1839. It is supposed that the rule has been altered bj' 1 Rev. St. 757, 2d ed. § 6. This requires the acceptance to be in writijig, and signed by the acceptor or his agent. Tlie acceptance in question was, as we have seen, declared by the law merchant to be both a mriting 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 requisi- tion. No particular form of expression is necessary in any EXCHANGE BANK OF ST. LOUIS v. KICE. 49 contract. The customary import of a word, by reason of its appearing in a particular place and standing in a certain relation, is considered 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 revisors , in their note, refer to the Prench 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 analo- gous cases. The whole purpose was probably to obviate the inconveniences of the old law, which gave effect to a parol acceptance. JVew trial denied. EXCHANGE BANK OE ST. LOUIS v. EICE. Supreme Court of Massachusetts, March, 1871. 107 Mass. 37. (See 98 Mass. 288.) No action can be maintained upon a promi,se to accept a bill of ex- change by one who has purchased the bill before he knew of the promise. A promise to accept made to the drawer, not acting for the holder, does not extend to the holder. Appeal from a judgment for the defendant in contract on the following agreed statement of facts : ' On March 8, 1866, John P. Hill, at St. Louis, drew on the defendants, commission merchants in Boston, a draft for f 3,300, payable thirty days after date to the order of E. E. Pitman & Co., and containing on its face a memo- randum in the terms following: " against 12 bales cotton." On the same day the draft was indorsed to and discounted in the usual course of business by the plaintiffs, and on March 15 was presented by them to the defendants, at Boston, who caused it to be noted for non-acceptance. On March 8 Hill wrote to the defendants as follows: "I ship 50 CASES ON BILLS, KOTES, AND CHEQUES. you to-day per Merritt's Express 12 bales, weighing 5,489 pounds, on whicli I have drawn on you at 30 days for f 3,300." To this letter the defendants replied on March 14 as follows : " We now have the pleasure to acknowledge your favor of the 8th. Your shipment 12 bales cotton per Merritt's Express will receive due attention. Bill of lading not at hand. Your draft for .«?3,300 is excessive, particularly as we shall have no margin on previous ship- ments, as the market now looks. We will honor the same, but shall expect you, on receipt of this, to make us shipment of cotton to cover the margin." And on March 15 they again wrote to Hill as follows : " Market for cotton continues weak. Have no bill lading 12 bales reported as shipped yesterday, and we have felt obliged therefore to have your draft for f3,300 noted for non-acceptance. When bill lading is received, will accept draft." The said bill of lading of the cotton ran to the defendants or order, and was received by them March 17, 1865. ' The defendants' letter of March 15 was shown to the plaintiffs by E. E. Pitman & Co., INIarch 22, 1865. The plaintiffs thereupon procured said letter, and the duplicate bill of lading, of Pitman & Co., and on March 27 again presented the draft, with the defendants' said letter and the duplicate bill of lading attached, to the defendants for acceptance. But the defendants declined to accept the same, and afterwards declined to pay, and they have never paid the same or any part thereof, and the same was duly protested for non-acceptance and non-payment. The twelve bales of cotton were received by the defendants on April 17, and were sold by them on April 21 for .5;i,.349 net, which sum they credited in their account with Hill, upon which a balance then was and still is due to the defendants.' Gray, J., for the court. — It has already been decided in this case, upon proof of substantially the same facts which are now agreed by the parties, that the plaintiffs could not sue the defendants as acceptors of the draft, EXCHANGE BANK OF ST. LOUIS o. RICE. 51 because their promise to the drawer to acoept it, having been made after the draft had been negotiated to the plain- tiffs, did not amount to an acceptance ; and the memoran- dum at the foot of the draft, that it was drawn against twelve bales of cotton, could have no more effect to charge the defendants as acceptors than the mere signature of the drawer, which of itself always imports a promise that he will have funds in the hands of the drawee to meet the draft. 98 Mass. 288. The defendants' promise to the drawer to accept the draft was a mere chose in action, not negotiable, and upon which no one but he to whom it was made could maintain an action. Worcester Bank v. Wells, 8 Met. 107 ; Luff v. Pope, 5 Hill, 413, and 7 Hill, 577. The general rule of law is, that a person who is not a party to a simple contract, and from whom no considera- tion moves, cannot sue on the contract, and consequently that a promise made by one person to another, for the benefit of a third person who is a stranger to the consider- ation, will not support an action by the latter. And the recent decisions in this Commonwealth and in England have tended to uphold the rule and to narrow the excep- tions to it. The unguarded expressions .of Chief Justice Shaw in Carnegie v. Morrison, 2 Met. 381, and Mr. Justice Bigelow in Brewer v. Dyer, 7 Cush. 337, to the contrary, on which the learned counsel for the plaintiffs relied at the argument, were afterwards, and while those two dis- tinguished judges continued to hold seats upon this bench, qualified, the limits of the doctrine defined, and a disin- clination repeatedly expressed to admit new exceptions to the general rule, in unanimous judgments of the court, drawn up by Mr. Justice Metcalf, and marked by his characteristic legal learning and cautious precision of state- ment. Mellen v. Whipple, 1 Gray, 317; Millard v. Bald- win, 3 Gray, 484; Field v. Crawford, 6 Gray, 116; Dow v. Clark, 7 Gray, 198. Those judgments have since been 52 CASES ON BILLS, NOTES, AND CHEQUES. treated as settling the law of Massachusetts upon this subject. Colburn v. Phillips, 13 Gray, 64; Flint v. Pierce, 99 Mass. 68. The first and principal exception stated by Mr. Justice Metcalf to the general rule consists of those cases in which the defendant has in his hands money which in equity and good conscience belongs to the plaintiff, as where one person receives from another money or property as a fund from which certain creditors of the depositor are to be paid, and promises, either expressly, or by implication from his acceptance of the money or property without objection to the terms on which it is delivered to him, to pay such creditors. That class of cases, as was pointed out in 1 Gray, 322, includes Carnegie v. Morrison a,nd most of the earlier cases in this Commonwealth, as well as the later cases of Prost v. Gage, 1 Allen, 262, and Putnam v. Field, 103 Mass. 556. The only illustration which the decisions of this court afford of Mr. Justice Metcalf's second class of excep- tions is Felton v. Dickinson, 10 Mass. 287, in which it was held, in accordance with a number of early English authorities, and hardly argued against, that a son might sue upon a promise made for his benefit to his father. Those cases, with the proposition on which they have sometimes been supposed to rest, that, by reason of the near relation between parent and child, the latter might be thought to have an interest in the consideration and the contract, and the former to have entered into the contract as his agent, are not now law in England. Tweddle v. Atkinson, 1 P.. & S. 393; Addison on Con. (6th ed.) 1040; Dicey on Parties, 84. And this case does not require us to consider whether they ought still to be followed here. The third exception admitted by Mr. Justice jNFetcalf is the case of Brewer v. Dyer, 7 Gush. 337, in which the defendant made a written promise to the lessee of a shop to take his lease (which was under seal) and pay the rent to the lessor according to its terms, entered into posses- EXCHANGE BANK OF ST. LOUIS v. RICE. 53 sion of the shop with the lessor's knowledge, paid him the rent quarterly for a year, and then before the expiration of the lease left the shop, and was held liable to an action by the lessor for the rent subsequently accruing. That case may perhaps be supported on the ground that such payment and receipt of the rent, after the agreement between the defendant and the lessee, warranted the infer- ence of a direct promise by the defendant to the lessor to pay the rent to him for the residue of the term. See McFarlan v. Watson, 3 Comst. 286. It certainly cannot be reconciled with the later authorities without limiting it to its own special circumstances, and affords no safe guide in the decision of the present case. The plaintiffs are then obliged to fall back upon the first exception to the general rule. But they fail to bring their case within that exception or within any of the authorities to which they have referred us. In Carnegie v. Morrison, 2 Met. 281, the defendants, hav- ing funds in cash or credit of the plaintiffs' debtor, gave him a letter of credit, which was shown to the plaintiffs, and on the faith of which they drew the bill for the amount of which they sued the defendants ; and the drawing of that bill, whereby they made themselves liable to the drawee^ thereof, was a consideration moving from them. In Lilly v. Hays, 6 Ad. & E. 548 ; s. c. 1 Nev. & Per. 26, the defendant, as the jury found, had authorized the plain- tiff to be told that the defendant had received the money to his use, and thus promised the plaintiff to pay it to liim. So in Walker v. Bostron, 9 M. & W. 411, the defendant had promised the plaintiff to pay the sum in question. And the rule established by the modern cases in England, as laid down in the text books cited for the plaintiffs, does not permit the person for whose benefit a promise is made to another person from whom the only consideration moves to maintain an action against the promisor, unless the latter has also made an express promise to the plaintiff, or the 1 A slip for payee. 54 CASES ON BILLS, NOTES, AND CHEQUES. promisee acted as the plaintiff's agent merely. Met. Con. 209 ; Addison on Con. (6tli ed.) 630, 1041 ; Chit. Con. (8th ed.) 53. Where the promisee is in fact acting as the agent of a third person, although that is unknown to the promisor, the principal is the real party to the contract, and may therefore sue in his own name on the promise made to his agent. Sims v. Bond, 5 B. & Ad. 389; s. c. 2 Nev. & Man. 608 ; Huntington v. Knox, 7 Cush. 371 ; Barry v. Page, 10 Gray, 398 ; Hunter v. Giddings, 97 Mass. 41 ; Ford v. Williams, 21 How. 287. In the case at bar the plaintiffs had acquired no title in the cotton against which the draft was drawn. The bill of lading was not attached to the draft, or made payable to the holder thereof, or delivered to the plaintiffs. The case is thus distinguished from Allin v. Williams, 12 Pick. 297, and Michigan State Bank v. Gardner, 15 Gray, 362, cited at the argument. The cotton was not of sufficient value to pay the draft, and the balance of account between the defend- ants and the drawer, at the time of their receipt and sale of the cotton, and ever since, was in favor of the defendants. There is no ground, therefore, for implying a promise from the defendants to the plaintiffs to pay to them either the amount of the draft or the proceeds of the cotton. Tiernan v. Jackson, 6 Pet. 580; Cowperthwaite v. Sheffield, 1 Sandf. 416, and 3 Comst. 243 ; Winter v. Drury, 1 Selden, 525 ; Yates v. Bell, 3 B. & Aid. 643. The plaintiffs did not take the draft, or make advances, upon the faith of any promise of the defendants, or of any actual receipt by them of the cotton or the bill of lading, but solely upon the faith of the drawer's signature and implied promise that the de- fendants should have funds to meet the draft. The whole consideration for the defendants' promise moved from the drawer, and not from the plaintiffs. And the defendants made no promise to the plaintiffs. Their only promise to accept the draft was made to Hill, the drawer, after the draft had been negotiated to the plaintiffs ; and there is no proof that the defendants authorized that promise to be EXCHANGE BANK OF ST. LOUIS v. RICE. 55 shown to the plaintiffs, or that Hill, to whom that promise was made, was an agent of the plaintiffs. His relation to them was that of drawer and payee, not of agent and prin- cipal. To infer, as suggested in behalf of the plaintiffs, that he was their agent in receiving the defendants' promise, so that they might sue thereon in their own name, would be unsupported by any facts in the case, and would be an eva- sion of the rules of law, which will not allow any person who took the draft before that promise was made to main- tain an action upon that promise either as an acceptance or a promise to accept. Judgment for the defendants. In many of the States one for whose benefit a promise is made may sue upon it tliough lie was not privy to the promise or to the consideration. But that, in so far as it is received doctrine, is received as doctrine of the common law, and not, it is appre- hended, as doctrine of the law merchant applicable to cases like that supra. And in any event the promise so treated would not be treated, further, as negotiable. One's rights may, generally speaking, be transferred to another; but the right of the drawer of a bill of exchange or of a cheque to have his draft honored, where he has such a right, cannot be trans- ferred with the draft to the holder of the same ; otherwise there would be nothing, or next to nothing, in the rule of the law mer- chant that the drawee of a bill or cheque is and can be under no liability to the holder (apart from a sufficient promise to him to accept) until he has accepted the one or certified the other. Nor can the circumstance that the drawee may have promised the drawer that he will honor the draft make any difference, where the drawer is not an agent of the holder ; for in the case supposed he was bound to honor the draft, so that the promise has added noth- ing to the case. Of course this is not saying that this particular right of the drawer may not pass to an assignee in bankruptcy or insolvency ; that is a very different thing. 56 CASES ON BILLS, NOTES, AND CHEQUES. HENRIETTA NATIONAL BANK v. STATE NATIONAL BANK. Supreme Court of Texas, 1891. 80 Texas, 64S. To maintaiu an action upon a promise to pay a cheque the promise need not he made upon a full and perfect description ; enough that the cheque comes fairly within the scope of the promise. Distinction hetween acceptance of and promise to accept a bill of exchange. Action on a promifse to pay a cheque. Gaixes, Assoc. Justice, for the court. — This suit was brought by the appellee to recover of the Henrietta National Bank and Frank Brown, as its receiver, the amount of a cheque drawn upon it by E. F. and W._ S. Ikard. On the 22d of July, 1887, E. F. and W. S. Ikard drew a cheque on the defendant bank in favor of one T. F. West for $1,800. West indorsed and delivered it to one Atkin- son, who on the next day presented it to the cashier of the plaintiff bank at Fort Worth with the request that he cash it. The cashier immediately telegraphed the defendant bank as follows: 'Will you pay E. F. and W. S. Ikard's cheque for $1,800 on presentation?' The cashier of the defendant bank on the same day replied by telegram, ' Yes ; will pay the Ikard cheque.' Upon the receipt of this telegram the plaintiff discounted the paper, and the holder transferred it to the bank by indorsement and delivery. The cheque was immediately sent by mail to the defendant bank with a request to remit the amount to the plaintiff. The letter reached Henrietta on Sunday, and on Monday before banking hours the directors of the defendant bank determined to suspend payment, and thereafter its doors were not opened for regular business. The court having given judgment for the plaintiff for the full amount of the cheque and interest, and the defendants having appealed, they now complain in effect that the cor- respondence by telegraph between the two banks did not HENRIETTA NATIONAL BANK v. STATE, ETC. 57 sufficiently describe the cheque so as to make the promise of the defendant bank an acceptance. The authority mainly relied upon by appellants' counsel in support of their con- tention is the case of Coolidge v. Pay son, 2 Wheat. 66. In that case Chief Justice Marshall says : ' 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.' The doctrine was re-aflBrmed in the same court in the cases of Schimmelpennick v. Bayard, 1 Pet. 284, and Boyce v. Edwards, 4 Pet. Ill, and has been frequently followed in other courts. Whether according to the rules laid down the correspondence should show any more than the amount and character of the bill as to the time of payment we need not here inquire, though it would seem that such a description ought to be sufficient accord- ing to the most rigid rule recognized by any court. The rule, however, applies only to a case in which it is sought to charge the defendant as the acceptor of the bill. Cases may arise in which the party who has proriiised to accept may be held liable upon the promise, although such promise may not be deemed equivalent to a formal accept- ance. A practical difference between an action upon an acceptance and one upon a promise to accept is that the former may be brought by the holder of the bill, while the latter suit can only be maintained by the party to whom the promise is made. In this case the promise to pay the bill 1 was made directly to the plaintiff, and it was upon the faith of that promise that the cheque was discounted. The suit is not brought upon an alleged acceptance. The peti- tion states the facts in detail and seeks a recovery for the breach of the promise to pay the cheque. In Boyce v. Edwards, supra, the Supreme Court of the United States 1 A slip, it seems, for clieque. 58 CASES ON BILLS, NOTES, AND CHEQUES. says: 'The distinctiou 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 evi- dence to support the one or the other is materially different. To maintain the former, as has already been shown, the promise must be applied to the particular bill alleged in the declaration to have been accepted. In the latter the evi- dence may be of a more general character, and the author- ity to draw may be collected from circumstances and extended to all bills coming fairly within the scope of the promise.' It is clear that the promise in the case before us was sufllciently definite to support an action fOr a failure or refusal to pay the cheque described in the petition, if not sufQciently specific to authorize its being treated as an acceptance. The cheque offered in evidence contained the character and figures ' f 1,800.00,' but in the body a line appeared to have been drawn through the word ' hundred.' If the word was intended to be erased, it was a cheque for $18 only; if not, it was a cheque for -S 1,800. The line appears to have been drawn along the top of the word, rather than through it, and it is not at all clear that even without explanation it should be held to be an erasure. The member of the firm who drew the cheque testified that it was intended to be a cheque for $1,800, and that he thought the line was upon the blank when the cheque was written. The circumstances attending the whole transaction leave no doubt that the purpose was to draw a cheque for the amount claimed by the plaintiff, and that the line was either upon the paper when the cheque was drawn and was not discovered, or that it was subsequently placed there by some accident. That it was competent to prove that a mark of this character was not intended as an erasure, especially when the figures in the margin tend to show the same fact, we have no doubt. Sharswood's Starkie on Ev. 500. The defendants intro- duced testimony tending to show that a prudent banker would not have paid the cheque, at least without inquiry CAREW V. DUCKWORTH. 59 as to the intention of the drawers in executing it. This may be true, but so far as this case is concerned it is a fact of no importance. It was nevertheless the duty of the defendant bank to pay the cheque. An inquiry would have shown beyond doubt that it was a cheque for |1,800, and though the apparent erasure may have justified a delay of a reasonable time to make inquiry, it did not justify a final refusal to pay. We find no error in the judgment, and it is Affirmed. CAREW V. DUCKWORTH. vS Court of Exchequer of England, Trinity, 1869. L. R. 4 Ex. 313. Notice of dishonor need not be given to tlie drawer of a cheque having no sufficient effects in the hands of the drav^ee to meet the cheque, and no reasonable ground to expect that the cheque will be paid. Meaning of 'sufficient effects' and ' reasonable ground.' Declaration by plaintiff as holder of the defendant's cheque on the Agra Bank, Limited, for £30, averring due presentment and non-payment, and excusing notice of dis- honor on the ground that the bank ' had not in their hands sufficient or any effects of the defendant for payment of the said cheque or order, nor had they received any considera- tion for the payment by them of the said cheque or order, nor had the defendant at any time any reasonable ground to expect that the said Agra Bank, Limited, would pay the said cheque or order, nor has the defendant sustained any damage by reason of not having notice of the non-payment by the said Agra Bank, Limited, of the said cheque or order.' ^ Plea traversing the averments excusing notice. Issue. It was proved that the cheque was given after banking hours on the 26th of February, and it was then agreed that ^ The presumptive duty to notify the drawer of a cheque of its dishonor should be noticed. See Chitty, Precedents in Pleading, 117, 3d Eng, ed., whose form is followed supra, and is approved in Kemble v. Mills, 1 M. & G. 757, 769 ; Bills and Notes (Students' Series), p. 53. 60 CASES ON BILLS, NOTES, AND CHEQUES. it should not be presented for several days. The defendant then had £106 in the bank. The cheque was presented on the 10th of March, and dishonored. On the morning of March 2d the balance in the defend- ant's favor was £18 17s. 2d,. ; in the course of the day £48 6s. Sd. was paid in, and £68 5s. '2d. was drawn out, leaving a balance of £8 18s. Sd. ; and from that day to the 10th of March the largest sum in the bank to the defendant's credit was £9 8s. 4rf. On the 10th £107 was paid in, and £99 drawn out, which left to the defendant's credit a balance of £1 16s. lid. It was also proved that the defendant had on a former occasion overdrawn his accouut, and that the bank had there- upon given him notice they would not honor overdrafts. The jury found all the averments of the declaration in favor of the plaintiff. A verdict was entered for the plain- tiff, with leave to the defendant to enter a verdict for him. A rule having been obtained accordingly, and for a new trial, on the ground that tlie verdict was against evidence, the cause came to argument. Beamwell, B. — I cannot think that the law on this point is in a very satisfactory condition. The true rule should be, that no notice of dishonor is required where it would convey no information, that is, when the party sued knew beforehand that the bill would not be paid ; but that when he did not know, it is right that he should be in- formed of the non-payment. If this rule should be adopted, the question would be, did he, practically speaking, know beforehand that the bill would not be honored ? This may depend upon a variety of circumstances ; he might think that the cheque would be honored by favor, though in fact there were no assets to meet it. But though this ought to be the rule, at all events in the case of cheques (and I am not sure that it is not the rule in fact), yet it is not always to be found laid down in those terms, and perhaps it could not be established without doing violence to some of the cases. CAREW V. DUCKWORTH. 01 The first question, then, is, had the defendant funds in the hands of the bank to meet this cheque ? Which here be- comes the question, whether there was evidence from which the jury could find this fact in the negative. The defend- ant had the sum of £106 in the bank at the time when he drew the cheque, but the question of his right to notice of dishonor must be considered in connection with his request that the cheque should not be presented for several days. Now the important question is, whether the drawer thinks that there will be funds to meet the draft, whether bill or cheque, when it is presented for payment. If I, in London, draw on a bank in York, where I have £1,000, which I know will be drawn out to-day, while the cheque cannot be pre- sented till to-morrow, it is idle to say that, knowing there will be no fundsthere at any time when the cheque can be presented, I am entitled to notice of dishonor. The ques- tion therefore is, what was the state of the funds at the time when the bill ought in regular course to have been presented ? Then the question arises, what is the meaning of several days or a few days ? The jury may well have thought that it at least postponed the presentment till the 2d of March. Now from March the 2d till the 10th, when the cheque was actually presented, there was not at any time a greater sum than £9 8s. id. available for its pay- ment. There was evidence in the accounts to show that the defendant paid in money to his account, but he at once drew out as much as he paid in, or the money was so paid in and dealt with that it was not applicable to the payment of this cheque. This was evidence on which the jury might find that the defendant had not, in fact, funds in the bank at the time when the bill was presented. But Mr. Sharpe [for the defendant] says, that if there were any funds, the defendant was entitled to notice of dis- honor. This cannot be so ; the question must be whether, practically, there were funds to such an amount as that at the time of drawing he could reasonably expect payment. For though the expression ' any funds ' is used in some 62 CASES ON BILLS, NOTES, AND CHEQUES. cases, it is preposterous to suppose that, because there was an old balance of £50 to the credit of a customer, he would thereby be entitled to notice of dishonor of a cheque for £5,000. The question then must be, whether there were any such funds as the drawer might reasonably and prop- erly draw against, with an expectation that the draft would be honored. We may read the allegations in the declaration that the defendant had not sufficient, nor any, funds for the payment of the cheque, as meaning that he had no funds adequate for its payment, no funds against which he was entitled to draw the cheque in question. Therefore, as to this first question, I think there was evidence for the jury that there were no such funds in hand, from the time when the defendant would expect the cheque to be presented up to the time when it was presented in fact, as to give him ground to suppose that the cheque would be honored ; and I think that this fact was rightly so found. Secondly, it is quite plain that there was evidence for the jury that the defendant had no reason to expect that the cheque would be honored ; and I also think that they were right in so finding. There were eight entire days after the time when the defendant might first expect the cheque to be presented, on none of which had he any reason to expect that it would be paid, for he had no right to expect that any cheque would be paid which he had not sufiicient effects to meet. Chanxell, B. — I am of the same opinion. There is no ground for saying either that the verdict was against evi- dence, or that there was no evidence to go to the jury in support of the declaration. The evidence was that the cheque was not to be presented for a few days ; the jury have found that when it was presented a reasonable time had elapsed ; and I think they were warranted in so finding. There had been then eight days during which there were no funds in the hands of the bank to meet the cheque. There is therefore no ground to contend that the defendant had a reasonable expectation of the cheque being paid ; and CAREW V. DUCKWORTH. 63 the case bears no resemblance to cases where funds might be expected to come in, — as, for instance, in the case of a landlord whose tenants were accustomed to pay their rents into the bank, and who had therefore a right to expect there would be assets to meet his draft, and might perhaps, for want of notice, lose his opportunity of recovering rent by distress. Cleasby, B. — I am also of the same opinion. The issue is distinct, and involves the question whether the defendant had reasonable ground for expecting that the cheque would be paid. That this is a material question appears from Kemble v. Mills, 1 M. & G. 767, 761, where the declaration being objected to, Tindal, C. J., says : ' I suppose the objec- tion is, that it is not stated that the defendant had no reason to expect that the bill would be paid ; ' this shows (though the declaration was in that case held sufficient) that the allegation of want of reasonable ground for the expectation of payment is an important and a necessary averment, and is therefore an essential matter for consider- ation. The existence of such reasonable ground must obviously be a question for the jury. Now, here the cheque was given with a request that it should not be presented for a few days ; but it is nevertheless said that if at the time of drawing it there were funds the drawer is entitled to notice of dishonor. But can it be said that after a cheque has been given with such a request, and its drawer next day draws out the whole of his funds, and never afterwards pays in a farthing, nor has any reasonable expectation of funds com- ing in, so that he must well know that there never can be any funds to meet the cheque, he is not completely aware that the cheque will not be paid in fact ? Then put the. case of a small sum being paid in, quite insufficient to ' satisfy the cheque, the question will still be, was there any reasonable expectation that there would be funds to meet the cheque? The jury have found that the defendant had no reasonable expectation that the cheque would be 64 CASES ON BILLS, NOTES, AND CHEQUES. paid, and I think there was suflB.cient ground for that finding. Bramwell, B. — I wish to add, that if there were funds in the hands of the bank sufi&cient to meet the cheque, the drawer would be entitled to notice though he knew that the bank would not honor the cheque, for he would be entitled to say they were bound to honor it, even though they had told him they would not. Rule discharged. KIN YON V. STANTON. 54 Supreme Court of Wisconsin, January, 1878. 44 "Wis. 479. If neglect on the part of the holder of a cheque to present the same within the usual time does not prejudice the drawer, the drawer is not thereby discharged. Action against the drawers for the amount of a cheque on the Corn Exchange Bank of Waupun in favor of the plain- tiff. The cheque was never presented for payment, and some eight days after it was drawn the bank closed its doors ; three weeks later it was adjudged bankrupt. From the time the cheque was drawn until the bank suspended payment the drawers had more than enough money in the bank to meet the cheque. The cheque might have been presented in the interval ; and the bank would then have honored it down to the day of closing, even without regard to the state of the defendant's account. Just before, and on the day the bank suspended payment, the defendants, having heard rumors affecting the bank, drew out all their funds, part in favor of themselves, part in favor of another. The defendants some days later refused to pay the cheque. For the sum drawn out by the defendants for themselves an action was afterwards successfully brought by the bank's assignee, in the federal court. Judgment for the plaintiff for the full sum; defendants appealed. KINYON V. STANTON. 65 Etan, C. J., for the court. — Doubtless the respondent was guilty of negligence in holding the cheque of the appellants so long without presenting it to the bank for payment. And if the appellants had left funds in the bank to meet it until the failure of the bank, the negli- gence of the respondent would have discharged the appel- lants from all liability over. Jones v. Heiliger, 36 Wis 149. But the appellants saw fit to draw out their entire account in the bank before its failure; and doing so, must be held in good faith to have intended, as they are liable, themselves to protect the cheque which they had given to the respondent. And so the negligence of the respondent did not prejudice the appellants. This view is not affected by the fact that the bank would probably have paid the cheque, without regard to the state of the appellants' account, at any time before the day of the bank's failure. On that day the bank apparently would not have honored the cheque without funds of the appellants sufficient to meet it. If at any time the bank had paid the cheque without funds of the appellants, they would have been liable to the bank for the amount advanced to pay it. It was immaterial to them whether they should owe the amount to the bank or to the respond- ent. Certain it is that they must owe it to one or the other. And they elected to owe it to the respondent. As between the parties here the appellants could have escaped liability over only by leaving funds in the bank to meet the cheque, from the day it was given until the failure of the bank. They cannot expect to draw all their funds from the bank before its failure, and then escape liability upon a cheque previously drawn, merely because the bank failed. It makes no difference in the relation of the parties that the assignee of the bank in bankruptcy afterwards recov- ered against the appellants the balance which they drew out in favor of themselves on the day of the failure, and 5 66 CASES OX BILLS, NOTES, AND CHEQUES. in view of it. That recovery went upon wliat the federal court must have held a fraud upon the bankrupt law. The state law gave them perfect right to do as they did. And the recovery in the federal court, even if the amount had been sufficient to pay the cheipie, leaves the fact untouched that the appellants had in fact withdrawn all their funds from the bank, leaving nothing to meet the cheque which they had given to the respondent. By the court. The judgment of the court below is Affirmed. BUEKHALTEE v. SECOND NATIONAL BANK OF ERIE. ^ Court of Appeals of New York, March, 1870. 42 N. Y. 538. The indorsee of a draft on demand may, on the d.ay he has taken it, receive from the drawre a cheqne upon another, and jiresent the clieque on the day following; and if the cheque is then dislionored, and the draft reclaimed by such indorsee and presented again to tlie drawee thereof on the same day and dishonored, the indtjrser Hxes the liabilitv of the drawer liy immediate protest, followed the next day hy notice of dishonor, though the drawer of the draft had funds in the hands of the drawee on the day on which tlic indorsee I'cceived it, .and though the drawee wonld have paid it on that day or early the next day, ou which latter day the drawer of the draft failed. Action against the drawer of a draft on demand. On the morning of the I'Oth of IMarch, 1866, the plaintiffs in New York received by mail a draft on Culver, I'enn, & Co. for .f 1,116. SO, in favor of Johnson & Brevillier, and by them indorsed and sent to the plaintiffs. The plain- tiffs presented the draft immediately to the drawees, and received in lieu thereof the drawees' cheque on the Third National Bank of New York for the same amount. On the 27th of March this cheque went into the clearing house for payment, and was dishonored, the drawees, Cirlver, I'enn, & Co., having failed on that day. The cheque was returned to them, and the original draft sent back to the BURKHALTER ;;. SECOND NATIONAL BANK, ETC. 67 plaintiffs on the same 27th of March. That draft was on that day, late in the afternoon, presented to the drawees, Culver, Penn & Co., by a notary, and dishonored. Imme- diate protest, and notice of dishonor to the defendant on the 28th of March, followed. On. the 26th of March the drawer had suflScient funds in the hands of Culver, Penn, & Co. to meet the draft; Culver, Penn, & Co. had in hand the whole day $12,000 or more. The draft would probably have been paid in money, had it been presented on March 26 or early on March 27 ; though Culver, Penn, & Co. could not have paid in money all the drafts on them presented that day. The defendant, supposing that it was liable on the first draft, gave another in lieu of it, and suit was brought upon the new draft. Defence, that it was given under mistake, and that the defendant was not liable upon the first draft. Judgment for plaintiffs ; defendant appealed. Earl, C. J., for the court. — The plaintiffs were bound to demand payment of the first draft on the day they received it (March 26) or the next day (March 27), and they had the right to hold it until the 27th. The draft being payable on demand, they were bound to use reason- able diligence in demanding payment, and a demand on the same day, or the next day, is, in the law, a demand within a reasonable time. Chit, on Bills, 377, Spring- field ed. of 1842; Harker v. Anderson, 21 Wend. 372; Smith V. Jones, 20 Wend. 192; Benton v. Martin, 31 N. Y. 385; Merchants' Bank v. Spicer, 6 Wend. 443; Hazleton v. Colburn, 2 Abb. N. S. 199. It was sufficient to give the notice of demand and refusal on the next day, the 28th of March. Farmers' Bank of Bridgeport v. Vail, 21 K. Y. 485; Howard v. Ives, 1 Hill, 263. Therefore in demanding payment of this draft on the 27th, and mailing notices of non-payment on the 28th, the plaintiffs did all that the law required of them, and the defendant was charged as drawer of the draft, unless it 68 CASES ON BILLS, NOTES, AND CHEQUES. was discharged by what took place on the 26fch. On that day the draft was neither paid nor refused to be paid. Culver, Penn, & Co. gave their cheque for it, and the cheque was in due time, the next day, in the ordinary course of business, through the clearing house, presented for payment and payment refused. There was no agree- ment to receive the cheque in payment. It was taken by the plaintiffs in the usual course of business, they believ- ing that it would be paid. They then, on the 27th, returned the cheque and reclaimed the draft, and demanded payment upon it. The cheque did not for a moment operate as a payment of the draft, and the whole trans- action does not show the absence of any diligence which the defendant had a right to demand of the plaintiffs. It is settled that, upon precisely such a state of facts, the drawer and indorser of a draft are not discharged. Johnson v. Bank of North America, 5 Robertson, 590; Smith V. Miller, 6 Kobt. 157, 413; Turner v. Bank of Fox Lake, 3 Keyes, -425. Without a critical examination of earlier cases I propose to rest the decision of this case upon the authority of the case last cited. The facts of the two cases are as nearly alike as they can be, and the principle involved is precisely the same. The judgment must therefore be Affirmed. Five judges for affirmance; two for reversal. It will be noticed that the instrument drawn on Culver, Penn, & Co. is everywhere called a 'draft,' while that given by Culver, Penn, & Co. is uniformly called a ' cheque.' The inference must be that the first instrument and subject of the action was not a cheque; it must then have been a bill of exchange. Further, it is fair inference that the drawees of the first instrument, Culver, Penn, & Co., were bankers. The ' draft' was payable on demand; and notice of dishonor appears to have been treated as necessary. We have here then, apparently, a bill of exchange — as distin- guished from a cheque — drawn upon a banker, and payable on demand; but nothing was said upon the point, and the case there- fore cannot be pressed very far as authority in that particular. See Bills and Notes (Students' Series), 29t, note. MINOT V. RUSS. 69 MINOT V. EUSS. i <^ Supreme Court of Massachusetts, June, 1892. 156 Mass. 458. If the drawer in his own behalf, or for his owu benefit, gets his clieque certified and then delivers it to the payee, the drawer is not discharged ; but if the payee or holder in his own behalf, or for his own benefit, gets it certified instead of getting it paid, then the drawer is discharged. The case is stated in the opinion of the court. Field, C. J., for the court. — The first case is an appeal from a judgment rendered by the Superior Court for the defendant, on his demurrer to the declaration. The defendant, on October 29, 1891, drew a cheque on the Mav- erick National Bank, payable to the order of the plaintiff, and, being informed by the plaintiff that the cheque must be certified by the bank before it would be received, the defendant on the same day presented the cheque to the bank for certification, and the bank certified it by writing on the face of the cheque the following: ' Maverick National Bank. Pay only through Clearing-House. J. W. Work, Cashier. A. C. J., Paying Teller.' After it was certified, the cheque was, on Saturday, October 31, 1891, delivered by the defendant to the plaintiffs, for a valuable consideration. The declaration alleges that the bank stopped payment on Monday morning, November 2, 1891, ' before the commencement of business hours on said day, ' and that on that day payment was duly demanded of the bank, and notice of non-payment was duly given to the defendant. The second case is an appeal from a judgment rendered for the defendants by the Superior Court, on an agreed statement of facts. On Saturday, October 31, 1891, the defendants drew their cheque on the Maverick National Bank, payable to the order of the plaintiffs, and delivered it to them in payment of stocks bought by the defendants of the plaintiffs. The cheque was received too late to be deposited by the plaintiffs for collection in season to be 70 CASES ON BILLS, NOTES, AND CHEQUES. carried to the clearing-house on that day, but during banking hours on that day the plaintiffs presented the cheque to the Maverick National Bank for certification, and the bank certified it by writing or stamping on its face the following : ' Maverick National Bank. Certified. Pay only through Clearing-House. C. C. Domett, A. Cashier. , Baying Teller. ' At that time the defendants had on deposit sufficient funds to pay the cheque, and the bank on certification charged to the defendant's account the amount of the cheque, and credited it to a ledger account called certified cheques, in accordance with their uniform custom. After certification, the plaintiffs, on the same day, deposited the cheque in the Hamilton National Bank for collection. It is agreed that if the cheque had been presented for payment on Saturday, in banking hours, it would have been paid ; but the Maverick National Bank transacted no business after Saturday, and on Sunday the Comptroller of the Cur- rency placed a national bank examiner in charge, and the bank was put into the hands of a receiver. The clearing- house on November 2 refused to receive cheques on the Maverick National Bank, and the cheque was on that day duly presented for payment, and due notice of non-payment was given to the defendants. Each of the cheques was in the ordinary form of cheques on a bank, and was payable on demand, and no presentment for acceptance or certification was necessary. In a sense, undoubtedly, a cheque is a species of bill of exchange, and in a sense also it is a distinct commercial instrument ; but according to the general understanding of merchants, and according to our statutes, these instruments were cheques, and not bills of exchange. ' A cheque is an order to pay the holder a sum of money at the bank, on presentment of the cheque and demand of the money ; no previous notice is necessary, no acceptance is required or expected, it has no days of grace. It is payable on presentment and not be- fore.' Bullard v. Randall, 1 Gray, 605, 606. The duty of MINOT ,.. ]IUSS. 71 the bank was to pay these cheques when they were presented for payment, if the drawers had sufBcient funds on deposit. The bank owed no duty to the drawers to certify the cheques, although it could certify them if it saw fit, at the request of either the drawers or the holders, and if it certified them it became bound directly to the holders, or to the persons who should become the holders. In either case, the bank would charge to the account of the drawer the amount of the cheque, because by certification it had become absolutely liable to pay the cheque when presented. When a cheque payable to another person than the drawer is presented by the drawer to the bank for certification, the bank knows that it has not been negotiated, and that it is not presented for payment, but that the drawer wishes the obligation of the bank to pay it to the holder. when it is negotiated, in addition to his own obligation. But when the payee or holder of a cheque presents it for certification, the bank knows that this is done for the convenience or security of the holder. The holder could demand payment if he chose, and it is only because, instead of payment, the holder de- sires certification, that the bank certifies the cheque instead of paying it. In one case the bank certifies the cheque for the use or convenience of the drawer, and in the other for the use or convenience of the holder. In the present cases the checks were seasonably presented to the bank for pay- ment, and on the facts stated the defendants would be liable unless the certification discharged them from liability. It is argued that the certification of a cheque, whereby the bank becomes absolutely liable to pay it at any time on demand, discharges the drawer, because it is said that the cheque then becomes in effect a certificate of deposit ; and it is also argued that the certification is in effect only an ac- ceptance of a bill of exchange, and that if payment is duly demanded of the bank and refused, and notice of non-pay- ment duly given, the drawer is held. So far as the question has been considered, it has been decided that the certification of a bank cheque is not, in all respects, like the making of a 72 CASES ON BILLS, NOTES, AND CHEQUES. certificate of deposit, or the acceptance of a bill of exchange, but that it is a thing sui generis, and that the effect of it depends upon the person who, in his own behalf, or for his own benefit, induces the bank to certify the cheque. The weight of authority is, that if the drawer in his own behalf, or for his own benefit, gets his cheque certified, and then delivers it to the payee, the drawer is not discharged ; but that if the payee or holder, in his own behalf or for his own benefit, gets it certified instead of getting it paid, then the drawer is discharged. Born v. First National Bank, 123 Ind. 78 ; Bounds v. Smith, 42 111. 245; Brown v. Leckie, 43 111. 497 ; Andrews v. German National Bank, 9 Heisk. 211 ; First National Bank v. Leach, 52 N. Y. 350 ; Boyd v. Nasmith, 17 Ont. 40 ; Essex County National Bank v. Bank of Montreal, 7 Biss. 193 ; .First National Bank v. Whitman, 94 U. S. 343, 345 ; Metropolitan National Bank v. Jones, 27 N. E. Rep. 533 ; Continental National Bank v. Corn- hauser, 37 111. App. 475 ; National Commercial Bank v. Miller, 77 Ala. 168 ; Larsen v. Breene, 12 Col. 480 ; Mutual National ISank v. Kotge, 28 La. An. 933; Morse on Bank- ing, §§ 414, 415. We are of opinion that this view of the law rests on sound reasons. If it be true that the existing methods of doing business make the use of certified cheques necessary, the persons who receive them can always require them to be certified before delivery. If they receive them uncertified and then present them to the bank for certi- fication instead of payment, the certification should be considered as discharging the drawer. It may also be said, that in the second case the certifica- tion amounted to an extension of the time of payment at the request nf the payees, without the consent of the drawers. Before the certification the drawers could have requested the payees to presejit the cheque for payment on Saturday, or could themselves have drawn out the money and paid the cheque. After certification the amount of the cheque no longer stood to the credit of the drawers, and the payees had accepted an obligation of the bank to pay only through WHISTLER o. FORSTER, 73 the clearing-house, which could not happen before the fol- lowing Monday. The result is that in the first case the judgment is reversed, and the demurrer overruled, and in the second case the judgment is affirmed. WHISTLER V. FOESTER. Common Pleas of England, Easter, 1863. 14 C. B. N. S. 248. One who receives, though for value, an unindorsed cheque payable to order, takes it with no better rights than the prior holder had. Action by indorsee against the drawer of a cheque, pay- able to A. S. Grifiiths & Co., or order, and indorsed by the payees to the plaintiff. The defendant traversed the drawing and indorsement of the cheque, and also pleaded that he was induced to draw it by and through the fraud of Griffiths & Co., and that there never was any value or consideration for the indorse- ment to the plaintiff or for the plaintiff's holding of it, and that he had notice of the premises before and when the cheque was first indorsed to him, and took the same from Griffiths & Co. with such notice. Issue thereon. The following facts appeared on the trial : The cheque in question, which bore a Id. stamp, was drawn by the defend- ant some day before the 3d of October, 1862, and handed by him to Griffiths upon an understanding that it was not to be presented for payment until the 4th, and an undertaking by Griffiths to furnish the defendant with funds to meet it early on the morning of that day, which, however, he failed to perform. Griffiths on the 3d gave the cheque to the plaintiff for value, but did not then indorse it. At the time he received the cheque he had no notice, apart from the want of indorsement to him, of the way in which Griffiths had obtained it from the defendant, but before he obtained the indorsement he had notice of the facts. 74 CASES ON BILLS, NOTES, AND CHEQUES. On the part of the defendant it was submitted that the" plaintiff could not recover upon the cheque, first, because it was post-dated, and. secondly, because before he obtained Griffiths' indorsement he had notice of the fraud practised by Griffiths upon the defendant. The learned judge directed a verdict to be entered for the defendant, reserving leave to the plaintiff to move to enter a verdict for him if the court should be of opinion that the cheque, though post-dated and unstamped (otherwise than with the penny stamp imposed by 21 & 22 Vict. c. 20, § 1), was a valid instrument, and that the plaintiff had a suSieient interest in the cheque to entitle him to sue upon it before he received information of the alleged fraud. Eiile nisi obtained. Erle, C. J. — This is an action against the drawer of a bill of exchange ; for though in form a cheque, the instru- ment is for all the purposes of the Stamp Act a bill. The plea is that the bill was obtained from the defendant by one Griffiths by means of fraud, and that it was indorsed to the plaintiff after he had notice of the fraud. The facts are shortly these : The instrument was a negotiable instrument which had been fraudulently obtained from the defendant by Griffiths and had been handed over by Griffiths to the plaintiff in part satisfaction of debt of a larger amount. But Griffiths, at the time he so handed over the bill to the plaintiff, omitted to indorse it. Under these circumstances the condition of things was this, that the plaintiff had at that time the same rights as if an ordinary chattel had passed to him by an equitable assignment ; he would have all the rights which Griffiths could convey to him. Now, Griffiths having defrauded the defendant of the bill, he could pass no right by merely handing over the bill to another. According to the law merchant, the title to a negotiable instrument passes by indorsement and delivery. A title so acquired is good against all the world, provided the instrument is taken for value and without notice of any WHISTLER V. FORSTER. 75 fraud.* The plaintiff's title under the equitable assignment here therefore was to be rendered valid by indorsement ; but at the time he obtained the indorsement he had notice that the bill had been fraudulently obtained by GrifBths from the defendant and that Griffiths had no right to make the indorsement. Assuming therefore that there may be coniiicting equities between the plaintiff and the defendant, I think the right should prevail according to the rule of law, and that the plaintiff had no title as transferee of the bill at all. Then as to the stamp . . . [Properly stamped.] WiLLES, J. — I concur with my lord as to both points. . . . [Properly stamped.] As to the second point, the general rule of law is uil- doubted, that no one can transfer a better title than he him- self possesses ; nemo dat quod non habet. To this there are some exceptions, one of which arises out of the rule of the law merchant as to negotiable instruments. These, being part of the currency, are subject to the same rule as money ; and if such an instrument be transferred in good faith, for value, before it is overdue, it becomes available in the hands of the holder, notwithstanding fraud which would have rendered it unavailable in the hands of a previous holder. This rule, however, is only intended to favor trans- fers in the ordinary and usual manner whereby a title is acquired according to the law merchant, and not to a trans- fer which is valid in equity according to the doctrine respecting the assignment of choses in action, now indeed recognized and in many instances enforced by courts of law ; and it is therefore clear that, in order to acquire the benefit of this rule, the holder of the bill must, if it be pay- able to order, obtain an indorsement, and that he is affected by notice of a fraud before he does so. Until he does so, he is merely in the position of the assignee of an ordinary chose in action, and has no better right than his assignor. 1 Or other equity. 76 CASES ON BILLS, NOTES, AND CHEQUES. When he does so, he is affected by fraud which he knew of before the indorsement. ELeating, J. — I am of the same opinion. The cheque in question, being payable to order, was properly stamped for the purpose of being admissible in evidence. ... As to the other point, I think the plea was made out. The plain- tiff sues as indorsee of the bill in question. The plea in substance is, that the defendant was defrauded of it by the person to whose order it is made payable, and that the plaintiff had notice of that fact before the instrument was indorsed to him. The question is, when was the bill indorsed to the plaintiff ? It must be recollected that the plaintiff is suing in a court of law, and that the right to sue in a court of law upon a negotiable instrument is not complete without a written indorsement. Now, before the plaintiff's right to sue was rendered complete by a written indorsement, he had notice of the fraud. The subsequent indorsement therefore transferred no title to sue. The rule must be discharged. Rule discharged. The 'notice' of the fraud in this case is evidently informa- tion of it. The indorsement had been made, it seems, before the cheque became overdue. That the plaintiff could not have re- covered though he had not obtained information of the fraud is clear, if the indorsement had been after maturity. See Lancaster Bank V. Taylor, 100 Mass. 18 ; Bills and Notes (Students' Series), p. 62. According to the case cited, indorsement after maturity would have been no better than taking after maturity. But see Beard v. Dedolph, 29 Wis. 136. On the other hand, indorsement before the cheque became overdue, though after it was taken, would have given the plaintiff a perfect title had he not meantime received information of the fraud. BROWN V. THE BUTCHERS' AND DROVERS', ETC. 77 BEOWN V. THE BUTCHEES' AND DEOVEES' BANK. 6> 3 Supreme Court of New York, May, 1844. 6 Hill, 443. The figures ' 1, 2, 8,' written upon a bill of exchange, constitute an indorsement, if so intended. Writ of error. Brown, the defendant below, was sued as indorser of a bill of exchange, upon which were the figures ' 1, 2, 8, ' in pencil. There was evidence strongly tending to show that the figures were in Brown's hand, and that he intended thereby to bind himself as an indorser ; though it was also proved that he could write. The judge charged that if this evidence was believed, the jury must find for the plaintiff. The defendant excepted. Verdict and judgment for the plaintiff. Nelson", C. J., for the court. — It has been expressly decided that an indorsement written in pencil is sufBcient. Geary v. Physic, 5 Barn. & Cress. 234; and also that it may be made by a mark. George v. Surrey, Mood. & Malk. 516. In a recent case in the King's Bench, it was held that a mark was a good signing within the Statute of Erauds; and the court refused to allow an inquiry into the fact whether the party could write, saying that would make no difference. Baker v. Denning, 8 Adol. & Ellis, 94. And see Harrison v. Harrison, 8 Ves. 185; Addy v. Grix, 8 id. 54. 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, pro- vided it be used as a substitute for his name, and he intend it to bind himself. Judgment affirmed. 78 CASES ON BILLS, NOTES, AND CHEQUES. CEIST V. CEIST. C,^ Supreme Court of Indiana, K'ovember, 1849. 1 Carter, 570. Until tlie executor consents to the bequest by the testator of a promis- sory note payable to A, A has no legal title to the note, and the executor may sue upon it.^ Blackford, J., for the court. — This was an action of debt brought by James W. Crist, executor of George W. Crist, deceased, against Christian Crist. Tlie suit is founded on two sealed notes for the payment of money, executed in December, 1839, by the defendant, and payable to the testator. There are two special pleas, to which replications were filed. The replications were demurred to generally, and judgment was rendered for the plaintiff. It is not deemed necessary to set out the plead- ings at length. Taking the allegations in the replications to be true, which we must do, the facts may be considered to be as follows : — In 1836 George W. Crist, being the owner in fee of a certain quarter-section of land, made his will, and devised the east half of said quarter-section to his son, Resin Crist. The defendant afterwards purchased of Resin Crist the interest which the latter claimed in the land under the will, and gave his notes for the price; but there does not appear to have been any written evidence of such purchase. After that purchase, namely, in 1839, George W. Crist, the devisor, sold said east half of said quarter-section of land to the defendant, and conveyed the same to him in fee, receiving in payment from the defendant the notes now sued on, together with a mortgage on the land to secure the purchase money. Resin Crist, who died before his fatlier, left an infant son named William as his heir, 1 It follows, as indorsement is necessary where the paper is payable to the order of the decedent, that there must be indorsement by the personal representative to the legatee, the point to be specially illustrated here. See Bills and Notes (Students' Series), p. 63. CEIST 0. CRIST. 79 who is now living. George W. Crist died on the 27th of March, 1844, without having altered his will, the Eevised Statutes of 1843 being then in force. The grounds relied on to defeat this suit were stated by the defendant's counsel, in their brief, to be as follows: ' First, these notes, or the proceeds of the sale, belong to William Crist, the infant son of Eesin. Secondly, the action should have been in the name of the infant. ' We agree with the defendant that the legacy of the notes and mortgage, if there be such a legacy, did not lapse by the death of Kesin Crist in the lifetime of his father. By virtue of the statute the legacy, if any, passed to William Crist, the infant son and heir of Eesin, as it would have passed to Eesin himself had he survived the testator. E. S. 1843, p. 489, § 23. But whether there is in fact any such legacy is another question. Previously to the Ee- vised Statutes of 1843 the testator's sale and conveyance in fee to the defendant of the land, and his taking of a mortgage .on the land to secure the price, after the execution of the will, would have been a revocation of the will as to said land. Adams v. Winne, 7 Paige, 97 (1). The defendant contends, however, that this rule is so changed by the 17th sec. of chap. 30 of the E. S. of 1843, that the notes and mortgage in question are now to be considered, under the circumstances of this case, as specifically bequeathed by the will. Whether this position of the defendant is correct or not we shall not stop to inquire. Admitting, for the sake of the argument, that William Crist is the specific legatee of the notes and mortgage, that specific bequest is not sufficient, of itself, to defeat the present action. It was the executor's duty, by statute, to inventory, among other things, all bonds, mortgages, notes, and other securities for the payment of money. E. S. 1843, p. 615. There is also the following statutory provision: ' When any mortgagee of real estate, or any assignee of such mortgagee, shall die without having foreclosed the right of 80 CASES ON BILLS, NOTES, AND CHEQUES. redemption, or recovered payment of the amount secured by such, mortgage, the mortgaged premises, and the debt secured thereby, shall be considered as personal assets in the hands of his executor or administrator, and shall be administered and accounted for as such ; and such executor or administrator, as such, shall have the same right to possession of the mortgaged premises, and to bring any suit or action respecting the same, or for the recovery of the debt secured thereby, and to execute, discharge, or perform any duty, act, or power contained in such mort- gage, or in the provisions of any law, as such mortgagee or assignee could if he were alive.' R. S. 1843, p. 572. There can be no doubt, therefore, but that the notes and mortgage before us, supposed by the defendant to be spe- cifically bequeathed, are part of the personal estate of the testator. It is well settled that before any legatee of personal property is entitled to his legacy, he must have the assent to it of the executor. The doctrine is thus stated : ' The whole personal property of the testator devolves upon his executor. It is his duty to apply it, in the first place, to the payment of the debts of the deceased; and he is respon- sible to the creditors for the satisfaction of their demands, to the extent of the whole estate, without regard to the testator's having, by the will, directed that a portion of it shall be applied to other purposes. Hence, as a protec- tion to the executor, the law imposes the necessity that every legatee, whether general or specific, and whether of chattels real or personal, must obtain the executor's assent to the legacy before his title as legatee can be complete and perfect. Hence, also, the legatee has no authority to take possession of his legacy without such assent, although the testator by his will expressly direct that he shall do so; for if this were permitted, a testator might appoint all his effects to be thus taken, in fraud of his creditors. It follows from the rule respecting the necessity of the executor's assent, that if, without it, the legatee takes CRIST V. CKIST. 81 possession of the thing bequeathed, the executor may- maintain an action of trespass or trover against him ; so, although a chattel, real or personal, specifically bequeathed, be in the custody or possession of the legatee, and the assets be fully adequate to the payment of the debts, he has no right to retain it in opposition to the executor; by whom, in such case, an action will lie to recover it.' 2 Williams on Executors, 982, 983. If the executor refuse his consent to a legacy without cause, the legatee is entitled to relief in equity. Id. 984; 1 Roper on Leg. 573. The following is a late case on this subject: A testator bequeathed to his two sons his two carriage manufactories, with all fixtures, implements, tools, stock, job-carriages, harness, and everything appertaining to his trade in the said manufactories. At the time of the testator's death a carriage was in one of the manufactories unfinished, which was being built to the order of the purchaser. A question arose between the executors and the sons, whether this carriage fell within the above bequest ; and the executors paid the legacy duty on the whole, but annexed the follow- ing memorandum to the legacy receipt: ' A disagreement arising between the sons S and T and the executors, as to whether the whole of this item belongs to the said sons, or part of the residue, the executors desire to pay the duty on the whole, leaving it for them to settle with the lega- tees the proportion of duty, when the matter in dispute shall be determined.' The sons retained possession, and finished the carriage, delivered it to the purchaser, and received the price. The executors thereupon brought an action against the sons for money had and received; and the action was sustained, on the ground that the executors had not assented to the legacy. Lord Abinger said : ' I see no evidence of assent to the taking of this particu- lar chattel by the defendants. Putting the case in the strongest way for them, that the executors had assented to the bequest of the stock, they yet expressly withheld 82 t'ASKS ON BILLS, NOTLS, AM) CIIKQILS. their assent as to this cavviai^c, supposing' that it did not form part of the stock in tr;uh', or at hvist wishiii;^,- lor time to malve np their minds wliether it eaiiie within tliat description oL' pruperty or not. And we ha.ve no riyht to consider whether tliev were v\'j;\\t in tlnis witldiohlint;- their assent or not. That is a ipu'sl,ion I'or the cimsideral-ion oi' a court 111' equity, on a bill tiled; bnt thi' lej^atce can main- tain no action a,t law until the exeentui- has assented to the lieipiest. Here, I'or some reason L;o(id or Inuh il' appears that the I'.xeciitors had withheld their assi-nt; and they had a rij^'ht to do so until com|Kdled h}' a c(im|ictent auth(n-ity.' Elliott -•. Elliott. '.) Mecs. \. W'ldsh. 1':;. It does not appear in the case liel'ore us that any assent was over expressly ,t;iven by the executor to the lej^acy in q\iestion ; niir are there any facts sta.ted from which an assent I'.an lie presiuned. This is a, suit by a-n exeiaitor on notes L;iven by the defendant to the, test;itor, the notes beini; secured by a mortga.;4e on ri'al estale. Tlu^ defence is, that the notes and mort.i;a,i;e were s]iecilicallY beipieaihed t,(i one William (h'ist, in whose name the suit should have been broie_;-hli. ^Ve have, shown that the notes and mort;,;ai;e are part, of the piM'sonal est,a,t,e of tin- testator, and that, supposing them to have Ihhmi specillcaljy bequeathed by him, they cannot be s;i,id to lie thi^ property of t,he legatee until tlu^ executor shall lia,ve consented to tln^ loLja.cy. No such assent being shown, the del'ence must fail. A debtor to an esta,t,i', where thi^ debt has been specili- eally bequeathed by t,lie test,at(u', <^a,nnot, before th(^ execu- tor has assented to t,hi> Ic^'acy, say to the ]at,tcr, ' I' will not pay you.' Ua.nk of l*higland r. l'a,rsons, ."> \^'s. (i(i.^). "\\'he1,lier, if the executor had a,ssenl,eil t,o thi; lega.cy, tho suit on t,hi^ notes should not still be in his name, w(^ have not examini'd. I'er curiam: The jrrdgment is AJ)!riiii'(l iri/h costs. SHAW .. KNOX. 83 SHAW V. KNOX.7(;,7/ Supreme Court of Massachusetts, November, 1867. 98 Mass. 214. One who indorses a draft for the accommodation of the drawer, and at the request of another who also indorses it at the same time and for the same purpose, does not thereby become a joint iudorser with him. An accommodation indorser of a draft who has been obliged to pay it to a holder for value may maintain an action thereon against a prior iudorser. Contract on a draft by Nathaniel Heath on John W. West for payment of $450, three months after date to the order of the defendant, indorsed by the latter and bearing also, below the defendant's indorsement, the indorsement of E. Longfellow & Son. Trial in the Superior Court, without a jury, when it appeared that the draft was drawn on the day of its date, and indorsed by the defendant, and then at his request by E. Longfellow & Son, ' so that it could be discounted' (neither of the indorsers receiving any consideration there- for), and then was negotiated, and discounted by a bank, and presented for acceptance ; that it was accepted by West, but on maturity was protested for non-payment; and that E. Longfellow & Son some months later paid it to the bank and took it up, and afterwards sold it to the plaintiff. The defendant asked the judge to rule ' that E. Long- fellow & Son and the defendant were joint accommodation indorsers, and, when the former paid the draft, its negoti- ability was destroyed, and they could not pass it to the plaintiif so that he could maintain an action thereon.' But he declined so to rule, and ruled that the plaintiff could maintain his action, and found for the plaintiff; and the defendant alleged exceptions. BiGELOW, C. J., for the court. — There was no joint liability on the part of the defendant with the subsequent indorsers. The indorsers on the draft were all liable to the holders of 84 CASES ON BILLS, NOTES, AND CHEQUES. the draft for value on their several contracts of indorse- ment. There was no agreement between the parties, when the draft was made and indorsed, that they should hold any other relation towards each other than that which would result from their being successive indorsers on the draft for the accommodation of the drawer. If the last indorser paid the draft to the holder for value, he would succeed to the right of such holder, and could look to his prior indorser for payment of the amount paid by him. Guild V. Eager, 17 Mass. 615. Such payment was in fact made by the second indorsers, from whom the plaintiff derives his title to the draft. The relations of the parties to the draft can in no sense be regarded as creating a contract of joint guaranty and suretyship. The rights and duties of the several parties to an accommodation note or bill of exchange are the same in all respects as upon notes given for value. The legal effect of the contract into which they respectively enter by becoming parties to negotiable paper is that which appears on the face of the bill or note. It follows that, if an accommodation indorser is obliged to take up the draft in the hands of a holder for value, he can look to his prior indorser for payment. Church v. Barlow, 9 Pick. 617; Clapp c. Kice, 13 Gray, 403; Howe v. Merrill, 5 Cush. 80. Excejjtlons overruled. DALE V. GEAE. '/3 Supreme Court of Connecticut, February, 1871. 38 Conn. 15. Parol evideuce is not admissible to show that an indorsement in blank of a iif'L''Otiable promissory note was by agreement of tlie parties to be taken as an imlorscment without recourse, if no agency, trust, or ante- cedent equity existed between the parties. Assumpsit by the holder against the indorser in blank of a promissory note. Plea, that in consideration of the defendant's agreement ' to indorse said note in blank, and ■ DALE V. GEAR. 85 to omit prefixing the words "without recourse " to his said indorsement, they, the said plaintiffs, by parol, then and there promised and agreed that they never would have recourse to the said defendant upon said note or upon said indorsement.' Demurrer to the plea, and case reserved thereon for the Supreme Court. Butler, C. J., for the court. — We have given this case the consideration which, as involving an important commercial question, it has seemed to require, and are of opinion that the plea cannot be sustained on principle or by authority. Pirst, it is not sustainable on principle. The rule that parol evidence is not admissible to contra- dict or vary a written contract is founded in the highest principles of public policy, and there is no class of contracts to which it should be more inflexibly applied than to those connected with bills of exchange and promissory notes. Nor is there any one of the varied and special contracts, so connected, in respect to which the application of the rule is more important than the contract of warranty implied by law from the blank indorsement of a negotiable note by the payee before maturity. It is absolutely essen- tial to the negotiability of such a note that the rule to which we have alluded should be applied to it; and it has always been so applied when the note has been negotiated to -a second indorsee and an effort has been made to prove some contemporaneous parol agreement in bar. But it has sometimes been claimed, and is claimed in support of the plea in this case, that notwithstanding the rule is so applied in favor of a bona fide holder to whom the note has been negotiated, yet as between the indorser and indorsee, the original parties to the contract of indorse- ment, the rule should not be applied. But the answer must be, that the contract of indorsement is implied by law as clearly and perfectly from the blank indorsement of a negotiable note, irrespective of any contingency of 86 CASES ON BILLS, NOTES, AND CHEQUES. negotiation, as if written out in full when indorsed. And if, as between the original parties, there is any equity existing dehors the instrument, which should prevent the indorsee from enforcing the contract, it must be set up as an equity provable in equity, to bar an apparent legal liability; and cannot be shown because the rule of evidence to which we have alluded is not applicable.^ The rule is as applicable to such parties as to others, and the true theory is, that the relation or antecedent agreement out of which the equity arises may be shown between them, and proof of it does not necessarily contradict the contract. There are four classes of cases in which, as exceptional cases, and as between the original parties, indorser and indorsee, any relation, antecedent agreement, or state of facts from which a controlling equity arises, may be pleaded and proved by parol in bar of an action on the warranty. Thus, the relation of principal and agent may be shown, for the agent takes no title or warranty from the indorser, but holds as agent. So, secondly, it may be shown that the note was indorsed to the holder for some special purpose, and is holden in trust, as where it is indorsed and delivered for collection merely. Lawrence V. Stonington Bank, 6 Conn. 521, is an example of this class of cases in our own reports. In like manner, thirdly, the relation of principal and surety may be shown, and that the indorsement was made at the request and for the accommodation of the immediate indorsee; for the equity of the relation forbids the enforcement of the contract. Such was Case v. Spaulding, 24 Conn. .'')78. So, fourthly, it may be shown that there was an equity arising from an antecedent transaction, includ- ing an agreement that the note should be taken in sole reliance on the responsibility of the maker, and that it was indorsed in order to transfer the title in jrarsuance of such agreement, and that the attempt to enforce it is a ^ That is, the equity may be shown, not upon any ground that the rule against parol eA'idence is not applicable, but upon grounds of its own. DALE c,. GEAK. 87 fraud. Such was Downer v. Cheseborough, 36 Conn. 39. The exceptions illustrate the rule. But this plea shows no agency, trust, equitable relation, or equity connected with an antecedent transaction constituting a considera- tion for the agreement, or which would justify a court of equity in interfering to prevent an enforcement of the contract of warranty which the law implies. It presents a naked case of an attempt to prove by parol that a clear and unambiguous contract of warranty is not such, and to con- tradict it in terms, — to turn an indorsement without restriction, before maturity, into a restricted indorsement. Such a plea cannot be sustained without a violation of essential principles. ISTor is the plea supported by any well-considered and un- questioned authority. The defendant claims, in the first place, that it is sup- ported by the decisions of this State, and he relies on a class of cases where the action was upon a non-negotiable note, or a negotiable note indorsed by one not a party to it, which by our law stands on the same ground. But those decisions cannot sustain him. That class of blank indorsements is not controlled by commercial usage, and does not import an absolute contract of warranty. The contract presumed by law from them is presumed prima facie only, and differs in different States. In this State such indorsements are not only prima facie but conditional ; that is, that the note shall be collected of the maker by due diligence. In Massa- chusetts and New York such an indorsement is treated as absolute guaranty,^ or the indorser charged as a joint pro- misor.'' In all, the presumption is treated as one of fact rather than one of law, and the real contract made between the parties, if a special one, may be written over the signa- ture of the indorser.* It is otherwise in a note like this. There are then broad lines of distinction between the two 1 As to the rule in New York, see ante, p. 29. ^ The rule in Massachusetts. See ante, p. 38. ' That is not true in Massachusetts. See Wright v. Morse, 9 Graj', 337. 88 CASES ON' BILLS, NOTES, AND CHEQUES. classes of indorsements, and the defendant's plea is not supported by the class of decisions referred to. The defendant also relies on Case v. Spauldiug, 24 Conn. 578, but it does not sustain him. There the defendant was not the payee, and as second indorser was not liable to the payees of the note, for they as first indorsers were bound to pay it. The defendant also indorsed at the request of the plaintifi: as surety, for his accommodation, and was within one of the classes of equitable exceptions, where the rela- tion on which the equity rests may be shown. The dictum of Judge Ellsworth, confined within the limits called for by the case, was undoubtedly true ; but the defendant does not bring himself within the exception. The defendant further relies on Downer v. Cheseborough, 36 Coun. 39, but he is not sustained by that case. It was not put to us as a case where the antecedent contract which created an equity between the parties could not be shown under our law, if the contract had been made sure, in con- nection with the agreement claimed, to show that the plain- tiff was attempting to perpetrate a fraud, but as a case where, by the laws of New York, where the contract was made, it could not be proved by parol. The case turned solely on the question whether the law of evidence of the forum or of the lex loci contractus should govern. In that aspect only we considered and decided it, and that question, alone is discussed in the opinion. If the questions which are raised here had been raised there, we should have holden without hesitation, first, that the indorsement of a negoti- able note before maturity by the payee creates an absolute warranty to the immediate as well as all subsequent in- dorsees that the instrument and the antecedent signatures thereon are genuine ; that the indorser has title to the in- strument, and is competent to bind himself by the indorse- ment; and that the maker will pay it on due presentment when it is due; but that, if he does not, the indorser will pay it if due notice is given him of such dishonor; and, secondly, that no special agreement — as that the unre- DALE V. GEAR. 89 stricted indorsement was intended or agreed to be a restricted one — can be given by parol evidence, except in the class of cases adverted to where an equitable relation existed be- tween the parties in respect to the indorsement when it was made, which rendered the enforcement of the contract ineqidtable and fraudulenb. Equity overrides all rights, and suspends the operation of all legal rules between original parties when necessary to prevent a fraudulent use of them ; and therefore the exceptions mentioned have been recog- nized and applied at law. Downer v. Cheseborough was clearly within one of the exceptions, but this case is not. The defendant under his second point cites three cases from Pennsylvania to show that the contract set up in the plea was provable there by parol. In examining those cases we think the law of Pennsylvania is otherwise. The first case cited is that of Hill v. Ely, 6 Serg. & Eawle, 363. The marginal note sustains his claim, but the case does not. In that case it appears that the defendant purchased coffee of the plaintiff upon an express agreement that the plaintiff should receive in full payment the notes of one Jabez Lamb, without the responsibility of the defendant. The notes were payable to the order of the defendant, and were handed to the plaintiff, pursuant to agreement, without indorsement. The plaintiff then said to the defendant, 'Hill, you must indorse those notes ; ' to which Hill replied, ' That is not our understanding.' The plaintiff rejoined, ' They are made payable to you ; how will you convey them to me ? You must indorse them, in order that I may collect them.' Hill then said, ' I indorse them ; but remember, I am not to be held responsible for their payment.' The case was put to the court by the distinguished counsel engaged solely on the ground that the attempt of Hill [Ely] to charge Ely [Hill] upon his indorsement was a fraud, and the court so held. They say : ' The evidence offered went to prove a direct fraud in obtaining the indorsements or their perversion to a use never intended, — a fraudulent pur- pose.' The court further say that parol or extrinsic evi- 90 CASES ON BILLS, NOTES, AND CHEQUES. dence would be received in chancery to reach such a fraud, and therefore would be received in their courts at law ; that the relief in equity would be grounded, not upon the admis- sibility of parol evidence as between such parties to contra- dict the writing, but to show extrinsic facts raising an equity dehors the instrument, to prevent the fraudulent purpose. The court also say that the evidence was admissible to show a trust between Hill and Ely for the purpose of collecting the notes and applying the proceeds in payment for the coffee. They recognize the leading case of Hoare r. Graham, 3 Camp. 57, as law, but distinguish it because in Hoare r. Graham there was no allegation of fraud. The case is on all fours with Downer v. Cheseborough. In both there was an antece- dent contract which raised an equity dehors the instrument, which made the attempt to enforce the contract implied by law from the indorsement a fraudulent one relievable in equity. It is implied in both decisions that in a case like this, where no equity existed, such a contract could not be shown by parol. Hill V. Ely was not overruled or shaken by the subse- quent cases cited. Patterson r. Todd, 18 Penn. St. 426, was the case of a negotiable note, but it was indorsed by the payee when ovi-rdiie, and there was no subsequent demand and notice. The main question in the case was whether such a demand should have been made upon the maker and notice given to the indorser. It was held that the indorsement was equivalent to drawing a new bill, and that demand should have been made in a reasonable time and notice given of the dishonor. The court also held that under the circumstances of that case the defendant might show by parol evidence that he said he would not warrant the notes. But the court did not question the authority of Hill V. Ely, nor does it appear that it has ever been ques- tioned. The remaining case cited from Pennsylvania was the case of a non-negotiable note. It has no bearing upon this case. The defendant under his third point cites a case from THE STATE BANK v. FEARING. 91 Massachusetts, and dicta from Judge Shaw.^ But the note in that case was not negotiable, and the case and dicta are unimportant. The defendant also cites one English case — that of Pike v. Street, Moody & Malkin, 227 — in support of his claim. It is sufficient to say of that case that it is not directly upon the point, is contrary to the present cur- rent of English decisions, and was questioned in the recent case of Foster v. Jolly, 1 Cromp. Mees. & E. 703. These are all the decisions cited by the defendant ; and there is not one of them directly in point which can be relied upon as authority. On the other hand, the current of decisions in England is directly against the admission of such evidence. Hoare v. Graham, 3 Camp. 57 ; Goupy v. Hardy, 7 Taunt. 159 ; Eree v. Hawkins, 8 Taunt. 92. And the adverse decisions in this country, which are directly in point, are quite numerous. Bank of Albion v. Smith, 27 Barb. 489 ; Thompson v. Ketcham, 8 Johns. 146 ; Patterson V. Hull, 9 Cowen, 747 ; Payne v. Ladue, 1 Hill, 116 ; Hall V. Newcombe, 7 Hill, 416; Odam v. Beard, 1 Blackf. 191; Eiiller V. McDonald, 8 Greenl. 213 ; Crocker v. Gretchel, 23 Maine, 392; Wilson v. Black, 6 Blackf. 509; Barry v. Morse, 3 N. H. 132. The Superior Court ''■ must therefore be advised that the plea is insufficient. THE STATE BANK v. FEARING.^P' Supreme Court of Massachusetts, March, 1833. 16 Pick. 5.33. A bank is entitled to recover against the second indorser of a note dis- counted by the bank, although the indorsement of the name of the payee is a forgery, and although the note was offered for discount by the maker and not by the second indorser. Assumpsit on a promissory note for the sum of $2,000, dated April 15, 1833, payable to the order of Thomas Jack- I Riley v. Gerrish, 9 Cash. 104. ^ A slip for Court of Common Pleas. 92 CASES ON BILLS, NOTES, AND CHEQUES. son, junior, in six months, made by Ciiarles Brown, and in- dorsed with the names of the payee and of the defendant. By an agreed statement of facts, it appeared that the sig- natures of Brown and the defendant were genuine, but that the defendant could prove, if such evidence was admissible, that the indorsement of the name of the payee was a forgery ; that the note was presented by Brown to the plaintiffs for discount, in the usual course of business, and discounted by them for him ; that, at the time of such discount, the plain- tiffs and the defendant were ignorant of the forgery ; and that due notice of the non-payment of the note was given to Brown, Jackson, and the defendant. If upon this statement of facts the court should be of opinion that the plaintiffs were entitled to judgment, the defendant was to be defaulted; otherwise, the plaintiffs were to be nonsuited. . Shaw, C. J., for the court. — The peculiar features of this action are, that the plaintiffs claim of the second indorser, from whom they immediately took the note. The question is, whether the forgery of the indorsement of the name of a prior party is a good defence to the note ; and the court are of opinion that it is not. In general it is not necessary for the holder to prove the signature of any party prior to the party whom he sues. The reason seems to be obvious, that the party defendant, by his indorsement, has admitted the ability and the signa- ture of all prior parties. Bayley on Bills, 313 ; Critchlow v. Parry, 2 Camp. 182. The effect of the engagement of the indorser is, that if the prior parties do not pay the note according to its tenor upon due presentment, upon notice to him he will. It is therefore a rule upon this subject, that a plaintiff is under no obligation to prove the signature of those prior to the party intended to be charged. It is very different where lie claims against the acceptor of a bill or maker of a note. They respectively promise to pay to the payee or his order, and until he has made such order by his EEWIN V. DOWNS. 93 indorsement, the plaintiff can establish no title, and, to prove such order, he must prove the genuineness of his sig- nature. Smith V. Chester, 1 T. R. 664 ; Lambert v. Pack, 1 Salk. 127. So an acceptor is bound, though the bill be forged. Jengs v. Fawler, 2 Strange, 946. The circumstance that this bill was offered for discount by Brown makes no difference ; the plaintiffs had a right to look to their immediate indorser, and if satisfied to take the note on his credit, he is liable to them ; and it was for him to see that he has a good remedy over against those who purport to be prior parties. Defendant defaulted. ERWIlSr V. DOWNS. ? f Court of Appeals of New York, June, 1857. 15 N. Y. 575. An indorsee of a promissory note may recover against an indorser, though the former took the note with knowledge that the maker was incompetent to contract. Action upon two accommodation promissory notes jointly made by the same persons, each note payable to the defend- ant, and indorsed by him. The plaintiff took them for value before maturity. Defence that the makers were mar- ried women when they signed the notes, and incompetent to contract, and that the plaintiff knew the fact when he took the notes. There had been due demand and notice of dishonor. Judgment for the plaintiff on report of referee ; the defendant appealed. Shankland, J., for the court. — The note was void, as against the makers, because they were married women, and incapable of contracting obligations in that form. But when the defendant indorsed the note, he impliedly contracted that the makers were competent to contract, and had legally contracted, the obligation of joint makers of the note. He also assumed the legal obligation, in most respects, of the drawers of a bill. The fact, known to the plaintiff at 94 CASES ON BILLS, NOTES, AND CHEQUES. the time he took the note, that the makers were married women, did not deprive him of the character of a bona fide purchaser ; nor does the payee's knowledge that the drawee is a married woman discharge the drawer in case of non- payment of the bill by the drawee ; nor is the indorser dis- charged, though the name of the maker is forged. 1 Comst. 113. The fact is not found that the plaintiff was aware the note was accommodation paper. The plaintiff was a bona fide purchaser within the law merchant. Neither the com- plaint nor the finding of the referee tells us who transferred the notes to the plaintiff. The legal presumption is, that he received them from some legal holder in due course of business. Judgment affirmed. TOWXSEXD V. BUSH. ' 0' Supreme Court of Connecticut, November, 1814. 1 Conn. 260. A party to a negotiable instrument, who is diyested of interest, is compe- tent to prove usury in the inception of the paper. 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. De- fence, usury. To prove this, the defendant offered the individuals composing the firm of E. & 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 on the ground that said parties were drawers of the bill. The court excluded the witnesses, and directed the jury to find a verdict for the plaintiffs ; which being accordingly done, the defendant moved for a new trial. The motion was reserved for the consideration of all the judges. Tkumhull, J., for the, court. — The principal question in this case is, whether Ebenezer and Atwater Townsend, the TOWNSEND V. BUSH. 95 drawers of the bill in question, 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 usurious contract, and therefore is void in law. The rule that no person can be permitted to give testi- mony to invalidate any instrument to which lie has made himself a party by affixing his signature, in cases wherein he has no interest in the event of the suit on trial, was first adopted in the case of Walton v. Shelley, 1 Durn. & East, 296, by Lord Mansiield, and the other judges of the King's Bench. He states that ' the rule is founded in public pol- icy ; that there is a sound reason for it, because 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 aifixing 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 consequence 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 with- out notice is void ; and, in the case of usury, a note given for a 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 con- curred, 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 applica- tion to negotiable instruments only. No new or additional reasons were ever adduced in its support. It was adhered to on the grounds stated by Lord Mansfield, and the author- ity of the decision in that case. But, at length, the rule was exploded in the King's Bench, and such a witness de- termined to be admissible, unless interested in the event of 96 CASES ON BILLS, NOTES, AND CHEQUES. the suit on trial. See Jordaine v. Lashbrooke, 7 Durn. & East, 601. As tlie decisions of the highest court and ablest judges at Westminster Hall have been thus 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, denying 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 according to the general rules and principles of law respecting admissibility of testimony ; and if the grounds and reasons in "Walton v. Shelley are found to be fallacious, we cannot consider the case and its authority conclusive. The first ground Lord Mansfield takes is, that every per- son 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 instrument, thereby gives to it, and what obligation he thereby incurs ; for each signer stands on a different ground. The drawer of a bill or negotiable note acknowledges 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 admitted to deny the handwriting of the drawer; and he 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 Sta.te. The indorsee or holder of a negotiable security has noth- TOWNSEND u. BUSH. 97 ing to do with the transaction between the original parties. See Jordaiue v. Lashbrooke. Nor has the drawer or acceptor anything more to do with the contracts between subsequent indorsers and indorsees. Each party is bound only so far as his own obligation extends, and cannot be precluded from denying any fact not acknowledged by his signature. All these contracts are separate and inde- pendent. No party by his signature warrants the validity of any contract but his own, or gives any further 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 instrument. He warrants nothing further 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. 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 applicable to every case in which he is a party, or is interested, and to no others. It was formerly holden as well in the English 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 sub- jected to a subsequent action on the instrument, was 7 98 CASES ON BILLS, NOTES, AND CHEQUES. 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 heard who alleges his own turpitude or crime, was never by any court or judge, before Lord Manstield, applied to the inadmissibility of a witness, but only to the rights of the pa,rties in a suit or action. No suitor can support a claim in which the ground or consideration 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 always 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 prohibitum by force of some statute, making it penal in some particular country or jurisdiction. In Jordaine v. Lashbrooke, Lord Kenyou says : ' The rule contended for is this : ^Vhatever fraud may have been com- mitted, 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 unimpeachable character, and not interested in the cause.'" This he denies to be 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 consi- deration 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 sup- ported, there is no hardship in the case of an innocent purchaser; he has his remedy. If in any case he is TOWNSEND V. BUSH. 99 deprived of every legal remedy, no court can have a right, in compassion to the hardship of his situation, to assist him in evading the law by excluding such witnesses or evidence as are admissible in 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 gaming, 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 recover 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 respect to bills and notes than other secu- rities ; 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 admis- sible, notwithstanding they have put their signature upon the bill. Swift, J., delivered a concurring opinion. 100 CASES ON BILLS, NOTES, AND CHEQUES. MUSSON V. JjAKE.Iljrt- Supreme Court of the United States, December, 1845. 4 How. 262. The notary should preseut the paper when he demands payment. 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. McKiNLEY, J., for the court. — The plaintiffs brought an action of assumpsit, in tlie 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 $6,133, payable twelve months after the first day of February, 1837, to E. H. aud J. H. Crump, and addressed to Kirkman, Kosser, & Co., at New Orleans, and by them afterwards accepted, and indorsed 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 pre- sented the bill to the acceptors, or either of them, when he demanded payment thereof. And upon the question, 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 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 maturity and demand payment; and if he refuse to pay it, and the holder cause it to be protested, and due notice to be given MUSSON V. LAKE. 101 to the indorser, then he promises to pay it. All these con- ditions 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 con- ditions precedent to the liability of the indorser of the bill. A presentment to and demand of payment must be made of the acceptor personally, at his place of business or his dwelling. Story, Bills, § 325. Bankruptcy, insolvency, or even the death of the acceptor will not excuse 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. Purbor, 8 East, 242, 245; Esdaile v. Sowerby, 11 East, 117; 14 East, 600. 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 pay- ment has a right to receive it, before he is bound 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. Robinson, 7 Barn. & C. 90. Mr. Justice Story 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 filled up with 'the pre- sentment, 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 102 CASES ON BILLS, NOTES, AND CHEQUES. 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 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. Everything, therefore, 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 evidence 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; Chesmer 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 rejected. But the counsel for the plaintiffs insists that the statute of Louisiana and the interpretation given to it by the Supreme Court of that State in the case of Xott's Executor V. Beard, 16 La. 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 b_y the notary to the acceptors for payment. To this objection, that court sa,id it might perhaps have been more specific, if, in the protest, it had been stated that the bill was presented, 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 pre- MUSSON V. LAKE. 103 sentment for, or demand of payment, and give notice of the refusal. Here, then, is a definite proposition, assert- ing that a presentment for payment and a demand of pay- ment 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' is used in it, and that the word 'presentment ' is not ; and they refer to the statute, also to show that notaries were vested with certain powers by it, which gave authority to their acts; and that they being public officers, the presumption of law is, that they do their duty; and therefore, if the protest were defective, and liable to the objection urged against it, this presumption of law would cover all such defects. This is substituting presumption for proof, in violation of all the rules of evidence. With all due respect for that distinguished tribunal, we are constrained to dissent from the general proposition they have laid down on the subject of demand and present- ment, and from all their reasoning 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 Ten- terden, C. J., said on this subject, in delivering the ■ judgment of the Court of King's Bench, in the case of Hansard v. Eobinson, 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 mer- chants, considered as part of the law, furnishes in this case an exception to the general rule. What, then, is the custom iu this respect? It is, that the holder of the 104 CASES ON BILLS, NOTES, AND CHEQUES. bill shall 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 tanto, 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 extract, we think, furnishes a full answer to all that has been said by the Supreme Court of Louisiana to prove that it is not necessary to jwesent 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 pre- sentment 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 pro- visions. The principal object of the legislature in passing this statute seems to have been to give authority to nota- ries to give 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 intended as a new enactment on these subjects, but as inducement to the powers conferred on the notary, which was the princi- pal 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 protests of bills of exchange, promissory notes, and orders for the payment of money, 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 cir- cumstances of such demand; and by certificate, added to MUSSON t: LAKE. 105 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 certificate shall be evidence of all the notices therein stated.' It seems to have been taken for granted by the legisla- ture 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 of the 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 legislature, 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, evi- dence of notice in the courts of Louisiana. But, indepen- dent 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 present the bill to the acceptor will justify his refusal to pay it, although payment be demanded. The legisla- ture cannot be presumed to have intended to make so important a change in the law merchant as that ascribed to them by the counsel for the plaintiffs, without at the same time providing some other mode of obtaining the acceptance and payment of bills of exchange, and of hold- ing drawers and indorsers to their liabilities. It is but 106 CASES ON BILLS, NOTES, AND CHEQUES. reasonable, 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 the 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 presentment of the bill for either acceptance or payment; and the circumstances 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 the statute; because it provides for a demand of payment of the acceptor of a bill. Now, how can there 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 'present- ment' 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 sufiioient to present it and demand pay- ment 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 wovild be a nugatory act, because it is not due; then it must be admitted that, 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 Louisiana has changed the law merchant in any of these respects. There is, however, another question, entirely indepen- dent of the statute and the decision of the Supreme Court MUSSON V. LAKE. 107 of Louisiana, which may be decisive of the case before this court; and that question is, whether the contract between the holder and indorser of the bill in controversy is to be governed by the law of Louisiana, where the bill was pay- able, or by the law of Mississippi, where it was drawn and indorsed. The place where the contract is to be per- formed is to govern the liabilities of the person who has undertaken to perform it. The acceptors resided at New Orleans; they became parties to the bill by accepting it there. So far, therefore, as their liabilities were con- cerned, they were governed by the law of Louisiana. 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 agree- ment of the parties, to be performed in Mississippi, where the suit was brought, and is now depending. The con- struction 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, 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 legislature in passing the statute, arid 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 presentment of the bill to the acceptors for payment, nor 108 CASES ON BILLS, NOTES, AND CHEQUES. 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, regarding it as sufficient evidence of presentment. They agreed with the majority as to the necessity of presentment, the chief point intended to be illustrated here. WEST V. BROWKf6.1{7 Supreme Court of Ohio, December, 1856. 6 Ohio St. 542. A note payable generally may be sent to a bank before maturity for collection, and the bank may then give notice of the fact to the maker and require him to come there and make payment. A room, in the oihce of another, being one's only place for receiving business calls, and being a place at which one gives notice that word left there will find one, is a proper place for making demand of payment. The case is stated in the opinion. BowBN, J.J for the court. — The suit below was on the following note : ' Cincinnati, Nov. 20, 1854. ' Three months after date I promise to pay to the order of Samuel West one hundred and fifty dollars, value re- ceived. ' (Signed) Joseph B. Babcock. ' (Indorsed) Samuel West.' The note was discounted by the defendant and proceeds paid to Babcock, the maker. It was afterward left at the Union Bank for collection. Notice was sent by the bank to Babcock some time before it matured, that this note would fall due on the 23d of February, 1855, at said Union Bank. Babcock resided in the eastern part of the city. He had no place of business exclusively his own. He was allowed to occupy the office of Mr. Harding, on Vine street, which was the place where he received business calls and directed WEST V. BROWN. 109 them to be made. The business of Babcock at the time was that of a small vender of pamphlets and periodicals in the streets of the city. He had told persons that informa- tion left for him at Harding's would find him. The notary public states that he went to the said office of Babcock, on Vine street, between four and five o'clock p. m., on the 23d of February, and demanded payment of the note. He was told there were no funds there to pay, and that Mr. Bab- cock was out ; whereupon he protested the uote for non- payment, and on the next day he put a notice in the post- office for West, the indorser, directed to him at Milford, Ohio. West received the notice on the 27th or 28th of February, postmarked Cincinnati, February 26. The notary says that he is confident that he mailed the notice to West before nine o'clock on the day after the protest, and that early business in Cincinnati, at that season of the year, did not commence before seven or eight o'clock in the morning. Milford is fifteen miles from Cincinnati, and it was shown that the mail was closed daily, for that place, at five o'clock a. m., and that all letters put into the office after that hour, for Milford, would not go until the next mail ; that in this case the next mail day was Monday, the 26th of February. Sunday, the 25th, intervened, when there was no mail. West was an accommodation indorser for Babcock. The cause was submitted to the court below as to West, and a judgment found for the plaintiff, when the defendant moved the court to grant him a new trial, which motion was refused, and a bill of exceptions was tendered and allowed. Judgment was taken by default against Babcock. Two points are relied on by the plaintiff in error, to reverse the proceedings of the Superior Court. 1. That no such demand of payment was made of Babcock, the maker, as the case required. 2. That there was no legal notice of demand and non-paj'ment served on West, the indorser. First. This note was deposited with a bank for collec- tion, and, according to the usage of bankers in Cincinnati, 110 CASES ON BILLS, NOTES, AND CHEQUES. Babcock was personally notified of tlie place where and of the time when the paper would become due. Although no place of payment was named in the note, yet as the maker resided in Cincinnati, it was not unreasonable to require pay- ment of it to be made at one of the banking houses of the city. It was the manifest duty of Babcock to have taken up the note at the Union Bank, in compliance with the notice which he received for that purpose. But having failed to do that, the notary public called at his place of receiving customers, and formally demanded payment. It is said that the de- mand ought to have been made at his family residence, and could not be made elsewhere, as he had no well established business ofBce. It seems that he occupied a room at Hard- ing's, where he directed calls to be made and where he received them. By his own acts and declarations he au- thorized this place to be known as his ofB.ce for transacting business. He apprised the public that he could be found there, that ' word left there would find him.' He claimed no other business location. He gave no directions or au- thority for calling on him, for business purposes, at his residence. His desire was to have an office for doing busi- ness, where he might conveniently and with certainty be found, and a selection of such place he accordingly made at Harding's, where he was sought by the notary public, but when applied for happened to be out. The object of the visit, however, was fully explained to those who were found in the ofQce. We are satisfied that reasonable dili- gence in this case was used by the holder of the note to obtain payment from Babcock, and that the claim that no demand of payment was made of him is not well founded. . . . [On the second point it was held that the defendant was duly notified]. The judgment of the Superior Court is Affirmed. TAYLOR V. SNYDER. Ill TAYLOR V. SNYDER, ^r Supreme Court of New York, May, 1846. 3 Denio, 145. The place of date of a promissory note, payable generally, is only prima facie the place of payment ; if the maker is known to reside elsewhere presentment must be made accordingly, as where, at the execution of the note, he was known by the holder to reside in another State. Assumpsit against the indorser of a promissory note, payable generally, but dated at Troy, New York, at which place presentment for payment was made, the maker being a resident of Florida. The plaintiff was nonsuited. Motion for new trial. The facts appear in the opinion. Beakdslet, J., for the court. — 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 the original holder, Morris, and to Stevenson, to whom it was subsequently transferred. The residence 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 occa- sion anything was said as to the place where payment would be made, or where the note should be presented for payment at maturity. 112 CASES ON BILLS, NOTES, AND CHEQUES. Upon the evidence as stated in the case, I think it cannot be said that anything has been done by the indorser to change or affect his original liability or his rights, in that 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 that purpose. And although he certainly gave a strong assurance that the maker would remit the money to him, and therefore that tlie 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 intended to assume any new obligation, or to dispense with the performance 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 doubtless 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 anything to indicate a place, unless that follows from 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, payment 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 TAYLOR V. SNYDER. 113 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 action against the indorser of a promissory note, bearing date in the city of New York, 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 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 demanding payment.' But the court thought otherwise, and held that a demand of the maker personally, or at his residence or place 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 bore date at that place. This 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 residence any- where, 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 indorser. It has been supposed that the case of Stewart v. Eden, 2 Gaines, 121, countenances a different doctrine. Livingston, J., there said, ' The note being dated in New York, the maker and indorser are presumed to have resided, and con- templated payment, there.' This remark was in part strictly 114 CASES ON BILLS, NOTES, AND CHEQUES. 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 contemplated payment at that place. Judge Livingston did not say that the note was by law payable at the jjlace 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 engagements as maker and indorser, but simply of what they were presumed 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 payable 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 there pretended that pay- ment had not been duly demanded. It was an action against the representatives of a deceased indorser ; and although an objection was taken to the form in which the present- ment for payment was alleged in the declaration, it was 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 sufficiency of the notice to the indorser, and the remark of the judge was made in discussing that ]!ioint. I admit that upon the question of due diligence in giving notice to an indorser, it may have been very pertinent and proper to say that the parties are presumed to have con- templated 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 agree- ment, 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 payable at the place TAYLOR V. SNYDER. 115 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 par- ticular place, the general rule of law is, that in order to charge the indorser 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. Wood- worth, 18 Johns. 315; s. c, in error, 19 Johns. 391. But although such is the general rule, yet, under various circum- stances, 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. Eaym. 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. H. 199 ; Whittier v. Graffam, 3 Greenl. 82. And in every ease where the maker has no known-resi- dence or place at which the note can be presented for pay- ment, the holder will in like manner be excused from making any demand whatever. Story, Promissory Notes, § 237; Whittier v. Graffam, supra; Putnam v. Sullivan, supra ; Duncan v. McCullough, 4 Serg, & 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 appear that the maker had absconded, was at sea, or had no known domicile or place where the note should be presented. The rule is 116 CASES ON BILLS, NOTES, AND CHEQUES. 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 de- mand 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 residence elsewhere, the holder need not follow him to make demand, but it is sufficient to pre- sent the note for payment at the former place of i-esidence of the maker. McGruder v. Bank of Washington, 9 Wheat. 598, post ; Anderson v. Drake, supra ; Dennie v. Walker, supra ; Gillespie v. Hannahan, 4 McCord, 503 ; Eeid v. Morrison, 2 Watts & S. 401 ; 3 Kent, 96. 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 suppo- sition that no such change would take place. Nevertheless, as was said in Dennie v. Walker, supra, ' this is an excep- tion to the general rule, and must be construed strictly.' 'We think,' say the court in McGruder v. Bank of Wash- ington, 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 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 dis- tance. 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 kingdom, the indorser is held, iu Eng- land, to stand committed.' These exceptions to the general rule, it will be 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 State and taken up his residence TAYLOR ./. SNYDER. 117 in another country. In each of these instances, let it be observed, the fact constituting the excuse occurs subse- quently to the making and indorsement of the note ; and it is this new and changed condition of the maker, and that only, by which 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 the condition 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 un- changed at the maturity of the note. It is palpable that this exception, if made, must be placed on some new prin- ciple ; 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 position is true, that one who indorses for a maker T)rho lives in another State may be ' held liable with- out 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, i,t cer- tainly may be shown ; but that it has no existence is, as I believe, not only according to the universal understanding amongst commercial men, but also according to the settled course of business 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 impracticable to make a demand, the indorser will himself, on receiving 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- ■118 CASES ON BILLS, NOTES, AND CHEQUES. tarily consents to take such an order, and why should he not perform 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 indorsement is made. The indorsee knows where the maker resides, and that it is in another State. He knows that by law, unless the intervention of a State line makes a difference, the maker must be 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 line make a diiierence in the construction and legal effect of this contract of the indorser ? It was fairly entered into between the parties ; let it then be fairly observed and performed by them. I can well understand why such an order made by an in- dorser upon tlie maker of a note then residing within this State, but who removes into another State before the note falls due, should receive 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 has occurred, which, like the absconding of a maker, or an inability 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 which will excuse the maker from making a demand, or using proper diligence to make a demand, as in ordinary cases. The interven- tion 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, however, to have been taken for granted, in the TAYLOR V. SNYDER. 119 case of McG-ruder v. The Bank of Washington, already re- ferred to. The case of Duncaa v. McCullough, Adm'r, &c., 4 Serg. & Rawle, 480, was, in some of its features, much like the one at bar. It was an action against the adminis- trator 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 specified in the note. It did not appear, otherwise than by its date, where the note was actually 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 anywhere ; nor was it shown that any search for the maker had been made. Here, then, was a note dated at Baltimore, no place of payment being stated in it, the maker living in another State. So far it is the case in hand ; yet it was not even suggested, by the counsel or the court, that a demand was unnecesssry, or that Baltimore 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 pur- pose, and upon this part of the case the final opinion of the court was thus stated by Chief Justice Tilghman: 'If the plaintiff had proved that Adams had absconded, and was not to be found when the note fell due, a demand of pay- ment 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 de- cided 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 de- mand, or at least due diligence in endeavoring to make a 120 CASES ON BILLS, NOTES, AND CHEQUES. 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 un- known, 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 re- quired, the argument 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 presump- tion. 3 Kent, 96, 97 ; Lowery v. Scott, 24 Wend. 358 ; Galpin v. Hard, 3 McCord, 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 iudorser resided, the maker then being at his home in Florida. I am aware that Judge Story, in his treatise on Promis- sory Notes, after adverting to various grounds on which a demand of payment may be excused, says : ' It seems, also, that if the maker of a promissory note resides and has his domicile in one State, and actually dates and makes and delivers a promissory note in another State, it will be suffi- cient for the holder to demand payment thereof at the place where it is dated, if the maker cannot personally, upon rea- sonable inquiries, be found within the State, and has no known place of business there.' § 236. For this he refers to the case of Hepburn v. Toledano, 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 be sought in the State TAYLOR V. SNYDER. 121 where he resides, and not 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 decided 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 the report of the case of Hepburn v. Toledano. It was an ac- tion 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 Kentucky ; 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 subse- quently removed to Kentucky, or by a person who lived in Kentucky when the note was made, is a fact upon which I cannot satisfy myself from anything 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 author- ity 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 the 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 indorsees cannot be presumed to know his residence, and all that the law re- quires of the holder is due diligence at that place where the note is drawn. Thus in the case cited by the appel- lant, 14 Johns. 116, it is stated by the court to have been previously decided 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 Or- 122 CASES ON BILLS, NOTES, AND CHEQUES. leans was sufficient. I must say that my impression upon this case is that the maker of the note had removed from Louisiana after the giving of the note ; but, if the fact were otherwise, 1 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 desirable. But I cannot assent to the principle that where no change has taken place in the residence of the maker, between the making 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 nonsuit was right, and a new trial should be denied. New trial denied. MONTELIUS V. CHARLES. -'r Supreme Court of Illinois, January, 1875. 76 111. 303. That a sight bill of exchange is presented to the drawee within reason- ahle time after delivery, is all the drawer can require. Appeal from a judgment in favor of the plaintiffs. The case is stated in the opinion. Scott, J., for the court. — This action was upon an inland bill of exchange, in the name of a remote assignee, against the drawers. One important question is, whether the holders had been guilty of such laches, before present- ing it to the drawee for payment, as would bar a recovery against the drawers. Defendants were engaged in the banking business at Piper City in this State. On the 8th of September, 1873, on the application of James McBride, thej- drew their draft on the Pranklin Bank of Chicago, payable at sight, to the order of John Strank, who then resided at Canton in Dakota. It was, on the same day, deposited in the post-office, directed to the payer at Canton, who received MONTELIUS 0. CHARLES. 123 it after some delay attributable alone to the fault of the mails. Having passed through the hands ot several holders, it was presented on the 13th day of October, 1873, to the bank for payment, which being refused, it was protested, and notice given through the post-office to the drawers and the several indorsers. In the meantime the Eranklin Bank, on which the draft had been drawn, had failed and gone into bankruptcy. The law is settled by an unbroken line of decisions that all drafts, whether foreign or inland bills, must be pre- sented to the drawee within a reasonable time, and in case of non-payment notice must be given promptly to the drawer to charge him. But what is a reasonable time, under all the circumstances, is sometimes a most difficult question. The general doctrine is, each case must depend on its own peculiar facts and be judged accordingly. In Strong v. King, 35 111. 9, it was declared to be a general rule, that the holder of a sight draft must put it in circulation, or present it for payment at furthest on the next business day after its reception, if within the reach of the person on whom it is drawn. In the case at bar the draft was put in circulation, and the point is made, that the mere fact it was not presented for payment until after the lapse of thirty-five days is per se such laches on the part of the holders as would discharge the drawers. In Muilman v. D'Eguino, 2 H. Black. 565, Eyre, C. J., said: 'Courts have been very cautious in fixing any time for an inland bill payable at a certain period after sight to be presented for acceptance, and it seems to me more necessary to be cautious with respect to foreign bills pay- able in that manner. ^ If, instead of drawing their foreign ' The bill in that case was a foreign bill, drawn in five sets, March 5, 1793, in London, on Calcutta ; the sets were sent to India in May following and reached there October 3 of that year. Four of the sets were pro- tested for non-acceptance on the 29th of the same month, and the fifth on the 18th of the next month. The causes of delay are stated in the report of the case. The jury found that there had been no laches, and ^;he ver- dict was upheld. 124 CASES ON BILLS, NOTES, AND CHEQUES. bills payable at usances in the old way, merchants choose, for their own convenience, to draw them in this manner and make the time commence when the holder pleases, I do not see how the courts can lay down any precise rule on the subject. I think, indeed, the holder is bound to present the bill in a reasonable time, in order that the period may commence from which the payment is to take place. The question what is a reasonable time must depend on the peculiar circumstances of the case, and it must always be for the jury to determine whether laches is imputable to the plaintiff.' Buller, J.: 'Due diligence is the only thing to be looked at, whether the bill be a foreign or an inland one, and whether it be payable at sight, at so many days after, or in any other manner. But here I must observe that I think a rule may thus far be laid down with regard to all bills payable at sight, or at a certain time after sight, namely, that they ought to be put into circulation. If they are circulated, the parties are known to the world and their credit is looked to; 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 in circulation, the holder were to lock it up for any length of time, I should say he was guilty of laches.' Bills, both inland and foreign, having the quality of negotiability, are intended in some degree to be used as a part of the circulation of the country, and are indispen- sable in the conduct of extended commercial transactions. They afford a safe and convenient mode of making pay- ments of indebtedness between distant points. Banking houses that for a consideration issue such bills must be understood to do so in accordance with the known custom of the country, — that they will be put in circulation for a limited period. If this were not so, their value would be greatly depreciated, and their utility in commercial trans- actions would be destroyed. Were it understood the purchaser of such a bill was bound to make all possible MONTELIUS V. CHARLES. 125 despatch to present it to the drawee or lose his recourse on the drawer, no prudent man would feel safe in taking one. He may know the drawer from whom he purchases the bill and be willing to rely on his responsibility; but in many cases he has and can have no knowledge of the drawer's correspondent, the drawee. Commercial usage has therefore placed the responsibility upon the drawer, and he is presumed, in consideration of the premium paid, to assume all risks as to the solvency of the drawee for such reasonable time as the bill shall be kept in circulation. There can be no doubt, if- the holder locks it up and keeps it out of circulation, he assumes all risks, and in case the bill is dishonored his laches in that regard would bar a recovery against the drawer. Such bills are not issued with a view to be held as a permanent security, with a continuing liability in the drawer. Illustrative of the law of this branch of the case is Shute v. Bobbins, 3 Car. & P. 80. The difficulty is, to determine for what length of time such a bill may be kept in circulation consistently with a continuing liability in the drawer. The rule adopted, as we have seen, is, it must be presented in a reasonable time under all the circumstances. But courts not infrequently experience great perplexity in making a distinction between a reasonable time for the presentation of such paper and laches on the part of the holder. Every case differs so essentially in its facts, it has given rise to many appar- ently contradictory decisions; but through all of them is noticeable the effort of the courts to ascertain whether the bill was kept in circulation for only a reasonable period in the regular course of business. When that fact is once established, the liability of the drawer is regarded as con- tinuing. It will be found the decisions differ only in what the various courts deemed reasonable in each particular case. In Eobinson ik Ames, 20 Johns. 147, the bill declared on was drawn on the 6th of March, but not presented for 126 CASES ON BILLS, NOTES, AND CHEQUES. payment to the drawees until tlie 20tli of May. In the meantime the drawees had failed ; but in a well -reasoned opinion the court came to the conclusion there was no such laches as would discharge the drawer. In Jordan v. Wheeler, 20 Tex. 698, the bill in suit was put in circula- tion and indorsed by defendants without having been pre- sented for acceptance before it came to the hands of the plaintiff. A little more than a month elapsed before he presented it for payment, and that was declared to be according to usage. In Nichols v. Blackmore, 27 Tex. 686, the court was of opinion a delay of forty-seven or forty-eight days was not such laches as would forfeit the right of the holder to recourse against the drawer, in default of payment by the drawee. Many other cases of the same import might be cited, but these are sufficient for our present purpose. They estab- lish, beyond doubt, the fact that there is no fixed period in which the bill must be presented for payment, but that each case must be decided on its own peculiar facts in the light of commercial usage. In the case at bar the bill was immediately put in circu- lation. It was mailed to the payee on the day it bore date, to his proper address in Dakota. Some delay occurred, attributable to interruption in the transmission of the mails, but this fact could not be imputed to the payee as laches. On the receipt the payee immediately undertook and availed of the first opportunity to negotiate the bill. It was kept in circulation, and no delay was suffered other than that incident to the transaction of business in a sparsely populated territory like Dakota. The facts and circumstances proven show no laches on the part of any holder that would operate to discharge the drawers. Judgment affirmed. ORIDGE V. SHERBORNE. 127 OETDGE V. SHERBORNE. 9 U Court of Exchequer, of England, May, 1843. 11 Meeson & W. 374. A promissory note payable by instalments is assignable within the Stat. 3 & 4 Anne, t. 9 ; and the maker is entitled to the days of grace upon the falling due of each instalment. Assumpsit by indorsee against payee of a promissory note, dated 19th November, 1838, payable to the defendant by instalments on the 19th of November in each succeed- ing year, for seven years. This action was brought to recover the amount of the instalment due on the 19th of November, 1842. There were pleas denying that the note was duly presented for payment, or that the defendant had due notice of the presentment and dishonor. At the trial it appeared that the note was presented for payment of the instalment in question on the 22d of November, the plaintiff thus allowing the three days of grace usually given in the case of negotiable instruments ; it was dishonored, and notice of the dishonor was given to the defendant the next day. It was objected for the defendant that the pre- sentment and notice of dishonor were too late ; that a promissory note payable by instalments was not a negoti- able instrument within the law and custom of merchants, and the maker thereof was not entitled to days of grace at all; or, if he were, they could be allowed only for pay- ment of the last instalment. The judge overruled the objection, and the plaintiff obtained a verdict. Rule nisi for a new trial. Pakke, B. I think the rule in this case ought to be discharged. The question is, whether, on a promissory note payable by instalments, the usual three days of grace are to be allowed or not. In order to determine this point, the first question that presents itself is, whether such an instrument is a promissory note at all, within the Stat. 3 & 4 Anne, c. 9, so as to entitle any party into whose 128 CASES ON BILLS, NOTES, AND CHEQUES. hands it may come to sue upon it; for, if so, there will be no difficulty in extending to it the same rule as prevails in the case of bills of exchange; namely, that days of grace are to be allowed in all cases where a sum of money is by such a negotiable instrument made payable at a fixed day. Now, in order to render this valid as a promissory note, we must first consider whether it might be sued on by the original parties to it. It is well known that, before the passing of the Stat. 3 & 4 Anne, c. 9, it was the opin- ion of Lord Holt that a promissory note was only evidence of a debt, and not an instrument of obligatory force in itself. Then came the statute, which puts promissory notes on the footing of inland bills of exchange. The preamble recites that it had been held 'that notes in writ- ing, signed by the party who makes the same, whereby such party promises to pay unto any other person or his order any sum of money therein mentioned, are not assign- able or indorsable over, within the custom of merchants, to any other person; and that such person to whom the sum of money mentioned in such note is payable cannot maintain an action by the custom of merchants against the person who first made and signed the same ; and that any person to whom such note should be assigned, indorsed, or made payable could not, within the said custom of mer- chants, maintain an action against the person who first drew and signed the same.' The statute is thus directed to two grievances, — that the note is not assignable, and that it is not the subject of an action. Therefore, ' to en- courage trade and commerce, which will be much advanced if such notes shall have the same effect as inland bills of exchange,' the statute in the first section goes on to enact that 'all notes in writing, whereby any person, body politic or corporate, shall promise to pay to any other person or persons, body politic or corporate, his, her, or their order, or unto bearer, any sum of money mentioned in such note, shall be taken and construed to be, by virtue thereof, due and payable to any such person or persons, etc., to whom OKIDGE ... SHERBORNE. 129 the same is made payable.' These words are general, and without any limitation as to the mode in which the money is to be paid. The section goes on to enact that ' every such note shall be made assignable or indorsable over, in the same manner as inland bills of exchange are or may be, according to the custom of merchants; and that the person or persons, etc., to whom any such sum of money shall be by such note made payable, may maintain an action for the same, in such manner as they might do upon any inland bill of exchange made or drawn according to the custom of merchants, against the person or persons who signed the same ; and that any person or persons, body politic or corporate, to whom such note is indorsed or assigned, or the money therein mentioned ordered to be paid by indorsement thereon, may maintain their action for such sum of money either against the person, etc., who signed such note, or against any of the persons who indorsed the same, in like manner as in cases of inland bills of exchange.' On the provisions of this statute, therefore, we find no limitation imposed as to the manner in which the money is to be made payable ; and conse- quently, unless there is some established rule or settled practice to the contrary, a promissory note must be deemed good within the statute, whether it be to pay an entire sum at once, or to pay it by instalments. No case has been cited to show that a promissory note in the latter form is not good, and we must therefore look at the course pur- sued in practice since the statute. Speaking from modern experience (and mine in this respect has been of some standing), I have no doubt that numerous actions have been brought by the original parties in whose favor such notes have been made ; indeed, that this is so every gen- tleman in the habit of drawing under the bar can testify; and it is now much too late to say such actions as those are not maintainable. And if promissory notes are within the first clause of the statute, I see no sufficient reason why they should not also be within the second, and conse- 9 130 CASES ON BILLS, NOTES, AND CHEQUES. quently assignable to an indorsee. Besides the invariable practice on this subject, and the fact that actions on notes of this kind have been so numerous, that it is, I may say, impossible that the present objection should not have been taken in some of them, if there were really any weight in it, several reported cases have been referred to, in which such actions were brought, and no objection taken that they would not lie on the ground suggested in this case, although other objections V)ere taken. One is that of Donaldson v. Thompson, 6 M. & W. 316, to which may be added those of Ashford v. Hand, Andr. 370, and Josselyu V. Lacier, 10 Mod. 294. If there had ever been any idea that a promissory note of this nature was not within the statute of Anne, the objection would certainly have been taken ; although I rely more on the established modern usage, and think it too late to raise this objection now. If, then, this is admitted to be a promissory note, suable on and indorsable under the statute, the next question is respecting the allowance of the usual days of grace upon it. Now, in the case of Brown.t'. Harraden, 4 T. R. 148, it is said that, with respect to the allowance of days of grace, the rule is exactly the same in the case of a promissory note as of a bill of exchange; namely, that they are always to be allowed, when the instrument is for the payment of money at a certain time, as after a certain number of days or after sight, but not when it is only payable on demand. That rule we must adopt in this case; and as this note is suable on and indorsable under the statute of Anne in the same manner as bills of exchange were before, — as both instruments are thereby simply put upon the same footing, — the days of grace for both must be the same, and consequently ought to be allowed on this promissory note. Aldeeson, B. I am of the same opinion. Notes of this nature are within the literal words of the statute of Anne ; and when we are called upon to decide whether they OEIDGE V. SHERBORNE. 131 are virtually within it, we ought to look to the invariable practice which has existed in such cases. My brother Parke has referred to the modern practice on this subject, in which he has had great eyperience ; then we have the fact that the intermediate parties to promissory notes in this form have sued upon them, and that there is a number of decided cases in which the declarations would have been bad if this objection had prevailed. Again, if we look at the Stamp Act, we shall find that the legislature itself has taken a similar view of this matter, and treated instruments in this form as negotiable, by imposing a stamp duty upon them. We thus have the opinion of those persons who have all along been employed in drawing declarations, and the opinion of the legislature itself ; and, in addition to all these, we have impliedly the concurrence of Mr. Barou Bayley, a great authority in questions of this nature, who, in his work on Bills of Exchange, when speaking of the requisites necessary to constitute a good bill, mentions every other objection which can be raised, but makes no exception of such as are made payable by instalments ; which would certainly have been a very great omission, if the present objection be well founded. The same observa- tion may be made as to other text-books which treat on this subject. Taking, then, all these matters together, they seem to establish that communis consensus, which we are told facit jus, of all persons to adopt the literal construction of the statute of Anne, and which ought on this account to prevail with us in the present case. If, then, a promissory note payable by instalments be within that statute at all, it must be so to the whole extent of the statute; so that not only may the original parties to the note sue upon it, but so also may all collateral parties, the instrument being indorsable like any bill of exchange, and subject to the incidents of such indorsement. The only question in the present ease, therefore, being that relative to the days of grace on this note, on which we think the decision at the trial was correct, the present rule must be discharged. 132 CASES ON BILLS, NOTES, AND CHEQUES. EoLFE, B. I am of the same opinion. It appears to me that the case which has been referred to, of Donaldson v. Thompson, is almost a direct decision on this point, for that was an action by the indorser of a promissory note, payable by instalments, against the maker, to which the defendant pleaded non assumpsit ; and the question raised on demurrer was, whether the declaration, which was somewhat peculiar in its form, was a declaration on a promissory note, within the meaning of the Eeg. Gen. H. 4 Wm. IV., Assumpsit, 2, which renders that form of plea inadmissible in all actions on bills of exchange and promissory notes. The defendant contended that it was ; and although the point was argued by very learned counsel, who made use of numerous argu- ments to show that the instrument there declared on was not a promissory note, they never suggested the objection raised here, that it was not a promissory note because made payable by instalments ; and the court held that it did amount to a promissory note within the meaning of the rule. It is impossible to give effect to the argument of Mr. Knowles in the present case, without saying that the decision of the court in that case was erroneous. Rule discharged. THE WINDHAM BANK v. NORTON. ? ' Supreme Court of Connecticut, July, 1852. 22 Conn. 213. Failure of presentment at maturity is excused by any inevitable or unavoidable accident, not attributable to the fault of the holder, provided he make presentment as soon thereafter as practicable. Assumpsit against indorsers of a bill of exchange, drawn by George Hobart, of Norwich, Connecticut, upon Mans- field, Hall, & Stone, of Philadelphia, and by them accepted, for $417.26; dated January 31, 1849, and payable four months after date, to the order of the defendants. The facts were found by the court, by agreement of the parties, as follows : Said bill of exchange was, on the day THE WINDHAM BANK v. NORTON. 133 of its date, accepted by said Mansfield, Hall, & 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 for- warded said draft, by the United States mail, to the Ohio Life and Trust Co., a banking corporation in the city of ITew York, for collection, and indorsed the same to their cashier, as follows : ' Pay G. S. Coe, Esq., cashier, or order;' signed, 'Samuel Bingham, cashier.' The bill, so indorsed, was, in a day or two thereafter, and in due course of mail, received by said Ohio Life and Trust Co. The third day of grace, June 3, being Sunday, the draft was actually due and payable on Saturday, June 2. During the year 1849, there' were two mails per day, each way, between New York and Philadelphia, 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 their departure. The Farmers and Mechanics' Bank were the Philadelphia correspondents of the Ohio Life and Trust Co., and communications by mail passed between them daily. On the morning of June 1, the cashier of the Ohio Life and Trust Co. enclosed this draft with others, addressed in the proper and usual mode, to the Farmers and Mechanics' 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 Philadelphia. 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 Philadelphia were, by the post-ofiS.ce clerks in the ofiB.ce 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 forwarded to Philadelphia, which place they reached in the course of Sunday, June 3. On the morning of the 134 CASES ON BILLS, NOTES, AND CHEQUES. next day said letter, with the draft enclosed, was delivered from the post-office at Philadelphia 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 accep- tors not to pay it, and that, had he presented it on Satur- day, June 2, he should have given him the same answer. Said notary thereupon, on said fourth 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 enclosed 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 ad- dressed to George S. Coe, cashier of Ohio Life and Trust Co., New York, who had indorsed said draft to the Farmers and Mechanics' Bank, and by whom said letter was, in due course of mail, received. Said Coe, on the same day on which he received them, enclosed said letter of protest and said notices, except the one to himself, in a letter duly addressed to the plaintiffs, and deposited the 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. Mans- field, Hall, & Stone became insolvent, and suspended paj'- ment on the twelfth day of April, 1849, and on the next day sent to the Farmers and Mechanics' Bank the following notice in writing : — THE WINDHAM BANK v. NORTON. 135 '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, & Stone.' No further notice was sent, and said bank, from that time forward, 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 2, when it became due, and was never presented for payment 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 ex- change, for collection or acceptance. It is the custom of the Windham Bank, and the four Norwich banks, to for- ward all paper in their hands, payable abroad, within five or eight days after it comes into their hands, without refer- ence 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 re- served for the advice of this court. Stoers, J., for the court. — 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 the facts set up by the plaintiffs by way of excuse. What- ever may be the course of authorities elsewhere, it is well set- tled here that those allegations are supported by evidence of matter of excuse, or a waiver of demand and notice. Nor- 136 CASES ON BILLS, NOTES, AND CHEQUES. ton V. Lewis, 2 Conn. 479, and Camp v. Bates, 11 Conn. 487, are decisive on this point. The other and more important question in this 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 are chargeable with negligence in not presentiug it on that day. If the agent of the plaintiffs, to whom they sent it to be forwarded' for presentment and collection, and who trans- acted this business for them, was guilty of such negligence, it is, of course, imputable to the plaintiffs. And it is not important to this question either that the defendants, in fact, sustained no damage by the draft not having been pre- sented for payment when it fell due, or that it would not have been paid by the acceptor, if it had then been pre- sented. The indorser, on a question of due presentment for payment, is not affected by either of these circum- stances. Nor, indeed, do the plaintiffs claim to recover on either of these grounds. The question of negligence here presented depends on the inquiry whether, under the circumstances of this case, the delay of the plaintiffs' agent in not forwarding this draft to Philadelphia 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 circum- stances, because there is no positive or absolute rule of law which 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 transmis- sion 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 diligence in the presentment of a bill for payment is required of the holder, and that, therefore, if THE WINDHAM BANK v. NORTON. 137 there has been no want of such diligence, he is excused. Story, Bills, c. 10; Chitty, Bills, c. 9, 10; Story, Prom. Notes, c. 7, § 368 ; 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 objection to any right of recovery against the indorser. But, although this is the general rule, it is not a 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 properly 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 liolder, 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 negli- gence on his part, or a want of reasonable diligence, no absolute or positive 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 presented for 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, con- stitutes 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 pre- sents the ordinary question of negligence. That question may, and often does, depend on such a variety of circum- stances, 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 appli- 138 CASES ON BILLS, NOTES, AND CHEQUES. cable 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 attributable to the fault of the holder, pro- vided there is a presentment by him as soon aftervs^ard as he is able ; by which is intended that class of accidents, casualties, or circumstances which renders 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 suffi- cient excuse for the want of a due presentment. But it seems justly and naturally to flow from the general prin- ciple, which regulates all matters of presentment and notice, in cases of negotiable paper. The 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 accomplishing the end required, by ordinary skill, caution, and effort.' And he cites the remark of Lord Ellen- borough, in Patience v. Townley, 2 Smith, 223, 224, that due presentment must be interpreted to mean, presented accord- ing to the custom of merchants, which necessarily implies an exception in favor of those unavoidable accidents which must prevent the party from doing it within regular time. Story, Bills, § 258. Applying these principles to this case, we are of opinion that the plaintiffs are not chargeable with a want of reason- able 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 Philadel- phia, where it was payable. It is properly conceded by the defendants that such mode of transmission was in accord- ance with the general commercial usage and law, in the case of paper of this description. Indeed, it is recommended in THE WINDHAM BANK v. NORTON. 139 the books as the most proper mode of transmission, 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 so late a period that, by the ordinary course of the mail, it could not, or there was reasonable ground to believe that it would not, reach the place of its destination in season for its pre- sentment when due, we have no doubt that there would be, on their part, a want of reasonable diligence, which would exonerate the indorser. On the other hand, to throw the risk of every possible accident, in that mode of forwarding the draft, upon the holder, where there has been no such delay, would clearly be most inconvenient, unreasonable, and unjust, as well as contrary to the expectation and under- standing of the indorser, who is presumed 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 supposed 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 estab- lished, requiring only reasonable diligence on the part of the holder, or with the policy which prevails in regard to 140 CASES ON BILLS, NOTES, AND CHEQUES. such, commercial instruments. It would, in the first place, be the means of restraining 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 qual- ity; 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 forwarding mercantile paper, be such as to render it impos- sible to ascertain its miscarriage, or to recall it in season to remedy the diflficulty. 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 transmission 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 mistakenly mailed, as in the pres- ent case, for Washington), it might not have been practi- cable for the plaintiffs to learn the accident, or obviate its effect, before the paper fell due. In short, such a rule as that suggested would be merely artificial in its character, productive of great inconvenience and injustice in particu- lar cases, without any corresponding general benefits, and change 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 obnoxious to the same or similar objections. The only remaining inquiry is, whether the plaintiffs are chargeable 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 THE WINDHAM BANK «. NOKTON. 141 mode. It was deposited iu 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 be 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 package containing it, would have reached its proper des- tination, and been received there in season for its present- ment when due. It in fact reached that place when it should have done, but was carried beyond it in conse- quence 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 con- trol or supervision over the postmaster. They had a right to presume that the latter had done his duty. They could not know that he had misdirected the package until it was too late to remedy the consequences. The occur- rence of the draft being sent beyond its place of destina- tion 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 prob- ably 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 be extremely 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 that of the postmaster. Under these cir- cumstances, we do not feel authorized to impute any blame or negligence to the plaintiffs. We are, therefore. 142 CASES ON BILLS, NOTES, AND CHEQUES. of opinion that judgment should be rendered for the plaintiffs. In this opinion the other judges concurred. Judgment for the plaintiffs. HALE V. BUEB. 9 6,(^7, Supreme Court of Massachusetts, March, 1815. 12 Mass. 86. Where the maker of a promissory note dies, and an administrator is appointed before the note falls due, a, demand upon the administrator is not necessary, in order to charge the indorser, so that notice of the death and non-payment be duly given to him ; unless the maturity of the note happens more than a year after the appointment of the administrator. Assumpsit by the indorsee against the defendant as indorser of a promissory note, signed by Joseph Francis, payable to the defendant or his order, in sixty days and grace, dated August 1st, 1812. At the trial of the action, which was had before the present Chief Justice, ISTovember term, 1813, on the gen- eral issue, it was in evidence, that Joseph Francis, the promisor, died on the 4th of September, 1812, and that administration of his estate was duly committed to William Dodd on the 14th of the same September, and that he gave legal notice of his appointment. The note wa.s lodged in the Union Bank, in Boston, for collection. At the time it fell due, the runner of the bank left a notification at the counting-room formerly occupied by the said deceased, and where he usually did business. No demand was made upon the said administrator, who lived, and had a place of business, in Boston, which was known to the runner, by whom notice was given to the defendant. One Bench, the former clerk of the deceased, at the request of the creditors, took care of the property of the deceased, and occasionally went to the counting-room, until the said Dodd was appointed administrator. The said Dodd then took all the books and papers of the HALE V. BUEH. 143 deceased to his own store, and took the sole charge of his other property. Before the note became due, all the prop- erty of the deceased was sold and delivered; and the counting-room was not used for some time before. The estate of the deceased was proved to be insolvent. A verdict was returned for the defendant by direction of the judge ; and it was agreed, that, if the court should be of opinion that a demand upon the administrator, under the circumstances of this case, was not necessary to entitle the plaintiff to recover, the verdict should be set aside, and the defendant should be defaulted; otherwise, that judgment should be rendered on the verdict. Paekee, C. J., for the court. — The question presented in this case is, whether an indorsee of a negotiable promis- sory note can maintain an action against the indorser, the promisor having died, and an administrator having been appointed and duly qualified to act, before the day of payment, without proving a demand upon such adminis- trator at the maturity of the note. Whether such demand was actually made or not, according to the usage of the bank where the note was left for collection, was a question for the jury ; and by the verdict it is established that none was made. But, as the jury were instructed that such a demand was necessary, if that instruction was not right, the verdict must be set aside. And we are all of opinion that the instruction was wrong; and that it is not necessary, to charge the indorser, that a demand should be made of the administrator. The authorities cited by the defendant's counsel ^ go merely to prove, that, in order to obtain a protest of a bill of exchange, or to charge the drawer or indorser, if the payee be dead, it is incumbent on the holder to present the bill to his personal representative, if he live within a reason- able distance. 1 Chitty on Bills, Story's ed. 1 72, 1 82 : MoUoy, L. 2, <;. 1 0, § 34 ; Pothier, 146. 144 CASES ON BILLS, NOTES, AND CHEQUES. From the strong analogy subsisting between bills of exchange and promissory notes, it is possible that this rule of law may be as applicable to the latter species of contract as to the former. Yet no authority has been cited to show that the rule has been applied to promissory notes, or to any instrument other than a foreign bill of exchange, where by the law merchant a protest is necessary/ In England, however, there may be reasons for making a demand upon an executor or administrator of a deceased promisor in a note necessary, which do not exist in this country ; and, if the reasons upon which the law is founded do not exist, there is no cause why we should not decide according to the nature and spirit of the contract. In this State a demand upon an administrator would, iu most cases, be entirely nugatory. He is not obliged to pay any debt of the deceased, except such as are particu- larly privileged, until a year from his appointment. If sued within the year, he is entitled to a continuance, of course. This indulgence is given to enable him to collect the effects of the deceased, and to ascertain their suffi- ciency to discharge all the debts. If there should be a deficiency, a general distribution takes place among all the creditors, without regard to the character of their demands, unless in the few excepted cases above alluded to. Under these circumstances, should he pay any debt, and it should afterwards appear that the estate is insol- vent, he pays at his peril. A prudent executor or admin- istrator will, therefore, .seldom hazard the payment of a debt before he has ascertained the situation of the estate; and a demand upon him would be sure to meet with a refusal. Such a demand would, therefore, be merely a troublesome formality, without any use ; and notice to the indorser, that (the promisor being dead) he will be looked to for payment, will in every respect be as advantageous to him as a previous demand upon the promisor. » But see Cliitty on Bills, 6th ed. 246-262 ; Bayley on Bills, 5th ed. 219 ; Thomson on Bills, 444 ; Price v. Young, 1 Nott & M'Cord, 438 ; Roscoe, ■Ev. 158, 2a ed. ; 2 Phil. Ev. 22. HALE u. BURR. 145 It is well settled, that, if the promisor abscond before the day of payment, or has concealed himself, the neces- sity of a demand is taken away.^ Due diligence to find him is all that is required in the latter case ; and, in the case of absconding, even that is not necessary.'' When the party is dead, and his representative is not obliged to pay his debts for a year after he assumed the trust, it would seem as idle to require a demand of him as it would be to pursue one who has absconded.' In England there may be more reason for requiring such demand; for there the representative is at liberty to pay the debts , although there should not be enough to pay all, if he has regard to their rank and degree; and he may always discharge himself by showing that he has paid away all that he has received. He may, therefore, pay a bill of exchange, or promissory note, when called upon. But in this country it is otherwise; for, where the estate is insolvent, as in the present case, there is no reason to presume that a demand would be effectual. We do not decide, that, when a note shall fall due after the expiration of the time allowed the executor or admin- istrator, by our statute, upon an estate not represented insolvent, a demand upon him, or due diligence to make one, must not be proved. But in the present case we are satisfied that no such demand was necessary. The verdict must, therefore, be set aside, and the defendant be called.* Defendant defaulted. 1 Chitty, 70; L. Raym. 743. ' Putnam v. Sullivan, 4 Mass. Rep. 45; Widgery y. Munroe, 6 Mass. Rep. 449 ; Whittier v. Graffam, 3 Greenl. 82. s Thomson on Bills, 444. * Burrill v. Smith, 7 Pick. 291. 10 146 CASES ON BILLS, NOTES, AND CHEQUES. DANA V. SAWYEE. ^? Supreme Court of Maine, April, 1843. 22 Maine, 2i4. Presentment of a promissory note to the maker at near midnight, after he has retired to rest, is not presumptively 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, which 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. Sheplet, J., for the court. — 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 anything 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 DANA V. SAWYER. 147 certain hours of the day, the law presumes that the parties intended to conform to such established course of busi- ness, and requires that a demand should be made during those business hours. Parker v. Gordon, 7 East, 385. The cases of Garnett 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 hours authorized to give an answer, the demand will be good ; while it may be difficult to reconcile these cases with the case of Elford v. Teed, 1 M. & S. 28. When the bill or note is not payable at a place where there are established business hours, a presentment for payment 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. Newnham, 10 Moore, 249; Wilkins v. Jadis, 2 Barn. & Adol. 188. What hour may be a reason- able 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 Ellenboroiigh said, ' If the presentment had been during the hours of rest, it would have been altogether unavailing.' In the third, this remark, among others, is quoted and approved by C. J. Best. In the fourth, Lord Tenterden remarked, that ' a presentment at twelve o'clock at night, when a person has retired to rest, would be unreasonable.' These observations, so just and so applicable to this case, author- ize the conclusion that the demand was not made at a rea- sonable 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 148 CASES ON BILLS, NOTES, AND CHEQUES. 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 disturbed, or because he could not then have access to funds prepared and deposited elsewhere for safety. Plaintiff nonsuit. FAENSWOETH v. ALLEN. f Supreme Court of Ohio, December, 1862. 14 Ohio St. 89. The fact that a drawer or indorser goes from the place of his residence to another place to dispose of property, which occupies him for several weeks of time, does not make such latter place his place of business. Action by the holder against the indorser of certain bills of exchange. Judgment for the plaintiff. Writ of error on instructions to the jury. The facts appear in the opinion. Eanney, J., for the court. — The bills of exchange upon which this action wa,s 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 dis- honor; 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 con- ditionally liable were in due time forwarded to the defend- ant in error, a subsequent indorser of the bills. The right 196 CASES ON BILLS, NOTES, AND CHEQUES. to recoYer 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 evi- dence 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 instruc- tions of the court based upon that state of facts. Stating these facts as broadly as anything in the evi- dence will warrant, they amounted to this: The plaintiff in error was a resident of Morristown, New Jersey, and had no fixed residence in the State of Ohio, or at Chicago, but during most of the season of 1866 had been engaged in the lumber business, staying at Cleveland, and in Ottawa County, where he owned a saw-mill; that about the 1st of jSTovember he left Cleveland, and, before doing so, informed the defendant in error that 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 ; 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 permanent business there, but was there WALKER V. STETSON. 197 temporarily, and for a temporary purpose only, the send- ing 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 sufQcient to charge the defendant with the payment of said bills.' To which the court responded as follows : ' That if the defendant did not reside in Chicago, and was not engaged in any perm&,nent business there, but was there for a pur- pose merely temporary, sending notices of protest to him at Chicago would not, as a proposition 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 that question, whether the business of the defendant at Chicago was of that character, or whether the plaintiff had suflS.- cient reason from his information derived from the defendant, 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 plaintiff, and sufB.cient 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 pur- sued by the defendant 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 subject. 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 reason- able diligence has been used; and it cannot be suljmitted 198 CASES ON BILLS, NOTES, AND CHEQUES. to the jury as a question of fact. Bank of Columbia v. Lawrence, 1 Peters, 578; Bank of Utica v. Bender, 21 Wend. 643; Carroll v. Upton, 3 Comst. 272 ; Wheeler «. 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 com- munity, 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 con- stantly 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 rela- tions 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-offi.ee 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. Houldsworth, 16 Mees. & W. 124; Dickens v. Beal, 10 Peters, 570; Jones ?'. Lewis, 8 Watts & S. 14. As to the place to which the notice should be directed, it is equally well settled that it should be sent to the drawer or indorser'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 applica- tion to particular cases, it has often been held that a notice is sufficient if sent to the post-office where the party usually WALKER V. STETSON. 199 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 indorser, and in general will be sufficient, both in refer- ence to himself and parties who stand behind him on the bill. Eeid v. Payne, 16 Johns. 218; Bank of Geneva v. Hewlett, 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 state- ment made by the plaintiff to the defendant in error suffi- ciently 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 dis- pose 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. The defend- ant says he went to Chicago, and was there from the 1st to the 24th of November, ' disposing of a quantity of lumber,' 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. 200 CASES ON BILLS, NOTES, AND CHEQUES. The question is then reduced to this : Does going to a city to dispose of property, which occupies the party for three weeks of time, without one word of explanation as to the mode of doing 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, and as we think a very disastrous, application to a large class of business men, dealing more largely than any other in com- mercial paper. The stock and produce of the West are taken to the eastern 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 of goods. Did anybody ever suppose that these persons were bound to watch the post-offices in those cities for notices of the protest of their paper? We think not; and yet, if these notices are sufficient, we see no distinction to be taken between this case and theirs. It is very certain that no decided case has given any countenance to the Supposition that such a notice, not received by the party, would be sufficient. The cases of Tunstall v. Walker, 2 Sm. & M. 638, and Chouteau v. Webster, 6 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 attendance 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.) 269. Upon the then state of the evidence, the court held that a notice sent to Washington City, when the senator had a residence in the State which he represented, would not be sufficient to charge him as an indorser; and the reason assigned is that ' his absence was but temporary, and the duration of that absence uncertain. In case of such absence from home, the law presumes that WALKER u. STETSON. 201 some member of the family is still at the residence, and that communications will be 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 4th of February, when the notice was forwarded, to the 4th of March ensuing, he was in the actual discharge of his official duties at Washington, and in the daily habit 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 Chouteau 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 defendant at Washington, where he was then, and for some time afterward, in attendance upon a session of Congress ; and that all letters addressed to mem- bers 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. Shaw, C. J., after premising the caution that the ' decision is founded on the circumstances of the particular case, and may be varied by other facts, ' proceeds to place it upon the ground that, while the defendant'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 established 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. 202 CASES ON BILLS, NOTES, AND CHEQUES. If we were entirely satisfied of the correctness of this qualification 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. That this was an error has been settled by this court, and the value of jury trial will very much depend upon the observance 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 exposi- tion of the law; and yet, as ' there was no evidence before the jury which required or even authorized the qualifica- tion annexed by the court,' the judgment was reversed. The court say: ' The judge must confine 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 perti- nently 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 evi- dence before them, they can hardly do otherwise than infer that, in his judgment, there is evidence upon which their verdict, when given, jnay rest.' Fay v. Grimsteed, 10 Barb. 321. But we are very far from being satisfied that the qualifi- cation annexed in this case does contain a correct state- ment of the law. After stating that, if the plaintiff in error was in Chicago for a purpose merely temporary, the notices would not be sufficient, the court proceed to say that if his business there was such 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 evi- dence, we do not think it would make any difference that WALKER V. STETSON. 203 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 be in any way decisive. At most, it would be but a circumstance, entitled to its just weight with others in determining the 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 uncontra- dicted and legally insufficient facts in evidence, and inquire into the motives of the plaintiff below; and concluding with the positive instruction that, if he had sufficient rea- son ' 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 charging 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 experi- ence has demonstrated to be necessary, and a substantial compliance with them lies at the very foundation 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 204 CASES ON BILLS, NOTES, AND CHEQUES. contract for him, instead of enforcing the one he has made for himself. The judgment must be reserved, and the cause re- manded to the District Court of Cuyahoga County for further proceedings. SIGERSON V. MATHEWS. ' "* 1* Supreme Court of the United States, December, 1857. 20 How. 496. Promise to pay, by an indorser, made before or, with full knowledge of facts, after maturity, is a waiver of steps. The case is stated in the opinion of the court. McLean, J., for the court. — 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 10th of March, 1852, for the payment of the sum of $2,000, 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 $2,000; 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 valuable real estate near St. Louis ; which offer was accepted, and the note was given. Some time in the fall of 1852, Joseph E. Elder, a wit- ness, received the note from Mathews 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. He replied, that the witness need SIGERSON V. MATHEWS. 205 not do so, and that the notes should be paid at maturity. The witness then placed the note in his portfolio, where it remained until after due. After it was due, witness called on John Sigerson, and informed him that he had neglected to put the note in bank for collection, and asked him what he was going to do. He said he would see wit- ness 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 Ifebruary, 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 $16,000. James executed twenty notes for f 2,000 each, payable in six, twelve, and eighteen months ; and John Sigerson 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 the 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 conversation 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 pro- vide 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 diie, and that no notice of its dishonor was given ; ' that, ' 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. 206 OASES ON BILLS, NOTES, AND CHEQUES. a want of such demand or notice.' ' If the defendant dis- pensed 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 substantially embraced in those given by the court. As there was no formal demand of payment, nor protest for non-payment and notice, those requisites must have been waived by the defendant, to make him responsible as indorser; 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 by the jury. Before 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 be 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 port- folio, where it remained until after it became due. After this, the agent called on the defendant, and informed him that he had neglected to take measures for the collection 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 bill 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. 52. 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 hound to prove notice on the trial. Walker v. Laverty, 6 Munf. 487. An uncondi- FOSTER V. PAEKER. 207 tional promise by the indorser of a bill to pay it, or an acknowledgment of his liability, 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 v. 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. rOSTEE, V. PAEKEE. /Vf Common Pleas Division, High Court of Justice of England, November, 1876. 2 C. P. D. 18. That an indorser of a bill of exchange wag not damnified by want of notice of dishonor, does not excuse want of notice. Action on a bill of exchange by an indorsee against an indorser. Statement of defence, want of notice of dis- honor. Eeply: That neither at the time when the bill was drawn, nor afterwards, nor when it became due and on presentment thereof, had the acceptor, or the drawer, or any indorser prior to the defendant, any efEeets of the defendant in his hands, and the said bill was drawn by the drawer and accepted by the acceptor and indorsed by the defendant and by the prior indorsers for the purpose of raising money for the defendant, the drawer, the acceptor, and the said persons who indorsed before tlie defendant, jointly; and the defendant was iu no way dam- nified even if there was no notice of dishonor. Demurrer and joinder. Denman, J. — I am of opinion that our judgment should be for the defendant. I think the allegation in the reply, that the defendant was in no way damnified by want of notice of dishonor, must be treated as an allegation of law, a mere conclusion from the previous allegations. Then, 208 CASES ON BILLS, NOTES, AND CHEQUES. are those allegations sufificient to make the reply good? In the case of Bickerdike v. Bollman, 1 T. E. 405, it was held that no notice of dishonor was necessary ; but in all the subsequent cases on the subject it is laid down that the doctrine in that case ought not to be extended; and that, with regard to an indorser, to excuse notice of dishonor facts must be stated which show, not as a mere possibility but as an absolute certainty, that he could not be damni- fied by the absence of such notice. The facts alleged in the reply only show that the drawer, acceptor, and prior indorsers of the bill were jointly interested with the defendant in some transactions for the purposes of which the amount of the bill was to be raised. It seems to me that so far from these facts making out that the defendant could not be damnified by want of notice of dishonor, the prima facie inference from them is that he would be. All the parties being interested jointly, prima facie if the defendant had to pay the whole amount of the bill he would be entitled to contribution from the other parties. The authorities cited in argument all show that the prin- ciple of Bickerdike v. Bollman, 1 T. E. 405, cannot be extended to the case of an indorser, unless it is clearly made out that under no circumstance could he be preju- diced by absence of notice. The allegations in the reply do not make this out. LiNDLEY, J. — To disentitle the defendant as the in- dorser of a bill of exchange to notice of dishonor the plaintiff must show that it was the defendant's duty, as between himself and the other parties to the bill, to pro- vide for it. It is obvious that the court cannot come to the conclusion that the defendant was, as between himself and the other parties to this bill, bound to provide for it from the averments in this reply. Indeed, the prima facie inference from them would be that he was not. The case therefore does not come within the authority of the cases in which notice of dishonor has been excused. With ARNOLD V. DRESSER. 209 regard to the general allegation that the defendant was not damnified by absence of notice of dishonor, it seems to me insufficient as being too vague. It might mean that the other parties to the bill would not have been able to pay. He would be damnified in the legal sense if he had a remedy over against any of them and was not bound, as between himself and them, to meet the bill, For these reasons I agree that our judgment should be for the defendant. Judgment for the defendant.^ ARNOLD V. DRESSER. /-S-"', /•"/< f V, ^ i Supreme Court of Massachusetts, September, 1864. 8 Allen, 435. In order to charge an indorser of a joint note, a demand must be made upon all the promisors by some one who has the note with him at the time, unless special circumstances are shown to excuse its absence. Such demand is not waived by a promise by the indorser to pay the note, if at the time of making the promise he is erroneously informed by the holder that a due demand has been made upon the promisors. Contract against the indorser of a joint promissory note. At the trial in the Superior Court, before Morton, J., it appeared that on the day when the note became due, Theo- dore S. Stratton, in behalf of the plaintiff, demanded payment thereof of the two promisors, but did not have the note in his possession at the time ; and the note was not paid. The plaintiff testified that on the same day he called upon the defendant, and gave notice to him that demand had been made on the makers ; that one of the makers called during the interview, and both he and the defendant said that the. note should be paid soon. Upon this evidence, the judge ruled that the plaintiff was not entitled to recover, and directed a verdict for the de- 1 See Turner v. Samson, 2 Q. B. D. 23. As to Bickerdike i/. Bollman, 1 T. R. 405, cited supra, see Hopkirk v. Page, 2 Brock. 20; L. C. Bills & Notes, 96, 97. 14 210 CASES ON BILLS, XOTES, AND CHEQUES. fendant, which was accordingly rendered, and the plaintiff alleged exceptions. BiGELow, C. J., for the court. — The defendant is not liable as indorser of the note declared on. In order to charge him it was necessary for the plaintiff to show due presentment and demand of the note on both the promisors ; Union Bank of Weymouth, &c. v. Willis, 8 Met. 504 ; ^ or a waiver thereof by the defendant. There were no such presentment and demand. If a note is made payable at a particular place, the holder must have it at that place on the day of its maturity, in order to make due presentment ; if it is not payable at a designated place, the note must be presented to the promisor at his usual place of business or at his dwelling-house. But no valid presentment and demand can be made by any person without having the note in his pos- session at the time, so that the maker may receive it in case he pays the amount due, unless special circumstances, such as the loss of the note or its destruction, are shown to excuse its absence. Shaw v. Eeed, 12 Pick. 132 ; Freeman v. Boyn- ton, 7 Mass. 488. Nor was there any waiver of due demand by the defend- ant. No such waiver is made, where an indorser promises to pay the note in ignorance of the fact 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 demand of the note. Low v. Howard, 11 Gush. 268 ; Kelley v. Brown, 5 Gray, 108. In the case at bar, the defendant made the statement on which the plaintiff relies to show a waiver, not only in ignorance of the fact that the note had not been duly demanded of one of the promisors, but under a mistaken belief that it had been so demanded, induced by the false statement to that effect made to him by the plaintifP. Exceptions overruled. 1 Ante, p. 38. LEHMAN V. JONES. 211 LEHMAN V. JONES./^/ Supreme Court of Pennsylvania, May, 1841. 1 Watts & S. 126. If the maker of a protoissory 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 promissory note. It was proved that Eobinson, the maker of the note in suit, had absconded to parts unknown and had not re- turned. The objection was that no demand was made upon Eobinson, 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 Eobinson 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 Jones- town, and attempt to make a demand 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. 1 — The rule in Lambert v. Oakes (1 Ld. Eaym. 443) is, that the holder must have demanded, or done his endeavor to demand, the money. But the law is not so unreasonable as to require an impossibility ; and therefore it is said (Id. Anon. 743), that where the drawee of a bill has absconded before the day of payment, notice of the fact is equivalent to notice of demand and dishonor. In Duncan v. MeCullough, 4 Serg. & Eawle, 480, the prin- ciple was recognized as being applicable to a promissory 1 Gibson, C. J., Rogers, Huston, Kennedy, Sergeant, JJ. 212 CASES ON BILLS, NOTES, AND CHEQUES. note ; and it has been established by direct decision in some of our neighboring States. It would have been idle for the plaintiff to demand payment at the late residence of Robinson, the 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 him and ascertain where he has gone, in order that he may follow him ; but when he has secretly fled, an appli- cation at the place would lead to no information in respect to him ; and the law requires nothing which is nugatory. The other errors are either resolvable by this precedent, or are plainly unfounded. Judgment affirmed. BEEKSHIRE BANK v. JONES. /5 a- Supreme Court of Massachusetts, September, 1810. 6 Mass. 524. Waiving notice by an indorser does not excuse demand ; but if the paper was payable at a designated place, and the indorsee was ready to receive payment at the time and place, no further demand is necessary. The plaintiffs declare on a promissory note made by one Amasa Glesen, on the 21st 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 indorse- ment 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 refusal by Glesen, the maker, and also notice to the defendant. The action was tried before Sedgwick, 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. Paesons, C. J., for the court. — The defendant has argued that, although he waived notice of a refusal of payment by BERKSHIRE BANK v. JONES. 213 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 objection 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 prom- ise ; and no other notice to him is necessary. In the case at bar, as the plaintiffs held this note, we must presume 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, guarantied 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 answer- able in a suit at law, without previous notice of the default of the promisor. Although we are satisfied that the judge was correct in his construction of the terms of the defendant's waiver of notice, considered in a general view, yet we are of opinion that, from the special tenor of the note declared on, the non- suit ought to be set aside ; and if, on the trial, the plaintiffs can show that on the day of payment 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 through the de- fault of the maker ; and by the defendant's waiver he cannot claim notice. 214 CASES ON BILLS, NOTES, AND CHEQUES. GRANT V. ELLICOTT.'i'^ Supreme Court of New York, May, 1831. 7 Wend. 227. 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. Assumpsit by indorsee against the acceptor of a bill of exchange. Plea, that the bill was accepted for accommo- dation of the drawer and that the plaintiff took it with knowledge of the fact. Demurrer to the plea. Savage, C. J., for the court. — The defendant says he ought not to pay the bill, because no consideration passed between him and Graham, and this was known to the plain- tiffs ; that is, the defendant accepted the bill for the accom- modation of the drawer, which the plaintiffs knew. This is no defence ; it was so decided in Smith v. 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 he 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 produced no proof but of handwriting of the parties to the bill. The case of Charles v. ^larsden, 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 plaintiffs 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 consid- eration for this bill ; it must, therefore, be presumed that SMALL V. SMITH. 215 lie 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 the 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 nego- tiated 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. The 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. SMALL V. SMITH. /i^O, Supreme Court of New York, October, 1845. 1 Denio, 583. One who purchases accommodation paper, with knowledge that the terms and conditions on which the accommodation was given have heen violated, is not a bona fide holder as against the party who lent his name for accommodation. Assumpsit upon a negotiable note, signed by the defend- ant as surety for accommodation of the maker. Defence, fraudulent diversion, and that the plaintiff took the note with knowledge. Verdict for the plaintiff, upon instruc- tions to the jury to which the defendant excepted. Motion for a new trial, for misdirection. The facts are detailed in the opinion. Beaedsley, J., for the court. — If the evidence given on the trial was true, and that was for the jury to determine. 216 CASES ON BILLS, NOTES, AND CHEQUES. it is perfectly clear that the note was delivered to the plain- tiifs 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 the transfer must have been upon what the law regards as a valuable consideration. These principles admit of no dispute ; and although, upon some points of commercial law in close proximity to those I have stated, discordant opin- ions may be 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 payment and satisfaction of a debt due to them from Hulburt, the maker of the note, that was a sufficient consid- eration for its transfer, 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 Hulburt. The judge, there- fore, in my view of the case, erred in submitting that ques- tion to the jury. But I shall not dwell on this point, for the case may be disposed of on the question of good fai'th. It appears by the testimony of Hulburt that he was in- debted 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 SMALL V. SMITH. 217 in order to obtain him as such surety. Pursuant to this arrangement, Hulburt went to see the defendant, and told him what he wanted. At first the defendant 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 defend- ant should be discharged from said indorsement. The note in question was accordingly signed by Hulburt and indorsed, by the defendant ; bub it was not to be transferred to Small, or used in any manner, until the one held by 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 did not see it again until Small had returned to Vienna. Hulburt first saw Small after his return at Aus- tin's office, where, on arriving 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 prevailed 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 comply- ing 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 remaxks made at that time. Both come to the same result ; for what was said, according to the 218 CASES ON BILLS, NOTES, AND CHEQUES. 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 indorsement was con- ditional ; and, if the note was subsequently transferred to him, he would necessarily take it subject to that condition. When this notice was given, the note was in Small's hands. He had received it, as he said, of Mr. Austin. But it cannot be pretended he had received it of Austin upon any consid- eration 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 Hulburt, 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 wit- nesses, pretend that he had acquired title to the note in any manner before he was apprised by Hulburt that the indorse- ment was made on a condition which had not been per- formed. It is more a matter of inference than of anything like direct proof, that Hulburt at any time assented to the transfer of the note to Small; but if he did so, after notice to Small of the condition on which the indorsement had been made, it is plain that the plaintiffs ought not to re- cover, as the condition has never been performed. If the plaintiffs claim as purchasers of the note from Austin, they are met by two objections : first. Small, one of the plaintiffs, was aware that the note belonged to Hulburt, and not to Austin ; and, secondly, it is not shown that the plaintiffs paid or advanced anything to Austin, or that any consid- eration passed between them for the transfer of the note. BELCHER .,. SMITH. 219 And as to Hulburt, if lie assented to the transfer of the note to Small, it was after explicit notice that the indorse- ment 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. New trial granted. BELCHER i;. SMITH./({;? Supreme Court of Massachusetts, September, 1851. 7 Cush. 482. The payee of a note, who signs his name to these words written on the back thereof, ' I hereby guaranty the within note,' is not liable thereon as indorser. This was an action of assumpsit on a promissory note, bearing date of January 16, 1850, and payable to the defendant or his order, on demand. At the trial in the Court of Common Pleas, before Hoar, J., the following facts appeared: The defendant on the 3d of February, 18.50, transferred this note to Field & Leland, in payment of a debt, and wrote his name on the back of the note, with these words over it : ' I hereby guaranty the within note. ' Field & Leland subsequently transferred the note to the plaintiff, and indorsed upon it, over their signature, these words: ' For value received pay to Henry S. Belcher at his own risk.' The defendant objected that the plaintiff could not maintain an action in his own name, on the defendant's indorsement ; that it showed a contract of guaranty with Field & Leland, and was not negotiable. But the court ruled that although the contract of guaranty was not negotiable, the effect of the transfer of the note from the defendant to Field & Leland with the indorsement upon it, was such as would have 220 CASES ON BILLS, NOTES, AND CHEQUES. authorized Field & Leland, and would authorize the plain- tiff, to write over the indorsement the words ' pay to Field & Leland or their order ; ' and the plaintiff was permitted by the court against the objection of the defendant to write those words. The plaintiff having obtained a verdict, the defendant excepted to the above ruling. Dewet, J., for the court. — The question raised in the present case, of the right of the plaintiff to maintain an action as indorsee of the promissory note sued upon, was fully considered by us and settled in the recent case of Tuttle V. Bartholomew, 12 Met. 462. Upon a review of the question, and comparison of the conflicting decisions and grounds upon which they were placed, the court were of opinion that where the name of the payee of the note was indorsed on the back of the note in no other form than as a signature to a guaranty fully written out and expressed, leaving nothing for implication, this was not such an indorsement as authorized a subsequent holder of the note to sue upon it as indorsee. It is true there was the further objection in that case, that the guaranty was signed not only by the payee of the note, but also by another person, and in the form of a joint guaranty. But irrespective of that, the court were of opinion that the plaintiff could not enforce the payment of the note by a suit in his own name, as indorsee. JVew trial ordered. MOSES V. LAWRENCE COUNTY BANK. 221 [Copyright, 1893, by Banks & Brothers.] MOSES V. LAWRENCE COUNTY BANK./6i Supreme Court of the United States, October, 1892. 149 U. S. 298. Guaranty of the payment of a promissory note made thereon on a day subsequent to the delivery of the note, requires a distinct consideration, and in Alabama a distinct expression of the same in writing. Aliter if note and guaranty are contemporaneous. Action upon a guaranty of a negotiable promissory note made by and payable to the order of Sheffield Furnace Company ; the guaranty being in the following words written upon the note and signed : ' We hereby guaranty the payment of the note at maturity.' It was alleged in the complaint that the guaranty was made for valuable consideration ; that the note with the. guaranty thereon was indorsed by the payee, for value, to the order of J. P. Witherow, before maturity, and before maturity indorsed and transferred for value by Witherow to the plaintiff; and that the defendants waived protest and notice. The note was made and was payable in Alabama, a statute of which provides that a special agreement to answer for the debt of another is void ' unless such agree- ment or some note or memorandum thereof, expressing the consideration,' is in writing. The defendant pleaded, inter alia : — Fourth. That the guaranty sued on was a special prom- ise to answer for the debt of another, and did not express any consideration for the promise. Fifth. That the note was given by the Sheffield Furnace Company for a debt owing to Witherow before it was made, and was not founded upon a consideration paid or liability accrued at the time of the making thereof, and the guaranty was without any consideration. Eighth. That the Sheffield Furnace Company paid the debt sued on to Witherow before this action was com- menced. 222 CASES ON BILLS, NOTES, AND CHEQUES. Twelfth. That the guaranty sued on was a special promise to answer for the debt of another, and did not express any consideration therefor, and was not executed contemporaneously with, nor before the negotiation of, the note of which it guarantied the payment. The plaintiff demurred to the fourth and fifth pleas, because they did not deny that the defendants indorsed the guaranty upon the note contemporaneously with its execution and before any negotiation thereof; and also demurred to these pleas, as well as to the twelfth plea, because they did not deny that the defendants indorsed the guaranty upon the note before its negotiation to the plaintiff, and in order to give it credit and currency, nor allege that the plaintiff had notice of any want of consid- eration for the guaranty. To the eighth plea a replication was filed, alleging that the plaintiff became the owner of the note for a valuable consideration before maturity, and that no part thereof had ever been paid to the plaintiff or to any one authorized by the plaintiff to receive it. To this replication the defend- ant demurred. The court below sustained the demurrers to the pleas, and overruled the demurrer to the replication. Issue was then joined on the eighth plea and the replica- tion thereto ; and a trial by jury was had upon that issue, at which the plaintiff gave in evidence the note with the indorsements and the guaranty thereon. Verdict for the plaintiff, by direction of the court. Exceptions and writ of error taken. Mr. Justice Gray, for the court. — By the Statute of Frauds of Alabama a special promise to answer for the debt, default, or miscarriage of another is void ' unless such agreement, or some note or memorandum thereof, expressing the consideration ' is in writing and subscribed by or in behalf of the party to be charged. Alabama Code of 1887, § 1732. The words 'value received,' or MOSES u. LAWRENCE COUNTY BANK. 223 acknowledgipg the receipt of one dollar, sufficiently express a consideration. Neal v. Smith, 6 Ala. 568; Boiling v. Munchus, 65 Ala. 558. Every negotiable promissory note, even if not purport- ing to be ' for value received,' imports a consideration. Mandeville v. Welch, 5 Wheat. 277; Page v. Bank of Alexandria, 7 Wheat. 35; Townsend v. Derby, 3 Met. 363. And the indorsement of such a note is itself prima facie evidence of having been made for value. Eiddle v. Mandeville, 5 Cranch, 322, 332. The promissory note in the case at bar, having been made payable to the maker's own order, first took effect as a contract upon its indorsement and delivery by the maker, the Sheffield Furnace Company, to Witherow, the first taker. Lea v. Branch Bank, 8 Porter, 119; Little v. Rogers, 1 Met. 108; Hooper v. Williams, 2 Exch. 13; Brown v. DeWinton, 6 C. B. 336. A guaranty of the payment of a negotiable promissory note, written by a third person upon the note before its delivery, requires no other consideration to support it, and need express none other (even where the law requires the consideration of the guaranty to be expressed in writ- ing), than the consideration which the note upon its face implies to have passed between the original parties. Leonardo. Vredenburgh, 8 Johns. 29; DeWolf v. Eabaud, 1 Pet. 476, 501, 502; Nelson v. Boynton, 3 Met. 396, 400, 401; Bickford v. Gibbs, 8 Cush. 164; Nabb v. Koontz, 17 Md. 283; Parkhurst v. Vail, 73 111. 343. The demurrers to the fourth and fifth pleas therefore were rightly sustained. But a guaranty written upon a promissory note after the note has been delivered and taken effect as a contract requires a distinct consideration to support it ; and if such a guaranty does not express any consideration it is void, where the Statute of Frauds, as in Alabama, requires the "consideration to be expressed in writing. Leonard v. Vredenburgh, and other cases above cited; Rigby v. Nor- wood, 34 Ala. 129. 224 CASES ON BILLS, NOTES, AND CHEQUES. The demurrer to the twelfth plea, therefore, should have been overruled and judgment rendered thereon for the defendant, unless the court saw tit to permit the plaintiff to file a replication to that plea. It was argued on behalf of the original plaintiff that the validity and effect of the guaranty must be governed by the general commercial law, without regard to any statute of Alabama. But there can be no doubt that the Statute of Frauds, even as applied to commercial instruments, is such a law of the State as has been declared by Congress to be a rule of decision in the courts of the United States. Act of September 24, 1789, c. 20, § 34, 1 Stat. 92; Eev. Stat. §721; Mandeville v. Eiddle, 1 Cranch, 290, and 5 Cranch,o22; DeWolf v. Rabaud, 1 Pet. 476; Kirkman v. Hamilton, 6 Pet. 20; Brashear v. West, 7 Pet. 608; Paine V. Central Vermont Ed. 118 U. S. 152, 161. It was also contended that the order sustaining the demurrer, if erroneous, did not prejudice the defendant, because he might have availed himself of the defence of the Statute of Frauds under the general issue. That might have been true if he had pleaded the general issue. Kannady v. Lambert, 37 Ala. 57; Pollak v. Brush Electric Assoc. 128 U. S. 446. But he did not plead it, and had the right to rely on his special pleas only. Alabama Code, § 2675. The suggestion of counsel that, by the practice in Ala- bama, the entry of an appearance of counsel for the defendant was equivalent to filing a plea of the general issue, is too novel to be accepted without proof, and seems inconsistent with Grigg v. Gilmer, 54 Ala. 425. If the record did not show what the pleadings were, it might be presumed that the general issue was pleaded. May v. Sharp, 49 Ala. 140; Hatchett v. Molton, 76 Ala. 410. But in this case twelve pleas are set forth in the record, and it cannot be assumed that there was any other. The eighth plea was payment. The defendant intro- duced no evidence to support this plea, and has therefore PETTEE V. PROUT. 225 no ground of exception to the rulings and instructions at the trial of the issue joined thereon. 'But the erroneous ruling on the demurrer to the twelfth plea requires the judgment to be reversed and the case remanded to the Circuit Court for further proceedings in conformity with this opinion. PETTEE V. PKOUT./;'/ Supreme Court of Massachusetts, September, 1855. 3 Gray, 502. Production of a note payable to A, or bearer, is sufficient evidence of the holder's title, though he is the general agent of A, who, the answer alleges, is the owner of the note. One to whom a note payable to A, or bearer, is transferred before maturity, takes it subject to no equities or rights of setoff which the. maker might have against A. Action of contract on a promissory note for f 50, dated March 14, 1851, signed by the defendant, and payable in one year to the Cheshire Iron Works, or bearer, with inter- est. The defendant, in his answer, denied that the plain- tiff was the owner and bearer of the note sued upon, 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 31,1851. Six months after date we promise to pay to the order of Gilman Bowker, 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 consideration, with the intention of securing a debt against the Cheshire Iron Works; that the Cheshire Iron Works was insolvent, and 15 226 CASES ON BILLS, NOTES, AND CHEQUES. had no property ; and that the 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 the 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., for the court. — 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 immuni- ties 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. 54."j. By giving a note payable to bearer at a future day, which is strictly a negotiable note, the defendant agreed to pay the amount to any per- son to whom it should be transferred, before the day of payment, without 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 renounc- ing any benefit of set-off or other equitable defence against the payee. Then the question is as to the proof. Where a plain- tiff brings the note declared upon in his hand, and offers it in evidence, this is not only evidence that he is the bearer, but also raises a presumption of fact that he is the BURSON V. HUNTINGTON. 227 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 cor- poration. But we think this fact alone is not suf&cient to rebut the general presumption. The demand relied on by 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 negotiable , because payable in part in goods. A negotiable note must be pay- able in money. But though the defendant could not sue on this note in his own name, yet we believe by the Rev. Sts. c. 96, § 5, as the assignee of a chose ia 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 demand of the defendant, legal or equitable, against the Cheshire Iron Works could avail him as a set-off. Judgment for the plaintiff. BUESON V. HUNTINGTON, j y^ Supreme Court of Michigan, October, 1870. 21 Mich. 415. A negotiable instrument has no legal existence until it has been de- livered ; that, too, even in the hands of a bona fide purchaser for value. Assumpsit against the defendant as maker of a negotiable promissory note, payable to the order of A. N. Goldwood, and by him indorsed to the plaintiff for value, and, as cer- tain disputed evidence tended to show, in good faith, with- 228 CASES ON BILLS, NOTES, AND CHEQUES. out notice of the facts set up in defence. The note was made in negotiations with Goldwood for the purchase by the maker of an interest in a patent right. The defendant made affidavit denying the delivery of the note,^ affirming therein that the instrument sued upon ' was never delivered by this defendant to the said A. N. Gold- wood, mentioned in said written instrument, nor to any other person for the said A. N. Goldwood, or any other person, and that this defendant never authorized any other person to deliver the written instrument for him this^ de- fendant to the said A. N. Goldwood, or to any other per- son ; . . . that said written instrument was taken from the house of this defendant, in this defendant's absence from the same, by the said A. IST. Goldwood, without the knowl- edge or consent of the deponent at the time.' There was evidence tending to support this, for which see the opinion. Counsel for the defendant asked for the following charge, in substance, to the jury : If they find that A. N. Gold- wood, the payee, took this note after it was drawn and signed by the defendant without the knowledge and against the will and consent of the defendant, and before the de- fendant had delivered the note to any person, the note thus obtained would be void in the hands of Goldwood, and in the hands of any subsequent holder deriving possession from him, whether for value or not ; and that the note, if not delivered by the defendant or by his authority, had no legal existence, and was therefore void. The court declined to charge as thus requested, and un- der the charge given the jury found for the plaintiff. Writ of error by the defendant. [Facts foreign to the present purpose are omitted.] Christianct, J., for the court. — .... But this note was indorsed by Goldwood, the payee, to the plaintiff, before maturity, for a valuable consideration, and, as plaintiff claims, in good faith and without notice 1 Under statute relating to denial of execution on oath. BU&SON V. HUNTINGTON. 229 of a want of delivery or of consideration, or any other cir- cumstance tending to invalidate it in the hands of Gold- wood ; and his evidence tended to show this, though there was evidence of some circumstances tending to show that he had notice of the circumstances under which the paper had been obtained. There was also evidence on the part of the defendant stroDgly tending to show that the note never was delivered by the defendant, but that G-oldwood, to whose order it was drawn, was endeavoring to sell to the defendant a patent right, or the right of certain territory under it, and that the parties had so far progressed towards the making of an arrangement to this end that it was understood and ver- bally agreed that Goldwood was to give him a deed of cer- tain territory upon defendant's executing to him a note for the amount, with some other person signing it as surety. That the parties being in the defendant's house, and the defendant's sister being present, Goldwood wrote this note and defendant signed it ; but as a surety was to be ob- tained, he laid the note on the table and went out to find his uncle for that purpose, telling Goldwood, as he went out, not to touch it till he came back ; but that while defend- ant was gone Goldwood picked up the paper and started out doors with it ; that defendant's sister then told him to let the note be on the table till defendant should come back, to which Goldwood replied he was going to have the note, and went off with it, without giving any deed of territory or anything else for it. That the note, at this time, was not stamped,^ and defendant never stamped or authorized it to be stamped ; that some four days after, Goldwood wrote to defendant requesting him to come immediately to Kalama- zoo ' and sign stamp on the note,' and saying if defendant was not there by Tuesday evening, ' I shall consider that you refuse your signature, and shall act accordingly.' The evi- dence also tended to show that defendant called upon Gold- wood about that time, while the latter had the note, and 1 As was required at that time by act of Congress. 230 CASES ON BILLS, NOTES, AND CHEQUES. demanded it, accusing him of stealing it, to which Gold- wood replied, 'Never mind, we can fix that up,' and said he was ready to do as he had agreed, and wanted defendant to get another signer and he would give him a deed of terri- tory ; but defendant said he did not want the deed, but wanted the note. Goldwood refused to return the note, or to give a deed till he got another signer. These facts, if found by the jury, would show, not only that the note was never delivered to the payee, and that it therefore never had a legal existence as a note between the original parties, but that there was yet no completed or binding agreement of any kind, and was not to be until de- fendant should choose to get a surety on the note and the payee should give him a deed of territory. Until thus com- pleted, the defendant had a right to retract. As a general rule a negotiable promissory note, like any other written contract, has no legal inception or valid exis- tence, as such, until it has been delivered in accordance with the purpose and intent of the parties. See Edwards on B. and N. 175, and authorities cited, and 1 Pars, on B. and N. 48 and 49, and cases cited ; and see Thomas v. Wat- kins, 16 Wis. 549 ; Jlalion v. Sawyer, 18 Ind. 73 ; Carter v. McClintock, 29 Mo. 464. Delivery is an essential part of the making or exerutiou of the note, and it takes effect only from delivery (for most purposes) ; and if this be subse- quent to the date, it takes effect from the delivery and not from the date. 1 Pars, ubi supra. This is certainly true as between the original parties. But negotiable paper differs from ordinary written con- tracts in this respect, that even a wrongful holder, between whom and the maker or indorser the note or indorsement would not be valid, may yet transfer to an innocent party, who takes it in good faith, without notice, and for value, a good title as against the maker or indorser. And the ques- tion in the present case is, how far this principle will dis- pense with delivery by the maker. When a note payable to bearer, which has once become BURSON V. HUNTINGTON. 231 operative by delivery, has been lost or stoleu from the owner, and has subsequently come to the hands of a bona fide holder for value, the latter may recover against the maker and all indorsers on the paper when in the hands of the loser ; and the loser must sustain the loss. In such a case there was a complete legal instrument ; the maker is clearly liable to pay it to some one, and the question is only to whom. But in the case before us, where the note had never been delivered, and therefore had no legal inception or existence as a note, the question is whether he is liable to pay at all, even to an innocent holder for value. The wrongful act of a thief or a trespasser may deprive the holder of his property in a note which has once become a note, or property, by delivery, and may transfer the title to an innocent purchaser for value. But a note in the hands of the maker before delivery is not property, nor the subject of ownership, as such; it is, in law, but a blank piece of paper. Can the theft or wrongful seizure of this paper create a valid contract on the part of the maker against his will, where none existed before ? There is no principle of the law of contracts upon which this can be done, unless the facts of the ease are such that, in justice and fairness, as between the maker and the innocent holder, the maker ought to be estopped to deny the making and delivery of the note. But it is urged that this case falls within the general principle, which has become a maxim of law, that when one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it.^ This is a principle of manifest justice when confined within its proper limits. But the principle, as a rule, has many exceptions; and the point of difficulty in its application consists in determining what acts or conduct of the party sought to be charged can properly be said to have ' enabled the third person to occa- sion the loss,' within the meaning of the rule. If I leave 1 See Bills and Notes (Students' Series), pp. 178, 179, 180. 232 CASES ON BILLS, NOTES, AND CHEQUES. my horse in the stable or in the pasture, I cannot properly be said to have enabled the thief to steal him, within the meaning of this rule, because he found it possible to steal him from that particular locality. And upon examination it will be found that this rule or maxim is mainly confined to cases where the party who is made to suffer the loss has reposed a confidence in the third person whose acts have occasioned the loss, or in some other intermediate person whose acts or negligence have enabled such third person to occasion the loss ; ' and that the party has been held responsible for the acts of those in whom he had trusted upon grounds analogous to those which govern the relation of principal and agent; that the party thus repos- ing confidence in another with respect to transactions by which the rights of others may be affected, has, as to the persons to be thus affected, constituted the third person his agent in some sense, and having held him out as such, or trusted him with papers or indicia of ownership which have enabled him to appear to others as principal, as owner, or as possessed of certain powers, the person repos- ing this confidence is, as to those who have been deceived into parting with property or incurring obligations on the faith of such appearances, to be held to the same extent as if the fact had accorded with such appearances. Hence, to confine ourselves to the question of delivery, the authorities in reference to lost or stolen notes which have become operative by delivery, have no bearing upon the question. If the maker or indorser, before delivery to the payee, leave the note in the hands of a third person as an escrow, to be delivered upon certain conditions only, or voluntarily deliver it to the payee, or (if payable to bearer) to any other person for a special purpose only, as to be taken to or discounted by a particular bank, or to be car- ried to any particular place or person, or to be used only in a certain way, or upon certain conditions not apparent upon the face of the paper, and the person to whom it is 1 See Bills and Notes (Students' Series), pp. 175, 176, 191, 192. BUESON V. HUNTINGTON. 233 thus intrusted violate the confidence reposed in him and put the note into circulation ; this, though not a valid delivery as to the original parties, must, as between a bona fide holder for value and the maker or indorser, be treated as a delivery, rendering the note or indorsement valid in the hands of such bona fide holder ; or if the note be sent by mail and get into the wrong hands, as the party intended to deliver to some one, and selects his own mode of delivery, he must be responsible for the result. These principles are too well settled to call for the citation of authorities, and manifestly it will make no difference in this respect if the note or indorsement were signed in blank, if the maker or indorser part with the possession or authorize a clerk or agent to do so, and it is done. 1 Parsons on Bills and Notes, 109-114, and cases cited, especially Putnam v. Sullivan, 4 Mass. 45, which was decided expressly upon the ground of the confidence reposed in the third person, as to the filling up, and in the clerks as to the delivery. And when the maker or indorser has himself been deceived by the fraudulent acts or representations of the payee or others, and thereby induced to deliver or part with the note or indorsement, and the same is thus fraud- ulently obtained from him, he must doubtless, as between him and an innocent holder for value, bear the conse- quences of his own credulity and want of caution. He has placed a confidence in another, and by putting the papers into his hands has enabled him to appear as the owner and to deceive others. Cases of this kind are num- erous; but they have no bearing upon the wrongful taking from the maker when he never voluntarily parted with the instrument. Much confusion, however, has arisen from the general language used in the books, and sometimes by judges, in reference to cases where the maker has volun- tarily parted with the possession, though induced to do so by fraud; where it is laid down as a general rule that it is no defence for a maker, as against a bona fide holder, 234 CASES ON BILLS, NOTES, AND CHEQUES. to show that the note was wrongfully or fraudulently obtained, without attempting to distinguish between cases where the maker has actually and voluntarily parted with the possession of the note, and those where he has not. We do not assert that the general rule we are discuss- ing — that ' where one of two innocent parties must suffer, ' etc. — must be confined exclusively to cases where a confi- dence has been placed in some other person (in reference to delivery) and abused. There may be cases where culpable negligence or recklessness of the maker in allowing an undelivered note to get into circulation might justly estop him from setting up non-delivery ; as if he were knowingly to throw it into the street, or otherwise leave it accessible to the public, with no person present to guard against its abduction under circumstances when he might reasonably apprehend that it would be likely to be taken. ^ Upon this principle the case of Ingham v. Primrose, 7 C. B. N. S. 82, was decided, where the acceptor tore the bill into halves (with the intention of cancelling it) and threw it into the street, and the drawer picked them up in his presence and afterwards pasted the two pieces together and put them into circulation. See also by analogy Foster v. Mackinnon, L. K. 4 C. P. 704.- But the case before us is one of a very different character, — no actual delivery by the maker to any one for any purpose. The evidence tends to show that when he left the room in his own house, the note being on the table, and his sister remaining there, he did not confide it to the custody of the payee, but told him not to take it, and no final agreement between them had yet been made and no con- sideration given. Under such circumstances he can no more be said to have trusted it to the payee's custody or confidence than that he trusted his spoons or other house- hold goods to his custody or confidence ; and there was no more apparent reason to suppose he would take and carry off the one than the other. 1 See Bills and Notes (Students' Series), pp. 176, 177. 2 post, 237. BURSON V. HUNTINGTON. 235 The maker therefore cannot be held responsible for any negligence; there was nothing to prove negligence, unless he was bound to suspect and treat as a knave, a thief, or a criminal the man who came to his house apparently on business, because he afterwards proved himself to be such. This, we think, would be preposterous. We therefore see no ground upon which the defendant could be held liable on a note thus obtained, even to a bona fide holder for value. He was guilty of no more negligence than the plaintiff who took the paper, and the plaintiff shows no right or equities superior to those of the defendant. Such, we think, must be the result upon principle. We have carefully examined the cases, English and American, and are satisfied there is no adjudged case in the English courts, so far as their reports have reached us, which would warrant a recovery in the present case. Some dicta may be found the general language of which might sustain the liability of the maker; such as that of Alderson, B., in Marston v. Allen, 8 Mees. & W. 494, cited by Duer, J., in Gould v. Segee, 5 Duer, 260, and that used by Williams, J., in Ingham v. Primrose, 7 C. B. n. s. 82. But a refer- ence to the cases will show that no such question was involved, and that these remarks were wholly outside of the case. On the other hand Hall v. Wilson, 16 Barb. 548, 555, and 566, contains a dictum fully sustaining the views we have taken. There are, however, two recent American cases where the note or indorsement was obtained without delivery under circumstances quite as wrongful as those in the present case, in one of which the maker, and in the other the indorser, was held 'liable to a bona fide holder for value. Shipley v. Carroll, 45 111. 285 (case of maker), and Gould V. Segee, 5 Duer, 260. But in neither of these cases can we discover that the court discussed or considered the real principle involved; and we have been unable to discover anything in the cases cited by the court to warrant the decision. It is possible that the case in Illinois may depend somewhat upon their statute, and the note being 236 CASES ON BILLS, NOTES, AND CHEQUES. made as a mere matter of amusement, and the making not being justified by any legitimate pending business, the maker might perhaps justly be held responsible for a higher degree of diligence, and therefore more justly chargeable with negligence under the particular circum- stances, than the maker in the present case. There is another case (Worcester Co. Bank v. Dorchester and Milton Bank, 10 Gush. 488) where bankbills were stolen from the vault of the bank, which though signed and ready for use, had never yet been issued, and on which a bona fide holder for value was held entitled to recover. This, we are inclined to think, was correct. The court intimated a doubt whether the same rule should apply to bankbills as to ordinary promissory notes, and as to the latter failed to make any distinction between the question of delivery and questions affecting the rights of the parties upon notes which have become effectual by delivery. But we think bankbills, which circulate universally as cash, passing from hand to hand perhaps a hundred times a day, with- out such inquiries as are usual in the cases of ordinary promissory notes of individuals, stand upon quite different grounds. And considering the temptations to burglars and robbers, and the much greater facility of passing them off to innocent parties without detection and identification of the bills or the parties, and that the special business of banks is dealing in and holding the custody of money and bank-bills, it is not unreasonable to hold them to a much higher degree of care, and to make them absolutely respon- sible for their safe keeping. We do not therefore regard this case as having any material bearing upon the case before us. We think the Circuit Court erred in refusing to charge upon this point as requested by the defendant below. [Concerning want of stamp and ' other minor questions ' not considered]. The judgment must be reversed with costs, and a New trial awarded. FOSTER «. MACKINNON. 237 POSTER V. MACKINNON. /?? Common Pleas of England, July, 1869.' L. R. 4 C. P. 704. No liability is incurred by a person's indorsing paper upon the fraudu- lent representation that the writing on the opposite side is a guaranty now renewed for one previously made by the same person, in the absence of negligence by him in so indorsing. Action by indorsee against indorser on a bill of exchange for £3,000, drawn on the 6tli of November, 1867, by one Cooper upon and accepted by one Callow, payable six months after date, and indorsed successively by Cooper, the defendant, J. P. Parker, T. A. Pooley & Co., and A. G. Pooley, to the plaintiff, who became the holder for value (having taken it in part-paj^ment of a debt due to him from A. G. Pooley) before it became due, and without notice of any fraud. The pleas traversed the several indorsements, and alleged that the defendant's indorsement was obtained from him by fraud. The cause was tried before Bovill, C. J., at the last spring assizes at Guildford. The defendant, who was a gentleman far advanced in years, swore that the indorse- ment was not in his handwriting, and that he had never accepted nor indorsed a bill of exchange; but there was evidence that the signature was his ; and Callow, who was called as a witness for the plaintiff, stated that he saw the defendant write the indorsement under the following cir- cumstances : Callow had been secretary ■ to a company engaged in the formation of a railway at Sandgate, in Kent, in which the defendant (who had property in the neighborhood) was interested ; and the defendant had some time previously, at Callow's request, signed a guaranty for £3,000, in order to enable the company to obtain an advance of money from their bankers. Callow took the bill in question (which was drawn and indorsed by Cooper) to the defendant, and asked him to put his name on it, 238 CASES ON BILLS, NOTES, AND CHEQUES. telling him it was a guaranty; whereupon the defendant, in the belief that he was signing a guaranty similar to that which he had before given (and out of which no liability had resulted to him), put his signature on the back of the bill, immediately after that of Cooper. Callow only showed the defendant the back of the paper; it was, how- ever, in the ordinary shape of a bill of exchange, and bore a stamp, the impress of which was visible through the paper. The Lord Chief Justice told the jury that, if the indorse- ment was not the signature of the defendant, or if, being his signature, it was obtained upon a fraudulent represen- tation that it was a guaranty, and the defendant signed it without knowing that it was a bill, and under the belief that it was a guaranty, and if the defendant was not guilty of any negligence in so signing the paper, he was entitled to the verdict. The jury returned a verdict for the defendant. Rule nisi for a new trial. In the course of the argument of Sir J. D. Coleridge, Solicitor General, in favor of the rule, the following was said : [Brett, J. Nance v. Lary (5 Ala. 370, cited in Par- sons on Bills, 114) seems to be very much to the purpose. In that case, the defendant and one Langford being about to execute a bond in blank, the latter produced a sheet of paper, upon which the defendant signed his name ; where- upon Langford suggested that the signature was so far from the bottom of the paper that there might not be room for the bond to be written above it, and produced another sheet for the defendant to sign so as to leave sufficient room for the intended bond. Langford, with apparent carelessness, slipped the first sheet aside, and signed the other with the defendant, who carried it to the clerk of the court to be filled up, leaving the former with Lang- ford, under the impression that it had been or would be destroyed. Subsequently, Langford caused the note upon which the present suit was brought to be written over the FOSTER V. MACKINNON. 239 blank signature of the defendant retained by him, and negotiated it to the plaintiff. Collier, C. J., said : ' The making of the note by Langford was not a mere fraud upon the defendant; it was something more. It was quite as much a forgery as if he had found the blank, or purloined it from the defendant's possession. If a recovery were allowed upon such a state of facts, then every one who indulges in the idle habit of writing his name for mere pastime, or leaves sufficient space between a letter and his subscription, might be made a bankrupt by having prom- ises to pay money written over his signature. Such a decision would be alarming to the community, has no warrant in law, and cannot receive our sanction.'] The Solicitor-General then citing Swan v. North British Australasian Co., 2 H. & C. at p. 184, that 'honest acqui- sition confers title,' [Byles, J. If that be right, it can only be with reference to the case of a complete instru- ment ; it can hardly be applicable to a case where a man's signature has been obtained by a fraudulent representation to a document which he never intended to sign.] Cur. adv. vult. Btles, J. , for the court. — This was an action by the plaintiff as indorsee of a bill of exchange for £3,000 against the defendant as indorser. The defendant by one of his pleas traversed the indorsement, and by another alleged that the defendant's indorsement was obtained from him by fraud. The plaintiff was a holder for value before maturity, and without notice of any fraud. There was contradictory evidence as to whether the indorsement was the defendant's signature at all ; bat, according to the evidence of one Callow, the acceptor of the bill, who was called as a witness for the plaintiff, he, Callow, produced the bill to the defendant, a gentleman advanced in life, for him to put his signature on the back, after that of one Cooper, who was payee of the bill and first indorser. Callow not saying that it was a bill, and 240 CASES ON BILLS, NOTES, AND CHEQUES. telling the defendant that the instrument was a guaranty. The defendant did not see the face of the bill at all. But the bill was of the usual shajoe, and bore a stamp, the impress of which stamp was visible at the back of the bill. The defendant signed his name after Cooper's, he, the defendant (as the witness stated), believing the document to be a guaranty only. The Lord Chief Justice told the jury that, if the indorse- ment was not the defendant's signature, or if, being his signature, it was obtained upon a fraudulent representa- tion that it was a guaranty, and the defendant signed it without knowing that it was a bill, and under the belief that it was a guaranty, and if the defendant was not guilty of any negligence in so signing the paper, the defendant was entitled to the verdict. The jury found for the defendant. A rule nisi was obtained for a new trial: first, on the ground of misdirection in the latter part of the summing up; and, secondly, on the ground that the verdict was against the evidence. As to the first branch of the rule, it seems to us that the question arises on the traverse of the indorsement. The case presented by the defendant is, that he never made the contract declared on ; that he never saw the face of the bill; that the purport of the contract was fraudu- lently misdescribed to him; that, when he signed one thing, he was told and believed that he was signing another and an entirely different thing; and that his mind never went with his act. It seems plain, on principle and on authority, that, if a blind man, or a man who cannot read, or who for some reason (not implying negligence) forbears to read, has a written contract falsely read over to him, the reader mis- reading to such a degree that the written contract is of a nature altogether different from the contract pretended to be read from the paper which the blind or illiterate man afterwards signs; then, at least if there be no negligence, FOSTER 0. MACKINNON. 241 the signature so obtained is of no force. And it is invalid not merely on the ground of fraud, where fraud exists, but on the ground that the mind of the signer did not accom- pany the signature; in other words, that he never intended to sign, and therefore in contemplation of law never did sign, the contract to which his name is appended. The authorities appear to us to support this view of the law. In Thoroughgood's Case, 2 Co. Eep. 9 b, it was held that, if an illiterate man have a deed falsely read over to him, and he then seals and delivers the parchment, that parchment is nevertheless not his deed. In a note to Thoroughgood's Case, 2 Co. Eep. 9 b, in Eraser's edition of Coke's Reports, it is suggested that the doctrine is not confined to the condition of an illiterate grantor; and a case in Keilwey's Eeports (Keilw. 70, pi. 6) is cited in support of this observation. On reference to that case, it appears that one of the judges did there observe that it made no difference whether the grantor were lettered or unlettered. That, however, was a case where the grantee himself was the defrauding party. But the position that if a grantor or covenantor be deceived or misled as to the actual contents of the deed, the deed does not bind him, is supported by many authorities: see Com. Dig. Eait, B. 2; and is recognized by Bayley, B., and the Court of Exchequer, in the case of Edwards v. Brown, 1 C. & J. 312. Accordingly, it has recently been decided in the Exchequer Chamber that, if a deed be delivered, and a blank left therein be afterwards improperly filled up (at least if that be done without the grantor's negligence), it is not the deed of the grantor. Swan v. North British Australasian Land Company, 2 H. & C. 175. These cases apply to deeds ; but the principle is equally applicable to other written contracts. Nevertheless, this principle, when applied to negotiable instruments, must be and is limited in its application. These instruments are ■ not only assignable, but they form part of the currency of the country. A qualification of the general rule is necessary 16 242 CASES ox BILLS, NOTES, AND CHEQUES. to protect innocent transferees for value. If, therefore, a man write his name across the back of a blank bill-stamp, and part with it, and the paper is afterwards improperly filled up, he is liable as indorser. If he write it across the face of the bill, he is liable as acceptor, when the instrument has once passed into the hands of an innocent indorsee for value before maturity, and liable to the extent of any sum which the stamp will cover. In these cases, however, the party signing knows what he is doing: the indorser intended to indorse, and the acceptor intended to accept, a bill of exchange to be there- after filled up, leaving the amount, the date, the maturity, and the other parties to the bill undetenniued. But, in the case now under consideration, the defendant, according to the evidence, if believed, and the finding of the jury, never intended to indorse a bill of exchange at all, but intended to sign a contract of an entirely different nature. It was not his design, and, if he were guilty of no negligence, it was not even his fault, that the instru- ment he signed turned out to be a bill of exchange. It was as if he had written his name on a sheet of paper for the purpose of franking a letter, or in a lady's album, or on an order for admission to the Temple Church, or on the fly-leaf of a book, and there had already been, without his knowledge, a bill of exchange or a promissory note payable to order inscribed on the other side of the paper. To make the case clearer, suppose the bill or note on the other side of the paper in each of these cases to be written at a time subsequent to the signature; then the fraudulent mis- application of that genuine signature to a different purpose would have been a counterfeit alteration of a writing with intent to defraud, and would therefore have amounted to a forgery. In that case, the signer would not have been bound by his signature, for two reasons: first, that he never in fact signed the writing declared on; and, secondly, that he never intended to sign any such contract. In the present case, the first reason does not apply, but FOSTER V. MACKINNON. 243 the second reason does apply. The defendant never intended to sign that contract, or any such contract. He never intended to put his name to any instrument that then was or thereafter might become negotiable. He was deceived, not merely as to the legal effect, but as to the actual contents of the instrument. We are not aware of any case in which the precise ques- tion now before us has arisen on bills of exchange or promissory notes, or been judicially discussed. In the case of Ingham v. Primrose, 7 C. B. n. s. 83; 28 L. J. C. P. 294, and the case of Nance v. Lary, 5 Ala. 370, cited 1 Parsons on Bills, 114, n., both cited by the plaintiff, the facts were very different from those of the case before us, and have but a remote bearing on the question. But, in Putnam v. Sullivan, an American case,- reported in 4 Mass. 45, and cited in Parsons on Bills of Exchange, vol. i. p. Ill, n., a distinction is taken by Chief Justice Parsons between a case where an indorser intended to indorse such a note as he actually indorsed, being induced by fraud to indorse it, and a case where he intended to indorse a different note and for a different purpose. And the court intimated an opinion that even in such a case as that, a distinction might prevail and protect the indorsee. The distinction in the case now under consideration is a much plainer one ; for, on this branch of the rule, we are to assume that the indorser never intended to indorse at all, but to sign a contract of an entirely different nature. Por these reasons, we think the direction of the Lord Chief Justice was right. With respect, however, to the second branch of the rule, we are of opinion that tlie case should undergo further investigation. We abstain from giving our rea- sons for this part of our decision only lest they should prejudice either party on a second inquiry. The rule, therefore, will be made absolute for a new trial. Hule absolute. 244 CASES ON BILLS, NOTES, AND CHEQUES. ALDOUS V. CORNWELL.;??, Queen's Bench of England, Trinity, 1868. L. R. 3 Q. B. 573. An alteration expressing only the effect in law of the instrument as it stood before will not affect the validity of the same. Declaration that the defendant, on the 8th of November, 1865, by his promissory note, promised to pay the plaintiff £125 on demand. Plea, that the defendant did not make the note as alleged. At the trial the following promissory note, signed by the defendant, was put in evidence : 'November 8th, 1865. 'On demand. I promise to pay Mr. Ed. Aldous the sum of £125.' But it was proved that the promissory note, when delivered to the plaintiff, did not contain the words ' On demand,' and that these words had been inserted while the note was in the possession of the plaintiff, the payee, without the knowledge of the defendant, but there was no positive evidence to show by whom the alteration was made. The learned judge directed a verdict for the plain- tiff, reserving leave to move to enter a verdict for the defendant, if the note was made void by the alteration. Eule obtained accordingly. Lush, J., for the court. — This was an action" by the payee against the maker of a promissory note, expressed to be payable on demand. The plea denied the making of the note. At the trial before the late Mr. Justice Shee it was proved that the words ' on demand ' were added after the note had been delivered to the plaintiff. It did not appear who made the alteration, but it was assumed to have been made by the plaintiff, and no question was raised as to this fact. The learned judge directed a verdict for the ALDOUS V. CORNWELL. 245 plaintiff, reserving the point whether by such an altera- tion the note was rendered void. No objection having been made to the pleadings, we must consider the case as if the question had been properly raised on the record. It was admitted, and properly so, on the argument, that the addition of these words did not alter the legal effect of the instrument, but only expressed what the law would otherwise have implied. But it was contended, upon the authority of Pigot's Case, 11 Kep. 26 h. and Master v. Miller, 4 T. E. 320; 1 Sm. L. C. 796, that the alteration, having been made by the payee and holder, though in a matter not material, avoided the instrument. In Pigot's Case it is said, ' If the obligee himself alters the deed by any of the said ways (viz. by interlineation, addition, erasing, or by drawing a pen through the line, etc.), although it is in words not material, yet the deed is void ; but if a stranger, without his privity, alters the deed by any of the said ways in any point not material, it shall not avoid the deed.' Por this proposition Dyer, 9 Eliz. fol. 261 b, is cited. Shep. Touch, vol. 1, p. 68, is to the same effect. It was found as a fact in Pigot's Case that the alteration, which was not a material one, was made by a stranger, and judgment was given for the plain- tiff, so that the case itself is not a decision upon the point in question. Master v. Miller extended the doctrine, as regards material alterations, to bills of exchange; and subsequent cases have applied it indiscriminately to all written instruments, whether under seal or not. See Davidson v. Cooper, 11 Mees. & W. 778; in error, 13 Mees. & W. 343. No authority was cited, nor are we able to find one, in which the doctrine has been acted upon and an instrument held to be avoided by an immaterial altera- tion. There are cases to the contrary, though we cannot regard them as entirely satisfactory. Thus, in Lord Darcy and Sharpe's Case, 1 Leon., an alteration in a bond not material, made by the executor of the obligee, was held not to vitiate the bond. But the court seemed to lay 246 CASES ON BILLS, NOTES, AND CHEQUES. stress on tlie fact that the alteration was in favor of the obligor. In Sanderson v. Symonds, 1 Ball & B. 426, the holder of a policy of insurance on a ship, on a voyage to the coast of Africa, during her stay there, and back to Liverpool, with liberty to ' touch and stay at any port or places to sell, barter, and exchange, and load and unload and reload at any of the ports and places she may call at, ' had, fear- ing that these words might not be sufficiently extensive for his purpose, added after the words ' during her stay ' the words ' to trade.' Several of the underwriters had initialed the alteration, but the defendant refused to do so, on the ground that he never underwrote trading policies to Africa, and he offered before the loss to cancel his sub- scription and return the premium rather than assent to such an alteration. The plaintiff refused to accept this offer, and held to the policy. The ship was afterwards lost, and the plaintiff, sued the defendant for his subscrip- tion; the defendant resisted the action on the ground that the alteration avoided the policy so far as he was con- cerned. It is to be observed here that both parties thought the alteration material at the time it was made. The court, however, held that the words so added expressed no more than was already contained in the policy as signed by the defendant, and therefore that the defendant was not discharged. This case might have been cited as con- clusive upon the question before us but for the reasons assigned by the different members of the court for their judgment. Dallas, C. J., said that the rule was intended not so much to guard against fraud as to insure the iden- tity of the instrument and prevent the substitution of another without the privity of the party concerned. ' But the present case,' he said, ' stands on its own circum- stances. The instrument is a policy of insurance signed by a number of individuals wholly unconnected in interest, and between whom no privity can exist. Indeed, it has never been contended that this was an alteration without ALDOUS V. CORNWELL. 247 the privity of the party ; and the old cases turn entirely on alteration made without the privity of the party. Here the instrument was shown to all the parties con- cerned. Those who put their initials to the alteration thereby expressly signified their consent to it ; those who refused to do so expressed their denial by the absence of their initials. But the latter were bound by the policy as it stood at first, the former by the policy in its altered state.' Park, J., said, ' In all the cases on policies the court refers to the materiality of the alterations. The alteration here is immaterial; the risk stands as it stood before, and the writing immaterial words does not vacate the policy.' And Burrough and Eichardson, J J., base their judgment on the fact that the risk was not varied by the alteration. Had the alteration in that case been a material one, the fact that some of the underwriters had assented to it, and that it had been shown to those who refused ^ their assent, would not have prevented the operation of the rule as against the latter. This had been decided in two prior cases in the same court, Langhorn v. Cologan ^ and Fairlie V. Christie,^ in each of which the dissentient underwriters had been held to be discharged by a material alteration in the policy, though they had been asked to Join others who had assented and had refused to do so. The judgment of Dallas, C. J., cannot therefore stand upon that ground, and it is obvious the real ground of the decision in San- derson V. Symonds was that the defendant was not and could not be prejudiced by the alteration. Why the court should have limited the doctrine they there laid down to policies of insurance it is not easy to understand. We can- not discover any reason for making a distinction between that and any other species of contract. Another case is that of Catton v. Simpson, 8 Ad. & E. 136; there the plaintiff had joined the defendant as his 1 Printed ' expressed,' but corrected in ' Erratum ' of the volume. 2 4 Taunt. 330. " 7 Taunt. 416. 248 CASES ON BILLS, NOTES, AND CHEQUES. surety in a joint and several promissory note. The payee, having pressed the defendant for payment, had consented to give time on his procuring a third person to add his name to the note. The plaintiff, who had afterwards paid a moiety of the amount, sued the defendant for re-pay- ment, and it was objected that, as the name of the third party had been added without the plaintiff's consent, he had been discharged and had paid the money in his own wrong. Patteson, J., who tried the cause, directed a ver- dict for the plaintiff; and the court refused a rule for a new trial, holding 'that it was not an alteration of the note, but an addition which had no effect. ' It is true that in the subsequent case of Gardner v. Walsh, 5 El. & B. 83, this court expressly overruled Catton v. Simpson, not how- ever on the ground that an immaterial alteration vacated the instrument, but on the ground that the alteration was a materia] one. This being the state of the authorities, we think we are not bound by the doctrine in Pigot's Case or the authority cited for it ; and not being bound, we are certainly not disposed to lay it down as a rule of law that the addition of words which cannot possibly prejudice any one destroys the validity of the note. It seems to us repugnant to justice and common-sense to hold that the maker of a promissory note is discharged from his obligation to pay it because the holder has put in writing on the note what the law would have supplied if the words had not been written. We therefore discharge the rule. Rule discharged. BANK OF COMMERCE v. UNION BANK. 249 BANK OF COMMERCE v. UNION BANKy^T Court of Appeals of New York, April, 1850. 3 Comst. 230. The drawee of a bill of exchange in paying it is not bound to knov>' whether the body of the bill is genuine. Assumpsit by the drawee of a bill of exchange against the late holder to recover the amount thereof paid to him, as paid under mistake of fact. The bill as originally drawn was a request to the plaintiff to pay ' one hundred and five dollars to the order of J. Durand. ' After it was delivered the word ' hundred ' was fraudulently altered to ' thousand, ' and the name ' Durand ' to ' Bonnet. ' J. Bonnet now indorsed it for value and without notice to the State Bank of Charles bon, which sent it for collection to the defendant ; to which the plaintiff paid it at sight, in ignorance of the alterations. The alterations having after- wards come to light, the plaintiff demanded of the defend- ant the return of the money, which was refused. The court below charged the jury that on such facts the plaintiff would be entitled to recover. The defendant excepted. Judgment for the plaintiff; appeal by the defendant. EuGGLBS, J., for the court. — The payment of a bill of exchange by the drawee is ordinarily an admission of the drawer's signature, which he is not afterwards, in a con- troversy between himself and the holder, at liberty to dispute; and therefore if the drawer's signature is on a subsequent day discovered to be a forgery, the drawee cannot compel the holder to whom he paid the bill to restore the money unless the holder be in some way impli- cated in the fraud. Price v. Neal, 3 Burr. 1354.^ This rule is founded on the supposed negligence of the drawee in failing, by an examination of the signature when the bill is presented, to detect the forgery and refuse payment. 1 Post, p. 267. 250 CASES ON BILLS, NOTES, AND CHEQUES. Tlie drawee is supposed to know the handwriting of the drawer, who is usually his customer or correspondent. As between him, therefore, and an innocent holder, the payer, from his imputed negligence, must bear the loss. In Price V. Neal the plaintiff had paid to Neal, the holder, two bills of exchange purjaorting to be drawn on him by Sutton, whose name was forged. On discovery of the forgery Price brought his action against Neal to recover back the money as paid by mistake. Lord Mansfield, in delivering the opinion of the court in favor of the defendant, said ' 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. ' ' Whatever neglect there was, was on his side. It is a misfortune which has happened without the defendant's fault or neglect.' In Wilkinson v. Lutwidge, 1 Strange, 648, Lord Chief Justice Pratt was of opinion that ' acceptance was a suffi- cient acknowledgment of the drawer's handwriting on the part of the acceptor, who must be supposed to know the hand of his own correspondent.' So the acceptance of a bill, whether general, or for honor, or supra protest, after sight of the hill, admits the genuineness of the signature of the drawer ; and consequently if the signature of the drawer turns out to be a forgery, the acceptance will nevertheless be binding, and entitle a bona fide holder for value and without notice to recover thereon according to its tenor.^ Story on Bills, § 262. But it is plain that the reason on which the above rule is founded does not apply to a case where the forgery is not in counterfeiting the name of the drawer, but in alter- ing the body of the bill. There is no ground for presum- ing the body of the bill to be in the drawer's handwriting, 1 This language should be noticed ; it is not stated that acceptance warrants the genuineness of the signature, but that it ' admits ' it, and is ' binding ' in favor of an innocent purchaser. See Bills and Notes (Students' Series), 76-79. BANK OF COMMERCE v. UNION BANK. 251 or in any handwriting known to the acceptor. In the present case that part of the bill is in the handwriting of one of the clerks in the office of the Canal and Banking Company in New Orleans. The signature was in the name and handwriting of the cashier. The signature is genuine. The forgery was committed by altering the date, number, amount, and payee's name. No case goes the length of saying that the acceptor is presumed to know the handwriting of the body of the bill, or that he is better able than the indorsers to detect an alteration in it. The presumption that the drawee is acquainted with the drawer's signature, or able to ascertain whether it is genu- ine, is reasonable. In most cases it is in conformity with the fact. But to require the drawee to know the hand- writing of the residue of the bill is unreasonable. It would, in most cases, be requiring an impossibility. Such a rule would be not only arbitrary and rigorous but un- just. The drawee would undoubtedly be answerable for negligence in paying an altered bill, if the alteration were manifest on its face. Whether it was so or not in this case was properly submitted to the jury, who found that it was paid by mistake and without knowledge of or reason to suspect the fraudulent alterations. It would have been difficult to find otherwise upon the evidence, the bill hav- ing passed through the defendants' bank and the Charles- ton bank without suspicion. If the forgery had been in the name of the drawer, it might not perhaps have been incumbent on those banks to scrutinize the bill, because they might have relied on the drawer's better knowledge of the hand; but the forgery being in the body of the bill, the plaintiffs were not more in fault than the defendants. The greater negligence in a case of this kind is charge- able on the party who received the bill from the perpetrator of the forgery. So far as respects the genuineness of the bill, each indorser receives it on the credit of the previous indorsers; and it was the interest and duty, in the present case, of the Bank of Charleston to satisfy itself that the 252 CASES ON BILLS, NOTES, AND CHEQUES. bill was genuine, or that its immediate indorser was able to respond in ease the bill should prove to be spurious. The party who fraudulently passed the bill cannot avoid his liability to refund on the pretence of delay in detecting the forgery or in giving notice of it ; and if reasonable diligence is exercised in giving notice after the forgery comes to light, it is all that any of the parties can require. Canal Bank v. The Bank of Albany, 1 Hill, 287, 292, 293. In Smith v. Mercer, 6 Taunt. 76, in Cocks v. Masterman, 9 Barn. & C. 902, and in Price v. Neal, 3 Burr. 1354, the plaintiffs who paid the forged bills, being chargeable with a knowledge of the signature of the drawer (which was forged), were held to have paid it negligently and without due caution and examination, and on that ground it was that the defendants to whom they paid the money were held not liable without immediate notice of the forgery. But in the present case no such negligence is imputable to the plaintiffs, the plaintiffs being no more capable of detecting the forged alteration by inspection of the bill than either of the other parties. This action is not founded on the bill as an instrument containing the contract on which the suit is brought. The acceptor can never have recourse on the bill against the indorsers. But the x^laintiff's right of recovery rests on equitable grounds. In the Canal Bank v. The Bank of Albany the principle was recognized, that money paid by one party to another through mutual mistake of facts in respect to which both were equally bound to inquire, may be recovered back. The defendants here, as in that case, have obtained the money of the plaintiff without right and on the exhibition of a forged title as genuine, the forgery being unknown to both parties. The defendants ought not in conscience to retain the money, because it does not belong to them ; and for the further reason that the defend- ants and the previous indorsers have each, on the same principle, ' their remedy over against the party to whom they respectively paid the money, until the wrong-doer is WOOD V. STEELE. 253 finally made to pay. If that party should be irresponsible, or if he cannot be found, the loss ought to fall on the party who, without due caution, took the bill from him. In cases where no negligence is imputable to the drawee in failing to detect the forgery, the want of notice within the ordinary time to charge the previous parties to the bill is excused, provided notice of the forgery be given as soon as it is discovered. Judgment affirmed. WOOD V. STEELE. /f/ Supreme Court of United States, December, 1867. 6 Wall. 80. Alteration of the date of a promissory note by a party to it, after sig- nature and delivery by the signer, without his consent, destroys the note as a contract by him. The case is stated in the opinion. SwATNE, J., for the court, — The action was brought by the plaintiff iu error upon a promissory note made by Steele and Newson, bearing date October 11th, 1858, for $3,720, payable to their own order one year from date, with interest at the rate of two per cent per month, and indorsed by them to Wood the plaintiff. Upon the trial it appeared that Newson applied to AUis, the agent of Wood, for a loan of money upon the note of himself and Steele. Wood assented, and Newson was to procure the note. Wood left the money with Allis, to be paid over when the note was produced. The note was afterwards delivered by Newson and the money paid to him. Steele received no part of it. At that time it appeared on the face of the note that ' September ' had been stricken out and ' October 11th ' substituted as the date. This was done after Steele had signed the note, and without his knowledge or consent. These circumstances were unknown to Wood and to Allis. Steele was the 254 CASES ON BILLS, NOTES, AND CHEQUES. surety of Newson. It does not appear that there was any controversy about the facts. The argument being closed, the court instructed the jury ' that if the said alteration was made after the note was signed by the defendant Steele, and by him delivered to the other maker, Newson, Steele was discharged from all liability on said note. ' The 'plaintiff excepted. The jury found for the defendant, and the plaintiff prosecuted this writ of error to reverse the judgment. Instructions were asked by the plaintiff's counsel, which were refused by the court. One was given with a modifi- cation. Exceptions were duly taken, but it is deemed unnecessary particularly to advert to them. The views of the court as expressed to the jury covered the entire ground of the controversy between the parties. The state of the case, as presented, relieves us from the necessity of considering the questions, upon whom rested the burden of proof, the nature of the presumption arising from the alteration apparent on the face of the paper, and whether the insertion of a day in a blank left after the month exonerates the maker who has not assented to it. Was the instruction given correct? It was a rule of the common law as far back as the reign of Edward III. that a rasure in a deed avoids it. Brooke's Abridgment, Faits, pi. 11. The effect of alterations in deeds was considered in Pigot's Case, 11 Coke, 27, and most of the authorities upon the subject down to that time were referred to. In Master v. Miller, 4 T. R. 320; 1 Smith's L. C. 1141, the subject was elaborately examined with reference to commercial paper. It was held that the established rules apply to that class of securities as well as to deeds. It is now settled, in both English and American jurisprudence, that a material alteration in any commercial paper, without the consent of the party sought to be charged, extinguishes his liability. The materiality of the alteration is to be decided by the court. The ques- tion of fact is for the jury. The alteration of the date, WOOD .,. STEELE. 265 whether it hasten or delay the time of payment, has been uniformly held to be material. The fact in this case that the alteration was made before the note passed from the hands of Newson cannot affect the result. He had no authority to change the date. The grounds of the discharge in such cases are obvious. The agreement is no longer the one into which the defend- ant entered. Its identity is changed; another is substi- tuted without his consent, and by a party who had no authority to consent for him. There is no longer the necessary concurrence of minds. If the instrument be under seal, he may well plead that it is not his deed; and if it be not under seal, that he did not so promise. In either case the issue must necessarily be found for him. To prevent and punish such tampering, the law does not permit the plaintiff to fall back upon the contract as it was originally. In pursuance of a stern but wise policy it annuls the instrument, as to the party sought to be charged. The rules that where one of two innocent persons must suffer he who has put it in the power of another to do the wrong must bear the loss, and that the holder of commer- cial paper taken in good faith and in the ordinary course of business is unaffected by any latent infirmities of the security, have no application in this class of cases. The defendant could no' more have prevented the alteration than he could have prevented a complete fabrication; and he had as little reason to anticipate one as the other. The law regards the security, after it is altered, as an entire forgery with respect to the parties who have not consented, and so far as they are concerned deals with it accordingly. The instruction was correct and the Judgment is affirmed. 256 CASES ON BILLS, NOTES, AND CHEQUES. WOEKALL V. GHEEN.//r, '?2- Supreme Court of Pennsylvania, 1861. 39 Penn. St. 388. In a case stated, of suit upon a raised negotiable promissory note by a bona fide holder for value against one who indorsed it before the altera- tion, held, that the plaintiff might recover the sum for which the note was originally made. Assumpsit by the holder against the first indorser of a negotiable promissory note. The following special ver- dict was rendered: ' Charles INI. Layman filled up a printed blank note in the following manner and in the following terms. The annexed is a correct copy as it was executed by him : 'October 14, 1857. $50. ' Thirty days after date, I promise to pay to the order of Levi A. Gheen, at the Bank of Chester County, fifty T^jy Dollars, without defalcation, for value received. Credit the drawer, C. M. Layman. Levi A. Gheen. ' Layman called upon Gheen with the note, and requested him to indorse it. Gheen did so, by writing his name across the back of the note, and signed his name under the words "Credit the drawer." Layman then took the note away and fraudulently altered its amount from fifty dol- lars to one hundred and fifty dollars, by adding the figure "1" between the $ and the figure "60," and the words "One hundred &" before the word "fifty." ' The fraud was so well executed that the appearance of the note was not such as to excite the suspicions of a man in ordinary business. On inspection a difference in the color of the ink with which the words " One hundred & " were written may be perceived.' "WORRALL V. GHEEN. 257 The plaintiff discounted the note before maturity for value and without knowledge of the alteration, and with- out notice thereof further than the foregoing facts indicate. Due steps were taken to fix the defendant's liability as indorser. Judgment below ordered for the defendant; the plaintiff sued out a writ of error. LowRiE, C. J., for the court. — We are not able to follow the cases of Pagan v. Wylie and Graham v. Gillespie, Eoss on Bills and Notes, 194, 195, in the principal point decided there. And yet we would not be understood as denying the case of Young v. Grote in the same book, p. 187, 4 Bing. 263. It may be that a cheque on a banker, so written as to be easily altered by the bearer of it, ought to be treated in the same manner as instructions sent by a principal to his agent, wherein the latter is not allowed to suffer from the carelessness of the former. ^ Thus probably alterations in cheques may be properly distinguished from those in bills, notes, and other contracts. We doubt it, however. This is a case of a printed form of a promissory note, filled up by the maker, and then indorsed for his accom- modation by another, and then altered by the maker to a larger sum by taking advantage of some vacant space left in the form. If the sum had been left entirely blank, the inference would have been that the parties authorized the holder as their agent in filling it in, and they would have been bound accordingly. But where a sum is actually written, we can make no such inference from the fact that there is room to write more. This fact shows careless- ness ; but it was not the carelessness of the indorser, but the forgery of the maker, that was the proximate cause that misled the holder. And we know not how we can say that a man be chargeable with a contract because he did not use proper precaution in guarding against forgery 1 See Holmes v. Trumper, post, pp. 258, 265. 17 258 CASES ON BILLS, NOTES, AST) CHEQUES. in any of the thousand forms it may take. We know of no way of saving purchasers of negotiable paper from the necessity and the consequences of relying on the charac- ter of the man they buy it from, if they do not take the trouble of inquiring of the original parties. But this plaintiff had no hand in the alteration, and, as this is a case stated, we are not met by any discrepancy of allegata and probata, and therefore we can give judgment for the true amount of the note.^ Ross on Bills and Notes, 201. This brings the case within the Hundred Dollar Act, and therefore the judgment must be without costs. Judgment for plaintiff for $60.37^. HOLMES V. TEUMPER. /-^2~ Supreme Court of Michigan, April, 1871. 22 Mich. 427. To alter a promissory note materially, after delivery of it, by adding words in a blank left at the end, which closes with the words ' ivith in- terest at,' avoids the note even in the hands of a bona fide holder for value. The facts are suflEiciently stated in the opinion. Cheistiancy, J., for the court. — -This was an action brought by Holmes against Trumper upon a promissory note signed by the latter, which note was partly printed and partly in writing, a printed blank having been used. The following is a copy of the body of the note as it appeared upon the trial, the portions in italics being printed and the other portions written, viz. : — ' $400. ' One year after date I promise to pay to Lyman Terry or hearer, four hundred dollars, at the First ISTational Bank of Ann Arbor, value received, with interest at 10 per cent, [signed] Jacob Thumper.' ^ See Bills of Exchange Act, 64, (1); Bills and Notes (Students' Series), 187, note. HOLMES V. TRUMPEE. 259 There was evidence on the part of the defendant tending to show that the note had been altered after it was made and delivered to the payee by adding, after the printed word ' at, ' in the last line, the figures and words ' 10 per cent,' and (as is to be fairly inferred from the whole record and the argument, though not expressly stated), that this alteration was made without the knowledge or consent of the maker. It was conceded on the trial that the plaintiff was a bona fide holder of the note before due, and the only question in the case is whether the wrongful alteration of the note by the payee or any subsequent holder (for such was the only inference, there being no evidence showing by whom the alteration was made) rendered the note void in the hands of the plaintiff, or constituted a defence as against him in favor of the maker. Without extrinsic evidence of authority to make the alteration, it is too clear to require the citation of authori- ties, that unless the note, as signed, can be treated as a note given in blank, so far as relates to the rate of inter- est, giving the payee or holder the right to fill the blank by inserting the rate, the alteration must be treated as a forgery, since it is one which, if valid, would enlarge the liability of the maker. We are entirely satisfied that this note when signed without the addition of the words ' 10 per cent ' was, not- withstanding the word *at, ' in legal effect, a complete and valid note, drawing the legal rate of interest at seven per cent ; and that the word ' at, ' at the end of the printed form, might readily be overlooked by the signer, or dis- regarded as of no consequence if noticed at all; and that there was, therefore, no such blank left in it as would warrant the payee or holder, without further evidence of assent, to insert a different rate of interest. See Warring- ton V. Early, 2 Ellis & Blackb. 763; Waterman v. Vose, 43 Maine, 604. The case which may be regarded as coming nearest to supporting the implied authority to insert the special rate 260 CASES ON BILLS, NOTES, AND CHEQUES. in this case, is that of Visher v. Webster, 8 Cal. 109. But whatever may be the authority of that case and that of Fisher v. Dennis, 6 Cal. 577, upon which it is based, we do not think it would authorize the alteration in the present case. The note in that case, as signed, was in the following form : — ' One day after date, we jointly and severally promise to pay Messrs. A. N. Fisher & Co., or order, the sum of seven hundred and eight 71-100 dollars, for value received, with interest, monthly, at the rate of per cent per annum, per month, until final payment.' The alteration consisted in filling this blank with the word ' five.' Such a blank in the body of the note would clearly indicate to any one that it was intended to be filled, and the fact that it was payable monthly could not well be overlooked. But in the case before us the insertion of the words ' 10 per cent, ' at the end of the note after the single printed word ' at, ' can hardly be called the filling a blank at all; and though it is urged that leaving the printed word ' at ' at the close of the note was calculated to facili- tate the forgery, by inducing in other parties the belief of the genuineness of the words added, yet it may be said with at least equal force, on the other hand, that to those looking at the note after the alteration critically enough to notice the printed word ' at, ' the printed form of the note itself might well excite suspicion that the form was specially got up by the payee to render the forgery more easy, and that the words ' 10 per cent, ' added at the end, were rather calculated to increase than to allay the suspi- cion of their genuineness; since, if the note was got up and printed only with the intention of leaving a blank for the insertion of the rate, the words, ' per cent, ' might just as well, and much more naturally would have been, printed after a small blank following the word ' at.' Even the name of the payee was printed in the note. "Would the payee, in honestly getting up such a note, have it printed without printing also the words ' per cent, ' which would HOLMES V. TEUMPER. 261 in all cases be the same, whateyer the rate? These con- siderations are not conclusive, it is true, but they are not without weight. We think the courts have gone quite far enough in sus- taining instruments executed in blank, and the implied authority to fill them up, and we are not disposed to take a step in advance in that direction. The counsel for the plaintiff in error fully admits the general rule, that an alteration having this effect thus to increase the maker's liability, renders the note void as against the maker, even in the hands of a bona fide holder for value. But he insists that, though it may be a forgery, the peculiar facts of this case bring it within a principle which constitutes an exception to the general rule; that the maker was guilty of negligence in leaving a blank apparently intended for the insertion of the rate per cent unfilled, and without drawing a line through the blank or erasing the word ' at, ' to indicate that it was not to be filled, and that he thereby invited and facilitated the for- gery in a manner calculated to impose upon innocent par- ties, and that he must therefore, as between him and such innocent parties, be held to pay the note, in its altered form, in the same manner as if it had been originally so drawn, on the principle that, 'where one of two innocent parties must suffer by the fault of a third, he shall sustain the loss who put it in the power of the third to occasion it; ' or, as expressed by the Louisiana court, in Isnard v. Torres et al., 10 La. An. 103: ' Where one of two parties, neither of whom has acted dishonestly, must suffer, he shall suffer who, by his own act, has occasioned the confi- dence and consequent injury of the other. ' This principle is one of quite general application, and where properly understood and limited, it is one of mani- fest equity ; but it has many limitations and qualifications. Whether the present case falls within it or constitutes an exception is a question of some nicety, requiring consider- able accuracy of discrimination for its solution, and upon which unanimity of decision could perhaps hardly be 262 CASES ON BILLS, NOTES, AND CHEQUES. expected; and we accordingly find that able courts have arrived at opposite conclusions upon it. But, upon prin- ciple and the weight of authority, we think the liability of the maker upon the note, as altered, cannot be main- tained. The general principle that ' where one of two innocent parties must suffer,' etc., upon which the plain- tiff in error relies, as stated by us in Burson v. Hunting- ton, ^ decided at the last October term, is one which, in its application, is mainly confined to cases where the third person, whose act or default has occasioned the loss, has been, in some sense or to some extent, the agent of the party who is made to sustain the loss, or when the latter, by his acts or negligence, has authorized the other party to consider him as such; and in all the cases (unless this is an exception) where, upon the general principle relied upon, a party has been held liable upon a written contract on the ground of negligence alone, without reference to such agency, he has only been held liable upon it in the shape in which he allowed it to go from his hands, and not as criminally altered by another. Thus, if an acceptor of a bill pay and take it up, and then, without cancellation or any mark to denote its payment, throws it into the street, and it gets into the hands of a bona fide holder before apparently dishonored or overdue, the acceptor will be liable upon it. See Ingham v. Primrose, 7 C. B. n. s. 82; Foster v. Mackinnon, Law Rep. 4 C. P. 704.2 g^^^ even such a case does not wholly, perhaps, exclude the idea of agency; since a party thus throwing his acceptance into the streets, may be said, as between him and the innocent holder, to have authorized any one who might pick it up to negotiate it. As between the maker of commercial paper and an innocent party acting upon the faith of the paper, which the maker has voluntarily and intentionally executed and even negligently allowed to go out of his hands and to get into circulation, the general principle we are discussing would preclude such maker from showing that the paper 1 Aute, p. 227. 2 Ante, p. 237. HOLMES V. TRUMPEE. 263 was not intended to have the effect which its appearance indicated, though, as between the original parties, many things might be shown to defeat it. It is substantially a representation upon which he has authorized innocent parties to act ; and when they have thus acted he must be held by the contract indicated by the representation tlius made. But this reasoning extends only to the paper as made and issued by him, or as he has thereby authorized some other person to change its terms ; and the note in this case being a complete legal instrument when issued, to hold him bound by the contract, as altered by the forgery, involves the idea that the person committing the forgery was his agent in committing it (a ludicrous absurdity), or at least that he had authorized innocent third parties so to treat him. Upon the hypothesis of the plaintiff in error which we are now considering, it is not claimed, nor in view of the facts as disclosed by the record can it be claimed, that the person making the alteration had any authority, nor that the maker had done or omitted anything to induce the belief, that he had authorized any subsequent holder to make it, nor that it was made by any person standing in any confidential relation to or held out as such by him. The whole argument goes upon the assumption that the plaintiff took the note in ignorance that any alteration had been made. The argument amounts simply to this: That by the maker's awkwardness or negligence his note was issued by him in a shape which rendered it somewhat easier for another person to commit a crime than if he had taken the precaution to erase the word ' at, ' and to draw a line through the blank which followed it ; and that a forgery committed by filling this blank would be less likely to excite suspicion than if committed in some other way. But how such a crime, whether committed in this or in any other way, could create a contract on the part of the maker we confess ourselves unable to comprehend; nor are 264 CASES ON BILLS, NOTES, AND CHEQUES. we satisfied that a forgery committed in this way would be any less liable to detection than if committed in many other ways. The negligence, if such it can be called, is of the same kind as might be claimed if any man, in signing a contract, were to place his name far enough below the instrument to permit another line to be written above his name in apparent harmony with the rest of the instrument; or, as if an instrument were written with ink, the material of which would admit of easy and complete obliteration or fading out by some chemical application which would not affect the face of the paper, or by failing to iill any blank at the end of any line which might happen to end far enough from the side of the page to admit the insertion of a word. The law has no scale by which to measure the various degrees of facility with which different modes of forgery may be committed, or their liability to suspicion or detection; and we see no clear and intelligible distinc- tion by which we could hold the maker in this case bound by this forgery, which would not hold all persons liable for the alteration and forgery of any paper signed by them. Whenever a party in good faith signs a complete promis- sory note, however awkwardly drawn, he should, we think, be equally protected from its alteration by forgery in whatever mode it may be accomplished; and unless, per- haps, when it has been committed by some one in whom he has authorized others to place confidence as acting for him, he has quite as good a right to rest upon the pre- sumption that it will not be criminally altered as any person has to take the paper on the presumption that it has not been ; and the parties taking such paper must be considered as taking it upon their own risk, so far as the question of forgery is concerned, and as trusting to the character and credit of those from whom they receive it, and of the intermediate holders. If promissory notes were only given by first-class busi- ness men who are skilful in drawing them up in the best possible manner to prevent forgery, it might be well to adopt the high standard of accuracy and perfection which HOLMES V. TKUMPER. 265 the argument in behalf of the plaintiff in error would require. But for the great mass of the people who are not thus skilful, nor in the habit of frequently drawing or executing such paper, such a standard would be altogether too high, and would place the great majority of men, of even fair education and competency for business, at the mercy of knaves, and tend to encourage forgery by the protection it would give to forged paper. We have thus far considered the question involved as one of principle alone ; and, though the authorities are not uniform, there is, we thiuk, a very decided preponderance in favor of the conclusion at which we have arrived. Of English authority, there is little if any opposed to the view we have taken. It is suflScient to say of the cases of Payne v. Wylie and Graham v. Gillespie, cited in Eoss on Bills and Notes, p. 194 and 195, that but one of them has any bearing upon the question, as it relates to a promissory note, and that nisi prius cases and others which have not been considered of sufficient weight to secure a place in the regular and authorized reports can be of little value as mere authority. But the English case upon which the plaintiff in error mainly relies is that of Young v. Grote et al. , 4 Bing. 263. At a hasty glance, this case might seem to support the rule for which it is cited ; but a careful examination will show that it has very little bearing upon the precise ques- tion involved in the present case. That was the case of a cheque drawn by a customer upon his bankers. The plaintiff, Young, having occasion to be absent, left with his wife certain printed cheques upon the bankers, signed by him in blank, to be filled up by her and drawn as his business might require. She delivered one of these cheques, so signed, to the plaintiff ' s-clerk to be filled up by him with the sum of fifty pounds (and some shillings and pence). The clerk filled out the cheque, beginning the word ' fifty' with a small letter, and in the middle of the blank line left for the sum, and showed it to the plaintiff's wife, who directed him to draw the cash. Before present- 266 CASES ON BILLS, NOTES, AND CHEQUES. ing it to the bankers, this clerk altered the cheque by- inserting before the word ' fifty ' the -words, ' three hun- dred and, ' thus making it a cheque of three hundred and fifty instead of fifty pounds, all in the same hand-writing, and then himself presented the cheque to the bankers, and dre-w the -whole larger sum. The action against the bankers -was not, of course, brought by Young upon the cheque, but for the money -which he claimed had been paid out by 'the bankers -without authority. Under the circum- stances stated, the court held the plaintiff -was not entitled to recover. No-w, there are several features or elements in this case which distinguish it from the present, and upon which it is quite possible that case may be supported as law with- out giving any support to the present action. It was a cheque by a customer upon his bankers, who, as depositaries of their customers' money, were bound, from time to time, to pay such sums as the latter might order. They were under obligation to pay his cheques so long as his money was in their hands to meet them. This circum- stance is made prominent in the opinion of Parke, J. Now, it is quite clear that no person is under any obliga- tion to purchase a promissory note, nor, consequently, to decide whether the paper is genuine or not. Another very important circumstance in that case was that the cheque was filled up by the plaintiff's clerk, the alteration made, and the money drawn by him in person, and the plaintiff, by employing him as he did, as his clerk, and (through his wife), as his agent to fill the cheque, and in person to draw the money from the bankers, might well be held to have placed a confidence in him for which he should be responsible, or at least to have authorized the bankers to place confidence in him. These circumstances are specially relied upon by Best, C. J., as distinguishing the case from that of Hall v. Fuller, 5 B. & C. 750, which was decided directly the other way. There is, however, one American case (Isnard v. Torres, 10 La. An. 103), which in its facts, reasoning, and conclu- PRICE V. NEAL. 267 sion does, as to a promissory note, fully sustain the doctrine contended for the plaintiff in error. On the other hand, Worrall v. Gheen, 39 Penn. St. 388, i is a well considered case, similar in all its facts to the Louisiana case, and involving the same principles, in which the Supreme Court of Pennsylvania reach the oppo- site conclusion, the same at which we have arrived. See also, as suppo]-ting this view, Goodman v. Eastman, 4 N. H. 455, and Bruce et al. v. Westcott, 3 Barb. 374. We see no ground upon which the defendant below could be held to pay the amount of the note, as originally drawn, at least when the action is brought upon the note itself, without departing from the whole theory upon which, at common law, the defence rests, which is that the paper, by the alteration or forgery, is rendered void, and does not constitute a contract in any respect. There was no error in the ruling of the Circuit Court, and the judgment must be affirmed with costs. The other justices concurred. PRICE V. NEAL./f continued) against the executors of an indorser of several i ' negotiable promissory notes. The defendant's testator had indorsed the notes at the request and for the accommo- dation, without value, of one Myers, who held them at maturity. Holding the notes, unpaid, for two or three years after they became due, Myers now transferred them for full value to the plaintiff's assignor. Verdict, under 320 CASES ON BILLS, NOTES, AND CHEQUES. direction, for defendant ; appeal ; report of referee in favor of plaintiff, afBrmed on appeal by the General Term, Superior Court of New York. Appeal. Woodruff, J. — Mr. Justice Story, in bis Treatise on Promissory Notes, § 178, thus states the difference between the legal effect of a promissory note before and after maturity ; ' If the transfer is made before the maturity of the note to a bona fide holder for a valuable consideration, he will take it free of all equities between the antecedent parties of which he had notice. If the transfer is after the maturity of the note, the holder takes it as a dis- honored note, and is affected by all the eqiiities between the original parties, whether he has any notice thereof or not.' But .... it is not to be understood by this expres- sion that all sorts of equities existing between the parties, from other independent transactions between them, are intended; but only such equities as attach to the particular note, and as between those parties, would be available to control, qualify, or extinguish any rights arising thereon. ' The learned author gives this as the final conclusion from the numerous cases cited by him, an examination of which shows that it is only after some difference of opinion that it has come to be deemed settled. Or, as jNFr. Chitty says, of the opinion of Buller and Ashhurst, JJ., in Brown V. Davis, 3 T. K. 80, expressed when Lord Kenyon doubted its broad extent, 'this latter opinion is now the law.' That opinion was to the effect ' that where a note is over- due, that alone is such a suspicious circumstance as makes it incumbent on the party receiving it to satisfy himself that it is a good one, otherwise much mischief might arise.' 'If a note indorsed be not due at the time, it carries no suspicion whatever on the face of it, and the party receives 1 This form of expression would hardly be used at the present day. 'Notice' here is used in the sense of knowledge. Taking after maturity is now considered taking with notice, — notice absolute of equities if any exist. Bills and Notes (Students' Series), 207. CHESTER V. DORR. 321 it on its own intrinsic credit. But if it is overdue, thougli I do not say that by law it is not negotiable, yet certainly it is out of ^ the common course of dealing, and does give rise to suspicion. . . . Generally when a note is due, the party receiving it takes it on the credit of the person who gives it to him.' The foundation of the rule which distinguished commer- cial paper from ordinary commercial-law choses in action is in harmony with the law thus stated. The holder of the former is protected against any inquiry into its pre- vious history, and is warranted in giving it full faith, according to its tenor, because commercial convenience and the importance of the free and unembarrassed use of commercial credits require it; and on this the mercantile customs, which ripened into the law merchant, were founded. These reasons, however, could have no applica- tion to paper which had been dishonored. The credit it was adapted to invite is spejit, and the very fact of dis- honor is inconsistent with the purposes which the rule was intended to subserve. The rule is simple and convenient of application, is in no sense inconsistent with the usefulness of negotiable paper for the purposes for which it is intended, and, as it seems to me, is a just security against mischief and fraud. In the terms in which it is above stated it includes the defence of want of consideration, whenever that ren- ders the note invalid in the hands of him who holds it when it becomes due. Such want of consideration is an inherent defect in the contract itself; or, in the language of the rule, attaches to the note itself, in the hands of one for whose accommodation a note is made, and does not, like a set-off or other collateral matter apart from the note, arise out of an independent transaction. But the same learned writer above referred to states that the mere fact that an accommodation note has been indorsed after it became due, does not of itself, without some other equity in the maker, defeat a recovery by the 21 322 CASES ON BILLS, NOTES, AND CHEQUES. indorsee. Story, § 194. And Mr. Chitty states that it has been so decided. The cases of Charles v. Marsden, 1 Taunt. 224, Sturtevant v. Ford, 4 Man. & G. 101, 4 Scott, 608, and Caruthers v. West, 11 Q. B. 143, are in support of the proposition. These are the cases upon the authority of which the present case was decided below. I am constrained to say that I am not satisfied that such an exception to the rule is either just or called for by any principle, nor am I at all convinced by the reasons assigned for the exception. That the maker or indorser of a note for the accommo- dation of another should be held to the terms of his own indorsement, according to their just interpretation, I fully agree. That one who receives such paper before maturity should not be affected by the mere fact that it was made or indorsed without consideration I equally agree. That when a party lends his note or indorsement to another without restriction as to its use he authorizes the negotia- tion thereof, in any manner which may serve the conve- nience or credit of the borrower, may be conceded. From this latter concession it is argued that such a lend- ing of one's name is furnishing a continuing guaranty of the payment of the note, irrespective of its terms as to time of payment, and is therefore binding whenever it is transferred and however long after it has become payable and been dishonored. That the absence of express restric- tion warrants the inference that the making or indorsement was to enable the borrower to use it whenever thereafter it suited his pleasure, and so ' enforcing its payment is in accordance with the object for which the note was, as matter of accommodation, made or indorsed; ' and in the discussion in England it has been suggested that, suppos- ing an accommodation acceptance to remain in the hands of the party accommodated, it may be treated as giving authority by implication to use it thereafter as his conve- nience or needs may require. In respect to the last suggestion two observations are CHESTER V. DORR. 323 pertinent; first, it begs the question, for assuming the rule to be that he who receives a note or bill after dishonor acquires no better title to recover thereon than he has from whom it was received, then there is no reason why the accommodation maker or indorser should not treat the note iii the hands of the borrower, after maturity, as functus officio, and mere waste paper. And second, how is the maker or indorser in such case to withdraw his note or indorsement ? Is he to be driven into a court of equity, and to praying out an injunction, to prevent a subsequent transfer? I think not. Take the present case; the note itself was the property of the holder at its maturity (Myers), and was a valid note in his favor against the maker. The indorsement of the defendant (the appellant's testator) was material as a transfer of title, although, being made for Myers' accommodation, it could not be enforced against such defendant as indorser. I cannot agree that it was incumbent on the defendant to go into a Court of Chancery to compel Myers to suffer a writing of the words ' without recourse ' or an equivalent expression as a quali- fication of such indorsement. As to the other reason, it is even less satisfactory, because it proceeds, I think, upon an entire misconstruc- tion of the act of making or indorsing a note for the accommodation of another. Its purpose and object is to obtain credit for such other, or to enable him to do so. The very terms of the note declare the credit it is intended to procure, that is to say, until the maturity of the note. Within that range the making or indorsement being unrestricted as to its use, the borrower may use it as his exigencies require, and a transferee may receive it in reliance upon the undertaking which is imported by its terms. But the very term of payment contained in the note imports that the accommodation partj' undertakes that the note shall be paid at its maturity, and that he who then holds the note shall have recourse to him, if it be not then 324 CASES ON BILLS, NOTES, AND CHEQUES. paid. Where the accommodation (as in the present case) is by indorsement, that is the precise contract, viz., that the note shall be paid at maturity, and not that it shall be paid at any future time. If the note be not paid at maturity, the contract is' broken, and if he who then holds it can recover thereon, then his right of recovery may be transferred to another; and the recovery of the latter will be, not because the accommodation indorser undertook that the note should be paid to him, or should be paid at some date after it was due, but because a valid cause of action, existing in favor of the holder at maturity, has been trans- ferred to him. It is not according to the intent or meaning of an indorse- ment for another's accommodation to say that the indorser intends to give the use of his credit for any other period than that limited in the note, or that such an indorsement imparts authority to use it when that period has elapsed. One may be willing by indorsement to guaranty the solvency of another for sixty days, or for six months, and yet he would wholly refuse to do so for a period of two years. And accordingly, when such accommodation is given, it is a most material circumstance that the time during which the borrower is at liberty to obtain credit on the note is fixed by the limitation of the time of payment therein. I deem the just view of the subject to be that, when a note has become due and is dishonored, the rights and responsibilities of the parties thereto are fixed. The note then loses the chief attribute of commercial paper. It is no longer adapted to the uses and purposes for which such paper is made, and in respect of which it is important that it should circulate freely. And thereafter he who takes it takes it with knowledge of its dishonor, with obvious reason to believe that there exists some reason why it was not paid to the holder; and takes it with just such right to enforce it as such holder himself has, and no other. CHESTER V. DORR. 325 In thus stating my views I am not insensible of the apparent authority for the decision made below ; but I am also aware that the judges in England have not been at all agreed on the subject, and have expressed doubt of the cor- rectness of the decision in Charles v. Marsden, upon which the other two cases above referred to were decided. The cases, largely collected in the notes to Chitty in the recent edition, warrant, I think, the dissatisfaction I have expressed. No case in this State has called for a decision of the question; and* yet in Brown v. Mott, 7 Johns. 361, and in Grant v. Ellicott, 7 Wend. 227, the case of Charles v. Marsden is referred to without disapprobation, and the proposition derived therefrom is stated; but in neither was the point now raised before the court, for in neither did it appear that the plaintiff took the note after it became due. And that in other States in this country such an exception to the general rule first above stated is repudiated, see Brown v. Hastings, 36 Penn. St. 285; Britton v. Bishop, 11 Vt. 70; Odiorne v. Howard, 10 N. H. 343; Cummings v. Little, 45 Maine, 183; Vinton v. King, 4 Allen, 563; Kellogg v. Barton, 12 Allen, 627. And the general proposition that he who takes a note when overdue takes it subject to all defences inherent in the note, or arising out of any agreement with the holder, expressed or implied, and relating thereto, or, in another form, that such an indorsee obtains no greater or other rights than his indorser had in it at the time of the in- dorsement, has been stated as law in cases almost without number. It will perhaps suffice to refer to two from the Supreme Court of the United States. Andrews v. Pond, 13 Pet. 79, says of the indorsee of a dishonored bill: ' If he chooses to receive it, he takes it with all the infirmities belonging to it, and is in no better condition than the person from whom he received it. ' Powler v. Brantley, 114 Pet. 321 [says] : ' A note overdue or bill dishonored is a circum- 326 CASES ON BILLS, NOTES, AND CHEQUES. stance of suspicion to put those dealing for it afterward on their guard, and in whose hands it is open to the same defences as it was in the hands of the holder when it fell due. After maturity such paper cannot be negotiable in the due course of trade, although still assignable.' See also Foley v. Smith, 6 Wall. 492. In my opinion the just rule, and the rule resting on the soundest principle, requires us to reverse. The supposed exception to the general rule rests on neither reason nor, as I think, on authority, certainly not in this country. Five other judges for reversal; two judges dissented. Judgment reversed. HASCALL V. WHITMOEE. Supreme Court of Maine, April, 1841. 19 Maine, 102. One who purchases commercial paper for value, with notice of defect in its inception, from a bona fide holder without notice, stands upon the rights of the latter, and may recover the amount of the paper. The case is stated in the opinion of the court. Shepley, J., for the court. — 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 without 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 nego- HASCALL V. WHITMORE. 327 tiate 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 iide and upon a valuable consideration.' Bayley, 650, ed. by Phillips & 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 Dandridge and by him to the plaintiff. The defence 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 plaintiff to show that he gave value for it, or that value was given for it by Dandridge;^ for if either the plaintiff or Dandridge 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 h, 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 Kenyon says, ' Upon this evi- dence I 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 promissory 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 sub- 1 This doctrine has been exploded. See Bills and Notes (Students' Series), 224; Faton v. Coit, ante, p. 311. 328 CASES ON BILLS, NOTES, AND CHEQUES. sequent holder, to whom it may have been passed after it was due. The promise is good to the first indorsee free from tliat objection; and the power of transferring it to others with tlie 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 the 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. NEWCOMB V. RAYXOR. 2.13 Supreme Court of New York, May, 1839. 21 Wend. 108. If the liolder of a promissory note release the first iudorser, this dis- charges the subsequent indorsers. Assumpsit against the maker and second and third indorsers of a promissory note. Plea by the indorsers that the holder had given a release under seal to Goings, the first indorser. Demurrer to the plea. Nelsox, C. J. , for the court. — 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 of principal; he stands behind them upon the paper, and is bound to take it up, in case of default of McLEMOEE v. POWELL. 329 the maker. A discharge of him, therefore, by the holder (regarding the relative position of the parties), on general principles, 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 con- tract existing between the 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 pre- sumed 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. McLEMORE v. POWELL. ^3^ Supreme Court of the United States, January, 1827. 12 Wheat. 554. Mere agreement by the holder with the drawer of a bill of exchange for delay, made without consideration, and not communicated to the indor- ser, does not discharge the indorser. The case is stated in the opinion of the court. Story, J., for the court. — This is a writ of error to the Circuit Court of the United States for the District of West Tennessee. 330 CASES ON BILLS, NOTES, AND CHEQUES. 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 Nashville, upon Messrs. McNeil, Fisk, & Rutherford, at New Orleans, payable to Thomas Eead, or order, for $2,000 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 defendant. At the trial, upon the general issue, Thomas Fletcher, the drawer, was, under a release from the defendant, McLemore, examined 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 Nashville 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 certainty, 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 expiration of that time, and would receive said payment. Since said time the witness has never seen said plaintiff. ' The wit- ness further testified that the defendant was an accommo- dation indorser for him on the bill ; that the plaintiff told him that the bill would be left with a Mr. Washington, at Nashville; that he expected he would himself be at that place at the time agreed on, but that, if he did not come, he would give the instructions to Mr. Washington, by letter, what to do if the Avitness did not pay at the expira- tion of the time agreed on. It did not appear 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 believed 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 MoLEMOBE v. POWELL. 331 given or paid, or to be paid by Fletcher, the indorsers were not discharged; that an agreement for giving day must be an obligatory contract for a consideration which ties up the hands of the creditor and disables him from suing, thereby affecting the interests and rights of the indorser ; that the indorser has a right to require and de- mand of the creditor to bring a suit against the drawer, and if he has disabled hilnself from bringing a suit by a contract for a consideration, he has thereby released the indorser; and that if the jury were satisfied from the testimony that time was given for a valuable considera- tion paid or to be paid, or that a new security was taken by the holder, the indorser was discharged and absolved from all the obligations of the indorsement. Under this instruction, the jury found a verdict for the plaintiffs, 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 indorser, 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 com- mon cases of suretyship, to compel the creditor to active diligence by suit against the principal. Without ex- pressing 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 com- munication with or assent of the indorser, is a discharge 332 CASES ON BILLS, NOTES, AND CHEQUES. of the latter, after he has been fixed in his responsibility by the refusal of the drawee, and due notice to himself. And we are all of opinion that it is not. "We admit the doctrine that, although the indorser has received due notice of the dishonor of the bill, yet if the holder after- wards enters into any new agreement with the drawer for delay, in any manner changing the nature of the original contract, or affecting 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 con- sideration to support it. An agreement without considera- tion 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 reme- dies against all the parties. It was correctly said by Lord Eldon, in English v. Darley, 2 Bos. & Pul. 61, 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 con- tract be entered into without his assent, it is to his prejudice, and discharges him. The cases proceed upon the distinction here pointed out, and conclusively settle the present action. In Walwyn v. St. Quentin, 1 Bos. & Pul. 052, 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-paynu'iit, though no notice had been given to the drawer, he having no effects in the hands of the acceptor, the plaintiffs received part of the money on McLEMORE v. POWELL. 333 account from the indorser ; and to an application from the acceptor, stating that it was probable he shonld 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 Eyre, in delivering the opinion of the court, said that if this forbearance to sue the acceptor had taken place before noticing and protesting for non-pay- ment, so that the bill had not been demanded when due, it 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, not- withstanding 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. 621, 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 334 CASES ON BILLS, NOTES, AND CHEQUES. 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 judgnaent of the court below is, therefore, Affirmed with costs. SOHIER V. LORING. x-i.'u. Supreme Court of Massachusetts, November, 1850. 6 Gush. 537. A composition deed, whereby the holder of a hill of exchange gives time to the acceptor, and agrees to discharge him on receiving a portion of the debt, reserving the holder's remedies against other parties to the bill, does not discharge the drawer and indorsers. This was an appeal from a decision of Ellis Gray Loring, Esquire, a master in chancery, overruling the motion of the appellant, as assignee of Edward H. Green & Com- pany, insolvent debtors, to expange or reduce the amount of certain claims, proved before the master against the estate of Green & Company. The case was submitted to the court upon the following agreed statement of facts: On the 23d of February, 1846, a warrant was issued by the said master, against the estate of Edward H. Green and John E. Short, both of Boston, merchants and partners, doing business under the firm of Edward H. Green & Company. The first publication of the notice required by the warrant was made on the 24th of February, 1846, and, on the 11th of March following, the appellant was chosen assignee, and duly received an assignment of all the insolvent's estate. Previous to their insolvency, Green & Company, as copartners, were employed by Oliver P. Mills, of New York, to make and negotiate certain bills of exchange, drawn on the firm of Major & Wallace, of London; and from time to time, as opportunity offered, Green & Company had drawn on account of Mills various bills of .SOHIER u. LORING. 335 exchange, against consignments of goods in the hands of Major & Wallace belonging to Mills, which bills were sold in the usual course of business to the appellees. Green & Company, for a commission paid to them by Mills, had become responsible as the drawers or indorsers of these bills, which were duly accepted by Major & Wallace, but were not paid at maturity. Notice of their dishonor was duly sent to the drawers, and the bills were taken up by the appellees, and proved by them against the estate of Green & Company. The appellees, whose claims were thus proved, Hawes, Gray, & Company, proved on the 10th of March, 1846; Benjamin Loring and Levi H. Marsh, executors of Elijah Loring, proved on the 20th of March; Thomas Tarbell & Company proved on the 29th of April, 1846 ; and Samuel May & Company proved on the 18th of January, 1847; the whole amounting to about $26,000. The bills proved by Hawes, Gray, & Company were drawn by Mills payable to his own order, and indorsed by him to the order of Green & Company, and by them indorsed. The bills proved by the other appellees were drawn by Green & Company on account of Mills. All the bills were directed to Major & Wallace, and were by them accepted. The several appellees sent their bills to England in payment of debts or to make purchases there during the months of November and December, 1845 ; and the bills were at maturity returned to them dishonored, by due course of mail. At a mfeeting of the parties holding bills drawn by or by the order of Oliver P. Mills held in London, on the 6th of June, 1846, a proposition for compromising their claims against Major & Wallace on these bills was agreed to; and, on the 23d of December following, an indenture for that purpose was drawn up and executed in London, by Major & Wallace, by these bill-holders, including the appellees, by their respective agents, and by certain trustees appointed under the composition deed. This 336 CASES ON BILLS, NOTES, AND CHEQUES. composition deed recited that Major & Wallace, being unable to pay in full all their debts, had proposed to pay their creditors, including the parties holding bills drawn by or by the order of Oliver P. Mills and accepted by Major & Wallace, a composition of five shillings in the pound, on the amount of their debts, by three equal instal- ments, payable at three, six, and nine months from the date of the deed, and to be secured by promissory notes of James Wallace, payable at those periods respectively, in full satisfaction and discharge of such debts ; and that their creditors, including said bill-holders, had consented to and agreed to accept such composition; and that the bill-holders had received in addition to this composition four shillings in the pound in money. Major & Wallace by this deed assigned certain goods to certain trustees therein named, in trust to sell and convert the same into money, and divide the proceeds among the bill-holders, parties to the composition deed; and the bill-holders cove- nanted not to sue Major & Wallace on said bills of exchange, unless on default of payment of the notes of James Wallace; and that upon payment of those notes to the trustees, the bill-holders vi^ould release Major & Wallace from the said bills of exchange. Then followed this clause: 'Provided always, and it is hereljy expressly agreed and declared, that it shall be lawful for the said bill-holders, parties hereto of the second part, to execute these presents without prejudice to their rights and reme- dies upon the said bills, mentioned in the second schedule hereunder written, respectively, or upon collateral or other securities for the same, respectively, against any person or persons whomsoever other than the said ^leKedy INIajor and James Wallace, or either of them, their or either of their heirs, executors, and administrators; and that not- withstanding these presents, or anything herein con- tained, they, the said bill-holders respectively, and their respective executors, administrators, and assigns, shall be at liberty to enforce and adopt all or any of such rights or SOHIER V. LORING. 337 remedies, against any such other person or persons, in the same manner as if these presents had not been executed.' And the bill-holders covenanted to indemnify the trustees, from all claims for or on account of the goods assigned to them in trust, or the payment of any dividend out of the proceeds thereof. The dividends, -which were made under this indenture, amounting to four shillings in the pound, have been received by the appellees respectively. On the 4th of August, 1847, the appellant, as the assignee of Green & Company, filed with the master in chancery a written motion, that the claims of the several appellees should be expunged from the list of debts proved against Green & Company; or, if not expunged, that they should be reduced in amount, by deducting therefrom the payments received by the appellees, respectively, under the provisions of the composition deed; but the master, after due hearing, overruled the motion, and the assignee appealed to this court. It was agreed, that if the court should sustain the master's decision, judgment should be entered for the appellees; but if the court should reverse the decision of the master, the case might be sent to a jury, to be tried on such issue or issues as the court should direct, or other- wise disposed of as they should determine. The case was argued in writing. Metcalf, J., for the court. — The composition made with the acceptors would have discharged the drawers and indorsers, if there had not been inserted in the composi- tion deed a proviso that it should not prejudice the holders' remedies against any other parties besides the acceptors. Bayley on Bills (2d Amer. ed."), 357, 358. The first ques- tion in the case therefore is, what is the legal effect of that proviso ? It is settled in England that a discharge or giving time by a creditor to his principal debtor, will not dis- 22 338 CASES ON BILLS, NOTES, AND CHEQUES. charge the surety, if there be an agreement between the creditor and the principal debtor that the surety shall not be discharged. And this rule of law is applicable to par- ties to bills of exchange and promissory notes, who are liable only on the failure of prior parties, though they are not technically sureties of those parties. 1 Steph. N". P. 936; Montagu on Composition, 36; Burge on Suretyship, 210; Chit, on Bills (10th Amer. ed.), 420; Byles on Bills (2d Amer. ed.), 202. See also Mallet v. Thompson, 5 Esp. R. 178. The same doctrine was advanced by Messrs. Hamilton and Eiker, 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 Giiford, 6 Ves. 80-5. In this last case, Lord Eldon said sureties would not be discharged by a dis- charge 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 reported. He afterwards laid down this principle more authoritatively in Boultbee V. Stubbs, 18 Ves. 20, and Ex parte Carstairs, 1 Buck, 560. In Ex parte Glendinning, 1 Buck, 517, he said: ' If a man by deed agree to give his principal debtor time, and in the deed expressly stipulate for the reservation of all his remedies against other persons, they shall still remain liable, notwithstanding the arrangement between their principal arid the creditor.' In Nichols v. Norris, 3 Barn. & Adolph. 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 proviso took the case out of the common rule as to the discharge of sureties by giving time to the principal. In 1846, the case of Kearsley >\ Cole, 16 Mees. & Welsh. 128, came before the Court of Exchequer. That was an action for money paid for the defendant, for whom the SOHIER V. LORING. 339 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. He was afterwards called on as surety of the defendant, and paid the claim. The ques- tion 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 plain- tiif was entitled to recover; he not having been discharged from his suretyship by the deed of assignment. The opin- ion 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 impli- cation that the surety was meant to be discharged, which is one of the reasons why the surety is ordinarily exoner- ated by such a transaction ; and, secondly, that it prevents 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 that 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 parte Gifford, and Boultbee v. Stubbs, as to the reserve of remedies; and the general proposition, that, 340 CASES ON BILLS, NOTES, AND CHEQUES. with that recourse, the composition or giving time does not discharge the surety, is supported by those and the following cases : Ex parte Glendinning; Nichols ■y. Norris ; Smith V. Winter, 4 Mees. & Welsh. 454, and others. This point must, therefore, be considered as settled. Some remarks have, indeed, been made by Lord Denman, in the case of Nicholson v. Revill, 4 Adolph. & Ellis, 675, on the doctrine of Lord Eldon in Ex parte 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 instru- ment of release could, by reason of the context, be con- strued to be a covenant not to sue, as it was in the case of Solly V. Eorbes, 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 American Bank v. Baker, 4 Met. 175, and were adopted and applied by the Court of Appeals of Mary- land, in Clagett v. Salmon, 5 Gill & Johns. 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 proceed- ings against him by his sureties, which his creditor might have instituted if no composition had been made. But if he pleases to subject himself to that liability, by volunta- rily executing an agreement which has that effect, there is no legal reason why he should not be held to that agreement. SOHIER V. LORING. 341 On these grounds, we are of opinion that the holders of the bills, in the present case, were rightly permitted by the master to prove their claims thereon against the drawers and indorsers; the latter not having been dis- charged by the composition made by the former with the acceptors. The second question respects the amount which the holders were entitled to prove against the drawers and indorsers. And we are of opinion that each was entitled to prove the full sum due and unpaid, at the time of mak- ing proof, on the bill or bills held by him. This question is not settled by any provision in our insolvent laws ; and we therefore adopt the rule applied in bankruptcy. That rule is, that a holder may prove his claim, under com- missions against the drawer, acceptor, and indorser, and receive a dividend from each upon his whole claim, pro- vided he does not receive, in the whole, more than his full due. But there is a distinction in this case, when a holder applies to prove his debt against one party, after having received a part of it from another, and when he applies to prove before receiving any payment or composition from another party, or before a dividend has been declared in his favor, under a commission against another party. Any sum actually received in payment, from any party to a bill, before proof made against another, must be deducted from the amount to be proved against any other party. So, as a general rule, must the amount of a divi- dend, declared on the estate of another party, be deducted. Cooper V. Pepys, and Ex parte Wildman, 1 Atk. 107, 109; see 5 Ves. (Perkins's ed.) 449, note; Eden's Bankr. Law 2d ed.), 155; 1 Mont. & Ayrt. Pract. in Bankruptcy, 202, 203. In the present case, we regard the composition made with the acceptors, on the 23d of December, 1846, as pay- ment of one fifth of the amount of the bills. The acceptors then conveyed property in trust to pay one fifth, and the holders accepted that conveyance. But all the holders. 342 CASES ON BILLS, NOTES, AND CHEQUES. except May & Company, made proof of their claims against the estate of Green & Short, drawers or indorsers, before they made the composition with the acceptors, and were therefore entitled, according to the rule just stated, to prove the full^ amount then due on their bills._ May & Company having made proof after they had executed the composition deed, by which they, in legal effect, had received part payment from the acceptors, were entitled to prove only the amount due after deducting that payment. The proceedings of the master, from which this appeal was taken, are affirmed in all things, except as to the amount proved by May & Company, which is to be reduced by deducting the sum received by them under the composi- tion with the acceptors. PAEMEES' AND MECHANICS' BANK v. EATHBONE. 'I - i Supreme Court of Vermont, 1852. 26 Vt. 19. One who for value has taken a bill of exchange accepted for the accom- modation of the drawer, without notice of the fact, may afterwards release the drawer without discharging the acceptor, though he then have notice of the nature of the acceptance. Assumpsit on two bills of exchange for $600 each, accepted by the defendant, payable to order and indorsed before maturity, for value and without notice, to the plaintiff. Defence, that the bills were accepted without consideration for the accommodation of the drawer, Caleb E. Barton, and that the plaintiff released and discharged the drawer after having acquired knowledge of the nature of the acceptance. The release was long after the plain- tiff's purchase of the bills. The said release was as follows : ' In consideration of $500 to the Farmers' and Mechanics' Bank, paid by Caleb E. Barton, of Charlotte, the said bank hereby wholly release and discharge the said Barton FAEMERS' AND MECHANICS' BANK v. RATHBONE. 343 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, cheques, drafts, or bills of exchange or acceptances to which Henry Eathbone 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, previous to the 17th of March instant, which said Eathbone was or is any wise a party to. ' In witness whereof, we have hereunto aflBxed the seal of said bank, at Burlington, this thirtieth day of March, A.D. 1848. (Signed) ' Farmers' and MEOHAsrics' Bank. [l.s.J ' By John Peck, Pres't.' The County Court rendered judgment for the defendant. Exceptions by plaintiffs. IsHAM, J., for the court. — This action is brought on two bills of exchange, drawn by Caleb E. Barton on the defendant, Henry Kathbone, of the city of New York; both of which were duly accepted, and, before maturity, were discounted, and transferred by indorsement to the 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 axe 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 acceptor. It is admitted that if these bills are not accom- modation bills, but are really bills for value, the release will not affect the liability of the acceptor. It will dis- charge all persons intermediate between the holders and 344 CASES ON BILLS, NOTES, AND CHEQUES. 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 Claridge v. Dalton, 4 Moore & S. 226; Chitty, Bills, 451. We are satisfied that these bills are not to be treated as accommodation 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 exceptions that, during the season of 1844, the drawer at different times consigned to the defendant as commission mer- chant, for sale on his account, a quantity of cheese, the gross proceeds of which amounted to $7,848.78; 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 Xovember of that year. There has been no statement of that account ren- dered, or balance ascertained by the parties. As between them, the whole account remains open and subject to their future liquidation. While this account was accruing, these bills were drawn and accepted, obviously and with the understanding that they were to be paid by the defendant, and the amount so paid be entered into their general account. During that period they doubtless anticipated that the balance would be sufficient to pay these bills, and have been respectively disappointed in the amount finally real- ized therefrom; so that there is now a balance due the acceptor, as stated in the account of sales. But as these bills, at first, were drawn upon property consigned to the acceptor, and he accepted them with the same means of knowledge which the drawer had. and thereby assumed the primary obligation to pay them, there is no propriety FARMERS' AND MECHANICS' BANK o. RATHBONE. 345 in treating the bills otherwise than as creating obligations of that character, after they have passed, in due course of business, into the hands of an indorsee. In so treating them, we are manifestly carrying into effect 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 sufficient in the hands of the drawee to pay them at maturity, and under that belief the drawer made such representations to the plaintiffs, at the time of their indorsement and discount. The legal effect and character 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 afterwards ascertained, that there was an indebtedness, at the time of the acceptance, from the drawer to the acceptor. 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, with- out entirely disregarding 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 account; ' 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 became due, the drawer became bankrupt, and indorsed the bill to the plaintiff, who was ignorant that an act of bankruptcy had been 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 346 CASES ON BILLS, NOTES, AND CHEQUES. such consequences would follow if this was an accommo- dation 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 defendant for goods sent, ^nd which he was then in the course of sending to him for sale. The drawer might, at that time, reasonably 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 nor acceptor knew the state of the account. A bill so drawn and accepted cannot be treated as an accommodation bill, nor, conse- quently, is there any implied obligation, on the part of the drawer, to indemnify the acceptor against the costs of any action which may be brought against him.' 1 Phil. Evid. 61; 9 Serg. & Eawle, 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 release 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 col- lateral, and arises upon the default of the acceptor. The necessity of protest and notice in such cases is not avoided by a fluctuating balance in their accounts, nor even by the fact, where there exists an open account, that there is an FARMERS' AND MECHANICS' BANK v. RATHBONE. 347 indebtedness from the drawer to the acceptor. Orr v. Maginnis, 7 East, 359; Blackhaw v. Doren, 2 Camp. 503; In re Brown, 2 Story's C. 0. 502, 521; Story, Bills, § 311; 2 Smith's Lead. Cas. 29; Smith's Merc. Law, 315; 15 Peters, 393. But if these bills are to be regarded strictly as accom- modation 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 that the accept- ance was for accommodation, whether that notice was received at the time he took the bills or at any subsequent period. It is proper to observe that this question does not now arise between the drawer and acceptor; as between them the consideration may be inquired into and the true rela- tion 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 accommodation 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 application is required to impart to them that credit and currency which is necessary to insure the pur- poses 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 la.w and in equity, to regard the acceptor as primarily liable, and the drawer as his surety ; they could have released, compounded 348 CASES ON BILLS, NOTES, AND CHEQUES. with, or given time to the drawer, without in any way affecting their right to hold the ultimate liability of the acceptor. Story, Bills, §§ 429, 430; 15 Peters, 393; 1 Mees. & W. 374. Such being their right at the time they became the holders of the bills, there is no propriety 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 payment 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. & Sur. 216. The plaintiffs, as holders of these bills, were not sub- ject to any 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 indorsee 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 when he received the bill that it was given for accommodation. Lord Ellenborough ruled that the maker was liable, notwithstanding the payment and release ; for his liability on the face of the note was pri- mary 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 disturbed 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 re- lations 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 FARMERS' AND MECHANICS' BANK v. RATHBONE. 349 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, Promissory Notes, § 423. In the case of Laxton v. Peat, 2 Camp. 185, and Collett V. Haigh, 3 Camp. 281, a different doctrine was applied to accommodation bills, where the holder, at the time he received the bills, knew that they were for the accommo- dation 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 the 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 exchange, knowing at the time that it was for accommoda- tion, he thereby assents to receive and hold it subject to that equity of the parties; while no such suggestions can be made in this case, as these plaintiffs had no such notice when the bills were received and discounted. The doctrine of those two cases was, however, subse- quently shaken by Justice Gibbs, in Kerrison v. Cooke, 3 Camp. 362, and was afterwards overruled in the Common Pleas, in the case of Pentum v. Pocock, 6 Taunt. 192, in which Mansfield, C. J., observed ' 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 compelled 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 accommoda- tion, it would make no manner of difference.' With this view of the case, Heath, J., and Chambre, J., agreed. It will be at once perceived that in this case the acceptor was held as the principal and primary debtor on an accommo- dation bill, known to be such by the holder when he 350 CASES ON BILLS, NOTES, AND CHEQUES. received it, and that act of the holder, which would have discharged a surety, was held not to affect his liability. We are not called upon in this case to approve or disap- prove of the doctrine of that case to the extent to which it was carried ; but it is a decided 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 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 that this right is unaffected by any subsequently acquired know- ledge 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. & G. 578, 584; Nichols v. Norris, 3 Barn. & Adol. 41; Harrison v. Courtauld, 3 Barn. & Adol. 36; Rolfe v. Wyatt, 5 Car. & P. 181; Moody & M. 14; Yallop V. Ebers, 1 Barn. & Adol. 698, 703. It is to be observed also that the same view of the subject is enter- tained by the different elementary authors. Chitty, Bills, 344; Smith's Merc. Law, .3.32; 3 Kent's Com. 104; Bayley, Bills, 364; Story, Promissory Notes, §§ 418, 423. This subject has arisen before many of the courts in this country, and the rule is generally sustained ' that the parties to a bill 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 holders, 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. & Eawle, 229; s. c. 12 Serg. & Pawle, .382; White v. Hopkins, 3 Watts & Serg. 99; Lewis v. Hanchman, 2 Barr, 416; Commercial FARMERS' AND MECHANICS' BANK v. RATHBONE. 351 Bank v. Cunningham, 24 Pick. 270, 275; Church v. Barlow, 9 Pick. 547, 551; In re Babcock, 3 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 holders, they were to be regarded as princi- pals, 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 assumed them on the face of the bills and notes, 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 the holders, who at the time received the note with notice of the circum- stances 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 contri- bution 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 sure- ties, 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 them in the rela- 352 CASES ON BILLS, NOTES, AND CHEQUES. tion of principal and surety. Tlie testimony clearly con- tradicts 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 con- tract 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 ignorance of that arrangement. Under such circumstances the holder has only to look to the bill itself, and the genuineness of the signatures, to ascertain the nature and extent of the liability of the par- ties thereon ; and they are liable to him in the successive order in which their names appear upon the face of the bill. McDonald c. Magruder, 3 Peters, 471 ; Flint v. Day, 9 Vt. 345; Brown ,-. Mott, 7 Johns. 361. This doctrine is sustained in Story's Treatise on Prom- issory 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 between themselves.' And in § 4.S3, he farther says ; ' Xor would it make any difference in the case that the released party was, in point of fact, the party ultimately bound to paj^ the note, and that the other party was a mere accommodation maker, payee, or indorser, 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 release, known to the holder.' Story, Bills, §§ 291, 3r;s, 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. FARMERS' AND MECHANICS' BANK v. RATHBONE. 353 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 countrj. ' As these bills were received and discounted by the plain- tiffs before their maturity, without notice that they were for accommodation, we are satisfied, from the authorities, that they had a right to treat the acceptor as the principal debtor, and the drawer as liable 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 princi- ples which prevail in that court are now equally, available at law. From an examination of the cases in chancery, we entertain a decided conviction that the same princi- ples, 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- lished, than from any rules prevailing in equity at vari- ance with them. There is much propriety in this ; for the principles regulating bills of exchange have their origin in mercantile usage, and have been adopted to meet the exi- gencies and wants of commercial transactions; it is there- fore equally the policy of courts of equity, as of courts of law, to make the application of and enforce those prin- ciples, in relation to these securities, which experience has found necessary, to preserve their negotiability a.nd 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 know- 23 354 CASES ON BILLS, NOTES, AND CHEQUES. ledge of the party, but tliat all shall be taken as appearing on the face of the bill, I think it a most wholesome doc- trine.' The case is important only, as showing the indi- vidual 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 refused to adopt the principle of the decision of Fentum o. Pocock, and recognized the general doctrine as held in Laxton c. 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 accommodation. If the plaintiffs in this case had received the bills with knowledge that they were given for accommodation, we do not say but that the defence would be available ; for when one takes a bill, even before maturity^ with notice of a given fact, it is not unreasonable that he 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 maturity, without notice and for value; for the bill is then held independent of all equities existing between the original parties; and Lord Eldon, in that case, nowhere intimates that the prin- ciple would have such an application. It is only to the case of an accommodation bill, 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 con- trolling influence in our decision of this case is that of Harrison v. Courtauld, 3 Barn. & Adol. 36. That case, it will be perceived, was sent from chancery by the Master of the Eolls, 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 parties have FAEMERS' AND MECHANICS' BANK v. EATIIBONE. 355 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 the time he received the bill that it was given for accommodation, but was afterwards 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 con- sidered; and all the judges — Tenterden, C. J., 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 principles prevailing in equity or at law, the result is the same. The plaintiffs having no notice at the time they received the bills that they 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 the 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 defendant 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. 356 CASES ON BILLS, iJOTES, AND CHEQUES. MADISON SQUARE BANK v. PIERCE. - '/ Court of Appeals of New York, March, 1893. 137 N. Y. 444. The maker of a negotiable promissory note, executed for value, cannot set up part payment by an indorser thereof not made on the maker's behalf. Action against the maker of a negotiable promissory note. Payment in part, by an indorser, set up in defence pro tanto. Judgment for the plaintiff, for the whole sum. The facts are stated in the opinion of the court, second paragraph. Pinch, J., for the court. — We have a novel and interest- ing question before us on this appeal, although its apparent importance will lessen as we pass from first impressions to some slower reflection. It arises upon facts which are very brief and simple, and may at once be stated. The defendant Pierce made his promissory note payable to his own order and indorsed it to the Bates Co., Limited, which indorsed it to the plaintiff bank ; the latter discount- ing and paying the proceeds over to the immediate indorser. Thereafter the Bates Co. became insolvent and passed into the hands of a receiver, who paid to the bank, upon the liability of the indorser, seventy-three and one-quarter per cent, of the amount secured by the note. Later the bank sued Pierce the maker, and recovered judgment for the full amount of the note in spite of tlie proof showing the pay- ment made by the receiver, and in disregard of the claim asserted by the defendant that he should only be held liable for the balance remaining unpaid. That judgment has been affirmed by the General Term, Judges Daniels and Barrett each writing very strong and valuable opinions in support of their doctrine, and relying upon the authority of Jones V. Broadhurst, 9 C. B. 173, 67 Eng. Com. L. 175, which fully warrants their conclusion. The question does not seem ever before to have arisen in this country, and we are left at MADISON SQUARE BANK v. PIERCE. 357 liberty to examine the English rule and to follow it or not as we approve or disapprove its logic and its consequences. We are not to regard the note as being accommodation paper, but must assume its transfer for value. The form of the transaction is equivalent to what it would have been if the Bates Co. had been named as payee, and loses none of its force by the intervention of the maker as first indorser. That indorsement, in the form adopted, was needed for the regular transfer of title, but does not change or affect the nature and character of the maker's liability. He remains the ultimate debtor, the person who ought to pay the debt, in preference to and in exoneration of all the other parties to the paper, who in some form or other are entitled to have final recourse to him. And it is to the case of such a maker of the note or such an acceptor of the bill of exchange that the English rule alone applies, and it is explicitly declared inapplicable where the indorser or drawer is the real debtor, although in form only secondarily liable. Pierce therefore was the ultimate debtor, and the party who ought to pay the note, both in discharge of the obliga- tion to the holder and in exoneration of the indorser. When the bank sued on the note, it was the legal holder and the legal party in interest. Upon production of the paper and the usual proof, judgment against the maker for the full amount was inevitable, unless some defence should be inter- posed. The only possible one for Pierce was part payment, and he was compelled to assert, and his counsel are com- pelled to argue, that the money paid by the indorser to the holder inured to the benefit of the maker as a payment on his debt. But that doctrine cannot prevail for very obvious reasons. The indorser's payment did not in the least lessen or satisfy the maker's debt. He owed it all exactly as be- fore. What had happened possibly changed somewhat the real creditor, but left the whole amount due and unpaid. To whom he should pay might become a new question, but how much he should pay in discharge of the note was not made doubtful in any degree. What the receiver advanced 358 CASES ON BILLS, NOTES, AND CHEQUES. to the holder is familiarly described as payment ; but it was such relatively to the indorser's liability alone ; while rela- tively to the obligation of the maker it was an equitable purchase instead of a payment. That view of it was taken in a very early case, the decision of which depended neces- sarily upon it. In Callow v. Lawrence, 3 Maule & S. 95, it appeared that one Pywell drew a bill upon Lawrence to his own order, which Lawrence accepted. The drawer in- dorsed the bill to Taylor, who discounted it and thereafter indorsed it to Barnett. It was protested for non-payment. The drawer paid Barnett the full amount and took the bill, and striking off the indorsements of Taylor and Barnett, transferred the bill to Callow, who sued the acceptor upon it. The latter claimed that the bill was paid and extin- guished, which the court denied, saying that the drawer ' became the purchaser of the bill ' when he paid and took it up out of Barnett's hands ; that it was not paid by the drawer animo solvendi, — in order to extinguish it, but only to redeem himself from the situation in which he stood. That must always be true of payment by indorser to holder, where the maker is the ultimate debtor. To the extent of the money paid the indorser becomes equitably entitled to be substituted to the rights and remedies of the holder, and becomes pro tanto the beneficial owner of the debt ; so that the maker's obligation to pay the note in full, at first due to the holder solely in his own right, becomes, after the part payment by the indorser, still wholly due to the holder, but partly in his own right and partly as trustee for the in- dorser. A court of law cannot split the note into parts, and must act upon the legal interest and ownership. In the present case there was no privity between maker and indorser as it respects the action of the latter. He paid, not as the agent of the maker, not at his reqiiest, not for his benefit, and under no duty to relieve him, but in- dependentl}'^, upon his own obligation, to lessen his own responsibility, and not at all to discharge the ultimate debt which it was the maker's duty to pay. It seems very clear MADISON SQUARE BANK v. PIERCE. 359 therefore that the maker cannot utilize for his own benefit a payment which, as to him, is not a payment upon the debt. It becomes, as I have said, merely a question to whom he shall pay and who may sue for and collect the whole unpaid sum. In that question the maker has no con- cern beyond the inquiry whether he may become liable to different persons for the same debt and encounter the dan- ger of paying it twice. I can discover no such peril. The judgment in favor of the holder is a bar to any other suit on the same note, and payment to the holder discharges the note utterly. Ordinarily the indorser cannot recover except upon the note, and as holder, and in accordance with the law merchant. If he ever has any other right of action against the maker, it is either in equity or by force of some facts beyond the bare relation established by the paper. And where the note is merged in the holder's j^idgment, or paid in full to him by the maker, the indorser's only right is through the judgment or against the proceeds if he has made a partial payment to the holder. That does the in- dorser no wrong. If he is not content that the holder shall collect to some extent as his trustee, he may prevent it by payment in full to the holder and so entitle himself to the possession of the note on which to sue, or, if judgment has been obtained, to be subrogated to all of the rights of the ' plaintiff therein. I think this result is clearly indicated by our own de- cisions. In Mechanics' Bank v. Hazard, 13 Johns. 353, the maker of the note had been arrested in an action upon it, and his bail sought to relieve themselves by force of a pay- ment made by the indorser to the holder, but such effect was denied to it ; the court saying that it was not a pay- ment by or on behalf of the maker, or of which he or his bail could avail themselves. And in Guernsey v. Burns, 25 Wend. 411, where the suit was by the holder, representing the legal title and interest, it was said to be no defence to the maker, and no concern of his, that some property in the note was in another. 360 CASES ON BILLS, NOTES, AND CHEQUES. It thus becomes apparent that there is no very great im- portance in the question which method of securing payment from the maker is adopted, since the same result follows from each, and that it narrows down to the inquiry whether as matter of correct doctrine and of convenience in practice the holder may recover the whole debt against maker or acceptor for himself and as trustee for the iudorser to the extent of his acquired interest ; or whether he shall take judgment only for the balance, leaving the indorser to sue in some way and on some theory, which apparently could not be upon the note because already merged in the judg- ment, but might be for money paid for the use of the maker, since he gets the benefit of it in the reduction of the judg- ment, as was held in Pownal v. Ferrand, 6 Barn. & C. 439, where the holder deducted the indorser's payment from the levy against the maker. The former seems to me to be the logical and convenient method, and so I think we should follow the English doctrine. I have not underrated the assault made upon it by the appellant. He asserts that Jones v. Broadhurst is contrary to the earlier cases, and has been criticised and shaken by the later ones. I have examined them all, with some won- der at the amount of learning and ingenuity expended upon the subject. Pierson v. Dunlop, Cowp. 571 ; Walwyn v. St. Quentin, 1 Bos. & P. 652 ; Bacon v. Searles, 1 H. Bl. 88 ; Hemming v. Brook, Car. & M. 57 ; Randall v. Moon, 12 C. B. 261 ; Cook v. Lister, 13 C. B. x. s. 54.> ; Solomon v. Davis, 1 Cahabe & Ellis, 83; Thornton v. Maynard, L. R. 10 C. P. 695. The prior cases were very fully and carefully reviewed by Baron Cresswell,^ in the opinion rendered in Jones V. Broadhui'St ; and of the subsequent cases I deem it only necessary to say that along with some criti- cism and doubt, the doctrine has remained substantially unshaken, and the case last cited was declared by Lord Coleridge to be the accepted law. It must not be forgotten, however, and I may prudently 1 A slip for Cresswell, J. SWOPE 0. ROSS. 361 repeat, that the doctrine has no application to accommoda- tion paper, and rests wholly upon the actual and ultimate indebtedness of maker or acceptor as the party who ought to pay. In such a case as that, which correctly describes the one now before us, and where no disturbing facts affect the relations of the parties as fixed by the paper itself, I think the holder may sue and recover the full amount, receiving so much of the proceeds as represents a part pay- ment by the indorser as trustee for him. It follows that the judgment should be aflS.rmed with costs. All concur, except Maynard, J. dissenting. Judgment affirmed. SWOPE V. ROSS. iya. Supreme Court of Pennsylvania, 1861. 40 Penn. St. 186. The drawee of a bill not accepted by him may discount the same before maturity and thus become holder of the paper. Such proceeding is not a payment. Assumpsit upon the following case stated : Eoss Forward gave to Swope & Karns the following instrument of writing : — 'Somerset, Pa., August 18, 1859. ' George Eoss & Co., bankers, pay to Swope & Karns or order, ninety days from date, six hundred and sixteen dollars. ' Eoss FOEWARD.' On or about the 1st of September thereafter, Swope, one of the firm of Swope & Karns, delivered this paper (indorsed Swope & Karns) to the plaintiffs' bank, had the same discounted, and received the money thereon, less the discount, f 16.40. At the time this check was given, and when it was discounted at the bank, Eoss Forward was 362 CASES ON BILLS, KOTES, AKD CHEQUES. one of the firm of George Ross & Co., but went out on the 19th of September, 1859. When 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 19th of November, 1859. If the court be of the opinion that, on the above state of facts, the plaintiffs are entitled to recover, the judgment to be entered in favor of plaintiffs for $616, with interest from Xov. 9, 1859; otherwise judgment for defendant with costs. Judgment for plaintiffs. Writ of error. Strong, J., for the court. — The question presented by the case stated is quite novel, and we have not been able to find that it has been adjudicated. Undoubtedly the acceptor of a bill of exchange is the principal debtor, and the drawer and indorsers are but sureties. Of course the acceptor, even after payment, cannot sue either the drawer or indorser of the bill unless his acceptance was supra protest. His payment of the bill extinguishes it, but the case stated finds that the plaintiffs discounted the bill for the payees before it became payable, 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 before. A bill is paid only when there is an intention to discharge and satisfy it. In Burbridge v. Manners, 3 Camp. 194, Lord Ellenborough said ' that even payment of a bill 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 pay- ment nor extinguishment. In Attenborough v. McKenzie, in the English Court of Exchequer, 36 Eng. L, & Eq. 662, it was held that, it the acceptor 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 SWOPE V. BOSS. 363 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 trans- fer by the drawer to the acceptor will opei'ate as an in- dorsement, 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 the 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 of a bill, payable on time, who has discounted it, main- tain 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 regard to it. His discount- ing has neither paid nor extinguished it, and it is not a promise to pay according to its tenor and effect. Is he precluded from becoming an indorsee 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, supra 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 incapacitate 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 364 CASES ON BILLS, NOTES, AND CHEQUES. hands to meet the bill at maturity, he may well refuse to accept, and yet may discount it on the credit of both the drawer and indorser. If he does not accept, he is as much a stranger to it as any other person discounting it for the drawer or indorser; is but purchasing the contract, 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 & 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 rights to it, and stand in the same condition as any other holder. It was said that there is no legal presumption if the drawer comes into possession of the bill previous to its dishonor, that he takes it with the obligation to accept. 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. The fact is not distinctly found that notice of dishonor of the bill was duly given to the defendants, but it was conceded on the argument that such was the fact, and that such is the meaning of the case stated. The judgment is Affirmed. "WHEELEE V. GUILD. 365 WHEELEE V. GUILD, j - - Supreme Court of Massachusetts, October, 1838. 20 Pick. 545. Payment by the maker before maturity, to the holder of a negotiable note not entitled to receive payment thereof, if not followed by surrender of the note, will not protect the maker. The case is stated in the opinion of the court. Shaw, C. J., for the court. — 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 community, the business of which is to a great extent transacted through the medium of these instruments. The facts which may be deemed material are these : The plaintiff became the holder of the note in question by regular indorsement for valuable consideration, soon after it was made, being a note dated September 1, 1833, payable in three years, with interest, and the last indorsement being in blank. Within 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 & Goodrich, attorneys and part- ners, in Worcester, one to Tappan & Co., and one to Stewart & Co., of New York, for both of which parties Brigham & Goodrich were agents and attorneys. On that occasion, the plaintiff, John Wheeler, delivered to Brigham & 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, 1835, these three notes had been fully paid. Though Brigham and Goodrich were in partnership as attorneys-at-law, yet 366 CASES ON BILLS, NOTES, AND CHEQUES. 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 December, 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 28th 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 Sep- tember, 1836, and gave him a receipt, in his separate name, signed D. T. Brigham, stating that the f 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 24th 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 gentle- man, 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 ease; but we think they are plainly deducible from the circumstances stated, and they are these : That Goodrich did not assent to the pay- ment received by Brigham, and did not in fact know of it till after he had been applied to by the plaintiff for the note; that Goodrich had the actual possession and custody of the note; and that, at the time that Brigham received the money and gave the receipt, he not only did not pro- duce 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 WHEELER V. GUILD. 367 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 promise 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 the ordinary course of business, when payable to bearer or indorsed in blank, so as to be transferable 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 indorse- ments. So that if such a bill or note be made without consideration, or be lost or stolen, and afterwards be nego- tiated 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. Eace, 1 Burr. 462; Peacock 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 confidence inspired by the actual custody and possession, and the actual delivery of the security upon such negotia- tion. 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 considered 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 adopted with this limitation, that the party thus taking the note or bill does it in the ordi- nary course of trade, when not overdue or otherwise dishonored by anything apparent upon the face of it, and without notice that it had been lost or stolen, or that the holder had obtained it wrongfully, or had no just right to 368 CASES ON BILLS, NOTES, AND CHEQUES. receive it in the way of business. Paterson v. Hardacre, 4 Taunt. 114. If one takes a note or bill with actual notice that it has been lost by the owner, he cannot hold it against the true owner. Lovell v. Martin, 4 Taunt. 799. It has been argued that where a party has a legal title by indorsement 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 con- sequence, we think, does not follow. The true ground is expressed by Eyre, C. J., in the case above cited, Collins V. Martin. 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 necessary to make them negotiable, and in this respect they differ essentially from goods.' In another part of his judgment, in assigning the reason why a person thus having a legal title may not enforce the col- lection 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 everything 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 WHEELER V. GUILD. 369 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 payment, and that known to the party paying, thougli 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 discharge 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 paj^ee, it was held that he was liable to repay the amount to the person losing it. Da Silva v. Fuller, Sel. Cas. 238, cited in Chitty, Bills, 6th Eng. ed. 148. In this case, although the holder had the legal title arising from the possession of the check, yet he was not bona iide 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 transfers and to payments. We think the rules deducible from the cases are these : Where a party takes a bill trans- ferable by delivery, 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 24 370 CASES ON BILLS, NOTES, AND CHEQUES. 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 eases 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 surrender and delivery of it upon the pay- ment or transfer. If, therefore, 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 dis- charge the party paying, but will be a payment in his own wrong; 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. 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 this 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 & 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 & Goodrich, they took the legal title, with a right to collect it, and apply the pro- ceeds to the payment of the notes, for the security of which it was pledged, if they should not be otherwise paid. But when those notes were paid, all right of Brig- ham & Goodrich 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 WHEELER V. GUILD. 371 to one of the promisors, on receiving payment, it is very clear that, according to all the rules applicable to this sub- ject, 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 busi- ness, although their transferee 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 & 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 wotild have passed as against the plaintiff, because such transfer without delivery would not be within the reason or principle of the rule. But we think the other point is equally decisive. Brig- ham 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 Brigham and Goodrich, as partners, been the true holders of the note, or if they had had a joint authority to collect it, it may well be admitted that the act of one or the receipt of one would bind both. But all the right and authority which they ever had over the note, except to give it back to the plaintiff, agreeably to their contract, had ceased. A receipt of one therefore in his own name, and not purporting to be for the use of both, was not within the scope of the partnership author- ity, and did not bind his partner. The defendant Stafford 372 CASES ON BILLS, NOTES, AND CHEQUES. gave credit to Brigham only. For though his receipt pur- ports to be not merely executory, but a present discharge 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 sur- render 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, which was wholly relinquished ; no notice was given to Goodrich, the partner who trans- acted 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 Brigham had no right, either in his own name or as a partner with Goodrich, to receive payment of, or to dis- charge this note. But the other grounds are sufficient, without relying upon these circumstances. 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 & Goodrich, for a special pur- pose, which was accomplished. After that, Brigham & Goodrich had a mere naked custody of the note for the plaintiff and had no right or lawful authority either to negotiate or collect it; a fortiori, Brigham alone had no such authority. The defendant, Stafford, was not law- fully called upon to pay Brigham, as having the possession and custody with a prima facie title, because he had no such custody or possession, and the note was not due. Stafford was not deceived into taking the note by the pro- duction and delivery of it, because it was not delivered or produced; if he paid it therefore to Brigham, without AYMAR V. SHELDON. 373 having [taken] up his note, he did it on the faith that Brigham had good right to receive payment and discharge it, and of course under the liability to pay it over again to the rightful proprietor, if Brigham had not such right. In fact and law, Brigham had no such right, but the plaintiff was at the time the rightful proprietor, and of course the defendants obtained no discharge 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. AYMAR V. SHELDON, is-i. Supreme Court of New York, October, 1834. 12 Wend. 439. The question of the liability of indorsers of a foreign bill of exchange drawn and payable in a foreign country, but indorsed in New York, upon protest for non-acceptance and notice thereof, without further steps at maturity, turns upon the laws of New York. Error from the Superior Court of New York city. The action was by indorsees against indorsers of a bill of exchange drawn in the French isle of Martinique upon a house in Bordeaux, Erance, payable at twenty-four days' sight to the order of B. Aymar & Co., the defendants, and by that firm indorsed to the plaintiffs in the city of New York, both plaintiffs and defendants being citizens of the United States. The bill was duly presented to the drawees for acceptance, and acceptance was refused. Whereupon the bill was protested for non-acceptance, and notice thereof given to the defendants. Pleas, (1) non-assumpsit; and (2) that the bill was drawn in Martinique, an island subject to France, that it was payable in France by subjects of that kingdom, that, by 374 CASES ON BILLS, NOTES, AND CHEQUES. the laws of France, on protest for non-acceptance the indorsers and drawer are bound to give security for the payment of the bill when due, and at maturity the holder is bound to present the bill if payable at one or more days after sight, for payment, and in case of dishonor must protest the same for non-payment, and is not excused by reason of the protest for non-acceptance, and that there had been no protest for non-payment. The defendants also pleaded (3) that on notice of protest for non-acceptance they were ready and willing to give security, according to the laws of France, and offered to do so. To the second plea the plaintiffs demurred; on the third they took issue. The second plea was adjudged bad, and the case went to trial upon the issues of fact. Verdict for the plaintiffs on the first plea, and for the defendants on the third. Nelson, J., for the court. — 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 default of the drawees to accept, must be determined by the French 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 now pre- sented has been examined or adjudged. But there 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 persons 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 indorsees in this case, the recovery below could not be AYMAR ^. SHELDON. 375 sustained, because 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 that the contract of indorser is a new and independent contract, and that the extent of his obligation is determined by it. The transfer by indorsement is equivalent to the draw- ing of a bill, the indorser being in almost every respect considered as a new drawer.^ Chitty on Bills, 42 j 3 East, 482; 2 Burr. 674-5; 1 Strange, 441; Selw. N. P. 256. On this ground the rate of damages 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 con- tractus.^ 6 Cranch. 21; 2 Kent's Comm. 460; 4 Johns. E. 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 indorse- ment made, has been adjudged both here and in England. In Hix V. Brown, 11 Johns. 142, the bill was drawn by the defendant, at New Orleans, in favor of the plaintiff, upon a house in Philadelphia; it was protested for non- acceptance, and due notice given; the defendant obtained a discharge under the insolvency 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 circumstance can make no difference, as the demand is against the defendant as drawer of the bill, in consequence of the non-acceptance. 1 See Bills and Notes (Students' Series), 75, 76. 2 i|j 254. 376 CASES ON BILLS, NOTES, AND CHEQUES. The whole contract or responsibility of the drawer was entered into and incurred in New Orleans. The case of Peters v. Brown, 5 East, 124, contains a similar principle. See also 3 Mass. E. 81; Van Eaugh v. Van Arsdaln, 3 Caines, 154; 1 Cowen, 107; 6 Cranch, 221; 4 Cowen, 512, «.' The contract of indorsement was made in this case, and the execution of it contemplated by the parties, in this State ; and it is therefore to be construed according to the laws of New York. The defendants below, by it, here en- gage 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 determine that the nature and extent of the obligation of the drawer are to be determined and settled according to the law of the place where the bill is drawn, are equally applicable to the in- dorser ; for, in respect to the holder, he is a drawer. Adopt- ing 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 payable 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. E. 202 ; Chitty on 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, having regard to the num- ber of days of grace there, as the drawee is under obligation to pay only according to such calculation ; ^ and it is there- fore to be presumed that the parties had reference to it. So the protest must be according to the same law, which is 1 See Bills and Notes (Students' Series), 249. 2 Id. 252. AYMAR V. SHELDON. 377 not only convenient, but grows out of the necessity of the case. The notice, however, mast be given according to the law of the place where the contract of the drawer or indor- ser, as the case may be, was made ; ' such being an implied condition. Chitty on Bills, 266, 93, 217 ; Bayley, 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 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 insist that it is also the implied contract of the indorser in this State. But this cannot be, unless the indorsement is deemed an adoption of the original 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 position 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 principle that the indorsement is equivalent to a new bill drawn upon the same drawer ; 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 their respective obligations. 1 See Bills and Notes (Students' Series), 253. 378 CASES ON BILLS, NOTES, AND CHEQUES. I am aware that this conclusion may operate harshly upon the indorsers in this case, as they may not be en- abled 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, however, can always protect himself by special indorse- ment, 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 indorse- ment, only to take such measures as are necessary to charge those to whom he intends to look for payment. Judgment affirmed. CAETEE V. THE UKIOl^ BANK. Supreme Court of Tennessee, April, 1847. 7 Humph. 548. Whether demand of payment of ii foreign bill of exchange may be made by a notary's deputy depends upon the law of the place in which the bill is payable. The case is stated in the opinion. Green, J., for the court. — This is an action against the plaintiff in error, as the indorser of a bill of exchange drawn in Memphis, Tennessee, by Arthur Bowen, on Fort & Wil- cox, New Orleans, in favor of the plaintiff in error, for $2,600, and by him indorsed. The bill was presented at maturity, payment demanded, and was protested for non- payment, by A. B. Cends, a notary public of New Orleans. The instrument of protest states that the notary 'by his deputy jNIcDime, junior, presented said draft to ]\Ir. Fort, one of the members of the firm of Fort & Wilcox, the acceptors, at their office, and demanded payment thereof, and was an- CARTER V. THE UNION BANK. 379 swered that the same -would not be paid.' The protest was made the 11th June, 1845. By an Act of the General Assembly of Louisiana, passed the 14th of March, 1844, it is made lawful, for each and every notary public in New Orleans, to appoint one or more deputies to assist him in making of protests and delivery of notices of protests of bills of exchange and promissory notes ; provided that each notary shall be responsible for the acts of each deputy employed by him; and provided that each deputy shall take an oath faithfully to perform his duties as such, before the judge of the parish in which he may be appointed ; and provided the certificate of notice of protest shall state by whom made or served. The defendant at the trial below objected to the protest which was offered as evidence, which objection was over- ruled by the court, and the evidence was admitted. The jury found a verdict for the plaintiff, and the defendant appealed to this court. It is now insisted that this protest is not evidence of the presentment and demand of the bill, because it states that the demand was made by the deputy of the notary. It is certainly true, as the general rule, that a foreign bill must be presented by the notary in person, and demand of payment made by him, and that the demand by his deputy is not sufficient. But it is seen that the law of Louisiana, where the bill was payable, authorizes the employment of a deputy in this service, and that the protest must certify by whom the demand was made. In Story on Bills, § 276, treating of protests of foreign bills, it is laid down, that the protest ' should be made out and drawn up in the form required by the law or usage of the place where it is made, and that so essential is the pro- duction of the protest that it cannot be supplied by mere proof of noting for non-acceptance and a subsequent protest for non-payment.' And Mr. Chitty observes (Chitty on Bills, 333) : ' Wherever notice of non-acceptance of a foreign bill is necessary, a protest must also be made, which, though mere 380 CASES ON BILLS, NOTES, AND CHEQUES. matter of form, is by the custom of merchants indispensably- necessary, and cannot be supplied by witnesses or oath of the party, or in any other way, and, as it is said, is a part of the constitution of a foreign bill of exchange.' The mere production of this protest, in the case of a bill payable and protested out of the country, will be evidence of its dis- honor, ' and to it all foreign courts give credit.' And at p. 456, he says : ' With respect to the protest, it should always be made according to the law of the place where the payment ought to have been made, though with regard to notice of dishonor, it must be given to the drawer within the time, and according to the laws of the place where the bill was drawn, and to the indorsers according to the law of the place where the indorsements were made.' These authorities settle the question, and establish the following propositions : 1. That a protest is indispensable to the dishonor of a foreign bill of exchange ; 2. That the protest is to be made according to the law of the place where the bill is payable ; 3. That the protest, properly authen- ticated, is evidence by its mere production of the present- ment and demand, in all foreign courts where the dishonor of the bill is required to be proved ; 4. That no other evidence of the facts stated in the protest is competent.^ The protest in the present case was made according to the law of Louisiana, where the bill was payable, and there- fore is evidence here of the dishonor of the bill. It is objected that there is no evidence that Memphis was the defendant's place of residence. It appears that, annexed to the name of the defendant on the bill, is added 'Memphis, Tennessee.' This we regard as part of his indorsement, and as sufficient authority to authorize the holder to send the notice to Memphis. Affirm the judgment. 1 See Bills and Notes (Students' Series), 107. INDEX. INDEX. ABSCONDING, as excuse of presentment, 115, 145, 211, 212. ABSENCE OF MAKER, from home, 195-204. ABSOLUTE DEFENCES, paper void by statute, 286, 290, 292. want of delivery, 227-243. fraud in obtaining possession of paper not delivered, 227-243. fraud in regard to nature of contract, 237-243. fraud in filling blanks in completed paper, 258-^67. alteration. {See Alteration.) forgery of signature. (See Forgery.) ACCEPTANCE, by stranger, 45. written, 48. words of, 48. promise of, 49. admits drawer's signature, 249, 250, 267-269. but not body of bill, 250-253, 274-276. rule that acceptance admits drawer's signature qualified, 270-274. does not admit payee's signature, 274-276. except when, 274-276. ACCIDENT, inevitable, as excuse of steps, 132-142. ACCOMMODATION PAPER, notice to purchaser, 214-219. of fraudulent diversion, 215-219. taken after maturity, 319-326. 384 INDEX. ACCOMMODATION VAVTiB,, — continued. English rule difTerent from American, 322-326. releasing drawer of bill accepted for drawer's accommodation, 342- 355. ADMINISTRATOR, {See Executor.) AGENCY, exempting agent from liability, 25-28. agent treated as principal as to time of notice of dishonor, 179. ALTERATION, immaterial, 244-248. cases reviewed, 245-248. of date, 253-255. raising sum, 256-258. adding words in blank left in completed instrument, 258-267. rule of two innocent persons, 265, 261, 262. {See FoEGERT.) ANNE, STATUTE OF, 1-11, 127-132. ANOMALOUS SIGNATURE, before that of payee, 29-45. New York rule, 29. Vermont rule, 35. Massachusetts rule, 38. ATTORNEY FEES, added to promise, 15. B. BAD FAITH, taking paper under circumstances of negligence, not, 293-295. BANK, paper payable at, 156, 212, 213. BANK NOTES, stolen before delivery, 236. BILL OF EXCHANGE, drawn on bank, payable on demand, query, 68, note. BLANK SPACES, filling of, fraudulently, in completed paper, 258-267. BURDEN OF PROOF, in case of duress, fraud, or illegality, 311-316. in case of want of consideration, 314. INDEX. 385 BUSINESS PLACE, what constitutes, 108-110. temporary stay in a town, 195-204. c. CAPACITY, of payee, in suit against prior party, 93, 94. of corporation to execute negotiable paper, 284-286. of insane person, 282-284. CARPENTER'S WORK, paper payable in, 11. CERTAINTY, of payment, 18. of time, 19, 24. CERTIFICATION OF CHEQUE, by drawer for himself, 69-73. by payee or holder, 69-73. not acceptance of a bill, 71. CHEQUE, not properly a bill of exchange, 70. certifying, 69-73. COLLATERAL SECURITY, paper held as, 22, 298-311. COMPETENCY, (See Capacity.) COMPOSITION DEED, with reservation of remedies, 334-342. CONDITION, paper held as security, 22. CONFLICT OF LAWS, liability of drawer or indorser, 373-378. law of place contemplated by the parties, 376. as to right of protest by deputy, 378-380. CONGRESS, residence of member of, 200, 201. CONSIDERATION, in guaranty, 221-225. statement of, in guaranty, 221-225. distinction between guaranty subsequent and guaranty contempora- neous, 221-225. (See Valuable Consideration.) illegal, 311-316. valuable, 296-311. 25 386 INDEX. CONTRACT, persons not parties to, 51-55. CORPORATIONS, power to execute negotiable paper, 284-286. CUSTOM OF MERCHANTS, 1-11. D. DAMAGE, question of, on want of notice of dishonor, 207-209. DATE, as evidence of place of payment, 111-122. DEATH, of maker, 142-145. DELIVERY, necessary to liability even as to bona fide holder for value, 227-236. obtained fraudulently, 227-236, 237-243. rule in regard to innocent persons one of whom must bear the loss, 201-234. lost or stolen paper once delivered, 232, 233. negligence, 235, 237, 240. stolen bank notes, not delivered, 236. DEMAND, {See Presentment and Demand.) DILIGENCE, reasonable, enough, 191-195. DISCHARGE, {See Payjient.) DISCHARGE OF SURETY, agreement for time, 329-334, DRAWEE, not bound to know hand of body of paper, 249-253. aliter of drawer's signature, 249, 207-269. e.xcept when, 270-274, may become holder and sue upon the paper, 361-364. DRAWEli'S CONTRACT, drawer of cheque presumptively entitled to notice of dishonor, 59, note, drawer of cheque not prejudiced by want of notice, 64-66. time for presenting demand draft, 66-68. INDEX. 387 DRAWER'S SIGNATURE, acceptance an admission of, 249, 250-253, 274-276. qualification of rule, 270-274. DURESS, burden of proof where paper was executed under, 316. E. EQUITIES, not available against bona fide holder for value, 225-227. ESTOPPEL, negligence in delivery, 235, 237, 240. facilitating alterations, 258-267. paying forged bills, 277-282. EVIDENCE, parol, to control indorsement, 84-91. EXCUSE OF NOTICE, by waiver, 204-207, 209, 210, 212, 213. no damage by want of notice, 207-209. does not excuse presentment, 212, 213. EXCUSE OF PRESENTMENT, absconding, 115, 145, 211, 212. inevitable accident, 132-142. mistake of post-office, 182-142. excuse of notice, not an, 212, 213. EXECUTOR, consent of, to make title, 78-82. indorsement by, 78, note. period of exemption from suit, 142-145. notice of dishonor to, before qualification good, 169-171. F. FORBEARANCE, agreement for, 329-334. FOREIGN BILLS, history of, 1-7. FORGERY, of signature before defendant's, 91-93. immaterial alteration, 244-248. in body of bill may be shown by drawee, 249-253. but not in drawer's signature, 249, 250. in date, 253-255. 388 INDEX. FORGEHY,— continued. rule of two innocent persons, 255, 261, 262. raised sum, and suit to recover original amount, 256-258. adding words in blank left in completed instrument, 258-267. negligence, 264. paying forged paper as an estoppel, 277-282. {See Alteration.) FRAUD, in obtaining paper not delivered, 227-243. in regard to nature of contract, 237-243. in reading or stating contract, 240, 241. upon illiterate person, 240, 241. in filling blank in completed instrument, 258-267. FUNDS, what meant by having, 59-64. G. GENUINENESS, (See Acceptance ; Alteration; Forgery.) GOOD FAITH, taking paper under circumstances of negligence, 293-295. GRACE, on instalment notes, 127-132. demand on last day of, 178. GROSS NEGLIGENCE, in taking paper not bad faith, 293-295. GUARANTY AND SURETYSHIP, guarantor not an indorser, 219, 220. consideration for guaranty, 221-225. guaranty subsequent, 221-225. guaranty contemporaneous, 221-225. statement in writing of considerRtion, 221-225. agreement to give time to principal debtor, 329-334. H. HISTORY, of custom of merchants, 1-11. HOLDER FOR VALUE, paper taken for pre-existing debt, 296-311. (See Valuable Consideration.) INDEX. 389 HOLDER'S POSITION, who is holder, 173, 174 presumptive right of action, 225-227. equities and set-ofE, 225-227. I. ILLEGALITY, right of indorser to prove, in contract of prior party, 94-99. of consideration, 311-316. ILLITERATE PERSON, fraud upon, 240, 241. INDORSEMENT, anomalous, 29-45. necessity of, 73-76. holder of unindorsed paper payable to order, 73-76. made in cipher, 77. joint, 83. control of, by parol evidence, 84-91. obtained by fraud as to nature of contract, 237-243. INDORSEE'S CONTRACT, stated, 100, 101, 181, 182. INEVITABLE ACCIDENT, as excuse of steps, 132-142. dut3' after obstacle ceases, 140-142. INLAND BILL, history of, 7, 11. INSANITY, of payee-indorser, 282-284. makes contract voidable, not void, 283. INSTALMENT NOTES, dishonor of, 127-132. grace on instalments, 127-132. INUREMENT, of notice by indorser in favor of holder, 167-169. JOINT INDORSEMENT, what constitutes, 83, 84. LEGAL OR ABSOLUTE DEFENCES, (See Aesoldte Defences.) 390 INDEX. LOST PAPER, bona fide holder for value of, 232, 233. M. MAIL, misdelivery by, 132-142. notice of dishonor by, 171-179. (See PosT-OrFiCE.) MAKER, notice that his note is lodged in bank for collection, 108. MATURITY, negotiable paper overdue does not lose negotiability, 317-319. accommodation paper taken after, 319-326. MEMBER OF CONGRESS, residence of, 200, 201. MISTAKE, money paid by, in case of forgery, 249-253, 267-269. of post-office as excuse of steps, 132-142. in notice of dishonor, 152-157. MONEY, carpenter's work not, 11. ore of mine, 19. N. NEGLIGENCE, in regard to delivery, 235, 237, 240. in regard to blanks, 264. in taking negotiable paper not bad faith, 293-295. NEGOTIABILITY, does not cease at maturity, 317-319. NOTARY, acting by deputy, 378-380. NOTICE OF DISHONOR, to drawer having no funds, 59-64. reasonable ground to draw, 59-64. drawer of cheque presumptively entitled to, 59, note. mistakes in, 152-157. not necessarily fatal, 152-157. object of notice, 156. what it should show, 156, 157-161. practice in cities, 157. mere notice of non-payment, 157-167. INDEX. 391 NOTICE OE DlSnO^Oli, — continued. cases reviewed, 160-166. inurement in favor of holder, 167-169. to an executor before qualification good, 169-171. personal notice necessary when, 171-175. when seasonable, 177-191. whether a whole day allowed for, 179-191. notice to one of several indorsers, 179. agent treated as principal, as to time, 179. NOTICE OF EQUITIES, taking accommodation paper with notice of fraudulent diversion, 215-219. taking accommodation paper after maturity, 319-326. holder with, taking from one who had no, 326-328. o. 'ON OR BEFORE,' payment so provided, 18. P. PARTNERS, acceptance by and demand upon, 150-152. PAYEE, in alternative, 11. administrator as, 14. capacity of, in suit against prior party, 93, 94. PAYMENT, ' on or before,' 18. place of, 111-122. by indorser for his own release merely, 356-361. holder may recover full sum of maker or acceptor in such case, 356-361. by indorser on behalf of maker or acceptor, 356-361. discount of bill by drawee not payment, 3Bi-364. when to be made and how, in case of negotiable paper, 365-373. PLACE OF PAYMENT, paper payable in another State, 111-122. payable generally, 115. absconding, 115. seamen, 115. no known residence, 115. removal, 116, 118. 392 INDEX. POST-OFFICE, mistake of, as excuse of steps, 132-142. notice of dishonor through, 171-179. posting letter containing notice may be enough, 176, 177. PRE-EXISTING DEBT, as a valuable consideration, 296-311. PRESENTIMBNT AND DEMAND, necessity of presentment, 100-108. place of, 111-122. paper payable generally, 115. absconding, 115. seamen, 115. no known residence, 115. removal, 116, 118. of sight bills, when, 122-126. at near midnight, 146-148. reasonable hour, 147, 148-150. business hours, 147. in evening, 148-150. paper payable at designated place, 165, 212, 213. in case of joint promise, 208, 210. {See ExcnsE of Presentment.) PRESUMPTION, from fraud, duress, or illegality, 311-316. PROMISSORY NOTE, history of, 7-11. PROMISE TO ACCEPT, not negotiable, 49. who may have benefit of, 49. description of paper, 56. how it differs from acceptance, 56. PROMISE TO PAY, as waiver of steps, 204, 207, 209, 210. PROTEST, certificate of, as evidence, 100-108, 150-152, 380. form of, 101. what it should state, 101, 102, 150-152. Louisiana law of, 102-107. of partnership acceptance, 150-152. conflict of laws as to. 376, .377, 380. by notary's deputy, 378-380. of foreign bill indispensable, 380. INDEX. 393 PUTTING UPON INQUIRY, negligence in taking paper, 293-295. R. READING CONTRACT, fraud as to, 240, 241. REASONABLE DILIGENCE, to find maker, 191-195. REASONABLE GROUND, for drawing bill or cheque, 59-64. REASONABLE TIME, for presenting sight bill, 122-126. RELEASE, of prior party may discharge later, 328. reserving remedy against later party, 334-342. technical sense of, 840. releasing drawer of bill accepted for drawer's accommodation, 342-355. REMOVAL, as excuse of presentment, 116, 118. RESIDENCE, reasonable diligence to find maker's, 191-195. temporary absence fromj_195-204. of member of Congress, 200, 201. ' S. SEAMEN, having no known place of residence, 115. SEASONABLE NOTICE, what is, 177-191. SECURITY, paper held as, 22, 296-311. SET-OFF, not available against bona fide holder for value, 225-227. SIGHT BILLS, to be presented when, 122-126. SIGNATURE, need not be at end, 25. in cipher, 77. of drawer, (-b'ce Acceptance.) 394 INDEX. STATUTE, declaring paper void, 286-290. Sunday, 290-293. usury, 292. STOLEN PAPER, bona flde holder for value of, 232, 233. stolen bank-notes, not delivered, 2.36. SUNDAY, paper delivered on, 290-293. SURETYSHIP, (See Guaranty and Sukettship.) SURRENDER OF PAPER, on paynaent, 365-373. SUSPICION, taking paper with suspicion of equities, 295, note. T. TIME, ' on or before,' 18. certainty of, 19, 24. of presenting demand draft, 66-68. general rule, 137. of notice, 177-179. agreement for time to principal debtor, 329-384. TRUSTEES, exempting themselves from liability, 25. U. USURY, right of indorser to prove, in maker's contract, 94-99. paper void for, is void in hands of bona fide holder for value, 291, 292, 314, 315. VALUABLE CONSIDERATION, holder for, 296-311. paper taken for pre-existing debt or as collateral security, 296-311. New York rule, 290-300. rule in United States courts, 300-311. VOID, paper so declared by statute, 286-290, 292. INDEX. 395 VOIDABLE, indorsement by insane person, 282-284. paper delivered on Sunday, 290-293. W. WAIVER, promise to pay before or after maturity, 204-207, 209, 210. knowledge of facts, 204-207, 209, 210. waiving notice not an excuse of demand, 212, 213. (